State: Texas
Volume: 163
Term: 1962-1962
Jurisdiction(s): Texas
Source: https://static.case.law/tex/163.pdf

NOVEMBER, 1961

PAN AMERICAN INSURANCE COMPANY, Petitioner
v.
HI-PLAINS HAULERS, INC., Respondent

No, A-8172. Decided October 18, 1961
Rehearing Denied November 22, 1961
850 S.W. 2d 644

JUSTICE SMITH, CHIEF JUSTICE CALVERT, and JUS-
TICES GRIFFIN and HAMILTON dissented.

Simpson, Adkins, Fullingim & Hankins, Richard E. Stokes, Jr.,
with above firm, Amarillo, for petitioner.

Underwood, Wilson, Sutton, Heare & Berry, H. C. Pipkin, Jr.,
with above firm, Amarillo, for respondent.

CULVER, Justice.

This suit grows out of a claim under the Workmen’s Compen-
sation Act against the compensation carrier, Pan American In-
surance Company on account of injuries sustained by Albert W.
Harris, an employee of Yellow Cab and Baggage Company. In
a settlement of this claim Pan American paid to Harris the sum
of $8500.00, plus $480.05 for medical and hospital expenses. There-
after, Harris filed this suit against Hi-Plains Haulers, Inc., as a

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third-party tort feasor. Pan American intervened pursuant to
Sec. 6a of Art. 8807, Vernon’s Ann. Civ. Stat., to recover the
amount paid by it to the employee, together with a reasonable at-
torney’s fee. During the pendency of the suit Hi-Plains settled
with Harris by paying him $1750.00 and thereupon tendered an
identical amount to Pan American, which tender was refused and
the case proceeded to trial. The jury found Hi-Plains guilty of
negligence, and assessed the damages sustained by Harris in the
sum of $1500.00. The trial court rendered judgment for Pan
American against Hi-Plains in accordance with that verdict.

On appeal the Court of Civil Appeals affirmed the judgment
insofar as that recovery was concerned, but reversed and re-
manded the cause, directing the trial court to include in its judg-
ment the sum of $480.05, the amount paid by Pan American for
hospital and medical services rendered to Harris, plus such attor-
ney’s fee as might be found to be reasonable. 341 S.W 2d 191.

Both parties applied for writs of error. Hi-Plains contends
that the Court of Civil Appeals erred in adjudging it liable to
Pan American for the hospital and medical expenses and the
attorney’s fee.

Pan American alleges that the judgment of the Court of Civil
Appeals is erroneous for the reason that in addition to the $1500.00
awarded it by the trial court upon the jury verdict, it is entitled
to the sum of $1750.00, the amount paid to Harris by Hi-Plains
in the agreed settlement. In the alternative Pan American says
that it is entitled as a matter of law to judgment against Hi-Plains
to the full extent of the amount paid by it in the settlement of
the claim for compensation, since the jury found that the negli-
gence of Hi-Plains proximately caused the damages sustained by
the employee, Harris.

HM Under the facts in this case we hold that Pan American is
not entitled to recover the attorney’s fee as allowed by the Court
of Civil Appeals. Its entire claim for recoupment is founded on
Sec. 6a of Art. 8307, Vernon’s Ann. Civ. Stat., the pertinent part
of which reads as follows:

“If compensation be claimed under this law by the injured
employee or his legal beneficiaries, then the Association shall
be subrogated to the rights of the injured employee insofar as
may be necessary and may enforce in the name of the injured
employee or of his legal beneficiaries or in his own name and
for the joint use and benefit of said employee or beneficiaries

4 |

and the Association the liability of said other person, and in
case the Association recovers a sum greater than that paid or
assumed by the Association to the employee or his legal bene-
ficiaries, together with a reasonable cost of enforcing such
liability, which shall be determined by the court trying the
case, then out of the sum so recovered the Association shall re-
imburse itself and pay said cost and the excess so recovered
shall be paid to the injured employee or his beneficiaries.”

We think the statute clearly limits the carrier’s recovery to
the amount assessed as damages but if on the other hand such
damages may be in excess of that paid by the carrier to the em-
ployee the carrier may collect “a reasonable cost of enforcing such
liability” out of that excess. An attorney’s fee was allowed both
in Fort Worth Lloyds v. Haygood, 151 Texas 149, 246 S.W. 2d
865, and in Traders & General Insurance Co. v. West Texas Util-
ities Co., 140 Texas 57, 165 S.W. 2d 718, but in each of those cases
the settlement between the employee and the third party was in
excess of the amount of compensation paid by the carrier.

Our decision in Smith v. Henger, 148 Texas 456, 226 S.W.
2d 425, 20 A.L.R. 858, does not run counter to our holding here.
In that case the objection to the allowance of an attorney’s fee
was raised by the deceased employee’s beneficiary. She com-
plained because the allowance would be paid out of the excess over
and above the amount of compensation paid to her. Thus, the
implication in that decision is merely that the court reached the
same conclusion as it did in the two foregoing cases. If this were
only a suit by Harris against Hi-Plains there could be no conten-
tion that in addition to the damages recoverable, Harris would
be allowed an attorney’s fee for bringing the suit. The intention
of the Legislature, we think, was not to increase the third party’s
liability by providing for the right of subrogation in favor of the
compensation carrier.

HI On the trial it was stipulated that Pan American paid “on
behalf of Albert W. Harris medical and hospital expense aggre-
gating $480.05.” No issue concerning these expenses was stipulated
to the jury and neither was any testimony offered to support the
finding that they were reasonable and necessary. Before Harris
could recover his medical expense he must have proved that it
‘was reasonable and necessarily incurred. Dallas Railway & Ter-
minal Co. v. Gossett, 156 Texas 252, 294 S.W. 2d 377. This case
was appealed without a statement of facts and we are of the
opinion that the trial court did not err in refusing to include the
amount of that expense in the judgment.

ee 5

HM Pan American argues that since the jury must not be in-
formed of the amount of benefits paid to the employee by the
insurer in settling the claim for compensation as held in Myers
v. Thomas, 143 Texas 502, 186 S.W. 2d 811, therefore it would
hhave been reversible error to have presented evidence as to the
medical expense paid and the necessity for a reasonableness there-
of. This assumption is not correct. The point is that it is improper
to introduce before the jury evidence as to the amounts paid by
the insurance company, but it would not be erroneous to introduce
evidence as to what the medical expense amounted to and whether
it was reasonable and necessary for the treatment of the injuries
sustained. This is as much an essential part of the damages that
Harris might recover from the third party as the physical injury
and pain suffered by him.

We proceed now to the contention of Pan American that it
should be awarded additionally the sum of $1750.00 which was
the amount paid by Hi-Plains to Harris in settlement of his claim.

Hf It is now the law in this state that the third party’s negligence
need not be judicially established before the compensation carrier
is entitled to assert its claim for subrogation and where the em-
ployee and the third party entered into a settlement, both employee
and the third party were liable to the carrier for the amount so
paid up to the amount of compensation paid by the carrier to the
employee. Traders & General Insurance Co. v. West Texas Utilities
Co., supra. Likewise it was held in Fort Worth Lloyds v. Haygood,
supra, that the first money “paid or recovered by the employee,
or his representatives, belongs to the compensation carrier paying
the compensation, and until it is paid in full, the employee, or his
representatives, have no rights to any funds; * * *.”

Under the law thus announced we are of the opinion and so
hold that Pan American is entitled to a judgment against Hi-Plains
for the sum of $1750.00 which was the first money paid in this
ease. The contention made by Hi-Plains, however, is that this
amount was tendered and refused and Pan American elected to
proceed with its suit and therefore was entitled to recover only
the sum of $1500.00 and no more, being the amount fixed as
damages.

II We have found no case squarely in point but we are of the
opinion that Pan American was entitled to collect the $1750.00
without being required to release Hi-Plains from any further
demands. Pan American had the right to proceed to trial and
have submitted to the jury the amount of damages. If the amount

6 ee

so found was equal to or in excess of the compensation so paid
then Pan American would have been entitled to collect from Hi-
Plains in full. In this case, however, the jury found that the dam-
ages were only $1500.00, less than the amount paid by Hi-Plains
in settlement.

The limit of Hi-Plains’ liability, had there been no settlement,
was the amount of damages occasioned by its negligence and no
more. On the face of things Hi-Plains made a rather unfavorable
settlement, but it is not to be punished or penalized for that by
having to suffer what would in effect be a double recovery or to
have its liability increased by more than the sum it paid in settle-
ment.

HM Pan American’s alternate contention that, merely because the
jury found Hi-Plains negligent, it thereby became liable to Pan
American for the full amount of all sums paid to the employee,
is not a sound theory nor is it founded on any authorities. No
decisions to that effect are cited. It is therefore overruled.

We therefore hold that Pan American is entitled to a judgment
against Hi-Plains Haulers, Inc., for the sum of $1750.00 and no
more.

The judgments of both courts are therefore reversed and the
cause remanded to the trial court for the entry of judgment in
accordance with this decision. It is so ordered.

Opinion delivered October 18, 1961.
SMITH, Justice, dissenting.

I respectfully dissent. Pan American’s contention that the
payment by Hi-Plains to Harris, and the receipt by Harris of
the sum of $1750.00 in settlement of his claim for damages, all
with the knowledge of Pan American’s right of subrogation, ren-
dered Hi-Plains liable as a matter of law to Pan American for
the sum of $1750.00 has, in effect, been sustained by the Court.
The Court holds that Pan American was entitled to collect the
$1750.00. This part of the holding is correct. When Hi-Plains
paid and Harris received $1750.00 in settlement of his claim for
damages with full knowledge of Pan American’s rights of subro-
gation, Hi-Plains and Harris became liable to Pan American
jointly and severally to the extent of an equal sum of $1750.00.
The money paid over to Harris by Hi-Plains, actually, in law,
belonged to Pan American. Therefore, the trial court erred in

See) 1

granting Hi-Plains’ motion to require an election of remedies,
and in ordering Pan American to elect in writing whether it
would accept the “sum of $1750.00 by way of full compromise
and settlement of its entire interest in the cause of action * * *
or whether * * * Pan American Insurance Company desires to
determine the liability, if any, of * * * Hi-Plains * * * to * * *
Harris, to the extent of the interest of Pan American Insurance
Company therein under the terms of Sec. 6a, of Art. 8807, RCST.”

The holding of the Court that Pan American is not entitled
to recover the sum of $1500.00, awarded by the jury, in addition
to the sum of $1750.00 is out of harmony with the stipulated facts,
the release agreement executed by Hi-Plains and Harris, and the
law as declared by the Supreme Court of Texas.

I cannot agree with the Court that the amount of the damages
awarded by the jury and the trial court must be equal to or in
excess of the compensation paid by Pan American to Harris be-
fore Pan American would be entitled to collect from Hi-Plains in
full. This is the sole reason given by the Court for not awarding
judgment in favor of Pan American for the $1500.00 in addition
to the sum of $1750.00.

The stipulated facts and the release agreement refute this
holding. It was stipulated that as the result of the injury received
by Harris, the Pan American Insurance Company was caused to
expend the sum of $3500.00 as compensation to Harris, and the
sum of $480.85 for medical and hospital expenses, a total of
$3980.85; that the settlement between Harris and Hi-Plains was
made without the consent, participation, knowledge, approval or
acquiescence of Pan American, and with full knowledge on the
part of Hi-Plains of Pan American’s right of subrogation. That
they had such knowledge and well knew that in the event Pan
American established that the injury sustained by Harris was
proximately caused by the negligence of Hi-Plains, Pan American
would be entitled to judgment against Hi-Plains for whatever
sum in damages should be awarded by the trial court, whether
such sum should be more or less than $3980.85, is conclusively
shown by the settlement agreement executed by Harris and Hi-
Plains. The settlement agreement was introduced in evidence as
a part of the stipulated facts. The portion of the written agreement
pertinent here, reads as follows:

“Tt is understood and contemplated by the parties that Pan
American Insurance Company, intervenor, * * * has paid to
said Albert W. Harris workmen’s compensation and medical

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expenses [$3980.85] * * *; and there is expressly excepted from
the terms of this compromise and settlement and reserved to
said Pan American Insurance Company its interest in said
cause of action of Albert W. Harris by virtue and to the extent
of the workmen’s compensation payments and medical ex-
penses made by said Pan American Insurance Company here-
tofore, to or on behalf of said Albert W. Harris as a result of
said accident and injuries of Albert W. Harris sustained there-
in. But it is expressly understood and agreed that except for
and only to the extent of the interest of said Pan American
Insurance Company in said claim and cause of action, this com-
promise and settlement is in full and complete discharge of the
entire remaining interest of the said Albert W. Harris in and
to said claim and cause of action against the parties to this
compromise and settlement agreement; and that said payment
of $1,750.00 is made by The Travelers Insurance Company to
and for the sole use and benefit of the said Albert W. Harris in-
dividually and compromise and settlement, release and dis-
charge of the cause of action asserted by him in the above en-
titled and numbered cause, excepted only to the extent of such
interest therein as has accrued to said Pan American Insurance
Company under Article 8807, Section 6a, RCST. It is also
specially understood and agreed that this compromise and set-
tlement agreement is intended only for the benefit of Albert
W. Harris, Hi-Plains Haulers, Inc., Levi C. Holt and The
Travelers Insurance Company, and is the compromise and set-
_ tlement and release and discharge of a doubtful and disputed
claim, liability for which is denied by said Hi-Plains Haulers,
Inc., Levi C. Holt and The Travelers Insurance Company as
shown by their answer filed in the above entitled and numbered
cause and the nature and extent of the injuries alleged by the
plaintiff being disputed; and that the payment herewith made
and the terms of this settlement is in no event to be construed
or constitute any admission of liability by Hi-Plains Haulers,
Inc., Levi C. Holt and/or The Travelers Insurance Company to
said Pan American Insurance Company, its successors or
assigns.”

Then again near the closing paragraph of the agreement, the
parties agree that Harris shall be forever barred from asserting
any claim or cause of action against “the remaining parties here-
to, * * * excepting from this compromise and settlement, release
and discharge, only the interest of said Pan American Insurance
Company in and to said claim and cause of action as to the extent
asserted by it in its First Amended Original Answer on file in
this cause.” .

eS 9

The claim asserted by Pan American was for a recovery of
damages. Pan American adopted the pleadings of Harris and those
pleadings prayed for a recovery of damages in the sum of $47,-
500.00, plus medical and hospital bills. Nothing contained in the
agreement placed a limitation on Pan American’s recovery. There-
fore, the “extent” of Pan American’s claim would naturally be only
limited by the amount paid by Pan American to Harris in settle-
ment of Harris’ claim for workmen’s compensation in the event
the jury award in damages exceeded such payment. The jury
verdict was for only $1500.00. By the very terms of the settle-
ment agreement, Hi-Plains and Harris admitted that Pan Amer-
ican would be entitled to the sum in damages which might be
awarded by the court’s judgment based upon the verdict of the
jury, the trier of the facts in this instance.

Since the money paid by Hi-Plains to Harris in settlement
was less than the amount of compensation paid by Pan American
to Harris, Pan American was entitled to receive from Hi-Plains
and Harris the amount of $1750.00 paid to Harris, and in addi-
tion thereto it was entitled for its benefit, but in the name of
Harris, to assert the original claim and cause of action by Harris
against Hi-Plains in order to make itself whole. Hi-Plains
recognized this right. In fact, Hi-Plains filed a motion in the
trial court that judgment for Pan American be limited to $1500.00,
the exact amount awarded by the jury. Pan American was clearly
entitled to this additional recoupment.

Pan American’s subrogation rights were not only stipulated
and agreed upon by Hi-Plains and Harris, but were definitely
fixed by Section 6a of Article 8807, Vernon’s Annotated Civil
Statutes of Texas. This statute does not provide for separate
causes of action. Under the statute, there is but one cause of action
against the third-party tort feasor. See Texas Employers’ Ins.
Ass‘n v. Texas & P. Ry. Co. et al., Texas Civ. App., 129 S.W. 2d
746, wr. dism. judg. cor.

Pan American was not compelled by statute or otherwise to
accept the tendered payment of $1750.00 in full and final settle-
ment of all of its subrogation rights. The money paid over to
Harris by Hi-Plains, actually, in law, belonged to Pan American.
It had the right under the statute to be reimbursed out of the
first monies paid to or recovered by Harris. See Traders & Gen-
eral Insurance Company v. West Texas Utilities Company, 140
Texas 57, 165 S.W. 2d 713; and Fort Worth Lloyds v. Haygood,
151 Texas 149, 246 S8.W. 2d 865.

There is no distinction, in principle, between the present case

10 re

and the two cases last cited. In the’ present case, Pan American
‘was required to proceed with the Harris cause of action against
Hi-Plains if it expected additional recoupment. It did just that
and in the trial judicially established that acts of negligence
charged against Hi-Plains were the proximate cause of the in-
juries sustained by Harris. The answers of the jury to the issues
inquiring as to the contributory negligence of Harris were all
favorable to Harris. The jury also found that the collision in
question was not the result of an unavoidable accident.

The fact that the jury verdict and judgment of the trial court
was for $1500.00, a sum less than the amount of money paid to
Harris, does not mean that Pan American is to be denied a re-
covery of the jury award. Pan American is entitled to a recovery
of the $1500.00 awarded by the judgment of the trial court, in
addition to a recovery of $1750.00, the amount of the settlement
payment by Hi-Plains to Harris. Both sums are to be considered
‘as money paid over to the employee within the meaning of Sec-
‘tion 6a of Article 8307, supra. This conclusion is inescapable in
the light of the holding of this Court in the cases of Traders &
General v. West Texas Utilities, supra, and Fort Worth Lloyds
v. Haygood, supra. This Court said in Traders & General, supra:

«“* * * Tt is pointed out in Fidelity Union Casualty Company

et al v. Texas Power & Light Company, Texas Civ. App., 35
S.W. 2d 782, 788, writ refused, that such ‘right of subrogation
hhas existence only in the terms of this statute [Sec. 6a] and it
can be enforced only as therein directed.’ It is also stated in the
opinion that ‘the amount to be recovered’ against the third
person tort feasor is ‘to be appropriated between the parties
as directed by the statute’, that is that the association first
recoup itself out of the amount recovered, and that the excess
only be paid to the injured employee. The money paid over to
the employee therefore belonged, under the law, to Traders
& General and both the company and the employee were
» charged with knowledge of that fact and had actual knowledge
that Traders & General was asserting its subrogation rights
in the cause at the time the settlement was made. The right
of the association to reimbursement out of the first money
paid is statutory; and in event the employee is permitted, with-
out the consent of the association, to settle his claim against
the alleged third person tort feasor, thus eliminating his further
interest in the suit, the provision of the statute authorizing
the insurance association to enforce for the joint use and bene-
fit of said employee and the association the liability of such
. tort feasor, ‘is theréby nullified. * * * The money belonging to

rs uu

Traders & General was wrongfully paid by the utilities com-
pany to the employee, who wrongfully received it, and both
were thereby rendered liable to pay to Traders & General the
amount of compensation theretofore paid by it to the employee,
together with the costs of enforcement, including a reasonable
attorney’s fee therefor.” [Emphasis added.] :

To fail to apply here the principle announced in Traders &
General, supra, would be in contravention of the legislative pur-
pose in enacting Sec. 6a, supra.

In the case of Fort Worth Lloyds v. Haygood, supra, this
Court cited with approval several cases, including Traders &
General, supra; Houston Gas & Fuel Co. v. Perry, 127 Texas
102, 79 S.W. 2d 628, 91 S.W. 2d 1052; Hanson v. Ponder, Texas
Comm. App., 300 S.W. 35; and Galveston-Houston Electric Ry.
Co. et al v. Reinle et al, Texas Civ. App., 264 S.W. 788, wr. ref.
The Court then went on to hold: “[TJhe fundamental principle
underlying the * * * cases cited above is that where compensa-
tion has been paid to an injured employee, or his representatives,
and they later file suit against the third party tort feasor, the
first money paid or recovered by the employee, or his representa-
tives, belongs to the compensation carrier paying the compensa-
tion, and until it is paid in full, the employee, or his representa-
‘tives, have no rights to any funds * * *.” [Emphasis added.]

The judgment of the Court of Civil Appeals should be reversed
and judgment should be rendered for Pan American against Hi-
Plains for the sum of $3250.00.

Chief Justice Calvert and Associate Justices Griffin and
Hamilton join in this dissent.

Opinion delivered October 18, 1961.

Key WESTERN Lire INSURANCE COMPANY, Appellant
v.
STATE BOARD OF INSURANCE ET AL, Appellees
No. A-8018. Delivered October 38, 1961

Rehearing Denied November 29, 1961
350 S.W. 2d 889

me
bo

STEAKLEY, Judge, not sitting. JUSTICE GRIFFIN dis-
senting.

Joe S. Moore, Graves, Dougherty & Gee, Austin, for appellant.

Will Wilson, Atty. Gen., Fred B. Werkenthin, Ray V. Loftin,
Jr., Asst. Attys. Gen.; ‘Austin, for appellees.

| De 18
MR. JUSTICE SMITH delivered the opinion of the Court.

This is a direct appeal from a decision of the District Court
of Travis County affirming an action of the Commissioner of
Insurance and the State Board of Insurance. The appeal is
authorized by Section 3b of Article 5 of the Texas Constitution ;
Article 1788a, Vernon’s Civil Statutes, and Rule 499a, Texas
Rules of Civil Procedure.

Appellant is a life insurance company with home offices in
Abilene. Appellant’s Policy Form Pic No. 1 was approved by the
Commissioner of Insurance on August 27, 1957, in accordance
with the provisions of Article 3.42 of the Insurance Code, and
appellant immediately began offering the policy to the public.

In March, 1958, the Commissioner of Insurance initiated a
series of hearings and inquiries regarding Policy Form Pic No. 1
which lasted until March 19, 1959, when the Commissioner with-
drew approval of the policy form in Office Order 3675. The Com-
missioner gave several reasons for his action, including: that the
premium charged was exceedingly high for the benefits provided
in the contract and can be justified only by promising high re-
turns from the investments provided for in Option 2, infra; in
view of certain policy provisions and the evidence and testimony
presented at the public hearing, the Commissioner was of the
opinion that the policy form contained provisions which “encour-
aged misrepresentation”, and were “unjust, unfair, inequitable,
misleading, deceptive, or contrary to law and the public policy
of this state’. Furthermore, the Commissioner found that the
policy form violates Rule 20 of the Board’s Official Order No.
957, dated May 26, 1958; the policy form is not a participating
insurance policy authorized by the laws of this state; a “Guar-
anteed Interim Endowment Option” obligated Key Western to
engage in the investment, trust, banking, or other similar busi-
ness on behalf of the policyholders, and the company was acting
outside its charter powers; “the Guaranteed Interim Endowment”
provided by the policy was in reality the return of a portion of
the premium paid. In view of all this, the Commissioner found
that appellant’s Policy Form Pic No. 1, “By its very terms and
provisions, and within the written contract itself, encourages
misrepresentation, is unjust, unfair, inequitable, deceptive and
contrary to the public policy of this state, and is contrary to
Rule 20 of Official Board Order No. 957 of the State Board of
Insurance, and Article 21.21, Texas Insurance Code, and obligates
Key Western Life Insurance Company to engage in a business
and function beyond its charter powers.” The Commissioner then

Cs

found that “these findings and conclusions, taken separately or
together, subject the entire policy to disapproval under the pro-
visions of Section (£)1 of Article 3.42, Texas Insurance Code.
The Commissioner specifically finds that each of the separate
conclusions is sufficient for disapproval of the policy under
Article 3.42.”

This order was affirmed by the State Board of Insurance
Order No. 1557, dated March 28, 1959. On March 81, 1959, ap-
pellant timely filed this suit in the 98th District Court of Travis
County to have reviewed and set aside the action of the Commis-
sioner of Insurance and the State Board of Insurance. The ad-
ministrative order was attacked on grounds which included both
a challenge of the constitutionality of the statute under which
the action was taken (Article 3.42 of the Insurance Code) and
assertions that the order withdrawing approval of the policy
form was invalid for other than constitutional reasons. A per-
manent injunction was sought. After a trial before the court
without a jury, judgment was entered denying all relief sought
by plaintiff, the court reciting in its judgment “that the orders
complained of are in all things supported by substantial evidence”.
This direct appeal followed.

Policy Form Pic No. 1 embodies a plan offered by Key West-
ern in which insurance benefits and investment opportunities are
offered in one policy. Some agents of Key Western were equipped
with an audio-visual kit which presented the policy provisions in
graphic form with discussions of the value of the policy as an
investment set out in optimistic terms, to say the least. An alterna-
tive oral presentation was substantially the same. All policyhold-
ers, regardless of age, have the same program which features the
same cost and offers the same benefits to all policyholders. All
policyholders pay $365.00 per year—(‘“a dollar a day’’).

Policy Form Pic No. 1 contains five “benefits” provided by
the policy; three are designated as “Death Benefits”, and two
as “Endowment Benefits”. The death benefits at age 35 are
payments to the beneficiary in the following amounts: (A)
$7,500.00 payable on death of the insured; (B) $2,000.00 at end

1. The pertinent part of Article 8.42 is Section (£) as follows:

“(f) The Board of Insurance Commissioners shall forthwith disapprove any
such form, or withdraw any previous approval thereto if, and only if,

“(1) ‘It is in any respect in violation of or does not comply with this Code,

“(2) It contains provisions which encourage misrepresentation or are
unjust, unfair, inequitable, misleading, deceptive or contrary to law or to the
public policy of this State.

“() It has any title, heading or other indication of its provisions which is
misleading. : :

re 15

of 15 years from the date of insurance, and (C) $100.00 on each
contract anniversary date following the death of the insured.
The returns characterized as “endowment benefits” are payable
to the insured, if living, and are characterized by the contract as:
(A) a “guaranteed annual interim endowment” whereby the
company promises to pay $50.00 when the first year’s premiums
have been paid; or (B) a “maturity endowment” whereby Key
Western promises to pay a single payment of $2,000.00 on the
maturity date of the contract. Most, if not all, policyholders have
elected (A) above. Under this “guaranteed annual interim en-
dowment” the policy provides that “the person controlling this
contract may elect in writing on forms satisfactory to the Com-
pany to have the proceeds thereof applied according to one of the
following options:

“1, Toward payment of the Annual Premium due if the
balance of such premium is paid.

“2. May authorize the Company to transmit the proceeds
thereof with reasonable promptness to a registered or author-
ized security dealer, or to the agent of the underwriter of a
mutual fund designated by the person controlling this Contract,
to purchase shares or fractional shares or both at the current
offering price for the account of the Insured in any mutual
fund which the person controlling this Contract may designate
and which is registered in the state of the Insured’s residence.”

According to the evidence, no policyholder has ever exercised
Option 1. Option 2 is at the heart of this case. The actuary who
designed the policy testified that Option 2 is what makes the
Guaranteed Annual Interim Endowment “attractive”; that he
doubted whether the company could sell the policy to any extent
without Option 2; and that the policy was “designed to be sold
on the merits of (Option 2)”. Since comparable insurance bene-
fits can be obtained for approximately $200.00, policyholders
electing Option 2 in effect pay the company a fee of $115.00 the
first year and $65.00 per year thereafter to simply mail the
policyholder’s “guaranteed annual interim endowment” ($50.00
the first year, $100.00 in subsequent years), to the investment
company.

HL Among other points presented, the appellant contends that
appeals to the District Court from orders of the State Board of
Insurance and the Commissioner of Insurance are to be deter-
mined by the preponderance of the evidence rule in a trial de novo
of the issues heard and decided by the Board rather than being

CS

determined by the substantial evidence rule as was done in this
case. We have concluded to sustain this point under the facts
of this case. Such action requires that the judgment of the trial
court be reversed and the cause remanded to that court for a new
trial. Before disposing of this point, however, we shall pass upon
the points which challenge the authority of the State Board of
Insurance and the Commissioner to withdraw approval of the
policy form issued by the appellant.

HE Appellant’s first point of error is that the provision of Article
8.42(c)? of the Insurance Code which authorizes the Board of
Insurance Commissioners to withdraw approval of a policy form
“at any time” is unconstitutional. Appellant insists that since the
power to withdraw approval is not mentioned in the title of the
1957 amendment to Article 3.42, then Article III, Section 35,
of the Texas Constitution has been violated.?

The title of Senate Bill 488 (55th Legislature, Regular Ses-
sion, Acts of 1957, Ch. 501, p. 1463), by which Article 3.42 was
amended, is as follows:

“An Act to amend Articles 3.42 and 8.48 of the Insurance
Code (Acts 1951, 52nd Legislature, Chapter 491, as amended)
relating to the filing with and approval by the Board of In-
surance Commissioners of all policy forms, endorsements, and
riders issued by any life, accident, accident and health or hos-
pitalization insurance company, doing business in this state;
prescribing the method of filing and providing for its approval
within thirty days unless disapproved or approved within such
time by written order of the Board; providing for specific
grounds for disapproval; providing for judicial review of any
‘such orders; repealing all laws in conflict herewith, providing

2 “(e) Every such filing hereby required shall be made not less than thirty
days in advance of any such issuance, delivery or use. At the expiration of thirty
days the form so filed shall be deemed approved by the Board of Insurance Com-
missioners unless prior thereto it has been affirmatively approved or disapproved
by the written order of said Board, The Board of Insurance Commissioners may
extend by not more than an additional thirty days the period within which it
may so affirmatively approve or disapprove any such form, by giving notice of
such extension before expiration of the initial 15-day period and at the expiration
of any such extended period, and in the absence of such prior affirmative
approval or disapproval, any such form shall be deemed approved. The Board
of Insurance Commissioners may withdraw any such approval at any time,
Approval of any such form by such Board shall constitute a waiver of any
unexpired portion of the waiting period, or periods, herein provided.”

8. “See. 85. No bill (except general appropriation bills, which may embrace
the various subjects and accounts, for and on account of which moneys are ap-
propriated) shall contain more than one subject, which shall be expressed in its
title, But if any subject shall be embraced in an act, which shall not be expressed
in the title, such act shall be void only as to so much thereof, as shall not be so
expressed.”

1

for a severability and saving clause; and declaring an emer-
gency.”

Section 35 helps assure that our legislators will not approve
legislation containing unnoticed and unwanted provisions, even
though in the press and din of legislative affairs it is not always
possible for them to examine all the parts of each proposed bill.
Holman v. Cowden & Sutherland, 158 S.W. 571, wr. ref. Gulf In-
surance Co. v. James, 148 Texas 424, 185 S.W. 2d 966. Appellant
maintains that the above title “descends into details, purporting
to reveal the substance of the changes wrought by the amendment,
but gives no hint of other changes incorporated in the body of
the bill.” Appellant cites cases which deal with various ways in
which Section 35 may be violated, including: new and independent
subjects in an amendatory bill; captions which conceal the true
purpose of a statute or do not reasonably apprise the legislator
of the scope of the bill so as to prevent fraud or surprise; and
provisions in the caption having no relevancy to the principal
object of the Act. See Arnold v. Leonard, 114 Texas 535, 273
8.W. 799; Ward Cattle & Pasture Co. v. Carpenter, 109 Texas
105, 200 S.W. 521; Board of Water Engineers v. City of San
Antonio, 155 Texas 111, 283 S.W. 2d 722; Hamilton v. St. Louis,
8. F. & T. Ry. Co., 115 Texas 455, 283 S.W. 485. However, the
present case is more closely analogous to Board of Ins. Com.
v. Sproles Motor Freight Lines, Texas Civ. App., 94 S.W. 2d
769, wr. ref. There the Court of Civil Appeals considered an
attack on a statute giving the then Board of Insurance Commis-
sioners the authority to fix premium rates for automobile in-
surance. The title of that Act (Chapter 258, Acts 40th Legisla-
ture, 1927) reads: “An Act to authorize the Commissioner of In-
surance of the State of Texas to fix the rate of automobile in-
surance, providing a penalty for violation of the provisions there-
of, and declaring an emergency.” The Act itself provided, among
other things, that “the Commissioner may withdraw approval of
any rate * * * if in his judgment such rate is unjust, unreasonable,
or inadequate to provide for the obligations assumed by the
insurer.” Attack was made, as here, that the statute violated
Article 3, Section 35, of the Constitution, because, among other
reasons, “its title does not contain the subject matter relative
thereto.” The principal objection was that there was no provision
in the title authorizing the Board to change the rates after once
having approved them. The court considered the appropriate re-
quirements of a title, and held “the subject of the proposed legis-
lation is sufficiently stated in the title to the Act.” Faced with
a similar problem, we hold that the title of Article 3.42, supra,
meets the constitutional requirements.

8

HE Next, appellant contends that the Commissioner erred in
disapproving Option 2 because the Commissioner’s interpretation
of Article 3.42(b) was too literal. With this contention we do
not agree. Article 3.42(b) is as follows:

“No application form which is required to be or is attached
to the policy, contract or certificate, and no rider or endorse-
ment to be attached to, printed upon or used in connection with
any policy, contract, or certificate described in Paragraph (a)
of this Article shall be delivered, issued or used in this state
by any insurer described in paragraph (a) of this Article unless
the form of said application, rider or endorsement has been
filed with the Board of Insurance Commissioners and ap-
proved by said Board as provided in Paragraph (c) of this
Article. Provided, however, that this Article shall not apply
to riders or endorsements which relate to the manner of dis-
tribution of benefits or to the reservation of rights and benefits
under such policies, contracts and certificates, and which are
used at the request of the holder of the policy, contract or
certificate.” (Emphasis added.)

The Commissioner obviously has not viewed Option 2, supra,
as a “rider or endorsement” within the meaning of the above
Article, but rather considers Option 2 a part of the policy itself.
Appellant argues that the same result achieved by Option 2 could
have been achieved by the policyholder executing an assignment
to a securities dealer, or the same provisions could have been at-
tached to a separate piece of paper and would then have been
without the control of the Commissioner. The option is neither a
rider nor an endorsement in the literal sense, and the Commis-
sioner chose to interpret the statute in the literal sense. The
Commissioner did not err in so doing. The provision was actually,
literally, and physically a part of the policy itself. The Commis-
sioner may well have reasoned that the presence of the option
in the body of the policy was probably instrumental in obtaining
100 per cent policyholder selection of Option 2 if for no other
reason than it lulled the policyholder into acquiescence in the key
option by its very physical presence in the body of the policy
rather than emphasizing its presence by its being separate and
apart as a rider.

fi In its fourth point of error, appellant asserts: “Article 3.42,
Texas Insurance Code, is so vague and grants such sweeping
powers, unbridled by any standard or guides, that it results in
an unconstitutional delegation of authority by the Legislature to
the Board of Insurance.” Appellant points out that action by the

es 19

Board under the “encourages misrepresentation” provision neces-
sarily means “a matter of opinion”, citing Railroad Commission
vy. Shell Oil Company, 139 Texas 66, 161 S.W. 2d 1022:

«ce & %* Tt ig a well-established principle of constitutional law
that any statute or ordinance regulating the conduct of a law-
ful business or industry and authorizing the granting or with-
holding of licenses or permits as the designated officials ar-
bitrarily choose, without setting forth any guide or standard
to govern such officials in distinguishing between individuals
entitled to such permits or licenses and those not so entitled, is
unconstitutional and void.”

The present case does not fall within the prohibition of the
Shell case, supra. We hold that Article 3.42 in this regard is
constitutional. The present case is more closely analogous to Jordan
v. State Board of Insurance, 160 Texas 506, 334 S.W. 2d 278.
That case upheld the standard “not worthy of the public confi-
dence”. In upholding such standard, the court cited Administra-
tive Law Treatise, par. 2.08, by Professor Davis, wherein there
were given numerous illustrations of phrases employing general
terms which have been held sufficient as administrative standards,
and we quote therefrom, as follows:

“(T)he standards the Supreme Court (of the United
States) has held adequate include ‘just and reasonable’, ‘public
interest’, ‘unreasonable obstruction to navigation’, ‘reciprocally
unequal and unreasonable’, ‘public convenience, interest or
necessity’, ‘tea of inferior quality’, ‘unfair methods of competi-
tion’, ‘reasonable variations’, ‘unduly or unnecessarily compli-
cate the structure’ of a holding company system or ‘unfairly
or inequitably distribute voting power among security-holders’.”

The standard “encourage misrepresentation” appears equally
as definite as the standard “unworthy of the public confidence”,
as well as the standards cited. The true test is whether the idea
embodied in the phrase is reasonably clear. The phrase meets that
test.

‘We come now to a consideration of appellant’s contention that
appeals to the district court from orders of the State Board of
Insurance and the Commissioner of Insurance are to be determined
by the preponderance of the evidence rule in a trial de novo and
not by the substantial evidence rule. Appellant insists that the
judicial review statutes are constitutional, and that the trial court
erred in testing the orders complained of by the substantial evi-

0

dence rule, contrary to the express provisions of the applicable
judicial review statutes. The pertinent statutes are:

Article 3.42(g) provides:

“Appeals from any order of the Board of Insurance Com-
missioners issued under this Article may be taken to the Dis-
trict Court of Travis County, Texas, in accordance with Article
21.44 of Subchapter F of this Insurance Code, or any amend-
ments thereof.”

Article 21.44 of Subchapter F provides, in part, that any
party dissatisfied with any decision of the Board of Insurance
Commissioners “may file a petition setting forth the particular
objections to such decisions” in the District Court of Travis
County, Texas.

The statute sets forth a standard of review as follows:

“The action shall not be limited to questions of law and
the substantial evidence rule shall not apply, but such action
shall be tried and determined upon a trial de novo to the same
extent as now provided for in the case of an appeal from the
Justice Court to the County Court.” (Emphasis added.)

Article 1.04(£) of the Insurance Code is partly as follows:

“If any insurance company or other party at interest be
dissatisfied with any decision, regulation, order, rate, rule, act
or administrative ruling adopted by the State Board of Insur-
ance, such dissatisfied company or party at interest after fail-
ing to get relief from the State Board of Insurance, may file
a petition setting forth the particular objection to such de-
cision, regulation, order, rate, rule, act or administrative ruling,
or to either or all of them, in the District Court of Travis
County, Texas, and not elsewhere, against the State Board of
Insurance as defendant. Said action shall have precedence over
all other causes on the docket of different nature. The action
shall not be limited to questions of law and the substantial evi-
dence rule shall not apply, but such action shall be tried and
determined upon a trial de novo to the same extent as now
provided for in the case of an appeal from the Justice Court to
the County Court.” (Emphasis added.)

It is clear that the district court has not afforded a trial de
novo as provided by the above statutes, but to the contrary has

21

reviewed the Board’s ruling according to the “substantial evi-
dence rule” and held that Key Western’s attack on the ruling
failed. The Board’s Order No. 7685 concludes:

“THEREFORE, ALL PREMISES CONSIDERED, it ap-
pears to the Commission of Insurance that Policy Form Pic
No. 1 of the Key Western Life Insurance Company, by its very
terms and provisions, and within the written contract itself,
encourages misrepresentation, is unjust, unfair, inequitable,
misleading, deceptive and contrary to the public policy of this
state, and is contrary to Rule 20 of Official Order No. 957 of
the State Board of Insurance, and Article 21.21, Texas Insur-
ance Code, and obligates Key Western Life Insurance Company
to engage in a business and function beyond its charter powers.
These findings and conclusions, taken separately or together,
subject the entire policy to disapproval under the provisions
of Article 3.42, Texas Insurance Code. * * *”

The district court by reviewing the ruling of the Board under
the substantial evidence rule has in effect found the applicable
review statutes in this case to be unconstitutional insofar as
they provide for “preponderance of the evidence” review. In
other words, the district court has held, in effect, that to afford
Key Western a trial de novo, under the preponderance of the
evidence rule, the court trespasses on that area of our govern-
ment reserved to the legislature, thus violating Article 2, Sec-
tion 1, of the Texas Constitution. We hold that a review by the
courts of the action taken by the Board of Insurance under Article
8.42, supra, in this case may constitutionally be had under the
“preponderance of the evidence” standard. The district court was
without authority to substitute a nonstatutory standard for that
prescribed by the statute. Key Western was entitled to a review
by trial de novo. Review by trial de novo has all the attributes
of an original action in the reviewing court. The trial court must
weigh the evidence by the “preponderance of the evidence” stand-
ard. Trial de novo has been defined as “A new trial or retrial
if no trial whatever had been had in the court below.” See Black’s
Law Dictionary; Ex Parte Morales, Texas Cr. App., 53 S.W.
108. Trial de novo is not an “appeal”, but is a new and indepen-
dent action. See Corporation Commission of Arizona v. Peoples
Freight Line, 16 P. 2d 420 (Sup. Ct. Ariz. 1936) ; Investors Syn-
dicate of America v. Hughes, 378 Ill. 418, 38 N.E. 8d 754.

The maximum scope of judicial review that may be provided
for the ruling of an administrative agency is a problem that has
vexed the courts of this and other jurisdictions numerous times.

Be

2

There are numerous cases in Texas and other jurisdictions where
the courts have applied the substantial evidence rule to the re-
view of administrative decisions where the particular statute in-
volved in those cases apparently called for a complete redetermina-
tion of the issue. See for example, Fire Department v. City of
Ft. Worth, 147 Texas 505, 217 S.W. 2d 664 (1949) ; Bradley v.
Texas Liquor Control Board, Texas Civ. App., 108 S.W. 2d 300
(1937), no writ history; Jones v. Marsh, 148 Texas 362, 224
S.W. 2d 198 (1949); Appeal of Fredericks, 285 Mich. 262, 280
N.W. 464 (1988); City of Jackson v. McLeod, 199 Miss. 676,
24 So. 2d 319 (1946).

The Texas Constitution provides that the powers of govern-
ment shall be divided into three distinct departments: Legisla-
tive, Executive, and Judicial, and that except in instances ex-
pressly permitted by the Constitution, “no person or collection
of persons, being of one of these departments, shall exercise any
power properly attached to either of the others, * * *.” Article
2, Sec. 1, Texas Constitution. Under this Section of Article 2 (or
similar provisions contained in the constitutions of other states)
provisions in Acts of legislatures calling for the review of legis-
lative determinations or executive rulings by a trial de novo in
a judicial tribunal have been declared invalid as violative of the
constitutional doctrine of separation of powers. A power or au-
thority which cannot be lawfully delegated directly to the judiciary
by the Legislature because of the constitutional provision cannot
be conferred upon the courts by means of a de novo trial after an
administrative hearing. Davis v. City of Lubbock, 160 Texas 38,
326 S.W. 2d 699 (1959) ; Cromwell v. Jackson, 188 Md. 8, 52 A.
2d 79 (1947); Mississippi Insurance Commission v. Insurance
Co. of North America, 203 Miss. 588, 36 So. 2d 165 (1948).

“The criterion used (by the courts in determining the con-
stitutionality of the review statute) is whether the reviewing
court is required to exercise a function that is deemed nonjudicial,
* * * The perplexing problem is the determination of what is
judicial and what is nonjudicial.” 4 Davis, Administrative Law
Treatise, Sec. 29.10 (1958). Many definitions of legislative func-
tions and judicial functions have been set forth by various courts.
The Supreme Court of the United States stated:

“A judicial inquiry investigates, declares and enforces lia-
bilities as they stand on present or past facts and under laws
supposed already to exist. That is its purpose and end. Legis-
lation on the other hand looks to the future and changes exist-
ing conditions by making a new rule to be applied thereafter
to all or some part of those subject to its power.” Prentis v.

re 28

Atlantic Coast Line, 211 U. 8. 210, 53 L. Ed., 150, 29 Sup.
Ct. 67.

In 78 Corpus Juris Secundum 306, it is said:

“Tt has been stated that the nature of the final act and
the character of the process and operation, rather than the
general character of the authority exercised, is determinative.
The action of the administrative body or officer is adjudicatory
in character if it is particular and immediate, rather than, as
in the case of legislative or rule-making action, general and
future in effect.”

These definitions aid us in reaching an answer to the specific
question facing this Court: Is the determination that the policy
form contains provisions which “encourage misrepresentation or
are unjust, unfair, inequitable, * * *” a “judicial function” or a
“legislative function”?

Appellee urges that the determination made by the Board
in the instant case is a legislative function in which the Board
utilizes “legislative discretion”. With this contention we do not
agree. The instant case is not controlled, as claimed by appellee,
by the holding of this Court in the case of Davis v. City of Lub-
bock, 160 Texas 88, 326 S.W. 2d 699 (1959). Appellee fails
to appreciate that there is a distinction between the types of de-
cisions rendered by different administrative agencies. Some
agencies perform judicial or quasi-judicial functions; others ex-
ercise powers which are essentially legislative. In re: Harmon,
52 Wash. 2d 118, 323 F. 2d 653 (1958).

Article 3.42(f) and the standard therein expressed are to
be distinguished from the statute and applicable standard which
were before this Court in the Davis v. City of Lubbock case,
supra. In that case this Court held that Section 17 of the Urban
Renewal Act which provided for a review by trial de novo of any
order or other act of the city or other agency was unconstitutional
as a violation of Article 2, Section 1, of the Constitution of Texas.
In reaching this conclusion the court said:

«* * * it is quite clear that a decision that it [a particular
area] is a slum area under (3) of the definition is a decision
of a question of pure public policy.”

“A decision or conclusion by the Agency that a particular
area is a ‘Slum Area’ or a ‘Blighted Area’ is thus made to rest

2

upon a finding involving legislative discretion. A de novo
judicial review of such a decision would clearly involve the
exercise by the courts of nonjudicial powers.” (Emphasis add-
ed.) 326 S.W. 2d 699, 714.

Section (3) of the definition referred to by the court reads
in part: “which is detrimental to the public health, safety, morals
or welfare of the city, * * *.” Section 4(h), Article 1269-3,
Vernon’s Annotated Texas Statutes,

Under Article 3.42(f) of the Insurance Code the Board of
Insurance Commissioners may disapprove or withdraw previous
approval of the policy form:

«x ® %® Gf and only if,

(1) It is in any respect in violation of or does not comply
with this code.

(2) It contains provisions which encourage misrepresenta-
tion or are unjust, unfair, inequitable, misleading, deceptive or
contrary to law or to the public policy of this state.

(3) It has any title, heading, or other indication of its
provisions which is misleading. (Emphasis added.)

“The Board can exercise only such authority as is conferred
upon it by law in clear and unmistakable terms and the same will
not be construed as being conferred by implication.” Board of
Insurance Commissioners v. Guardian Life Ins. Co., 180 8.W. 2d
906 (Comm. of App. 1944). See also Humble Oil & Refining Co.
v. Railroad Commission of Texas, 183 Texas 830, 128 S.W. 2d 9;
Commercial Standard Ins. Co. v. Board of Insurance Commission-
ers, Texas Civ. App., 34 S.W. 2d 843, wr. ref. Therefore, the
Board in the instant case could exercise no more discretion than
the terms of the statute clearly provide, and it appears from a
literal reading of the statute that the Board was not to have broad
legislative discretion. The Board of Insurance Commissioners is
empowered to disapprove a form for certain specific reasons only
and may not dictate to the insurance companies the particular
form to be used. Its only duty is to determine whether the form
of the policy submitted for its approval meets the standards pre-
scribed by the statute. The action of the Board of Insurance Com-
missioners “is particular and immediate, rather than, as in the
ease of legislative or rule-making action, general and future in
effect”.

eS 25

Hl The dissimilarity between the standard set forth in Article
3.42(f) and the standard before the Court in the Davis case,
supra, is readily apparent. The Board of Insurance Commission-
ers under Article 3.42(f) does not make a determination “of a
question of pure public policy”, as in the Davis case, supra. The
Board may disapprove a form “if and only if” it violates the
provisions of the statute. Under the provisions of the statute, the
State Board of Insurance is also empowered to disapprove or
withdraw approval of a policy form if the form is contrary to
the public policy of the state. It is to be noted that this particular
provision provides no standard by which public policy is to be
measured. The absence of a standard or guide to govern the
Commissioner of Insurance or the State Board of Insurance in
the determination of what type of policy form would be contrary
to public policy would leave it to the unbridled discretion of the
Commissioner and the Board to disapprove in the first instance
or withdraw previous approval of a policy form. This would leave
the right to enter into insurance contracts subject to the arbitrary
discretion of the Commissioner and the State Board of Insurance.
This of itself would render the statute void. See Railroad Com-
mission v. Shell Oil Company, supra. However, if possible, it is
the duty of the courts to construe a statute in such a way as to
avoid repugnancy to the Constitution. This may be done by hold-
ing that the “public policy” of which the statute speaks is defined
in the statute itself. It is the right of the public to be free of in-
surance contracts which contain “provisions which encourage
misrepresentation or are unjust, unfair, inequitable, misleading,
deceptive * * *.” Thus, the determination made by the Board of
Insurance Commissioners under Article 3.42 (f) is clearly a quasi-
judicial function. Such determination is reviewable on appeal by
a trial de novo under the preponderance of the evidence rule. This
is particularly made clear when we consider that the court, the
trier of the facts, in determining whether or not the policy “en-
courages misrepresentation” is not limited to a consideration of
the words and phrases of the policy alone, but may consider out-
side, relevant factors, as herein pointed out, in its evaluation of
these words and phrases.

The Supreme Court of Minnesota, in an early case dealing
with the problem of determining whether a given function was
“legislative” or “judicial”, said:

“As a general proposition of law the Legislature cannot
delegate legislative powers to the judiciary or require the
judges of the various courts of the state to do any acts which
are not in their nature judicial. Kilbourn v. Thompson, 103
U.S. 168, 26 L. El. 377, and cases there cited; * * * But it is

26

not always easy to discover the line which marks the distinc-
tion between executive, judicial, and legislative functions, and
when duties of an ambiguous character are imposed upon a
judicial officer any doubt will be resolved in favor of the
validity of the statute, and the powers held to be judicial.
Foreman vy. Board Co. Com’rs., 64 Minn. 371, 67 N.W. 207.
In many instances the acts which are to be done require the
performance of functions, some of which are judicial and others
legislative or executive, and these are often so interwoven and
connected that they cannot readily be separated and distin-
guished. When this is the case the court will not attempt to
unravel the combination, but will sustain the act against the
constitutional objection.” State ex rel Patterson v. Bates, 96
Minn. 110, 104 N.W. 709 (1905).

Appellee also relies upon the case of Farmers and Merchants
Ins. Co. v. State Board of Ins., Texas Civ. App., 321 8.W. 2d 354,
wr. ref. nr.e. In that case the Court of Civil Appeals considered
a statute which authorized a trial de novo if an appellant were
“dissatisfied with any order of the Board respecting its applica-
tion [for permission to write insurance for less than the maximum
rate prescribed by the Board of Insurance]’. The court in holding
the statute unconstitutional cited the case of Southern Canal Co.
v. State Board of Water Engineers, Texas Civ. App., 311 S.W.
2d 938.

The present case is distinguishable from the Farmers and
Merchants case. That case involved the question of whether a
rate is “inadequate” or “unfairly discriminatory”. The determina-
tion is whether or not a rate deviation should be granted depends
upon a variety of factors listed in the statute. These factors are
such as would involve the use of “legislative discretion” or the
exercise of “quasi-legislative’ power. The Board may deny the
application “if it finds the resulting premium would be inadequate
or unfairly discriminatory’. Such a determination is a question
involving broad legislative discretion, and not susceptible to full
redetermination by the judiciary. Therefore, it would appear that
although the Farmers case, supra, was correctly decided, it does
not govern the disposition of the instant case.

4, “In considering any application * * the Board shall give consideration to
the factors applied by insurers or rating organizations generally used by such
insurers or rating organizations in determining the bases for rates; the financial
condition of the insurer; the method of operation and expenses of such insurer;
the loss experience of the insurer, past and prospective, including where pertinent
the conflagration and catastrophe hazards, if any, both within and without this
State; to all factors reasonably related to the kind of insurance involved to a
reasonable margin for an underwriting profits for the insurer, and, in the ease
of participating insurers, to policyholders’ dividends.” Art. 5.26, Texas Insur-
ance Gode.

re an

Appellee points out numerous problems and difficulties which
will be encountered by the courts in attempting to provide a de
novo review for this type of administrative decision. This Court
in Southern Canal, supra, also emphasized the dire results pos-
sibly attendant from such a course of action. With these views
this Court is in full accord.

However, the fact that a statute may have mischievous or
even disastrous results is not basis for declaring the same to be
unconstitutional. “* * * It should perhaps be reiterated that
Courts have no concern with the wisdom of legislative acts, but
it is our plain duty to give effect to the stated purpose or plan
of the Legislature, although to us it may seem ill advised or im-
practicable. * * *” State Board of Insurance v. Betts, 158 Texas
612, 315 S.W. 2d 279 (1958). See also, Board of Insurance Com-
missioners v. Guardian Life Ins. Co., 142 Texas 630, 180 S.W.
2d 906 (1944).

We therefore hold that insofar as the trial court held the
judicial review statutes unconstitutional as applied to the instant
case, it was in error. The function of the Board of Insurance
Commissioners under Article 3.42(f) is quasi-judicial, and there-
fore the courts could properly make the same determination on
trial de novo.

Hf In view of another trial of the case, we deem it necessary to
discuss the points of error raised by appellant pertaining to the
relevancy and admission of certain evidence before the Board and
the trial court.

Appellant attacks the admission of the premium rates before
the Board and contends that the Board has no authority to
regulate premium rates. The trial court refused to allow testi-
mony pertaining to the premium rates. We find that the premium
rate charged is of evidentiary value in determining whether the
policy “encouraged misrepresentation”. If the premium rates
charged were so high that unreasonably high returns must be
promised, this would encourage misrepresentation.

Appellant insists that “If the rate has to be looked into in order
to discover the supposed inequity, then it is not the provisions
of the policy which cause it but the rate.” What appellant fails
to recognize is that the rate has an undeniable effect on whether
or not provisions of the policy might necessarily have to be mis-
represented in order to sell the policy; therefore evidence of the
rate charged is relevant in determining if the policy “encourages

Be

misrepresentation” and if introduced in the trial court on retrial,
would be admissible. The use of the premium rate charged as
circumstantial evidence of whether or not the policy “encourages
misrepresentation” is not directly or indirectly an attempt to regu-
late rates.

Appellant next maintains that the meaning of the policy pro-
visions are clear and unambiguous, and that such provisions,
standing alone, do not misrepresent anything. Therefore, appellant
reasons that it is error to consider the policy provisions in rela-
tion to anything outside the four corners of the policy itself. At
this point we again turn our attention to a recurring question
in this case, Should the Court and the Board be limited to a con-
sideration of the words and phrases of the policy alone, or may
the Court and the Board consider outside, relevant factors in its
evaluation of these words and phrases?

In determining what construction is to be placed on the phrase
“encourages misrepresentation” contained in Subdivision (2)
and the language “If it [the policy] has any * * * other indication
of its provisions which is misleading” contained in Subdivision
(8) of Article 3.42(f), supra, we are mindful of the following
elementary rules of statutory construction summed up in 39 Texas
Jurisprudence, at pages 217, 218, and supported by substantial
Texas authority:

“Thus it is settled that a statute will be construed with
reference to its intended scope, its general purpose, and the
ends or objects sought to be attained. * * * Where the statutory
language * * * admits of more than one meaning it is to be taken
in such a sense as will conform to the scope and intent of the
act, and will best or most certainly accomplish its purpose,
without doing violence to plain statutory language. Thus where
a statute is designed to afford a remedy for existing evils, it
should be given such signification as will.afford a reasonable
remedy. Contrariwise, a construction that is repugnant to the
object of the law or that will defeat, thwart or unduly limit
its plain purpose, will be avoided if possible.”

And see: Ex parte Flake, 67 Crim. Rep. 216, 149 S.W. 146;
Crooms v. State, 40 Crim. Rep. 672, 51 S.W. 924, 53 S.W. 882;
Magnolia Petroleum Co. v. Walker, 125 Texas 480, 88 S.W. 2d
929 (cert. den. 296 U.S. 623) ; Wray v. Citizens National Bank
(Comm. App.), 288 S.W. 171; Red v. Bounds, (Comm. App.),
63 S.W. 2d 544; Trimmier v. Carlton, 116 Texas 572, 296 S.W.
1070; Highway Comm. of Texas v. Vaughn, 288 S.W. 875, er.

re 29

ref.; Adams v. Bida, 83 S.W. 2d 420, rev. on other grounds at
84 S.W. 2d 693; Longoria v. State, 71 S.W. 2d 268; Oliver v.
State, 65 Crim. Rep. 150, 144 S.W. 604; Higgins v. Rinker, 47
Texas 393; Shelton v. Wade, 4 Texas 148; Imperial Irrigation
Co. v. Jayne, 104 Texas 395, 188 S.W. 575; Texas Co. v. Schriew-
er, 88 S.W. 2d 141, modified Comm. App., 58 S.W. 2d 774;
First Texas State Ins. Co. v. Smalley, 111 Texas 68, 228 S.W.
550; Cannon’s Administrator v. Vaughan, 12 Texas 399, Ex
Parte Miller, 85 Crim. Rep. 263, 211 S.W. 451.

With this principle before us it becomes evident that the
court and the Board would clearly be within their authority in
considering all pertinent factors in arriving at their decision, and
not just the words of the policy alone. As has been succinctly
stated by a Louisiana court in a situation similar to our own:

«#* © * While it is true that the Secretary of State, not the
Commission, has the responsibility and power to enjoin ‘any
unfair or deceptive act or practice prohibited’, LSA-R.S.
22:1215, we feel that the Commission could properly take
notice of the large newspaper advertisements ‘informing’ the
public of State Farm’s membership fee plan which in the Com-
mission’s opinion were misleading. The insurance Code is an
integrated whole. The Commission is not required to leave
the stable door unlocked until the horse is stolen.” State Farm
Mutual Automobile Insurance Co. v. Louisiana Insurance Rat-
ing Commission, et al, 79 So. 2d 888 (Ct. of App. of La.).

Appellant contends that the Board and the Court must look
only to the form of the policy. We do not agree. We hold that the
Court will be justfied in considering outside factors in its de-
termination. The Board and the Court must have the power, in
approving or disapproving a policy, to consider not only the
terms of the policy form itself, but also the fact that the policy
will be used in an undesirable scheme. Our conclusion does not
give the Insurance Board unbridled opportunities to abuse its
powers. The Legislature has carefully provided for appeal from
orders of the Board to guard against such abuse. This present
action is an excellent example of the extent to which such an
appeal can be perfected.

Finally, appellant contends, “The trial court erred in receiv-
ing in evidence, and considering as a basis for upholding the
orders in question, testimony and exhibits concerning the means
by which the policy was sold or advertised for sale, because ad-
vertising materials or methods may not be utilized directly or

00

indirectly as a ground for disapproval of, or withdrawal of ap-
proval of, appellant’s policy form.” Our answer to that contention
is that it would be unreasonable to suppose that the Commissioner
or the trial court must disregard facts which have a material rela-
tion to the matters under their inquiry, especially where, as here,
the advertising was directly welded to the provision in question,
Option 2, supra. Appellant urges that it was not the intent of the
Legislature that deceptive advertising practices be a ground for
disapproval of the policy form. With this we agree, but advertis-
ing practices may be relevant in determining if the statutory
grounds exist. A consideration of the policy form aside from the
advertising accompanying it would be to view the policy as if
“in a vacuum”, as appellee has phrased it. We hold that the
trial court may view policy provisions and advertising practices
together to determine the acceptability of the policy itself. This
is by no means an attempt by the Commissioner or the Court to
regulate advertising.

The judgment of the district court is reversed and the case
is remanded to that court with directions that any subsequent
trial proceed in a manner not inconsistent with this opinion.

Opinion delivered October 8, 1961.

MR. JUSTICE GREENHILL, joined by JUSTICE CULVER,
concurring.

I agree that the trial de novo provisions of the statute are
constitutional. But I disagree that the policy itself should be struck
down because of oral representations or misrepresentations made
by agents in connection with the selling of the policy. Any policy
of insurance is capable of being misrepresented. And as I read it,
this policy itself contains nothing which is illegal, which of itself
is misleading or fraudulent, or which peculiarly lends itself to
misrepresentation.

The Legislature has clothed the Board of Insurance with
broad power in Article 21.21 of the Insurance Code to deal with
and stop misrepresentations and false advertising made in con-
nection with the sale of insurance policies. The Board is also
given the power to call before it any person who is accused of
deceptive acts or practices or unfair methods of competition in
the business of insurance. It has authority to issue cease and
desist orders to stop the objectionable practices. To me, this would
have been the proper approach to the objectionable practices in
this case.

31

As originally introduced in the Legislature, Senate Bill 438,
which became Article 3.42 of the Insurance Code, authorized the
Board to disapprove a policy form “(d) If the purchase of such
policy is being solicited by deceptive advertising.” This authority
was deleted before enactment. This is evidence of legislative in-
tent that misleading advertising and practices outside of the
policy should be separately dealt with, and that the policy should
be judged by its own terms.

I agree that misleading and deceptive practices should be
stopped. I disagree only in the manner in which they should be
stopped.

MR. JUSTICE GRIFFIN dissenting.
I cannot agree with the majority opinion and I therefore re-
spectfully dissent.

I dissent from the holding that the matter of the content
and form of insurance policy provisions can be tried de novo.
The content and form of insurance policies most certainly are
administrative matters and not judicial matters. In the first in-
stance, to permit the courts to write insurance policies would, in
my opinion, lead to interminable confusion and great lack of
uniformity. Such procedure would lead to the approval of one
form of policy for one company, and approval of another and
different form for another company.

Opinion delivered October 3, 1961.

Ex Parte BeTry RHODES

No. A-8552. Decided December 6, 1961
Rehearing Denied January 10, 1962
852 S.W. 2d 249

MR. JUSTICE GRIFFIN, dissenting.

Dibrell, Gardner & Dotson, San Antonio, Fred V. Klingeman,
Karnes City, for relator.

Ronald Smallwood, Karnes City, for respondent.

MR. JUSTICE GREENHILL delivered the opinion of the
Court.

In this habeas corpus proceeding, the question is whether a
district judge has the power, in a divorce decree, to provide that
the infant child of the marriage shall remain within the county
and that the residence of the child shall not be moved from the
county without an order of the court. Because of the violation of
such an order, Betty Rhodes was adjudged to be in contempt of
court. She seeks relief from this Court.

The pertinent facts are these: Betty Rhodes was formerly
married to Edgar Sherrill, Jr. They and their parents lived in
Karnes County, Texas. In 1954, Betty sued Edgar Sherrill for
divorce and sought custody of their only child, a daughter then
two years of age. The suit was uncontested. The divorce decree
awarded exclusive custody of the child to Betty, the mother.
While the judgment had no specific provisions as to the days
and hours of visitation, Edgar Sherrill was given the right to
visit the child at all reasonable times and places. The judgment
then stated:

83

“It further appearing to the court that the best interest
of said child will be served if she resides in Karnes County,
Texas, where plaintiff and defendant reside and where the
four grand-parents of said child reside; it is ordered, adjudged,
and decreed by the court that said child shall reside within
Karnes County, Texas, and that plaintiff not move said child’s
residence from within Karnes County, Texas, without first
making written application to this court, and after hearing by
the court of all parties concerned, and an order being made by
the court allowing plaintiff to move said child’s residence from
within Karnes County, Texas.” (Emphasis added.)

There was no appeal from the judgment, and it became final.
Tt has not been modified.

In 1960, Betty married Barry Rhodes. They moved from
Karnes County to the City of Bryan in Brazos County, Texas, in
February, 1961. The child remained in Karnes County with
her maternal grandparents. In May, 1961, however, Betty’s father,
at her request, brought the child from Karnes County to her in
Brazos County.

The father of the child, Edgar Sherrill, Jr., was dissatisfied
with his reception at the home of Betty and Barry Rhodes when
he went to visit his daughter. He considered that his rights of
visitation had been unduly curtailed. He thereupon brought suit
in Karnes County seeking: (1) the return of the child to Karnes
County; (2) punishment, by contempt proceedings, of Betty and
her father for violating the terms of the custody provisions of
the divorce decree; and (3) a change in the terms of the judgment
as to custody of the child. He sought particularly to have his days
and hours of visitation made definite.

All parties thereafter appeared in the district court of Karnes
County. Betty and her second husband, Barry Rhodes, filed a
plea of privilege to be sued in the county of their residence,
Brazos County. As to the visitation matters, the court sustained
the plea of privilege; and that portion of the case was ordered
to be transferred to Brazos County. That feature of the case is
not now before us.

The district court of Karnes County, however, did adjudge
Betty Rhodes to be in contempt for willfully and knowingly vio-
lating the order of the court, and ordered her to jail for 12 hours
and until she should purge herself of the contempt. She here
contends that the district court was without power to restrict the

LS

residence of the child to Karnes County and was without power
to decree that such residence should not be removed without an
order of the court.

When counsel for Betty Rhodes made application for leave to
file the application for writ of habeas corpus in this Court, sev-
eral members of the Court doubted the power of the district court
to impose such restrictions in the divorce decree. It was force-
fully argued that such provisions, in effect, prohibit the wife

. from remarrying and moving, or from seeking gainful employ-
ment in another county without the consent of the district judge,
and that this deprived her of her liberty without due process of
law. While the decree does not prevent Betty Rhodes from re-
marrying or moving whenever or wherever she pleases, it does
require her to obtain the consent of the court to move if she
desires to take the child with her. She has not been denied con-
sent to move and take the child with her. She did not ask the
court’s permission to change the child’s residence to Brazos
County. Her contention is that the court was without power to
impose such a condition in the decree.

I We find that the question has been heretofore answered in
Texas. For this Court to order the release of Betty Rhodes, the
order of the district court must be absolutely void. It is not
enough that the order of the court be erroneous. The order must
have been beyond the power of the court to enter. Ex parte
La Rocca, 154 Texas 618, 282 S.W. 2d 700 (1955); Ex parte
Tyler, 152 Texas 602, 261 S.W. 2d 883 (1953).

The question of the power of the district court to restrict the
residence of a minor child to the state and to the jurisdiction of
the court has been resolved in the affirmative on several occasions.
One of the earliest decisions was Hx parte Ellerd by the Texas
Court of Criminal Appeals, 158 S.W. 1145. That court upheld
contempt proceedings which, among other things, enforced a
divorce decree which directed that the minor child be maintained
in Plainview, Hale County, Texas.

In 1949, the Court of Civil Appeals at Eastland upheld a
custody decree which directed that the child be not removed
from Eastland County, Texas. Lasater v. Bagley, 217 S.W. 2d
687 (writ refused, n.r.e.). Thereafter, in 1951, in McAnnally v.
McAnnally, 239 S.W. 2d 154, the same Court of Civil Appeals
upheld a decree of a district court which directed that the child
be not removed from Texas or from the jurisdiction of the court.

es 35

Upon further appeal, this court “refused” the application for writ
of error, thus approving the ruling by the Court of Civil Appeals.

I There are other opinions by the Texas Courts of Civil Appeals
to this same effect: White v. Lobstein, 246 S.W. 2d 958 (1052, no
writ) where the residence of the child was restricted to Coleman
or Brown Counties, Texas; and Fasken v. Fasken, 260 S.W. 698
(1924, no writ) where the residence of the child was restricted
to Midland County, Texas. We have been cited to no Texas ap-
pellate opinion, and we have found none, which holds to the con-
trary. The rule set out above is recognized outside of Texas. An-
notation, 154 A.L.R. 552; 2 Nelson, Divorce and Annulment, Sec.
15.20, p. 198 (2nd ed.).

‘We therefore hold that the court had the power to direct that
the child’s residence should not be removed from Karnes County.

HE Counsel for Betty Rhodes also attacks that portion of the
divorce decree which requires “an order being made by the court
allowing plaintiff to move said child’s residence” because it is an
attempt, on behalf of this particular court, to retain continuing
and exclusive jurisdiction of the question of custody. Many states,
by statute, have given the trial court continuing and exclusive
jurisdiction of custody. 27B C.J.S. 424, Divorce Sec. 303. How-
ever, this Court held in Lakey v. McCarroll, 134 Texas 191, 184
S.W. 2d 1016 (1940), that an action to modify or change custody
is an independent action and that the court which granted the
divorce and first awarded custody did not retain exclusive, con-
tinuing jurisdiction of custody. It was held that the defendant
in such a suit was entitled to have venue of such an action re-
moved to the county of his residence. If, therefore, the decree in
question means that only the district court in Karnes County
could thereafter pass upon change of custody of the child, it was
ineffective.

We really do not have the question here as to whether the
district court in Karnes County has attempted to exercise ex-
clusive and continuing jurisdiction. If, for example, the father
had moved to Dallas, Dallas County; and the wife had moved to
Bryan, Brazos County, and the wife brought suit there on the
right to remove the child from Karnes County, and the husband
had attempted to move the case to Karnes County on the ground
that only that court could pass upon removal from Karnes County,
we would have the question squarely presented. Or if the wife
had brought suit in Bryan, Brazos County, to remove the re-
striction against the removal of the child from Karnes County,

0

and the father had remained in Karnes County, the point might
have arisen. But Betty Rhodes did not attempt to get the decree -
of the court sitting in Karnes County modified in any district
court.

I While we have held that the restrictive residence provision
of the custody decree was not void, it is one of an extreme nature.
It may drastically affect the freedom of decision of the custodian
of the child as to what is best for the child. And, as pointed out
by counsel for Betty Rhodes, if request for removal to another
county is denied, it may materially restrict the right of a citizen
(who would not move without her child) to change the place of
his or her residence. If permission to move were denied, she would
be in a better position to assert that she was deprived of her
liberty without due process. We express no opinion on that matter.
In any event, the appellate court will look with care to see whether
there has been an abuse of discretion on the part of the court
which denies permission to remove the residence of the child to
that of the new residence of the person having been adjudged
the proper person to be the custodian of the child. By citing White
v. Lobstein, 246 S.W. 2d 958, we are not to be understood as ap-
proving the decision that there was no abuse of discretion in
refusing to grant consent for the removal of the child to the resi-
dence of the custodian. That case did not reach this Court.

Betty Rhodes is remanded to the custody of the sheriff of
Karnes County.

Opinion delivered December 6, 1961.
ASSOCIATE JUSTICE GRIFFIN dissenting.

REPUBLIC NATIONAL BANK OF DALLAS, INDEPENDENT EXECUTOR
OF THE ESTATE OF RAY K. GLENN, DECEASED, Petitioner
v.
LEONARD STREALY, Respondent
No. A-8881. Decided November 1, 1961

Rehearing Denied December 6, 1961
(850 S.W. 24 914)

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3

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EEE

Jackson, Walker, Winstead, Cantwell & Miller, Jack Pew, Jr.,
Dallas, with firm, for petitioner.

Elmo Irby, Fort Worth, for respondent.

MR. JUSTICE HAMILTON delivered the opinion of the
Court.

This case involves the question of the legal effect of a ne-
gotiable instrument where the place of payment had been left
blank but was filled in by the holder without express authority
of the maker.

On December 31, 1953, Leonard Strealy executed a note in
the principal sum of $8,888.15, payable to the order of Ray K.
Glenn “ai . At the time of making delivery of
the said note ies ived i in Fort Worth. Later Glenn moved
to California and then to Dallas, where he died about four years
after the date of the note. The Republic National Bank of
Dallas, the petitioner here, became independent executor of his
estate. Payment on the note had always been sporadic, but shortly
after Glenn’s death Strealy signed an agreement with the Re-
public National Bank agreeing to make regular payments. After
several payments to the bank Strealy once again became delin-
quent. On October 9, 1958, the bank sued Strealy in the District
Court of Dallas County for the balance claimed to be owing on
the note. Strealy filed a plea of privilege to be sued in Tarrant
County, the county of his residence. After the plea was filed,
counsel advised the bank that it had the right to insert the words
“Dallas, Texas” in the blank space in the note after the word
“at”, thus indicating that the note was made payable in Dallas.
This was done, and the bank’s attorney immediately notified the
respondent and his attorney of the filling in of the blank and of
the legal authority upon which they had relied. However, before
any action was taken on the plea of privilege, the petitioner took
a nonsuit in the Dallas County action and commenced this suit
in the 153rd District Court of Tarrant County, Texas.

Petitioner’s cause of action was based upon a verified account
and alternatively on the note, alleging the balance owing on the
note to be $3,640.36. Strealy did not file a general denial, but
pleaded that the verified account was untrue in whole or in part
and that the note was avoided by the action of the bank in filling
in “Dallas, Texas” in the space in the note left blank for the
place of payment; that such action constituted a material altera-
tion of the note, that it was fraudulently done, and that it dis-

ee 39

charged respondent from liability on the note and underlying
debt. The substance of Strealy’s testimony was that he had not
given any express authority for anyone to fill in the blank space
with a place of payment.

The bank’s motion for directed verdict was overruled, the
court submitted a single special issue to the jury, and the jury
answered that the action of the plaintiff in writing “Dallas,
Texas” into the note in question was for the sole purpose of fraud-
ulently preventing the transfer of the suit to Tarrant County.
Petitioner’s motion for judgment non obstante veredicto was over-
ruled and judgment was rendered that petitioner, Republic Na-
tional Bank, take nothing. This judgment was affirmed by the
Court of Civil Appeals, which held that the petitioner avoided the
note by materially altering it and thereby also avoided the under-
lying debt because the alteration amounted to a species of legal
fraud. 343 S.W. 2d 284, We reverse the judgments of the trial court
and Court of Civil Appeals and render judgment for petitioner.

I The bank contends that the insertion of a place of payment in
a blank space provided for that purpose is not a material altera-
tion as defined in Section 125 of Article 5939, Texas Civil Statutes
(Vernon 1948), and that it had the right to fill in such blank
under Section 14 of Article 5932, and that regardless of its legal
right to do what it did there was no evidence of fraud on its part.
Respondent, Strealy, contends that Sections 124 and 125 of Article
5939 control, and that the filling in of the blank space was a
material alteration which avoids the instrument and that such
action constituted fraud, which discharges the underlying debt.

We hold that Section 14 of Article 5982 governs in this case.
Section 124 of the Negotiable Instruments Act (Art. 5939,
V.C.S.), provides that “Where a negotiable instrument is mate-

rially altered * * * it is avoided * * *.”

Section 125 of the Negotiable Instruments Art (Art. 5939,
V.C.8.) defines a “material alteration” as:

“Sec. 125 * * * * Any alteration which changes:

“3, The time or place of payment;

“Or which adds a place of payment where no place of payment
is specified, * * * is a material alteration.”

SN

The filling in of blank spaces of negotiable instruments is
governed by Section 14, Article 5932, V.C.S., which reads:

“Where the instrument is wanting in any material particu-
Jar, the person in possession thereof has a prima facie au-
thority to complete it by filling up the blanks therein. And a
signature on a blank paper delivered by the person making the
signature in order that the paper may be converted into a
negotiable instrument operates as a prima facie authority to
fill it up as such for any amount. In order, however, that any
such instrument when completed may be enforced against any
person who became a party thereto prior to its completion, it
must be filled up strictly in accordance with the authority given
and within a reasonable time. But if any such instrument, after
completion, is negotiated to a holder in due course, it is valid
and effectual for all purposes in his hands, and he may enforce
it as if it had been filled up strictly in accordance with the
authority given and within a reasonable time.”

At first glance it might appear that these sections are in
conflict. Section 14 authorizes completion of the instrument by
the filling in of blanks, but Section 125 says that the adding of
place of payment where no place of payment is specified is a
material alteration, and Section 124 says a material alteration
will avoid the note.

The Legislature did not intend these sections to be in conflict,
and if they can be reasonably harmonized so as not to be in con-
flict it is the court’s duty to so construe them. Hill v. State, 54
Texas Crim. 646, 114 S.W. 117.

In order to resolve the seeming conflict between Sections 14
and 125 it is necessary to become involved with semantics. Section
125 talks only of “changes” and “additions” which constitute a
material alteration. Section 14 deals with “completions” by filling
up blank spaces left in the instrument. In construing this language
it appears probable that the Legislature intended “changes” to
mean the marking out, erasing, detaching, or writing over of
parts of an already completed instrument, and the word “addi-
tion” to mean the insertion of a new clause or wording where
no blank is provided. See for example cases and annotations in 5
Uniform Laws Annotated (Part 2), Section 125 (Uniform Ne-
gotiable Instruments Act). We believe that Section 125 is not
applicable to completing a note by filling in of blanks.

In the case of Citizens’ State Bank v. Martens, 204 Iowa 1878,

es 4

215 N.W. 754, The Supreme Court of Iowa was also faced with
the problem of a conflict between Section 14 and Sections 124 and
125. That court said:

«« * * When harmony, uniformity, and enforcement of all
portions of the act are possible, it is our duty so to proceed
in order that no part will be discarded and the entirety made
effective. Truly, a material alteration will work an avoidance;
also ‘change of place of payment’ may amount to such ‘material
alteration’; but not so if the transaction involves the ‘filling
in’ of a blank intended therefor, within the purview of said
Section 9474. * * * [Sec. 14 NIL].

eo ok kk ok

“Therefore Section 9474 [Sec. 14 NIL] prevails where the
facts and circumstances are such as are therein contemplated,
and in that contingency Sections 9585 and 9586 [Secs. 124 and
125 NIL] have no bearing on the situation.”

Therefore, if the filling in of a blank is not a material altera-
tion under Section 125, Section 124 would not apply to avoid the
note, as it applies only “where a negotiable instrument is mate-
rially altered * * *.”

Another indication of the intention not to call “filling in the
blank” a “material alteration” can be derived from comparing
the legal effect of a materially altered note in the hands of a
holder in due course not a party to the alteration (Sec. 124),
with a note that has had a blank filled in contrary to authority
given or not within a reasonable time and then negotiated to a
holder in due course (Sec. 14). In the first instance the innocent
holder can enforce payment of the note, but only in the amount
of the original tenor. Whereas, in the case of an unauthorized
filling in of blanks, when it is negotiated to a holder in due course
after the unauthorized completion, “it is valid and effectual for
all purposes in his hands, and he may enforce it as if it had been
filled up strictly in accordance with the authority given and
within a reasonable time.” Sec. 14. If filling in the blanks is a
material alteration, would not Section 124 allow a holder in due
course to enforce payment of a note only according to its original
tenor? What then would be the effect of the last sentence of Sec-
tion 14? In order to harmonize these two sections of the Negoti-
able Instruments Act, we must say that the filling in of blank
spaces is not an alteration; therefore, in cases involving the filling
in of blanks left in negotiable instruments, Section 14 must be
applied.

eee

Hi In applying Section 14 to petitioner’s act of filling in the
words “Dallas, Texas” it must be determined whether this act
was done strictly in accordance with the authority given. The
general rule seems to be that where a writing containing unfilled
blanks has been delivered there is implied authority to fill in the
blanks, the instrument remaining valid. See Mazanec v. Lincoln
Bonding and Insurance Co., 169 Neb. 629, 100 N.W. 2d 881;
Simpson v. First National Bank of Roseburg, 94 Ore. 147, 185
Pac. 917; Holman v. Higgins, 184 Tenn. 387, 183 S.W. 1008;
Curlee Clothing Co. v. Wickliffe, 126 Texas 578, 91 S.W. 2d 677;
7 Am. Jur., “Bills and Notes”, Sec. 67; 8 Texas Jur. 2d, “Altera-
tion of Instruments”, Sec. 34; 10 C.J.S., “Bills and Notes”, Sec.
186c(8) ; 8 C.J., “Bills and Notes”, Sec. 315.

lf As this court pointed out in Curlee Clothing Co. v. Wickliffe,
supra, the authority to fill in the blank spaces in negotiable in-
struments did not originate in a uniform negotiable instruments
law. The law is summarized in the Curlee case as follows:

“Long before the Negotiable Instruments Law was in force,
the general rule was announced that where a party to a negoti-
able instrument intrusts it to the custody of another, with
blanks not filled in, such negotiable instrument carries on its
face an implied authority to fill in the blanks and perfect the
instrument, so far as consistent with its printed words.”

Numerous authorities say that Section 14 of the Negotiable
Instruments Law is declaratory of the common law. Saxon v.
McGill, 179 Ark. 415, 16 S.W. 2d 987; Diamond Distilleries Co.
v. Gott, 187 Ky. 585, 126 S.W. 181; Linthicum v. Bagby, 131
Md. 644, 102 Atl. 997; Stephens v. Underwood, 157 S.W. 2d 936,
Texas Civ. App., no writ history; Brown v. Thomas, 120 Va. 763,
92 S.E. 977; 10 C.J.S., “Bills and Notes”, Sec. 136.

«sx * * Manifestly a note executed and delivered by the
maker in the form originally presented by the one under con-
sideration is not upon its face a completed instrument. When
one executes and puts in the hands of another a note provided
with a blank line or space, apparently intended to be filled
with the name of a bank, or other place of payment, any holder
in due course of the note has prima facie authority to fill such
blank; and especially would such authority be implied where
the blank line or space immediately follows a word which un-
mistakably indicates that it is to be filled with the place of
payment. The word ‘at’ in the note executed by appellee with
the blank or space following it was well calculated to produce

es 43

* in the minds of any holder of the note a reasonable belief that
the filling of the blank with a place of payment was necessary
to complete the instrument, and that he was authorized, if not
invited, to fill it. Indeed, if the blank therein was not such a
one as the framers of the statute, supra, contemplated should
be filled by the ‘person in possession thereof’, it would be
difficult to conceive of a blank that would justify the prima
facie right to fill it conferred by the statute.”

HE The Court of Civil Appeals held that the instant case is out-
side the scope of Section 14 because it concluded an instrument.
without a place of payment is not “wanting in any material par-
ticular”, a requirement of that section. No case was cited support-
ing such holding and we have found none. The precise point was
considered by the Supreme Court of Iowa in Johnston v. Hoover,
139 Iowa 143, 117 N.W. 277, and the court specifically held that
an instrument with the space for a place of payment left blank
is wanting in a material particular. We agree with that holding.

The Supreme Court of Vermont in Howard National Bank
y. Arbuckle, 92 Vt. 86, 102 Atl. 477, held that a “material par-
ticular” does not mean such as may be necessary to make the
instrument a negotiable note, but includes “any particular” proper
to be inserted in such an instrument.

IE Respondent contends that even if petitioner did have prima
facie authority to fill in the place of payment, the prima facie
authority was rebutted by the testimony that respondent did not
give Glenn authority to fill in the blank and that both parties lived
in Tarrant County at the time of the execution and delivery of
the note. In the first place the authority under Section 14 is not
given just to the payee in the note, but is given to any “person
in posession” of the note. No one knows where any “person in
possession” might live; therefore, the fact that both of the original
parties to the instrument lived in Fort Worth creates no pre-
sumption as to place of payment. The testimony that the respondent
did not give Glenn express authority to fill in the note amounts
to no more than evidence that there was no agreement with refer-
ence to the filling in of the place of payment in the blank space.
This is not sufficient to rebut the authority given by the statute
to the possessor of the note. It can only be overcome by evidence
of an express agreement as to a particular place of payment, or
that no place shall be filled in.

In Citizens’ State Bank of Earlham v. Martens, supra, the
maker of the note testified that he had left the place of payment

Ce

plank and did not authorize anyone to fill in the place of payment
in the blank. The Supreme Court of Iowa said:

“This is not sufficient to overcome the statutory presump-
tion; for assertion is not made that the act was prohibited or
in violation of an express agreement.”

See also: Simon v. Mittleman, 258 Mich. 266, 241 N.W. 816;
State Bank of Finley v. Doronen, 50 N.D. 588, 197 N.W. 150;
Lincoln Deposit & Trust Co. v. Sanker, 305 Pa. 576, 158 Atl.
255; Ellis J. Gomez & Co. v. Hartwell, 97 Vt. 147, 122 Atl. 461.

The provision of Section 14 which reads “In order, however,
that any such instrument when completed may be enforced against
any person who became a party thereto prior to its completion,
it must be filled * * * up with the authority given and within a
reasonable time”, appears to be in the form of a statutory con-
dition precedent which must be pleaded in stating the cause of
action. 83 Texas Jur., “Pleadings”, Sec. 42. In his pleadings
petitioner claimed authority under Section 14. If there is no ex-
press agreement with reference to such authority, then the prima
facie authority granted by the first sentence of the statute acts
to supply the “authority given”.

i However, the statute supplies nothing to relieve the require-
ment of pleading and proving reasonable time as to the filling
up of the blank on the part of the petitioner. It had the burden
of pleading and proving this in the trial court. Petitioner failed
to plead “reasonable time”, and it had no such issue submitted
to the jury. Failure to meet this burden prevents petitioner from
enforcing the note, as this Court cannot say as a matter of law
that the blank was filled up within a reasonable time.

However, it is the opinion of this Court that the underlying
debt in this instance has not been extinguished even though the
note is unenforceable. The case of Otto v. Halff & Bro., 89 Texas
884, 34 S/W. 910, which is a material alteration case (plaintiff
scratched out “maturity” and wrote in “date”) and not a com-
pletion case, puts forth a test we think applicable when there is
a question as to whether or not the underlying debt should remain
when a note is made unenforceable through some action or in-
action on the part of the holder.

I Essentially this case says the debt is good unless there is a
showing by the maker that there was an agreement or understand-
ing that the note given was accepted as payment of the original

eS 45

account, or that there is fraudulent intent behind the action or
inaction which made the note unenforceable. Neither of these
requirements was met to avoid the debt in the case before us.
There was no pleading of novation nor showing of any such
agreement by respondent.

ff As to fraudulent intent, Otto v. Halff says the law will inflict
the penalty of forfeiture of the debt if such intent is found. In
the case at bar the petitioner filled in the blank space of the note
on advice of counsel. This advice was given after consideration
of competent legal authority which in fact did give petitioner
authority to fill in the blanks. Petitioner immediately notified
respondent of the action and even cited the authority on which
reliance was made, thereby showing good faith in taking such
steps.

The jury found against the petitioner, saying, “Such action
was for the sole purpose of fraudulently preventing a transfer of
the suit to Tarrant County, Texas.’ Under the facts of this case
we find that there was no evidence of fraud on the part of the
petitioner.

The Court of Civil Appeals relies on the case of Benson v.
Adams, 285 8.W. 818, (Comm. App.), in determining that peti-
tioner was guilty of a “species of legal fraud”.

The present case is distinguishable from Benson v. Adams.
That case involved an obvious material alteration, i.e., the erasure
of the words “at Plano” and writing in the words “at Houston”.
In the instant case there was no material alteration, but a filling
up of blanks authorized by statute.

In Benson v. Adams the petitioner testified that the notes
were taken as payment of the goods and merchandise. In our case
there is no evidence that the note was taken as payment for re-
spondent’s debt.

Finally, citing among other cases Otto v. Halff, supra, Com-
missioner Bishop said:

«« * * TT]t was necessary for him to show that the altera-
tion was innocently made without any intention to defraud,
and thereby rebut the presumption of fraud which arises from
his wrongful act. (cases cited). * * * Adams testified that he
knew he had no right to change the place of payment of the
note. He knew he was committing a wrongful act which in law

Ce

he had no right to commit. Certainly one cannot admit his guilt
and at the same time claim innocence.”

The case before us is obviously without testimony that the
petitioner “knew he had no right to change the place of payment
of the note”. In fact it is clear that petitioner thought he had the
right to insert the words “at Dallas”, and relied on statutes and
authorities to support this belief. Benson v. Adams does not apply
in this case.

I Respondent asserts that if the note is not good, the debt is
barred by the two and four year statute of limitations. By letters
written within two years of filing of suit, and by testimony in
court, respondent admits the debt. Therefore the two year and
four year statutes of limitation do not bar the debt in this case.

It is the opinion of this court that the note in question is
unenforceable; however, the underlying debt remains. The judg-
ments of the trial court and Court of Civil Appeals are reversed
and judgment rendered for petitioner in the amount of three
thousand six hundred forty dollars and thirty-six cents
($8,640.86), plus 6% interest from July 10, 1958.

Opinion delivered November 1, 1961.
ASSOCIATE JUSTICE SMITH concurring.

The filling in of blank spaces of negotiable instruments is
governed by Section 14 of Article 5932, Vernon’s Annotated Civil
Statutes of Texas. The insertion of a place of payment in a blank
space provided for that purpose is not a material alteration as
defined in Section 125 of Article 5939, Vernon’s Annotated Civil
Statutes. Strealy pleaded that it was such a material alteration
as to render the note void, and that the fraudulent action of the
bank in filling in the place of payment discharged the underlying
debt. We have held against such contention. In so doing, we have
held that the bank was in legal possession of the note; that the
note was wanting in a material particular, namely, the place of
payment was not inserted in the blank space provided therefor
at the time of delivery, and that under such circumstances the
bank had a prima facie authority to complete the note.

The bank pleaded that it acted “in good faith reliance on the
law as plaintiff supposes it to be that plaintiff had implied author-
ity to fill in the blank following the word ‘at’ on the promissory
note executed by defendant, filled in said blank with the words

es a

‘Dallas, Texas’. Thus, plaintiff, suing on the note, asserts its
claim based either on the note as it existed before it was thus
changed, or on the note after it was thus changed, alternatively.”

Of course, the bank sued alternatively upon the promissory
note and upon the obligation underlying it. The bank also pleaded
for attorneys’ fees in connection with such alternative actions.

Strealy did not defend on the ground that the act of the bank
in filling in the place of payment was not performed within a
reasonable time. There are no pleadings and no evidence was
tendered or introduced that Strealy suffered any injury as a con-
sequence of the bank’s authorized act in filling in the blank space
in the note. Strealy’s only defense was that the note was voided
because petitioner materially altered it.

Thus, it remains that the prima facie authority, granted by
Section 14 of the Negotiable Instrument Act, to fill in an instru-
ment wanting in any particular, can be overcome only by evi-
dence of an express agreement or stipulation by the maker as to
the place of payment. In the absence of such an agreement or
stipulation by Strealy, it must be presumed that the bank was
authorized to fill in “Dallas, Texas”, or any other place of its
choice. The burden of proving such an express agreement and
the violation thereof was on Strealy. See Citizens State Bank v.
Martens, 204 Iowa 1878, 215 N.W. 754 (Sup. Ct. Iowa).

Certainly, the note was wanting in material particular. See
Howard National Bank v. Arbuckle, 92 Vt. 86, 102 A. 477, for
a definition of “material particular” as used in the Negotiable
Instrument Act. When the note was completed it was just as
though “Dallas, Texas” had been a part of the note from its
inception. The holder of the note was not only authorized to fill
in the blank and thereby complete the instrument, but the bank
in this case was invited to do so. See Diamond Distilleries Co. v.
Gott (1910), 187 Ky. 585, 126 S.W. 181, 31 L.R.A. N.S. 648.
Not only that, the record in the present case shows that Strealy’s
action was in accordance with his express agreement that he
would make payments under the note to the bank in Dallas,
Texas. However, the bank as the “person in possession” had, by
statute, “prima facie authority” to type “Dallas, Texas” in the
blank space, and was not required to rely upon the authority to
do so, which is clearly evidenced by his letter of agreement of
February 8, 1958.

It is true that under Section 14, N.I-L., the implied authority

SEE

of the-bank to fill in the blanks continued for “a reasonable
time”. What “a reasonable time” is depends upon the circum-
stances of each case. See Article 5948, Section 198, Texas Nego-
tiable Instrument Act. The fact that the blank was not filled in
until after an action was commenced on the note, Allen v. Rouse-
vill Cooperage Co., 157 Va. 855, 161 S.E. 50, or even that the
blank had not been filled in until a trial was actually in progress,
Cassetta v. Baima, 288 P. 880 (Cal. App.) would not mean that
an unreasonable time had elapsed. The blank in our case was
filled up within a reasonable time as a matter of law. This is
especially true in the absence of any pleading or proof that Strealy
suffered injury as a direct result of the delay of the bank in
actually filling in the blank, an act which had been impliedly
authorized upon delivery of the note. Why should the bank be
required to prove that it acted within a reasonable time when
there was no denial or claim that it had not so acted?

While in the case of Finley v. Rose (Ky.), 224 S.W. 1059,
it is not expressly held that the burden rests upon the maker of
the note to prove that the blank space for place of payment was
not filled in within a reasonable time, no one can read the opinion
without reaching the conclusion that such is the effect of the
holding. In that case, the Court held that a delay of seven years
in filling in a blank did not prevent recovery upon the note in-
volved. The Court said:

“Manifestly, plaintiffs as holders of the note, had the right
to fill in the blank and make the note payable to themselves as
executors, with the consequent right to bring the suit in their
names. * * * In so holding, the original purpose of the parties
is carried out and no right of the makers is injuriously affected.
We therefore conclude that the insertion of the name of the
deceased holder as payee was not fatal to a recovery on the
note. * * * It is therefore insisted that the blank was not filled
in within a reasonable time * * * but where, as in this case,
only the name of the payee is left blank, and both of the joint
makers are alive, and the note has never been negotiated so
as to cut off defenses, we are unable to perceive how the rights
of the makers have been prejudiced by the delay of seven years.”
(Emphasis added.)

No injury to Strealy has been shown in the present case. The
argument that Strealy was caused injury by the suit being filed
in Dallas County is untenable. In fact, the suit filed in Dallas
County was dismissed, and the present cause of action was filed
in Tarrant County, Texas, the county of Strealy’s residence. The

49

ease was tried to a court and jury in Tarrant County. The jury
found the bank guilty of fraud, and that the bank did not act
“in the good faith belief that it had the legal right to do so [fill
in the words ‘Dallas, Texas’] under the laws of the State of Texas.”

‘There was no evidence raising the issue of either fraud or
bad faith. Therefore, the bank’s motion for an instructed verdict
should have been granted. Further, the bank’s motion for judg-
ment notwithstanding the jury verdict should have been granted.

Judgment should be here rendered that the bank recovered
on the note in accordance with its prayer. That prayer is:

“By delivering to Ray K. Glenn a promissory note with the
space for a place of payment left blank, Respondent impliedly
authorized Mr. Glenn to fill up the blank space with a place of
payment convenient to himself. Under the express provisions
of Section 14 of the N.I.L., Petitioner (who stood in Mr. Glenn’s
shoes) had the right, prima facie at least, to insert ‘Dallas,
Texas’ in the blank space, as it did. If there had been an ex-
press agreement between the parties that the note was not to
be paid in Dallas, Petitioner’s authority would have been lim-
ited by such agreement, and it would have been required to
fill up the blanks ‘strictly in accordance with the authority
given’. There was, however, no evidence of such an agreement.
On the contrary, the undisputed evidence showed that Respond-
ent had agreed with Petitioner that he would make his pay-
ments under the note in Dallas, Texas. Thus, when Petitioner
wrote ‘Dallas, Texas’ in the blank space, it was in full com-
pliance with the law and with the understanding and practice
of the parties. The note, therefore, is still in effect, and Peti-
tioner is entitled to its judgment thereon.”

Opinion delivered November 1, 1961.
a
RosBert J. CoOK ET AL, Petitioners

v.
RALPH NEILL ET AL, Respondents

No, A-8189. Decided December 18, 1961
852 S.W. 2d 258

Guilford L. Jones, Big Spring, J. C. Hinsley, Austin, for peti-
tioners.

Harvey C. Hoover, Jr., Hartman Hooser, Big Spring, Newton
J. Steele, Turpin, Kerr, Smith & Dyer, Midland, for respondents.

ASSOCIATE JUSTICE CLYDE E. SMITH delivered the
opinion of the Court.

This controversy stems from the action of the County School
Trustees of Howard County in passing orders annexing Center
Point Common School District No. 7 and Gay Hill Common School
District No. 6 to Big Spring Independent School District. The
suit was by the trustees of the common school districts against
the County School Trustees of Howard County, the County School
Superintendent, Walker Bailey, and the Trustees of the Big Spring
Independent School District to have declared void the orders of
annexation.

For convenience, we shall hereafter refer to the petitioners
as Cook, and the respondents, who were plaintiffs in the trial
court, as Neill.

es a

Neill alleged in his petition that the enactment of the two
annexation orders annexing the Center Point and the Gay Hill
Common School Districts to the Big Spring Independent School
District were unenforceable and of no legal effect for several
reasons:

(A) that the orders violated the Constitution of the United
States and Texas because the orders were made without notifying
the plaintiffs and giving them an opportunity to be heard; (B)
that the orders were in violation of the statute because not made
at a meeting held at a proper place; (C) that the statutes under
which the county school trustees purported to act are unconsti-
tutional; (D) that the orders were arbitrary, capricious, and
were an abuse of discretion because of the facilities of the common
school districts involved; (E) that a school district would be
created containing more than one hundred square miles contrary
to law, and (F) that the order so far as the Gay Hill District
was concerned was void and unenforceable because the area of
the Big Spring District and the Gay Hill District were not con-
tiguous for the reason that, according to plaintiffs’ allegations,
the order annexing the Center Point District to the Big Spring
District did not become final until sometime after the order an-
nexing Gay Hill to Big Spring was made, there being no conten-
tion that the three districts did not constitute as a whole one
contiguous area.

Neill further alleged that the orders were invalid because they
were in violation of certain promises and representations which
had been made by some of the individual members of the Board
of County School Trustees of Howard County at some time in the
past with respect to the matter of consolidation of the district
involved.

Neill also alleged that the statute under which the county
school trustees acted in the annexation (Article 2922a, Vernon’s
Ann. Texas Statutes) was improperly applied here because of
the financial condition of Gay Hill Common School District. Neill
alleged in his petition that the statute under which the annexa-
tion orders were made authorized the creation of rural high school
districts and that the Big Spring Independent School District is
not a rural high school district nor a rural school district within
the meaning of the statute and that for such reason the orders
were void.

On May 9, 1960, and within five days after the annexation
orders were passed, Neill began a series of moves to perfect an

5

appeal. Two suits were filed. The first suit, Cause No. 12,416,
was filed at 11:53 a.m. in the District Court of Howard County.
This filing was about 40 minutes after a notice of appeal was
filed with the Secretary of the County School Trustees and some
two hours after a notice of appeal was filed with the State Com-
missioner of Education. However, this cause is not involved here.

The suit involved here was filed in the same district court at
4:48 o’clock in the afternoon of May 9, 1960, some 5144 hours
after the notice of appeal was filed with the Secretary of the
County School Trustees of Howard County, and some 634, hours
after the filing of the notice of appeal with the State Commis-
sioner of Education.

On May 12, 1960, Neill filed a First Amended Original Peti-
tion. Thereafter, on May 13, 1960, Cook filed a plea to the juris-
diction of the court, alleging, in effect, that the district court
was without jurisdiction for two reasons: (1) that since co-
ordinate jurisdiction over the subject matter of the suit was
vested by statute, Article 2686,1 Vernon’s Annotated Civil Stat-
utes, in two tribunals, the district court and the administrative
authorities—the State Commissioner of Education and the State
Board of Education, such administrative authorities having first
acquired active jurisdiction, retained that jurisdiction, and the
district court had no power to interfere, although Article 2682,?
Vernon’s Annotated Civil Statutes, gives the district courts gen-
eral supervisory control of the actions of the County Board of
School Trustees in creating, changing, or modifying school dis-
tricts; and (2) that Cook, by filing his appeal first with the
administrative authorities, elected to appeal to those authorities
rather than trying his cause of action in the district court.

The trial court in its judgment determined that Cook’s plea

1. “Art. 2686. Appeals.

“All appeals from the decision of the County Superintendent of Public In-
struction shall lie to the County Board of School Trustees, and should either
party decide to further appeal such matters, they are here given the right to
elect to appeal to any court having proper jurisdiction of the subject matter;
or to the State Superintendent of Public Instruction as now provided by law,
provided the election of which course of appeal the party or parties desire to
pursue, shall be given within five days from the final decision of said County
Board of School Trustees, provided this act shall not apply to any controversy
now pending or to any orders of school authorities made more than five days
before this act becomes effective. Acts 1915, p. Ti; Acts 1927, 40th Leg., p. 128,
ch. 88, Sec. 1.”

2. “Art. 2682. Supervisory powers of district court

“The district court shall have general supervisory control of the actions of
the county board of school trustees in creating, changing and modifying school
districts. Id.”

ee ee) 58

to the jurisdiction and motion for dismissal was “well taken”.
The plea to the jurisdiction was sustained and the cause dismissed.

Neill appealed on one ground of error: “The trial court erred
in dismissing the action for want of jurisdiction.” The Court of
Civil Appeals sustained the point, holding that the district court
erred in sustaining the plea to the jurisdiction and dismissing the
case, and ordered the judgment reversed and the cause remanded
for a trial on the merits. 340 S.W. 2d 315.

Cook’s points in his application for writ of error present the
contention that the district court was without jurisdiction: (1)
Because the legislature, by the adoption of Article 2686, Vernon’s
Annotated Civil Statutes, gave to the school authorities co-
ordinate jurisdiction with the district court in all cases challeng-
ing the creation, changing, and modification of school districts,
thereby giving the school authorities coordinate jurisdiction to
review and pass upon the validity of actions of county school
trustees in annexing districts to other districts where the attack
upon such actions is based upon mixed questions of fact and
questions of law, and (2) Because Neill elected his remedy by
first appealing to the administrative authorities, the State Com-
missioner of Education, and the State Board of Education.

Neill contends that the sole question before the Court is
whether his attack upon the legality of school annexation orders
is to be ruled upon by the courts rather than the State Commis-
sioner of Education. Neill contends that the annexation orders
are invalid for several reasons, some of the reasons being (1)
because the actions of the County School Trustees in entering the
orders were unreasonable, arbitrary, capricious, and constituted
an abuse of discretion; (2) because the actions were not taken
at a duly constituted meeting; and (3) because no elections were
held to create a district containing more than 100 square miles.

HT The Court of Civil Appeals has held that the courts have
jurisdiction of the matters involved to the exclusion of the school
authorities. In so holding, the court relied primarily upon the
holding in the case of Henderson et al v. Miller et al, Texas Civ.
App. (1926), 286 S.W. 501, wr. ref., wherein it was held “that
neither the Board of County School Trustees, nor the state super-
intendent, nor the State Board of Education, is vested with any
jurisdiction to determine the constitutionality of any statute, or
the question whether or not any action by any board of school
trustees is violative of constitutional rights. Authority to de-
termine such questions is exclusively the function of the judiciary.

ee

* * *” The court cited other cases such as Hale v. McMurrey,
Texas Civ. App. (1929), 22 S.W. 2d 499, 501, wr. ref.; Adams
v. Miles, Texas Civ. App. (1927), 300 S.W. 211, reversed on
other grounds by The Supreme Court of Texas, 35 S.W. 2d 123,
127; Crow v. Burnet Independent School District et al, Texas
Civ. App. (1927), 304 S.W. 2d 439, wr. ref. nr.e., in support
of its final conclusion in the present case. The effect of the hold-
ing is to say that the rule declared in these and other cases of
like holding applies in any case wherein constitutional questions
are involved, despite the wording of a specific statute such as
Article 2686, supra. With this we do not agree. The district court
and the administrative authorities have coordinate jurisdiction in
a suit involving the annexing of school districts by a county
board of trustees. Any statements in former decisions to the effect
that the district court has exclusive jurisdiction in such cases
are incorrect and should be disregarded.

Where county school trustees take action to annex some school
districts to other school districts as authorized under the pro-
visions of Article 2922a, Vernon’s Annotated Civil Statutes, those
dissatisfied with such action may elect to appeal directly to the
district court. See Adkins v. Rogers, Texas Civ. App., 303 S.W.
2d 820, wr. ref. n.r.e.; County School Trustees of Callahan County
vy. District Trustees of District No. 15 (Hart) Common School
District of Callahan County, Texas Civ. App., 192 S.W. 2d 891,
wr. ref. nr.e.; County Board of School Trustees of Limestone
County v. Wilson, Texas Civ. App., 15 S.W. 2d 144, wr. dism.
On the other hand, they may elect to appeal directly to the State
Commissioner of Education (formerly the State Superintendent
of Public Instruction). This administrative agency has appellate
coordinate jurisdiction with the district court to determine ap-
peals from orders of county school trustees, creating, changing,
and modifying school districts. See Stinson v. Graham, Texas Civ.
App. (1926), 286 S.W. 265; District Trustees of Tennessee .
Colony Common School Dist. No. 21 v. Central Education Agency,
Texas Civ. App. (1953), 256 S.W. 2d 151, wr. ref. nr.e.; State
ex rel. Texas City Independent School Dist. v. La Marque Inde-
pendent School Dist., Texas Civ. App. (1953), 258 S.W. 2d 384,
wr. ref. n.r.e.; and, Erath County School Trustees v. Hico County
Line Independent School Dist., Texas Civ. App. (1952), 247
S.W. 2d 564, wr. ref.

In the last case, the court held that jurisdiction of the county
judge to receive a petition for consolidation of two independent
school districts was coordinate with that of the county school
trustees to group one of the independent school districts with

es 55

another school district to form a rural high school district. This
case is also authority for the rule, which has been invoked by the
Texas courts, that where two tribunals have coordinate juris-
diction over the subject matter the one which first acquires active
jurisdiction shall retain its jurisdiction until the matter is dis-
posed of without interference from the other tribunal. The court
cited: Cleveland v. Ward, 116 Texas 1, 285 S.W. 1063; State ex
rel. George v. Baker, 120 Texas 307, 40 S.W. 2d 41; Garrett,
County Judge v. Unity Common School Dist., Texas Civ. App.,
211 S.W. 2d 238, Wichita Common School Dist. No. 11 v. Dick-
ens Independent School Dist. of Dickens County, Texas Civ. App.,
206 S.W. 2d 885; Lynn County School Board v. Garlynn Common
County Line School Dist., Texas Civ. App., 118 S.W. 2d 1070;
21 C.J.S., Courts, Section 492, page 745.

The application of this rule is not limited to situations where
original action is taken by an officer or body having jurisdiction
over the subject matter. The rule applies with equal force to
the review of the actions of such bodies in the exercise of ap-
pellate jurisdiction. See Adkins v. Rogers, supra. That case in-
volved a dispute over jurisdiction of an appeal from orders of the
county school trustees annexing two common school districts to
an independent school district under provisions of Article 2922a,
supra. The precise question presented was whether jurisdiction
of the appeal was in the district court or in the State Commis-
sioner of Education. The plaintiffs who were attacking the an-
nexation orders had filed their suit in the District Court of
Brazoria County seven days prior to the time they took action
to appeal administratively to the State Commissioner of Educa-
tion. The court held that since the suit was first filed in the
District Court of Brazoria County, that court had jurisdiction
to determine the validity of the annexation orders to the exclusion
of the administrative officers, namely, the State Commissioner of
Education and the State Board of Education. No contention was
made that appeals involving a determination of the validity of
annexation orders under Article 2922a, supra, could not be made
first to the State Commissioner of Education had the parties so
elected.

I The case of State ex rel. Texas City Independent School Dist.
v. La Marque Independent School Dist., supra, supports Cook
in his contention that the State Commissioner of Education has
jurisdiction of appeals in territorial matters to the exclusion of
the district court where the appealing parties have chosen to
appeal first to the administrative authorities. The court said:

«* * * As the trial court properly held the deposition of

5

the State Commissioner of Education was not admissible for
the purpose of showing that an appeal to him by the appellant,
in seeking the order it coveted in this cause, had been dis-
missed or abandoned; this, for the reason that appellants hav-
ing admitted that they did file such appeal, the law bound them
to pursue that remedy to its final conclusion, which they did
not do before appealing to the courts in this controversy. * * *.”
(Emphasis added.)

It is argued that Article 2686, supra, has application only in
cases where the appeal is to be perfected from a decision of the
County Superintendent of Public Instruction to the County Board
of School Trustees, ete. We cannot agree with this contention.
We have found no case which holds that the Article has reference
only to appeals from a decision of the County Superintendent. In
the case of Jennings v. Carson, Texas Civ. App. (1916), 184
S.W. 562, Id., Comm. App. 1920, 220 S.W. 1090, holdings ap-
proved by the Supreme Court, which originated when the trustees
of the school district involved refused a petition to create a new
district, the Court of Civil Appeals observed that the duties of
the County Superintendent are only ministerial and that “since
the County Superintendent has no discretionary powers, it is
difficult to conceive of any action on his part from which it would
ever be necessary for anyone to appeal.” This language in the
Jennings case, presumably at least, is the reason why the courts
have consistently disregarded the literal language of the statute
from the beginning. Although the Court of Civil Appeals opinion
was rendered in this case on March 15, 1916, the final judgment
of the Supreme Court was not rendered until May 5, 1920. See
220 S.W. 1090, Comm. of App. The Court of Civil Appeals had
held that the district court had jurisdiction of the case and
affirmed the judgment of the trial court creating the new dis-
trict and perpetuating the injunction theretofore issued. The
Supreme Court, upon the recommendation of the Commission of
Appeals, entered its judgment reversing the judgment of the
Court of Civil Appeals and remanding the cause to the trial court
with instructions to dismiss. The Commission of Appeals was not
required to directly pass upon the question of whether or not
the appeal provision of what is now Article 2686 applies only to
decisions originating with the County Superintendent of Public
Instruction. However, it was held that the statute in effect at
the time conferred the right of appeal from the decisions of the
subordinate school officers in certain matters to the State Super-
intendent of Public Instruction and thence to the State Board of
Education, and that it was necessary to prosecute the appeals
in the manner designated before resort could be had to the courts.

ES a1

The Court held that the statute conferred upon the Board of
County School Trustees the authority to manage and control the
public high schools provided for in the Act of the Thirty-Second
Legislature. (General Laws 32d Leg. Ch. 26, p. 34; Vernon’s
Sayles’ Ann. Civ. Stat. 1914, Arts. 2849a-2849c). Section 10
of the Act, Article 2849j, read as follows:

“All appeals from decisions of the county superintendent
of public instruction shall lie to the county school trustees, and
from the said county school trustees to the state superintendent
of public instruction, and thence to the state board of educa-
tion.”

The Court after quoting the above section of the statute, said:

“As the foregoing section was originally enacted when the
duty to establish school districts devolved upon the Commis-
sioners’ Court, the appeals therein referred to had no relation
to such duty. The Act of the Thirty-Fourth Legislature, supra,
amending the Act of the Thirty-Second Legislature, so enlarged
the scope of the administrative duties of the county trustees as
to extend their management and control over all the public free
schools of the county. * * *.”

The reasoning employed by the Court in reaching its ultimate
conclusion in the Jennings case leads us to conclude that the right
of appeal from the decisions of the Board of County School Trus-
tees was granted by the provisions of Article 2686, supra.

Neill’s argument in his original reply to Cook’s application
for writ of error was to the effect that the Legislature has ex-
pressly conferred exclusive jurisdiction upon the district court
in all cases challenging the creation, changing, and modification
of school districts, through the enactment of Article 2682, supra.
In a supplemental brief filed on September 18, 1961, he advances
the theory that the Legislature repealed Article 2686, supra, and
portions of Articles 2690 and 2749, Vernon’s Annotated Civil
Statutes of Texas, by the adoption in 1949 of Article 2654-7,
Vernon’s Annotated Civil Statutes. In making such contention,
he agrees with the position taken by Mr. Ernest A. Knipp, who
has filed a “Brief of Amicus Curiae”. However, Neill does not
agree with Knipp’s position that Article 2654-7, Section 1,3 had
the effect of also repealing Article 2862, supra.

3. “Parties having any matter of dispute among them arising under pro-

visions of the School Laws of Texas, or any person or parties aggrieved by the
actions or decisions of any Board of Trustees or Board of Education, may appeal

58

We shall consider Neill’s contention in the order of presenta-
tion. We do not agree that the Legislature has expressly con-
ferred jurisdiction upon the district court to the exclusion of the
administrative agencies in cases challenging the creation, chang-
ing, and modification of school districts through the enactment
of Article 2682, supra. A holding by this Court adopting such
view would be wholly inconsistent not only with the views ex-
pressed in the above cited cases, but with the cases of Mission
Independent School District v. Diserens, 144 Texas 107, 188
S.W. 2d 568, 570, 161 A.L.R. 877 (1945); Palmer Publishing
Co. v. Smith, 180 Texas 346, 109 S.W. 2d 158, 159; Warren v.
Sanger Independent School District, 116 Texas 183, 288 S.W.
159, 160, 161; Nance v. Johnson, 84 Texas 401, 19 S.W. 559;
Bishop v. Houston Ind. School Dist., 119 Texas 407, 29 S.W. 2d
812, 314. These cases were recently cited and discussed in the
case of McIntyre v. Hoblinski, Texas Civ. App. (1960), 833 S.W.
2d 697, wr. ref.

There is language in the cases of Mission Independent School
Dist. v. Diserens, 144 Texas 107, 188 S.W. 2d 568, 161 A.L.R.
877, and McIntyre v. Hoblinski, 333 S.W. 2d 697, wr. ref., which
would seem to run counter to our present interpretation of the
effect of Article 2686. In refusing the application for writ of
error in the latter case, this Count adopted the opinion of the
Court of Civil Appeals.

The troublesome language is as follows:

“Tt is a well-settled rule that in all matters pertaining to
the administration of school laws involving questions of fact
as distinguished from pure questions of law resort must first
be had to the school authorities and the method of appeal there
provided for exhausted before the courts will entertain juris-
diction of a complaint with reference to such matters.”

If taken out of proper context and read literally, this language
would compel the result that in all school cases where there is
not a pure question of law involved, the school authorities would
have jurisdiction of the controversy to the complete exclusion of
the courts. This is not the law.

We do not question the correctness of the language above as

in writing to the Commissioner of Education who, after due notice to the parties
interested, shall examine in a hearing and render a judgment without cost to
the parties involved. However, nothing contained in this section shall deprive
any party of a legal remedy.”

es 59

it applied in the particular cases where used. In the Hoblinski
case the language was taken as a direct quote from the Diserens
case. In turn, the language was used in the Diserens case only to
state a general principle and was again taken as a direct quote.
The actual origin of this language is the case of State ex rel.
Nevills v. Sanderson, 88 S.W. 2d 1069, Texas Civ. App. (1935),
no wr. hist. In the Sanderson case, a private citizen sued, through
the county attorney, to remove a county trustee on the grounds
that he was not qualified for office. The trial court dismissed
the suit and was affirmed by the Court of Civil Appeals. That
court observed that the county superintendent had not requested
the county attorney to bring suit nor had he personally been re-
quested to remove the trustee. Because Art. 2747 expressly charges
the superintendent with the duty of removing disqualified trus-
tees, the Court held that the courts were without jurisdiction
until the superintendent had acted. The opinion, including the
language which we have quoted above, did not in any way alter
or question the provisions of Article 2686. In fact, the Court in
that case quoted Article 2686 and left the clear implication that
after the superintendent had acted, the provisions of Article 2686
would apply, including the election provision.

Likewise, the Diserens case, supra, in no way affects our
present interpretation of. Article 2686. That case involved a dis-
pute between an independent school district and a teacher who
had breached her contract with the school district. The language
in question was used to state a general principle only and was
clearly dicta in the case. No action by a county school superin-
tendent or county board of trustees was involved in any way,
and Article 2686 had no application in the case whatever.

The Hoblinski case, supra, involved a suit by individual tax-
payers against an independent school district and others. The
complaint alleged breaches of the principle of separation of church
and state. Again, a county superintendent or trustees were not
involved and Article 2686 could have no application in the case.

In short, it is our position that the language quoted above
states an accurate general proposition and was validly applied in
the three cases just discussed. However, it is not to be applied
broadly in all school cases. We believe that wherever it is appli-
cable, Article 2686 is to be applied as it has been written and
construed by the courts. That is, specifically, whenever the par-
ticular dispute involves a decision by a county board of school
trustees, either on appeal from the county superintendent or as
an original proposition, then the aggrieved party may elect to

00

appeal either to the courts or to the proper administrative au-
thorities. This is true whether the dispute involves only questions
of fact, mixed questions of law and fact, or questions of law only.

We turn now to Neill’s contention that Article 2686, supra,
was repealed by the Legislature by the enactment of Article 2654-7,
Sec. 1, supra. He now argues that “Article 2654-7, Sec. 1, how-
ever, eliminated any election of procedures, in school cases, by
recognizing that both administrative and judicial action may be
taken in the same case.” Neill reasons that now “a party may,
but shall not be required to, go to school officials for relief, even
when the County School Superintendent is the offensive one. If
the aggrieved one does invoke the aid of the school authorities,
perforce of the last sentence of the 1949 [Article 2654-7] statute,
he is not to be denied his day in court because thereof.” In sub-
stance, Neill is saying that the Legislature, in enacting Article
2654-7, supra, recognized the concurrent existence of rules, and
he reasons that in this case “the higher school authorities should
have jurisdiction to determine in their expertise whether, in the
interest of good school administration, the Big Spring Independent
School District should have Respondents’ moneys and properties,
while at the same time the courts have the authority to de-
termine whether the county school trustees, in law, have taken
these assets and vested them in another. Thus, one body, the
administrative body, may look at whether the county school trus-
tees should have done what they purport to do, while another
body, the judicial body, determines whether, in law, they did
what they purport to do. This concept is what the Legislature
had in mind in Article 2654-7 when it said that “administrative
appeals involving the school laws of Texas shall not deprive a
party of his legal remedy.” With this contention we cannot agree.
Article 2654-7, Sec. 1, was enacted in 1949 as a part of the so-
called Gilmer-Aikin Legislation, Acts 1949, 51st Leg., p. 587,
Ch. 299, Art. VII, Senate Bill No. 115. There was no express
repeal of Article 2686, supra, in this statute. In fact, there ap-
pears nothing to indicate that Article 2656, Vernon’s Annotated
Civil Statutes, was repealed by Article 2654-7, supra. This latter
Article provides, in substance, that the State Superintendent [now
the State Commissioner of Education] of Public Instruction is
charged with the administration of the school laws, and that he
shall hear and determine all appeals from the rulings and de-
cisions of subordinate school officers, and that appeals would lie
from his rulings to the State Board of Education. Aside from
that, there is no conflict between Article 2686 and Article 2654-7,
Sec. 1, as applied to this case. Under the former, the parties are
given the right to elect whether to appeal to the State Commis-

a 6

sioner of Education or to the appropriate court. Article 2654-7
states that they may appeal to the State Commissioner of Educa-
tion, but that this Article shall not deprive them of any legal
remedy. This simply means that if the parties appeal to the court,
Article 2654-7 does not deprive them of that right, inasmuch
as Article 2654-7 makes no provision with regard to an election
as does Article 2686. There cannot be a conflict as to that on
which Article 2654-7 is silent.

It clearly appears from the statutes, including Articles 2656,
2686, and 2654-7, supra, that some matters involved in the opera-
tion of the Texas public school system are appealable to the State
Commissioner of Education. The matters involved here present
an action which may be appealed to such agency. Article 2654,
supra, provides in part that the State Commissioner of Educa-
tion shall hear and determine all appeals, etc. Article 2654-7, in
Section 1, provides for appeal of “any matter of dispute among
them arising under provisions of the school laws of Texas”, to
the State Commissioner of Education, and for appeals from “the
actions or decisions of any Board of Trustees or Board of Educa-
tion”, and Article 2686 with respect to the subject matter involved
speaks of “all appeals”. These Articles do not in any manner
limit the subject matter of decisions that may be appealed to the
State Commissioner of Education.

In this case, we hold that the appeal provisions of Article
2686, which provide for an election to appeal either to the State
Commissioner of Education or the appropriate district court, have
not in any manner been repealed, and that such provisions apply
in this case.

HT We must now determine whether Neill made a binding elec-
tion to pursue the administrative route so as to preclude his
subsequent appeal to the district court. We hold that he did not.
Under the provisions of Article 2686, election of the desired course
of appeal must be made within five days. Here, Neill gave notice
of appeal to the administrative authorities and also filed suit in
the district court within the five-day period. Indeed, as stated
above, these acts were performed on the same day, only some
hours apart. We hold that the mere giving of notice of appeal
to the administrative authorities was not a binding election. By
later filing suit in the district court, Neill in effect withdrew his
appeal to the administrative authorities and indicated a new and
different course of appeal. This he had the right to do, so long as
it was within the five-day statutory period. In other words, there
is no binding election until the five-day period has expired. Thus,

CO

Neill’s ultimate election was to the district court in this case, and
that court improperly dismissed the suit.

It is well settled that once a matter in controversy is sub-
mitted to the school authorities for decision on appeal, that
course of appeal must be exhausted and completed before resort
can be had to the courts for relief. See Plains Common Consoli-
dated School District No. 1 of Yoakum County v. Hayhurst, Texas
Civ. App., 122 S.W. 2d 822, no wr. hist.; State ex rel. Texas
City Independent School District v. La Marque Independent School
District, supra. We do not disturb that principle here, and it
would have applied in the present case had there been a final,
binding election to appeal to the school authorities. As stated
above, there was not such a final election here.

For the reasons stated, the judgment of the Court of Civil
Appeals is affirmed.

Opinion delivered December 18, 1961.
a
OWEN M. Lorp AND C. H. Meyer, Petitioners

v.
HaroiD R. CLAYTON ET AL, Respondents

No. A-8709. Delivered December 18, 1961
Rehearing Denied January 24, 1962
352 S.W. 2d 718

2
oo

Gilbert T. Adams, Beaumont, for relator.

Will Wilson, Atty. Gen., F. J. Maloney, Jr., and N. V. Suarez,
Assts. District Attorney, Austin, W. G. Walley, Jr., Acting Dis-
trict Attorney, Jefferson County, Beaumont, for respondents.

CHIEF JUSTICE CALVERT delivered the opinion of the
Court.

ORIGINAL MANDAMUS

In this direct proceeding in this Court Owen M. Lord, Judge
of the Criminal District Court of Jefferson County, Texas, and
C. H. Meyer, relators, seek writs of mandamus. Meyer seeks
a writ directing Judge Lord to proceed to trial and hearing of
his writ of habeas corpus and directing respondent, Harold R.
Clayton, Judge of the District Court of the 186th Judicial Dis-
trict, to proceed no further with a suit to enjoin the habeas corpus
hearing. Judge Lord seeks a writ directing Judge Clayton to
proceed no further with the injunction suit. Other persons and
public officials, unnecessary to name, are also respondents.

Hi Normally we would not entertain mandamus proceedings to
interfere with injunctive orders of a trial court. While the re-
straining order entered by the 136th District Court was inter-
locutory in nature and non-appealable, any temporary injunction
entered by that court would have been reviewable by appeal. Or-
dinarily the parties would have been relegated to that remedy. It
appears, however, that the jurisdictional conflict between the

Ce

Criminal District Court of Jefferson County and the 136th Dis-
trict Court, as hereafter indicated by our recitation of facts, has
reached the point where the public interest and orderly adminis-
tration of justice must suffer irreparably unless the conflict
is relieved by this Court. Our jurisdiction to relieve it is estab-
lished. Art. 1734, V.A.T.S.; Cleveland vs. Ward, 116 Texas 1,
285 S.W. 1063.

Prior to 1929 Jefferson County constituted two judicial dis-
tricts, the 58th and the 60th, and the district courts of those
districts had all jurisdiction, civil and criminal, conferred by the
Constitution on district courts.

By Act of the 41st Leg., Reg. Session, 1929, Ch. 170, p. 374,
an additional court for Jefferson County, known as “Criminal
District Court of Jefferson County”, was created. In the act it
was provided that the Criminal District Court should have and
exercise “original and exclusive jurisdiction over all criminal
eases of the grade of felony in the County of Jefferson of which
district courts, under the Constitution and laws of this State,
have original and exclusive jurisdiction”. Section 14 of the Act
reads:

“From and after the taking effect of this Act, the District
Courts of Jefferson County as now constituted, shall be, and
they are hereby deprived and divested of all jurisdiction in
all criminal cases, and of all jurisdiction given the Criminal
District Court of Jefferson County by this Act, and all criminal
cases pending in said District Courts at the time of the taking
effect of this Act, and all matters pertaining to criminal cases
pending therein over which the Court herein created is given
jurisdiction, shall be, by the Clerk of the District Courts trans-
ferred to and entered upon the docket of said Criminal District
Court, and when so entered upon the docket, the judges of said
Criminal District Court shall try and dispose of same in the
same manner as if such cases were originally instituted therein.”

At the Second Called Session of the 41st Legislature, Secs.
58 and 60 of Art. 199 were amended. It was provided that Jef-
ferson County should constitute the 58th and 60th Judicial Dis-
tricts and that the district courts of those districts should “have
and exercise concurrent jurisdiction coextensive within the limits
of Jefferson County in all civil cases, proceedings and matters
of which district courts are given jurisdiction by the Constitution
and laws of this State’. It was further specifically provided:
“Neither of said two district courts shall have or exercise any

a 65

criminal jurisdiction in Jefferson County, such criminal juris-
diction having been by law vested exclusively in a criminal dis-
trict court”.

In 1955 the Legislature created the District Court of the
136th Judicial District composed of Jefferson County. Acts 54th
Leg., Ch. 216, p. 684. Sec. 2 of the Act provides: “The District
Court for the 136th Judicial District shall have and exercise con-
current jurisdiction with the 58th and 60th District Courts within
the limits of Jefferson County in all civil cases or proceedings
and matters over which District Courts are given jurisdiction by
the Constitution and laws of this State.”

Until recently the Criminal District Court of Jefferson County
has exercised exclusive jurisdiction over all criminal matters in
Jefferson County normally exercised by district courts. Until
recently the 186th District Court has not exercised, or attempted
to exercise, jurisdiction over any such matters.

On September 19, 1961, Judge Clayton appointed Grand Jury
Commissioners to select a grand jury for the July term of the
186th District Court. That duty performed, the court empanelled
a grand jury on September 29, 1961. Thereafter, on November 1,
the said grand jury returned a true bill of indictment against
C. H. Meyer into the 186th District Court and delivered it to
Judge Clayton who, in turn, delivered it to the District Clerk of
Jefferson County. The clerk entered the case on a docket sheet
in the “Docket—Criminal District Court” after striking out the
word “Criminal” from the heading on the docket sheet and writ-
ing “186th” in lieu thereof. A capias, issued by the clerk and
directed to any constable of Jefferson County, commanded the
arrest of Meyer and that he be brought before the 136th District
Court. Meyer was arrested on November 3 and on the same day
applied to Judge Lord for a writ of habeas corpus. The writ was
duly issued on the 8rd directing the constable to produce Meyer
before Judge Lord in the courtroom of the Criminal District
Court on November 9, then and there to show why Meyer was
held in custody and restrained of his liberty. Judge Lord ordered
Meyer released on bail pending the habeas corpus hearing. The
record before us reflects that on November 3 the district clerk
transferred the case against Meyer to the docket of the Criminal
District Court, if, indeed, it had ever been on the docket of any
other court.

On November 8 the habeas corpus hearing before Judge Lord
was postponed until November 17. On November 9 the State of
Texas filed a motion in the Criminal District Court seeking to

CS

have that court correct the writ of habeas corpus granted by
it so as to make the same returnable to the 136th District Court.
That motion was denied by Judge Lord by order entered on
November 10.

Before the habeas corpus hearing set for the 17th could be
held, the State, acting by and through the acting Criminal Dis-
trict Attorney of Jefferson County and the Attorney General of
Texas, filed suit in the 136th District Court against Judge Lord,
the District Clerk, Meyer and Meyer’s counsel. A restraining
order was sought and was granted by Judge Clayton restraining
each of the defendants.

“From proceeding with or taking any further action, orders
or judgment in a certain habeas corpus proceeding on behalf
of Charles H. Meyer, Sheriff of Jefferson County, Texas, pres-
ently pending before the Criminal District Court of Jefferson
County numbered Cause No. 858 on the docket of said Court,
except an order or judgment dismissing the Petition for habeas
corpus; or an order or judgment transferring said habeas corpus
proceeding to the 136th Judicial District Court; or an order
making said writ of habeas corpus returnable to the 136th
Judicial District Court; * *”.

Hearing on the prayer for a temporary injunction was set
for November 27.

On November 22 we granted leave to file relators’ petition .
for writ of mandamus and stayed all proceedings in the habeas
corpus hearing set for the 27th in the Criminal District Court
and in the injunction suit set for the 29th in the 136th District
Court.

The principal basis of relators’ claim to relief is that under
the legislative acts creating the two courts only the Criminal
District Court of Jefferson County has jurisdiction of the matters
in controversy and that all orders made with reference thereto
by the 186th District Court are absolutely void. They say this is
so not only because the act creating the Criminal District Court
expressly conferred on it exclusive jurisdiction over such mat-
ters but also because the act creating the 136th District Court
expressly limited its jurisdiction to “civil cases or proceedings”.

HI Relators’ contention that the Criminal District Court of Jef-
ferson County has exclusive jurisdiction of all criminal business
in the county of which district courts would have jurisdiction

eS 67

under the Constitution is foreclosed against them by our decisions
in Reasonover v. Reasonover, 122 Texas 512, 58 S.W. 2d 817.
There is no need to analyze that decision at length. It is enough
to say that we held invalid a provision of an act creating a Crim-
inal District Court which undertook to give the court jurisdiction
of divorce cases to the exclusion of other constitutional district
courts. We specifically held that while the Legislature could
create special courts under authority of an 1891 amendment to
Section 1, Article 5 of the Constitution and could confer on such
courts concurrent jurisdiction over subjects mentioned in Sec-
tion 8 of Article 5 of the Constitution, it could not deprive regular
district courts of the jurisdiction conferred on them by the Con-
stitution. We adhere to that holding. See also Ex Parte Richards,
187 Texas 520, 155 S.W. 2d 597. There is nothing in Jordan
vs. Crudgington, 149 Texas 237, 231 S.W. 2d 641, contrary to
our holding in Reasonover and both Harris County vs. Stewart,
91 Texas 188, 41 S.W. 650, and Cockrell vs. State, 85 Texas Cr.
R. 326, 211 S.W. 989, were decided before and duly noticed in
the opinion in Reasonover.

If Neither do we agree that in creating the 186th District
Court the Legislature created a special court, as distinguished
from a regular or constitutional court, with jurisdiction limited
to civil matters only. The 186th District Court is in all respects
similar to the 58th and 60th District Courts. Each is a district
court for a regularly created judicial district. Each is given con-
current jurisdiction in “all civil cases, proceedings and matters
of which district courts are given jurisdiction by the Constitution
and laws of this State’. There is nothing in the legislation affect-
ing the existence and jurisdiction of the three courts to indicate
that the Legislature intended the jurisdiction of the 136th Court
to be any more limited than the jurisdiction of the 58th and
60th Courts. We hold all three courts to be regular or constitu-
tional district courts and that in so far as the legislative acts
above referred to undertook to deprive them of their constitu-
ional criminal jurisdiction those acts are unconstitutional and
void.

Having constitutional criminal jurisdiction, it follows that
the 136th District Court has jurisdiction to select and empanel
a grand jury in the manner provided by law, to receive and have
felony indictments docketed in its own docket, to issue a capias
for the arrest of one so indicted and have the capias returnable
to the court where the case is pending, to try felony cases pend-
ing in the court, and to do and perform all other acts in connec-
tion with indictment and trial of persons charged with felonies

SA

which the Criminal District Court of Jefferson County or any
other district court of general constitutional criminal jurisdiction
might do. Its power and jurisdiction to select and empanel a
grand jury was not nullified by the fact that the Criminal Dis-
trict Court had selected and empanelled a grand jury which was
in existence and functioning at the time the 186th District Court
acted. Farrar v. State, 162 Texas Cr. Rep. 186, 277 S.W. 2d
114; Hamman v. State, 166 Texas Cr. Rep. 349, 314 S.W. 2d
301. Art. 838a, Vernon’s Texas C.C.P., has no relevancy.

It does not follow from what we have said that the Criminal
District Court did not have jurisdiction of the habeas corpus
proceeding or that it was proper for the 136th District Court to
interfere by writ of injunction with the habeas corpus hearing.

I A necessary corollary of our holding that the 136th District
Court has not been ousted of its constitutional criminal juris-
diction is a further holding that there is, and can be, no manda-
tory duty on the district clerk to docket all criminal cases in
Jefferson County of the grade of felony in the docket of the Crim-
inal District Court, or to transfer to the Criminal District Court
all criminal indictments returned to and docketed in the 58th,
60th or 136th District Courts. Sec. 14 of the Act creating the
Criminal District Court is permissive and directory only. On the
other hand, Sec. 14 contains a mandate of transfer, and it has
been held that a transfer made by the Clerk in obedience to the
mandate, although not ordered by the court, is a valid transfer.
Floyd v. State, 117 Texas Cr. R. 384, 36 S.W. 2d 739.

Articles 584 and 585, C.C.P., contemplate that each court of
record having criminal jurisdiction will have a criminal docket
to be kept by the clerk. The record before us indicates that the
136th District Court had no criminal docket when the indictment
of Meyer was received and filed. The district clerk entered the
case in the docket of the Criminal District Court. If we may as-
sume that jurisdiction of the case was retained to the 136th
District Court by the change made by the clerk in the printed
heading of the docket sheet, we must nevertheless accept the fact
that, absent an order by Judge Clayton to the contrary, jurisdic-
tion of the case was transferred from the 136th District Court
to the Criminal District Court when, on November 38, the district
clerk changed the docket sheet to one for the Criminal District
Court in accordance with the directory provisions of the statute.

We need not here decide whether the 136th District Court
had jurisdiction of the case pending against Meyer when Judge

69

Lord issued the writ of habeas corpus, or whether the issuance
of the writ under the circumstances and considering the provisions
of Art. 120, C.C.P., was an unwarranted interference with the
jurisdiction of the 186th District Court. After the case against
Meyer was transferred by the clerk to the Criminal District Court
that court then had jurisdiction of the case with jurisdiction to
conduct the habeas corpus hearing.

II It is the duty of Judge Lord to proceed to trial in the habeas
corpus hearing. He has declined to proceed in the face of Judge
Clayton’s restraining order. The restraining order issued by
Judge Clayton is void in so far as it purports to restrain Judge
Lord from proceeding with the habeas corpus hearing: One
court has no power to enjoin official action by the judge of
another court of co-ordinate power and jurisdiction. Cleveland v.
Ward, 116 Texas 1, 285 S.W. 1068, 1072; Barrier v. Lowery,
118 Texas 227, 11 S.W. 2d 298; Millikin v. Jeffrey, 117 Texas
184, 299 S.W. 398, 895. It is also void in so far as it purports
to restrain Meyer and his counsel from further prosecution of
the writ of habeas corpus in the Criminal District Court of Jef-
ferson County. To deny to Meyer the right to prosecute his writ,
personally and by counsel, in a court having legal authority to
conduct a hearing, is a suspension of the writ of habeas corpus
in violation of Sec. 12, Art. 1 of the Constitution of Texas and
of Art. 6, Code of Criminal Procedure, and a denial of due
process. Barrier v. Lowery, 118 Texas 227, 11 S.W. 2d 298.

The restraining order entered by Judge Clayton is annulled
and vacated, and Judge Owen M. Lord is directed to proceed
with a hearing on the writ of habeas corpus of C. H. Meyer now
pending in the Criminal District Court of Jefferson County. In
the event he does not so proceed, a writ of mandamus will issue.

Opinion delivered December 13, 1961.

Le

STATE OF TEXAS, Petitioner

v.
Don W. Wair ET AL, Respondents
No. A-8679. Decided December 18, 1961

851 S.W. 2d 878

Fisher, McLaughlin & Harrison, Paris, for petitioner.

Moore & Lipscomb, Paris, for respondents.
PER CURIAM.

The State brought this condemnation suit for a right-of-way
east of Paris, Texas. The only question tried was the amount of
damages. The landowner sought a new trial on the ground of
jury misconduct. He alleged that the jury used a quotient verdict.
The court, after hearing testimony from 4 of the 6 jurors,
overruled the motion, thus finding that misconduct did not
occur. The Court of Civil Appeals reversed on the grounds that
it appeared beyond question and as a matter of law that mis-
conduct did occur; and in the alternative, if there was some
evidence to support the trial court’s implied finding of “no mis-
conduct”, then it held that the finding was against the over-
whelming weight and preponderance of the evidence. 349 S.W.
2d 637. The question is whether this finding of the trial judge
should be tested by (1) the great weight and preponderance of
the evidence or by (2) abuse of discretion.

MM The trial court’s refusal to grant a new trial upon an
express or implied finding of no occurrence of jury misconduct
is ordinarily binding on the reviewing courts and will be re-
versed only where a clear abuse of discretion is shown. Barring-

val

ton v. Duncan, 140 Texas 510, 169 S.W. 2d 462 (1943) ; Mary-
land Casualty Co. v. Hearks, 144 Texas 317, 190 S.W. 2d 62
(1945) ; Saladiner v. Polanco, 160 S.W. 2d 581 (1942, error
refused) ; Thompson v. Railway Express Agency, 206 S8.W. 2d
184 (1947, nre.); Martin v. Shell, 262 S.W. 2d 564 (1953,
no writ); Morgan v. State, 343 S.W. 2d 738 (1961, ref., n.r.e).
The occurrence of jury misconduct is not properly reviewed by
the great weight and preponderance test which was applied by
the Court of Civil Appeals. We hold that the occurrence of jury
misconduct was conclusively proved as a matter of law and that
the trial court clearly abused its discretion in not granting a
new trial. Probable injury of a jury’s misconduct, once miscon-
duct has been found to have occurred, is a question of law for
the trial court and reviewing courts to determine from a review
of the entire record, and from such a review we conclude that
the respondents probably were injured from the quotient ver-
dict. City of Houston v. Quinones, 142 Texas 282, 177 S.W. 2d
259 (1944).

The application for writ of error is therefore refused, no
reversible error.

Opinion delivered December 13, 1961.
as

Nora TopD ELLIOTT ET vir, Petitioners
v.
EDWARD JOSEPH, Respondent
No, A-8416. Decided October 18, 1961

Rehearing Denied and Dissenting Opinion Filed December 20, 1961
351 S.W. 2d 879

“a

2

JUSTICE SMITH, joined by GREENHILL and HAMILTON,
JJ., dissenting.

Hardy Hollers, Austin, for petitioner.

Cofer & Cofer, Douglass D. Hearne, with above firm, Austin,
for respondent.

MR. JUSTICE CULVER delivered the opinion of the Court.

In this suit in the district court against Nora Todd Elliott
and her husband, Roy C. Elliott, Edward Joseph sought a declara-
tory judgment to determine what amount of rent he is obligated
to pay and an injunction to restrain the Elliotts from inter-
fering with his enjoyment of the leasehold estate which he holds
upon land owned by them.

In 1946 Joseph and the Elliotts entered into a written con-
tract by the terms of which the Elliotts leased to him a certain

Pe 8

tract containing 12.5 acres with the option of extending the lease
until March 31, 1966, at the monthly rental now in effect of
$166.67. Joseph is now and has been for a number of years operat-
ing a drive-in moving picture show on the premises.

In October of 1959 the City of Austin filed proceedings to
condemn 3.87 acres of this tract for the purpose of street widen-
ing. Joseph contends that under the terms of said lease and the
Jaw of the State of Texas, he is entitled to have the rental appor-
tioned pro tanto and reduced accordingly and tendered the sum
of $115.00 monthly rental. The Elliotts by cross-action asserted
that Joseph was obligated to pay the contract rental of $166.67
per month without any proportionate reduction, prayed for judg-
ment for accrued rentals at that rate, and sought rescission of
the lease contract by reason of default.

The trial court found that the Elliotts are entitled to re-
cover the full rental agreed to in the contract without any re-
duction on account of the taking by the City of Austin of the 3.87
acres and entered a take-nothing judgment against Joseph. The
court also denied Elliotts’ claim for rescission of the least contract.

The Court of Civil Appeals on its own motion held that the
same issue presented in this case is to be determined in the
county court in the presently pending condemnation proceedings
and ordered this cause abated until final disposition of the con-
demnation suit, invoking the rule that after the county court
has acquired jurisdiction in a condemnation suit no other court
is authorized to interfere with its proceedings. One justice dis-
sented (345 S.W. 2d 297). All parties applied for writs of error
insisting that the rule invoked by the Court of Civil Appeals is
not applicable here. With that contention we agree.

Hf A condemnation suit in the county court is a special proceed-
ing and determines only the issues of the right to condemn and
the amount of the damages. The trial in the county court is a
de novo appellate proceeding. State v. Nelson, 160 Texas 515,
334 S.W. 2d 788.

I The county court has no power to determine the rights of
the parties under the lease or to reduce the rent or to give a
judgment for or against the Elliotts for the amount of rent
claimed by them. It is true that the question of law as to whether
or not a pro tanto abatement of rent is to be allowed upon a
partial taking of the leasehold by condemnation would have a
bearing upon the apportionment of damages between the land-

Be

lord and tenant in the condemnation proceeding but that question
‘will not be and cannot be resolved in the condemnation suit. What
the county court will determine, so far as the tenant is concerned,
is the diminished value of the lease. City of Pasadena v. Porter,
201 Cal. 881, 257 P. 526, 58 A.L.R. 679, holds:

“A proceeding for condemnation of private property under
the Street Opening Act is.a special statutory proceeding. The
court sitting therein has no equitable jurisdiction, and accord-
ingly, has no power to reform or revise the lease in question,
nor to determine to what extent the covenant to pay rent shall
be affected, if at all.”

The authorities relied upon by the majority of the Court of
Civil Appeals do not support their conclusion that the same issue
is involved in the county court condemnation proceedings and in
this suit.

In Compton v. Texas Southeastern Gas Co., Texas Civ App.,
815 S.W. 2d 345, writ refused mr.e., plaintiff could not maintain
her suit for damages in the district court caused by the laying
of a pipe line through her property by the defendant because
that was exactly the issue to be determined in the pending con-
demnation suit in the county court. Likewise in Pickens v. Hidalgo
County Water Control & Improvement District, Texas Civ. App.,
284 S.W. 2d 784, no writ history, and in Texas Pipe Line Co. v.
Ennis, 127 Texas 470, 98 S.W. 2d 148, the only issue presented
was the amount of damages that would be suffered by the land-
owner as a result of the taking under the power of eminent
domain. The county court was empowered to grant full relief for
all damages suffered and consequently the landowners could resort
to no other forum.

Mf There is here an actual present controversy between the
parties. The Elliotts contend in their cross-action that irrespective
of any condemnation proceedings they are entitled to the pay-
ment of the contractual rental and asked judgment for the amount
due. They also claimed the right to rescind because the rent had
not been paid. Joseph on his part contended that he was entitled
to a pro tanto abatement of the rent and tendered into court the
rent reduced proportionately on an acreage basis. These issues
could not be decided elsewhere than in the district court.

The landmark case of Cleveland v. Ward, 116 Texas 1, 285
S.W. 1063, is not applicable. In that case one of the parties had
filed suit in the district court of Johnson County to cancel cer-

rs 15

tain notes and the deed of trust given to secure the same. The
other party had filed suit in the District Court of Dallas County
to foreclose under the same deed of trust. The only question
involved was the validity of the notes and deed of trust and the
right of foreclosure. Both courts had potential jurisdiction. Very
naturally it was held that two courts could not at the same time
possess the power to make a final determination of the same
controversy between the same parties, but that is not the situation
we have here. The Court of Civil Appeals erred in ordering that
this cause be abated until final disposition of the condemnation
suit.

Hl We now come to a consideration of the question of law pre-
sented here, namely, when there is a partial taking of a leasehold
estate by condemnation and the remaining portion is susceptible
of occupation whether or not the contractual monthly rental is
to be abated pro tanto for the part taken during the remainder
of the time of the lease. Although many courts in other jurisdic-
tions have considered and passed upon this problem and a number
of able text writers have expressed their views, we find that the
question has not been decided by the Texas courts. A review of
the authorities reveals that a large majority of these decisions
hold that the rentals are not abated in this situation, but rather
the tenant is obligated to continue the payment of the rentals
provided in the lease contract and must look to an apportionment
of the damages assessed against the condemning authority based
on the reduced value of his lease. We are inclined to follow the
majority concept.

The general rule is that when the whole of leased premises
is taken under eminent domain proceedings, the lease is terminated
and the tenant is no longer liable to pay rent. See annotations
43 A.L.R. p. 1176, 3 A.L.R. 2d p. 828. Joseph argues that the
same rule should be applied where only a portion of the premises
is taken and that there is no reasonable ground to make a dis-
tinction beteween the two classes of cases. A few courts have
so held.

In Biddle v. Hussman (1856), 23 Mo. 597, after condemna-
tion by the City of St. Louis of a part of the premises leased to
Hussman, the owner sued the lessee, Hussman, for the rent for
the entire premises. The court held that as to the part appropriated
to public use the rent was extinguished. The same result was
reached in Kingsland v. Clark (1856) 24 Mo. 24, and likewise
in Barclay v. Picker, 88 Mo. 315.

Ce

In Board of Levee Commissioners v. Johnson, (1889) 66
Miss. 248, the taking of a portion of leased premises under the
power of eminent domain was held to operate as an apportion-
ment of rent and dissolved the relation of landlord and tenant
pro tanto. Additionally, there are a number of text writers who
urge the adoption of the minority rule. Lewis on Eminent Domain,
Sec. 488; 3 Tiffany on Real Property, 8rd ed. Sec. 904, pp. 565,
566; 1 Orgel on Valuation Under Eminent Domain, 2nd ed. Sec.
121, p. 522. The converse is to be found in 1 Washburn on Real
Estate, 5th ed., ch. 10, Sec. 6, p. 558, where the following state-
ment is made:

«* * * But the better rule, and the one believed to be adopted
in most States, is that such a taking operates, so far as the
lessee is concerned, upon his interest as property for which the
public are to make him compensation, and does not affect his
liability to pay rent for the entire estate according to the tenor
of the lease and this extends to ground rent; such taking does
not abate any part of the rent due.”

Joseph quotes from 2 Nichols on Eminent Domain, pp. 42,
43, Note 60, the rule as follows:

“Conversely, as the tenant is not entitled to an abatement
of his rent if he has been dispossessed by a disseizor, or by the
public enemy, or if the premises are destroyed or rendered
untenantable by earthquake, lightning, floods or fire, he re-
mains liable in the same manner for the full amount of a rent
when a portion of the leased premises are taken by eminent
domain,”

but urges that the premises laid down in that statement is not
the law of abatement in this state. It is the law here that where
the estate from which the rent issues ceases to exist the landlord
is not entitled to recover rent for the remainder of the period.
This was the case in Norman v. Stark Grain & Elevator Co.,
Texas Civ. App., 237 S.W. 968, error refused, and Behan v.
Ghio, 75 Texas 87, 12 S.W. 996. In the former case the rented
elevator collapsed and was rendered totally unfit for the storage
of grain that was the only purpose for which the elevator could
be used by the express terms of the lease. On the other hand
the destruction of a building on leased premises by fire or other
catastrophe does not relieve the tenant against the obligation
to pay rent unless it is so stipulated in the lease. Japhet et al v.
Polemanakos, Texas Civ. App., 160 S.W. 416, writ dismissed,
and see cases therein cited.

1

The objection raised by the text writers to the majority rule,
that the rent is not to be reduced where a part only of the
leasehold is taken, is that it works an inconvenience and hard-
ship on the landlord. As said by one writer in 29 Amer. Law
Rev. p. 354 (1895) :

“Tt is easy to conceive of instances, where, under this rule, °
the tenant would receive a very considerable amount of the
landlord’s damages in order that he may go through the idle
form of repaying it in installments in the shape of rent, and
at the same time the landlord will be obliged to look to the
solvency and order of the tenant in its repayment.”

The landlord may protect himself by providing for the term-
ination of the rent obligation if the property is condemned. Ap-
peal of Scholl, 292 Pa. 262, 141 A. 44. In some states the statute
provides for a proportionate reduction. Matter of Daly, 29 App.
Div. 286, 51 N.Y.S. 576; McCardell v. Miller, 22 R.I. 96, 46 A
184; Hinricks v. New Orleans, 50 La. Ann. 1214, 24 So. 224.

Many of the decisions in support of the majority rule take
note of the early Missouri and Mississippi cases but refuse to
adopt the result there reached.

In City of Chicago v. Garrity, 7 Ill. App. 474 (1880), the
matter was first noticed in the State of Illinois. The court there
recognized that the decisions of other states were not entirely
harmonious, yet after considering the three Missouri cases de-
cided to follow the weight of authority in favor of the principle
that the tenant remains liable for the entire rent notwithstanding
the condemnation of a portion of the property to public use.
Thereafter that jurisdiction has consistently adhered to this posi-
tion. See Stubbings v. Village of Evanston, 136 Ill. 37, 26 N. E.
577; Corrigan v. City of Chicago, 144 Ill. 587, 383 N. E. 746;
Yellow Cab Co. v. Stafford-Smith Co., 320 Ill. 294, 150 N. E.
670, 43 A.L.R. 1173.

Gluck v. Baltimore, 81 Md. 815, 82 A. 515 (1895), a con-
demnation proceeding by the City, held that the taking of a por-
tion of leased land does not operate to abate any portion of the
rent reserved, nor will it apportion the rent, and the tenant
should be allowed damages for the decreased value of the premises.
In that case the court took note of the argument that this rule
would or might in many instances, result in loss to the landlord.
The answer is given that this is a mere suggestion of a possible
hardship, but that a sound principle ought to be applied without

1S

reference to ulterior results. The fact that it may operate in some
instances with apparent or even real hardship does not indicate
that it is inherently erroneous.

The plaintiff sued for rent due under a lease contract in
Olson Land Co. v. Alki Park Co., 63 Wash. 521, 115 P. 1083
* (1911). The court upheld the rule that a tenant when part of his
leased premises is taken under the power of eminent domain
cannot claim an eviction by the landlord nor be released from the
payment of rent.

Also F. W. Woolworth Co. v. Berlin, 82 N.H. 153, 180 A.
741 (1925), follows the general rule, though taking note of Bid-
dle v. Hussman and Levee Commissioners v. Johnson, supra.

Earlier cases holding to the same effect are Parks v. Boston,
15 Pick. (Mass.) 198 (1838); Patterson v. Boston, 20 Pick.
(Mass.) 159 (1888), Workman v. Mifflin, 80 Pa. 862 (1858).

In Leonard v. Auto. Car Sales and Service Co., 392 Ill. 182,
64 N.E. 2d 477, 163 A.L.R. 670, writ cert. den., 327 U.S. 804,
90 L. ed. 1029, 66 Sup. Ct. 968, the entire leased property was
taken temporarily by the United States for a definite period of
time short of the term of the lease, but even in that situation
the lessee was not relieved of liability for rent. The court ob-
served that “When it is remembered that every lease possesses
a double aspect, being both a conveyance and a contract, a ready
explanation may be found for the view that a lessee may cease
to be entitled to the possession yet remain bound by his con-
tractual obligation to pay rent.”

Hf There is also, we think, a practical procedural reason for not
adopting the very logical minority rule. Article 3265 bearing on
rule of damages on condemnation suits, in Section 1, provides
that the commissioners shall assess the actual damages that will
accrue to the owner. Section 3 provides that where only a por-
tion of the real estate is condemned the commissioners shall
estimate the injuries sustained and the benefits received by the
owner. The term “owner” in this sense includes a lessee for years
as well as any other person who has an interest in the property.
Houston North Shore Ry. Co. v. Tyrrell, 128 Texas 248, 98 S.W.
2d 786, 108 A.L.R. 1508. The amount of rent is a factor in
determining the damages suffered by the lessee in the taking of
a portion of his lease, but it is not the only element. Frankfurt
v. Texas Turnpike Authority, Texas Civ. App., 811 S.W. 2d 261,
no writ history; State v. Parkey, Texas Civ. App., 295 S.W. 2d

19

457, wr. ref. n.r.e. The rules applicable to the condemnation of
a, fee title apply equally to the condemnation of a part of a lease-
hold interest. Brazos River Conservation & Reclamation District
v. Adkisson, Texas Civ. App., 173 S.W. 2d 294, writ refused.

Possibly in this case an abatement of the rent pro tanto
might work a complete satisfaction of this lessee’s claim for
damages, but probably not in all situations.

Although Orgel, supra, concedes that even if the lessee is
relieved from his obligation to pay the rentals, where only part
of the premises had been taken, the problem of fair apportion-
ment is simplified but by no means solved.

Since under our condemnation procedure all persons having
any interest in the subject matter must be made parties in order
for the condemning authority to obtain complete title, the adop-
tion of a rule permitting the abatement of rent in the district
court would probably tend to hamper and disrupt the statutory
condemnation processes and might require under some situations
an abatement of the condemnation in the county court until the
lessee’s claim of pro tanto abatement could be determined in
the district court.

We therefore conclude that while the minority rule makes
a logical approach to the solution of this troublesome problem,
and while valid reasons may be assigned in support thereof,
nevertheless in considering all aspects of the question the ma-
jority rule should be followed.

The judgment of the Court of Civil Appeals is therefore
reversed and that of the trial court is affirmed.

Opinion delivered October 18, 1961.
ASSOCIATE JUSTICE SMITH, dissenting.

The dissenting opinion delivered on October 18, 1961, is
withdrawn, and the following substituted therefor:

I respectfully dissent.

The question involved has never been expressly decided in
Texas. The Court here seems to attach some weight to what
it deems to be the majority rule. It is of no particular significance
as to which is the majority rule, and which the minority rule,

50

when the question is an open one in this State. We are not com-
pelled to follow the majority rule which, if followed, will bind
the tenant to pay rent on premises after he has been permanently
ousted therefrom. Texas should adopt a rule which will be in
accord with our Texas decisions on Landlord and Tenant. Where
the so-called minority rule is followed, the obligation to pay rent
is extinguished pro tanto and the present value of the rent ap-
portioned to the part taken is paid directly to the lessor as in
the taking of the whole property. See American Law of Prop-
erty, Sec. 3.55, p. 291.

In Dyer v. Wightman, 66 Pa. 425, the court placed the
ground for the extinguishment of the rent on the theory that
equity will not give the award for the value of the rent to the
tenant because that would leave the landlord insecure, and hence
the equitable thing to do is to give the sum to the landlord and
extinguish the tenant’s obligation to pay rent.

Regardless of where equity should lie, it is difficult for me
to see why the rule applied on a total taking would not also be
applicable to a taking of a part of the premises. By applying the
rule to a partial taking, we would have a pro tanto abatement
of the rent.

The adoption of this sensible and most equitable rule would
not in the least complicate statutory condemnation proceedings
in cases where landlord and tenant are involved.

A proceeding for condemnation of private property for public
use is a special statutory proceeding. The court sitting in such
proceeding has no equitable jurisdiction, and accordingly has no
power to reform or revise the Elliott-Joseph lease, nor to de-
termine to what extent the covenant to pay rent shall be affected.

The payment of rentals, of course, is a factor which must
be considered in arriving at the fair market value of the lease.
See Frankfurt v. Texas Turnpike Authority, 311 S.W. 2d 261.
However, the apportionment of the rents is a problem of the
Jaw of Landlord and Tenant to be finally adjudicated in separate
proceedings in a court of competent jurisdiction.

In 1 Orgel on Valuation Under Eminent Domain, 2d Ed.
Sec. 121, p. 522, it is said:

“Where a contrary ruling is not required by the lease or
by statute, it would seem to us far more reasonable to release

81

the lessee from his obligation to continue the rent payments,
or partially to reduce it when only a part of the premises has
been taken, leaving the remaining part still inhabitable.”

The rule for which I contend has been adopted in other
jurisdictions. However, if it had never been followed in any
jurisdiction, I still contend that Texas should refuse to follow
the harsh and inequitable rule followed by the so-called majority
rule. Many times this Court has, in instances of divided authority,
struck out on its own course. Since Texas is to adopt a rule, it
would seem that our courts should be inclined to adopt the sensi-
ble, simplest, and most equitable rule.

ASSOCIATE JUSTICES GREENHILL and HAMILTON
join in this dissent.

Opinion delivered December 20, 1961.
be
TRAVELERS INSURANCE COMPANY, Petitioner
JACK Hm. Respondent
No. A-8889. Decided November 22, 1961

Rehearing Overruled December 20, 1961
851 S.W. 2d 530

99
iy

ASSOCIATE JUSTICES NORVELL, CULVER, WALKER,
and HAMILTON dissented.

Baker, Botts, Andrews & Shepherd, Finis Cowan, Houston,
with above firm, for petitioner.

Davis, Phelps, Liles, Norton & Gray, Houston, for respondent.
MR. JUSTICE GRIFFIN delivered the opinion of the Court.

This is a suit to mature a workmen’s compensation award
under Article 8307, Sec. 5a, Vernon’s Annotated Texas Civil
Statutes, which provides that when the Industrial Accident Board
enters an award requiring the insurance carrier to make weekly
or monthly payments to an injured employee and the carrier
thereafter fails or refuses, ‘without justifiable cause” to con-
tinue to make such payments promptly, the injured employee
may bring suit to mature the award; that is, collect the full
amount thereof, plus attorney’s fees and recover a twelve percent
penalty.

Judgment in the district court was for the injured employee
and such action was affirmed by the Court of Civil Appeals.

ee) 83

See Travelers Insurance Company v. Jack Hill, Texas Civ. App.,
844 S.W. 2d 208. Travelers, the insurance carrier as petitioner
here, submits one point only, viz: the Court of Civil Appeals
erred in holding that under the facts of this case a penalty could
be imposed on the insurer even though the delay in making pay-
ment was desired and induced by respondent and his counsel.
This point raises the question of whether or not the trial judge’s
findings of fact support his conclusion of law.

From the findings of fact and the undisputed evidence, it
appears that Jack Hill was accidently injured while working
for the Sebastial Corporation. Pending action by the Industrial
Accident Board, the insurance carrier paid Hill compensation
for 29 weeks at the rate of $35.00 per week. On February 6,
1959, the Board made its final award whereby the carrier was
ordered to pay to Hill certain weekly sums for a period of total
disability followed by further sums payable weekly for permanent
partial disability. On February 10 Hill filed with the Industrial
Accident Board his notice of intention to appeal from the Board’s
award. However, he did not perfect the appeal with the result
that the Board’s award became final on March 2. Article 8807,
Sec. 5, Vernon’s Annotated Texas Civil Statutes. Seventeen days
later, on March 19, this suit was filed.

Travelers made no attempt to ascertain from Hill or his
attorney whether or not a suit had been filed in the district court.
Had it done so at any time after March 2 it would have ascer-
tained that Hill was going to abide by the Board’s award. Based
upon these facts, the court concluded that the period of seventeen
days’ delay (from March 2 to March 19) was without justifiable
cause and rendered judgment maturing the award with penalty
and attorney’s fees. As above indicated, the Court of Civil Appeals
affirmed.

Hf The case of Minor v. London Guarantee & Accident Co.,
Limited, Texas Com. App., 280 S.W. 163, (holdings approved
by the Supreme Court), is authority for the proposition that
when an award is made by the Industrial Accident Board, and
no appeal is taken therefrom, and the carrier failed to make
payments promptly in accordance with the award, the claimant
may mature the award under the provisions of Article 8307,
Sec. 5a. We are not disposed to depart from that holding. As
pointed out by the Court of Civil Appeals, the later holding of
this Court in Maryland Casualty Co. v. Lewis, 151 Texas 480,
252 S.W. 2d 155, in no way militates against the doctrine stated
in the Minor case. See also Dixon v. United States Fidelity &

TO

Guaranty Co., Texas Civ. App., 293 S.W. 291, wr. dism., and
Texas Employers’ Ins. Ass’n. v. Harrington, Texas Civ. App.,
61 S.W. 2d 167, no writ history.

I We accordingly reach the question as to the legal effect of
respondent’s giving notice of appeal from the Board’s award,
but not perfecting such appeal and then failing to notify peti-
tioner of such action, or demand payment of the award. In our
opinion the rule is that when notice of appeal has been given
and not perfected, the award may be matured whenever it is
made to appear that the carrier knew or should have known, by
the exercise of reasonable diligence, that the award of the Board
had become final and payable.

Hf In this case it may be assumed that the carrier had no actual
knowledge that the award of the Board had become final. The
trial court however made numerous findings to the effect that
it should have known that the award was final and hence due
and payable prior to March 19, when the suit to mature the
award was filed. There is evidence supporting these findings.
There is also evidence to support the trial court’s finding that
the delay in payment of the award was without justifiable cause.
The fact that the respondent gave notice of appeal from the
Board’s award may work some change in the factual pattern
disclosed in Minor v. London Guarantee & Accident Company,
supra, in that the carrier may not have been chargeable with
notice of the finality of the award immediately upon the expira-
tion of the statutory twenty-day period for perfecting an appeal
by filing suit in the district court. But here, as above pointed out,
the last date for filing suit was March 2, yet the petitioner, al-
though it had not been served with citation in a district court
suit, waited seventeen days from March 2 until March 19, the
date the maturity suit was filed, taking no action whatsoever.
The trial court could well conclude that this delay in making
proper inquiry as to the status of the award was without justi-
fiable cause. It was said in the Minor case that “mere neglect to
pay either the amount due under the order of the Board, or the
weekly payments as they became due, does not show justifiable
cause for defeating the beneficiary’s right to mature the entire
claim, nor does it show justifiable cause to avoid payment of
either of the 12 percent damages or reasonable attorney’s fee.”

I Petitioner contends that respondent’s action in giving notice
of his intention not to abide by the decision of the Board and
then failing to file suit in the district court constitutes a form
of entrapment. It points to evidence that respondent and his

Cee) 85

attorney were both hopeful that petitioner would overlook the
fact that no appeal had been perfected and thus give respondent
grounds for maturing the award. The trial judge found that
when respondent filed his notice of intention of appeal it was
not done with any intent on the part of respondent or respondent’s
attorney to mislead the petitioner, but the notice of an intention
to appeal was filed with the Board in good faith. The fact that
when respondent subsequently decided not to perfect his appeal
he entertained hopes that the insurance carrier would fail to
resume weekly payments in accordance with the award and thus
allow him to file a suit to mature the award cannot make the
ease one of entrapment or bad faith, as a matter of law, and
thus permit this Court to disregard the trial judge’s findings
as having no factual basis.

I Further, we cannot say that respondent was required to
demand payment of the Board’s award or notify the petitioner
of his decision to abandon his proposed appeal and abide by the
award. This for the reason that the statute nowhere required
such demand or notice. Under certain circumstances some delay
in payment may be permissible. The statute does not make a
demand for payment necessary to render the claim due and
payable. This Court, in discussing Secs. 5, 5a of Article 8307,
Vernon’s Annotated Texas Civil Statutes, providing that in the
event of no suit being filed to set aside an award against the com-
pensation carrier, held in the case of Maryland Casualty Co. v.
Lewis, supra, “it shall at once comply.” “ * * * The phrase at once
has often been distinguished from other words or phrases im-
porting immediate or instantaneous action, and in doing so the
‘courts have declared without qualification that it signified in a
reasonable time.’ 7 C.J.S., at p. 160. And see 4 Words and Phrases,
p. 682 et seq. * * *” There is evidence that supports the trial
court’s judgment herein. If such demand under certain cireum-
stances should be required, that is a matter for the legislative
branch of the government.

The judgments of the district court and the Court of Civil
Appeals are affirmed.

Opinion delivered November 22, 1961.
NORVELL, Justice, dissenting.
Considering that a notice of appeal from the Board’s award

had been given by respondent, it seems that he should have
notified the insurance carrier of his subsequent decision to aban-

8

don the appeal and abide by the award. This for the reason that
Article 8307, Sec. 5a, Vernon’s Ann. Texas Stats. is highly
penal in nature, and has for its purpose the punishment of an
insurer for an inexcusable refusal to pay an award. Maryland
Casualty Co. v. Lewis, 151 Texas 480, 252 S.W. 2d 155. It is
not designed to provide windfalls as a reward for procedural
vigilence or the lack thereof. The trial judge found that “the
only reason why the Travelers Insurance Company did not com-
mence the payment of benefits to Hill, in accordance with the
award of the Industrial Accident Board, was because they re-
ceived and relied upon a notice of intention to appeal from the
award of the Industrial Accident Board mailed, prepared and
filed by counsel for plaintiff.”

The record clearly indicates that had the insurance company
known that the award was due and payable, that is, that re-
spondent had abandoned his appeal, payment would have been
forthcoming. Even before the Board had taken action the carrier
had admitted liability and offered to settle the claim by paying
$4,000 in addition to the weekly payments theretofore made to
respondent. It is likewise apparent that respondent did not notify
the carrier that he had abandoned his appeal because he hoped
that the insurance company would overlook this circumstance, and
thus allow him to mature the award and collect a penalty and
attorney’s fees. While the decision of this case should not rest
upon such factors as hopes and emotional attitudes, the facts
of this case point up a situation that is not conducive to open and
above-board dealings, to say the least. In ordinary business trans-
actions when a person takes a certain action which will place
another within his debt, he is generally expected to notify such
party of his action. There is no reason why this usual standard
of business conduct should not be applied in the present case.
The last word the carrier had from Hill was that he, Hill, in-
tended to sue in the district court and not abide by the award
of the Industrial Accident Board. Before saddling the carrier
with a penalty, it seems fair and equitable to require Hill to
make known his change in position and the fact that he had
decided to abide with the decision of the Board.

It is Hill’s position that the insurance carrier should have
maintained a “cat at the rat hole” type of vigilance in order to
avoid a penalty. It is argued that the carrier knew that Hill must
file suit in the district court within twenty days after the filing
of notice that he would not consent to abide by the final ruling
of the Industrial Accident Board and therefore shortly after
March 2 the insurance company, as it had not been served with

ee) 87

citation in a district court suit, should have known that Hill
had changed his mind and thereupon should have started paying
him the installments awarded by the Board. It would seem much
simpler and more in accordance with usual business dealings if
the one changing his mind would notify the other party of that
fact so that the contractual obligations incident to such change
of mind could be promptly carried out.

The punitive liability of the statute under the facts of this
case has been visited upon the insurance carrier, not as a result
of a willful or wrongful refusal to perform, but upon a mere
inadvertance which resulted in a failure to ascertain the inten-
tions of a party who in good faith and conscience should have
made his intentions clearly known.

Article 8307, Sec. 5a provides for a penalty, Maryland Cas-
ualty Co. v. Lewis, 151 Texas 480, 252 S.W. 2d 155, and hence
‘should be strictly construed. 50 Am. Jur. 482, Statutes Sec. 408.
The Legislature sought to secure the prompt payment of insurance
claims by providing a penalty for an inexcusable delay. How-
ever, it is not necessary in order to serve the statutory purpose
to impose a penalty for nonaction which is in no sense willful
and could have been wholly avoided by making a simple demand
for payment. When a fair construction will accomplish the legis-
lative purpose, a harsh construction should be avoided.

We are unable to agree with the Court of Civil Appeals that
respondent’s giving notice of appeal from the action of the In-
dustrial Accident Board does not distinguish this case from
Minor v. London Guarantee & Accident Co., Texas Com., 280
S.W. 163; Dixon v. United States Fidelity & Guaranty Co., 293
S.W. 291, wr. dis., and Employers’ Insurance Ass’n. v. Harring-
ton, Texas Civ. App., 61 S.W. 2d 167. In all three of these cases
cited, it clearly appears that neither the injured employee nor
the insurance carrier gave notice of an intention not to abide
by the award. Accordingly, there was no action taken by the
claimant which could have misled the carrier in any way. These
eases are authority only for the narrow proposition that when
neither side gives notice of appeal, the award of the Industrial
Accident Board becomes final when the time for giving notice
of appeal expires and hence a failure of the carrier to promptly
abide by such award and make payments in accordance there-
with constitutes a basis for maturing the award under the pro-
visions of Article 8307, Sec. 5a.

Ss

I respectfully dissent from the order of the Court which
affirms the judgments of the courts below.

ASSOCIATE JUSTICES CULVER, WALKER and HAM-
ILTON join in this dissent.

Opinion delivered November 22, 1961.
bn

Pxcos VALLEY SOUTHERN RAILWAY COMPANY, Petitioner
v.
PARKHILL PRODUCE COMPANY, Respondent
No. A-8616. Decided October 18, 1961

Rehearing Denied December 20, 1961
852 S.W. 2d 723

Kleberg, Mobley, Lockett & Weil, Corpus Christi, Russell &
Tomlin, Pecos, for petitioner.

Ward & Brown, Corpus Christi, for respondent.
PER CURIAM.

We are in agreement with the decision of the Court of Civil
Appeals in this case, 8348 S.W. 2d 208, upon the points wherein
there is conflict with the 1897 decision of the Galveston Court
of Civil Appeals in First National Bank v. East, 48 S.W. 558.
See, Middlebrook v. David Bradley Manufacturing Company, 86
Texas 706, 26 S.W. 935; Warner v. Gohlman, Lester & Co., 117
Texas 145, 298 S.W. 890; Id. Texas Civ. App., 8 S.W. 2d 1049;
Stevens v. Willson, 120 Texas 584, 39 S.W. 2d 1088; Shafer v.
Brashear, Texas Civ. App., 274 S.W. 229; Mutual Federal Sav-
ings & Loan Association of El Paso v. Anderson, Texas Civ.
App., 88 S.W. 2d 499; Wolcott v. Hall, Texas Civ. App., 111
S.W. 2d 1140; Dickson v. Klett, Texas Civ. App., 211 S.W. 2d
881, mand. overr., 1 McDonald, Civil Procedure, 420, Sec. 4.38.
In accordance with the provisions of Rule 483, Texas Rules of
Civil Procedure, the application for writ of error is refused, no
reversible error.

Opinion delivered October 18, 1961.

89
W. M. Len, Petitioner
v.
STATE OF TEXAS, Respondent

No. A-8484. Decided January 2, 1962
352 S.W. 2d 724

Dawis, Kee & Thomas, Angleton, for petitioner.

Will Wilson, Attorney General, J. Arthur Sandlin, Assistant
Attorney General, and Joe G. Davis, Huntsville, for respondent.

MR. JUSTICE NORVELL delivered the opinion of the Court.

The controlling question in this case relates to the constitu-
tionality of that portion of Senate Bill No. 317 of the Acts of
the Regular Session of the 56th Legislature (Acts 1959, ch.
201, p. 472) which purports to authorize the Texas Board of

ee

Corrections to condemn certain lands in Brazoria County, Texas.
The caption of the Act reads as follows:

“An Act concerning State Prison lands in Brazoria County;
and declaring an emergency.”

Petitioner here asserts that insofar as the power to condemn
Jands is concerned, this caption is patently insufficient to meet
the requirements of Article 3, Sec. 35 of the Texas Constitution
which provides that:

“No bill, (except general appropriation bills, which may
embrace the various subjects and accounts, for and on account
of which moneys are appropriated) shall contain more than
one subject, which shall be expressed in its title. But if any
subject shall be embraced in an act, which shall not be expressed
in the title, such act shall be void only as to so much thereof
as shall not be so expressed.”

We agree with petitioner’s contention.

The trial court held for the condemnee Lee (petitioner here)
upon the ground that certain jurisdictional requirements pre-
scribed by Article 3264, Vernon’s Ann. Texas Stats., had not
been met. The Court of Civil Appeals correctly held that the
trial court erred in the particular mentioned, but in reversing
the judgment of the trial court the Court of Civil Appeals over-
ruled Lee’s contention based upon Article 8, Sec. 35 of the
Constitution. See State v. Lee, 846 S.W. 2d 498.

Section 1 of Senate Bill No. 317 authorizes the Texas Board
of Corrections to sell and convey certain described land in Bra-
zoria County. Section 2 of the Act provides that the Board shall
have the right to acquire the surface estate in several described
tracts by eminent domain. Nine separate tracts are described,
including two tracts belonging to the petitioner. These tracts lie
within the limits of the Ramsey State Prison Farm. Section
8 contains the emergency clause which recites that a security
hazard exists because of the presence of privately owned tracts
within the limits of Ramsey Prison Farm.

The courts have construed Article 8, Sec. 85 of the Con-
stitution upon numerous occasions. As a result, there is an
abundance of authority to sustain certain broad, general prin-
ciples governing its application.

m1

II It is well established that the caption of an act should be
liberally construed so as to uphold its validity if at all possible.
Gulf Insurance Co. v. James, 143 Texas 424, 185 S.W. 2d 966.
It has also been said that, “None of the provisions of a statute
should be regarded as unconstitutional when they relate, directly
or indirectly, to the same subject, have a mutual connection, and
are not foreign to the subject expressed in the title.” Austin v.
Gulf, Colorado & Santa Fe R. Co., 45 Texas 234. So long as the
caption states the main subject of an act, it will also be con-
strued to cover any subsidiary matters if they are reasonably
connected, germane, incidental, or relevant to the main subject.

However, in Consolidated Underwriters v. Kirby Lumber
Co., Texas Com. App., 267 S.W. 708, holdings approved by the
Supreme Court, Judge Robert W. Stayton, -writing for the
Commission, said:

“{I}t has been held that * * * particular provisions are not
within a given title where no subject at all is expressed in
the title; where the ultimate subject expressed and that pro-
vided for are plainly different; where the provisions are
palpably ulterior or foreign to the title; where they are separate,
distinct from, and not germane to the subject expressed ; where
by no intendment they possess a necessary or proper connec-
tion with it; where they are discounected from it and in-
appropriate to it; or where the provisions come clearly within
the evil to be suppressed.”

There is no substantial difference between petitioner and
respondent as to these basic principles but rather a divergence
between them as to their application to the factual situation of
this particular case.

Hi Our agreement with petitioner is predicated upon the fact
that Section 2 of the Act, authorizing the State to condemn the
lands of private citizens, does not “concern” prison lands in any
way. It is undoubtedly true that had the State successfully con-
demned these lands, they would have become prison lands. But
the caption of the Act does not state that it concerns the acquisi-
tion of prison lands, or lands which are about to be prison lands.
We do not believe that the caption would reasonably give fair
notice to a legislator or any other person interested in the subject
matter of the bill that the proposed act would provide for the
condemnation of private lands. A most liberal interpretation
would not allow us to say that a statutory provision which con-
cerns the condemning and acquisition of private lands is rea-

ee

sonably related to the subject of the caption, which uses the
words “concerning prison lands”, that is, lands owned for prison
purposes. We must hold that Section 2 of the Act is unconstitu-
tional and void.

The judgment of the Court of Civil Appeals is reversed, and
the trial court’s judgment of dismissal is affirmed.

Opinion delivered January 2, 1962.
|

SKELLY OL ComMPANY, Petitioner
v.
MATTHEW HaRRIS ET UX, Respondents

No, A-8224. Decided January 8, 1962
352 S.W. 2d 950

|
io)

C. E. Blodget, Tulsa, Oklahoma, Ramey, Brelsford, Hull &
Flock, Tyler, for petitioner.

LeRoy Salle and Crawford Parker, Jr., Carthage, for re-
spondents.

ASSOCIATE JUSTICE RUEL C. WALKER delivered the
opinion of the Court.

In Gulf Oil Corp. v. Reid, 161 Texas 51, 387 S.W. 2d 267,
it was held that an oil and gas lease had terminated where there
was no production or tender of shut-in royalty for a period of
thirty-two days following the capping of a well begun before and
completed after the end of the primary term. Under somewhat
similar facts but different lease provisions, we hold that the
lease in the present case was kept in force by production which
began forty-one days after completion of a well beyond the
primary term on land with which part of the leased premises
was pooled.

The cause was submitted to the trial court on an agreed
statement of facts. On October 21, 1943, Matthew Harris and
wife, respondents, executed and delivered to W. H. Oberthier
an oil and gas lease covering nine tracts, aggregating 550.52
acres, in Panola County. A few months later the lease was as-
signed to Skelly Oil Company, petitioner. The instrument pro-
vides for a primary term of ten years and authorizes the lessee
to pool the land described therein or any part thereof with other
Jands or leases in the immediate vicinity. All provisions neces-
sary to an understanding of the contentions made by the parties
are quoted in the margin with the third sentence of Paragraph
6, hereinafter referred to as the 60-day clause, set out in italics.
The emphasis there and elsewhere in this opinion is supplied.

1. “2, Subject to the other provisions herein contained, this lease shall be
for a term of ten years from this date (called ‘primary term’) and as long
thereafter as oil, gas or other mineral is produced from said land or land with
which said land is pooled hereunder.

ee

A written declaration pooling 59.59 acres covered by the
lease with other land in the vicinity to constitute a 640-acre unit,
designated as the Shivers-Hamilton Unit, for the production of
gas, distillate and condensate was filed for record on October
5, 1958. On that date petitioner also commenced operations for
drilling a well at a location in the Shivers-Hamilton Unit but
not on any of the land described in the Harris lease. After clear-
ing the drilling site, erecting a derrick, and setting up a drilling

“3, The royalties to be paid by Lessee are: * * * where gas from a gas
well is not sold or used, Lessee may pay as Royalty $100.00 per well per year
and if such payment is made it will be considered that gas is being produced
within the meaning of Paragraph 2 hereof; * * *

“4, Lessee, at its option, is hereby given the right and power to pool or
combine the acreage covered by this lease or any portion thereof with other land,
lease or leases in the immediate vicinity thereof, when in Lessee’s judgment it
is necessary or advisable to do so in order properly to develop and operate said
premises in compliance with the spacing rules of the Railroad Commission of
‘Texas or other lawful authority, or when to do so would, in the judgment of
Lessee promote the conservation of the oil and gas in and under and that may
be produced from said premises. Lessee shall execute in writing an instrument
identifying and describing the pooled acreage. The entire acreage so pooled into
a tract or unit shall be treated, for all purposes except the payment of royalties
on production from the pooled unit, as if it were included in this lease, If
production is found on the pooled acreage, it shall be treated as if production
is had from this lease, whether the well ‘or wells be located on the premises
covered by this lease or not. In lieu of the royalties elsewhere herein specified,
Lessor shall receive on production from a unit so pooled only such portion of
the royalty stipulated herein as the amount of his acreage placed in the unit
or his royalty interest therein on an acreage basis bears to the total acreage
so pooled in the particular unit involved.

* #8

“6. If prior to discovery of ofl, gas or other mineral on said land or on
acreage pooled therewith Lessee should drill a dry hole or holes thereon, or
if after discovery of oil, gas or other mineral, the production thereof should
cease from any cause, this lease shall not terminate if Lessee commences addi-
tional drilling or reworking operations within 60 days thereafter or if it be
within the primary term, commences or resumes the payment or tender of rentals
or commences operations for drilling or reworking on or before the rental paying
date next ensuing after the expiration of 60 days from date of completion of
ary hole or cessation of production. If at any time subsequent to sixty (60)
days prior to the beginning of the last year of the primary term and prior to
the discovery of oil, gas or other mineral on said land, or on acreage pooled
therewith, Lessee should drill a dry hole thereon, no rental payment or opera~
tions are necessary in order to keep the lease in force during the remainder of
the primary term. If at the expiration of the primary term, oil, gas or other
mineral is not being produced on said land, or om acreage pooled therewith, but
Lessee is then engaged in drilling or reworking operations thereon or shall have
completed a dry hole thereon within sinty (60) days prior to the end of the
primary term, the lease shall remain im force so long as operations are prose-
cuted with no cessation of more than sixty (60) consecutive days, and if they
result in the production of oil, gas or other mineral, so long thereafter as oil,
gas or other mineral is produced from said land or acreage pooled therewith.
In the event a well or wells producing oil or gas in paying quantities should be
brought in on adjacent land and within one hundred fifty (150) feet of and
draining the leased premises, or acreage pooled therewith, Lessee agrees to drill
such offset wells as a reasonable prudent operator would drill under the same or
similar circumstances.”

ee 95

rig, petitioner began actual drilling of the well on October 17,
1953. All of the foregoing events occurred during the primary
term, which expired on October 21, 1953.

The drilling operations were prosecuted continuously until
November 24, 1953, when the well was completed and capped.
It was then capable of producing gas and condensate in paying
quantities, but no shut-in gas royalty was ever paid or tendered.
Petitioner requested and obtained an allowable from the Rail-
road Commission, arranged for Carthage Corporation to extend
its gas gathering lines to the well, installed the necessary meters
and meter stations, and negotiated a contract with Arkansas-
Louisiana Gas Company for sale of the gas from this and other
wells in the area. Production of gas from the well began on
January 4, 1954, and has continued without interruption from
that date to the present time. Sundry additional wells which were
later drilled on other units that included different parts of the
Jand covered by the lease have no bearing on the question pre-
sented for decision.

The trial court concluded that the lease had terminated on
November 24, 1953, by reason of petitioner’s failure to pay shut-
in royalties or otherwise maintain the lease in force on or after
that date. Judgment was accordingly entered in favor of re-
spondents and the Court of Civil Appeals affirmed on the au-
thority of the Reid case, 341 S.W. 2d 693. As indicated above,
the facts of the Reid case are similar in many respects to those
here involved, but the provisions of the two leases are materially
different. One of the clauses which Gulf there sought to invoke
became operative upon cessation of production after expiration
of the primary term. The other provided that in the event no
mineral was being produced but the lessee was engaged in
drilling or reworking operations at the end of the primary term,
the lease would not terminate if the lessee did not allow more
than the sixty days to elapse between abandonment of one well
and the commencement of drilling or reworking operations on
another until production was obtained. We pointed out that
neither of such clauses could extend the term of the lease, be-
eause there had been no cessation of production and the well
was never abandoned.

Paragraph 6 of the lease in the present case does not deal
merely with cessation of production or the completion of a dry
hole after expiration of the primary term. The third sentence
comes into play when there is no production at the end of the
primary term but drilling or reworking operations are then in

ST

progress. It stipulates that in such event the lease shall remain
in force if the operations are prosecuted and result in production
as therein provided. The purpose of this provision is to enable
the lessee to maintain the lease by obtaining production as a
result of diligent prosecution of the very operations which were
in progress at the expiration of the primary term, and a precise
yet quite liberal standard of diligence is prescribed. See Rogers
vy. Osborn, 152 Texas 540, 261 S.W. 2d 811; Stanolind Oil &
Gas Co. v. Newman Bros. Drilling Co., 157 Texas 489, 305
S.W. 2d 169. 7

IE Respondents contend that the 60-day clause has no further
application after the lessee has completed a well capable of
producing in commercial quantities. They insist that its only
purpose is to prevent termination of the lease during any brief
periods that may be required by the lessee to make tests, de-
cisions and alterations in equipment in an attempt to complete
the well as a producer. We are urged to say that when the opera-
tions in progress at the end of the primary term have resulted
in the discovery of oil or gas in paying quantities and a well
capable of commercial production has been completed, the lease
can thereafter be kept in force only by actual or constructive
production. Respondents recognize that the clause will maintain
the lease during temporary periods of inactivity to enable the
lessee to continue good faith efforts to complete either a pro-
ducer or a dry hole, but they argue that when the same is read
in connection with the shut-in royalty clause, it does not allow
a period of sixty days after final completion of drilling operations
within which to pay shut-in royalty or begin production from
the well.

I We do not think the lease provisions are subject to the con-
struction urged by respondents. Under the terms of the shut-in
royalty clause, the lessee may pay the stipulated amount per
well per year and if such payment is made it will be considered
that gas is being produced within the meaning of Paragraph 2.
This does not suggest that the lessee is under a duty to make
such payment, or that the shut-in royalty clause provides an
exclusive method for maintaining the lease in force, when a well
capable of producing in commercial quantities has been completed
and capped.

As pointed out in Stanolind Oil & Gas Co. v. Newman Bros.
Drilling Co., supra, the habendum clause is required by its own
terms to yield to any and all other provisions which affect the
duration of the lease. One of these provisions states that under

m7

the circumstances which existed at the end of the primary term
in this case, the lease shall remain in force so long as operations
are prosecuted with no cessation of more than sixty consecutive
days. The parties also provided, in effect, that if such operations
result in production, the lease shall continue in effect as long
thereafter as oil, gas or other mineral is produced from the leased
premises or acreage pooled therewith. Although discovery of oil
or gas is mentioned several times in the first two sentences of
Paragraph 6, the 60-day clause does not stipulate that the lease
shall be maintained by production after the operations result in
discovery of minerals or the completion of a well capable of
producing.

“Cessation” is defined by Webster as “a temporary or final
ceasing or discontinuance (as of action)”. Webster’s Third New
International Dictionary. There is nothing to indicate that the
term was used in any other sense, or that the parties were re-
ferring to a cessation occurring at any particular period in the
well’s history. When the language of the 60-day clause is given
its ordinary and commonly accepted meaning, it contemplates and
permits either a temporary interruption or a final discontinu-
ance of the operations in progress at the end of the primary
term. If such operations result in production at a time when
there has been no cessation of more than sixty consecutive days,
the lease remains in force so long thereafter as production con-
tinues. The 60-day clause thus allows the lessee that period after
completion of a well capable of producing within which to begin
either actual or constructive production. If the work in progress
at the end of the primary term results in a dry hole prior to
discovery of oil, gas or other mineral, the first sentence in Para-
graph 6 specifically grants the lessee sixty days within which
to commence additional drilling or reworking operations. See
Stanolind Oil & Gas Co. v. Newman Bros. Drilling Co., supra.

Respondents also contend that under the facts of this case
the lease has terminated even though the lessee would ordinarily
have sixty days after completion of a well beyond the primary
term within which to begin production. Since the well was not
drilled on the land described in the lease but on acreage pooled
therewith, they insist that the 60-day clause has no application
and that the lessee must look to and comply with the require-
ments of the habendum and pooling clause if the lease is to
remain in force after expiration of the primary term. In sup-
port of this argument, respondents point out that the pooling
clause declares that production from pooled acreage shall be
treated as if production is had from the lease but does not state

SE

in so many words that drilling operations on pooled acreage shall
have the same effect as operations conducted on land described
in the lease. They also direct our attention to the commas which
set off the phrase “or on acreage pooled therewith” in the
60-day clause and to the absence of such punctuation where the
same phrase appears in the first sentence of Paragraph 6, and
contend that the word “thereon” as used in the former refers
only to the land described in the lease. We do not agree.

fl The second sentence of Paragraph 4 states plainly and un-
equivocally that except with respect to the payment of royalties
on production, the entire acreage pooled into a unit shall be
treated for all purposes as if it were included in the lease. Hav-
ing excepted the matter of royalty payments on production from
this sweeping declaration, the parties then dealt specifically with
the legal consequences of production from a pooled unit and
the royalties which the lessor would be entitled to receive there-
from. It seems clear to us that these provisions were not in-
tended to limit the scope and effect of the second sentence in the
paragraph as contended by respondents. From a consideration of
the entire lease, the terms of the 60-day clause, and the other
provisions of Paragraph 6, it is our opinion that drilling in
progress at the end of the primary term on pooled acreage has
the same legal effect as similar operations conducted on land
described in the lease.

No mineral was being produced from the land described in
the Harris lease or from acreage pooled therewith at the end
of the primary term. The lessee was then engaged in drilling
operations on the Shivers-Hamilton Unit. Such operations were
prosecuted with no cessation of more than sixty consecutive days
until they resulted in production, which has continued to the
present time. The requirements of the 60-day clause have thus
been satisfied in every particular, and under its provisions the
lease is and will remain in full force and effect so long as oil,
gas or other mineral is produced from the leased premises or
acreage pooled therewith.

The judgments of the courts below are reversed and the
cause is remanded to the district court with instructions to render
judgment for petitioner.

Opinion delivered January 8, 1962.

99

Lee G. BREWER, Petitioner

v.
CENTRAL GREENHOUSE CORPORATION D/B/A GREENWOOD
GREENHOUSES, Respondent
No. A-8374. Decided December 6, 1961

Rehearing Denied January 3, 1962
352 S.W. 2d 101

Bagby & Atkins, Arlington, Jacob I. Karro, Deputy Asst.
Sol., U. S. Dept. of Labor, Washington, D. C., for petitioner.

Walker, Day & Harris, Fort Worth, for respondent.

ASSOCIATE JUSTICE WALKER delivered the opinion of
the Court.

00

This suit was brought by Lee G. Brewer, petitioner, against
Central Greenhouse Corporation, respondent, to recover minimum
wages under the provisions of the Fair Labor Standards Act
of 1938. 29 U.S.C.A. Sec. 201 et seq. The trial court granted
respondent’s motion for summary judgment on the ground that
petitioner was an agricultural employee, and the Court of Civil
Appeals affirmed. 344 S.W. 2d 518.

HI Anyone employed in agriculture is expressly excepted from
the minimum wage provisions of the Fair Labor Standards Act.
29 US.C.A. Sec. 218 (a) (6). “ ‘Agriculture’ includes farming
in all its branches and among other things includes the cultiva-
tion and tillage of the soil, dairying, the production, cultivation,
growing and harvesting of any agricultural or horticultural com-
modities * * * and any practices * * * performed by a farmer
or on a farm as an incident to or in conjunction with such farm-
ing operations, including preparation for market, delivery to
storage or to market or to carriers for transportation to market.”
29 U.S.C.A. See. 203 (f).

i The definition of agriculture in the Act comprises two dis-
tinct meanings. The primary meaning is farming in all its
branches and includes certain specific practices such as the
production, cultivation, growing and harvesting of agricultural
and horticultural commodities. The second and broader meaning
covers other activities, whether or not they would ordinarily be
regarded as farming practices, provided the same are performed
by a farmer or on a farm as an incident to, or in conjunction
with, such farming operations. See Farmers Reservoir and Irri-
gation Co. v. McComb, 387 U.S. 755, 69 S. Ct. 1274, 93 L. ed. 1672.

Hf Throughout the period involved in this action, petitioner
worked in and around respondent’s greenhouse in Ft. Worth.
Growing plants of various kinds purchased by respondent from
others were delivered there by truck. Many of them were in pots
when received, but some were bare-rooted. The latter were placed
in pots by respondent’s other employees. Some of the plants
were delivered to respondent’s customers shortly after they were
received at the greenhouse. The remainder were kept in pots
standing in shallow beds of sand until sold. About ninety-five
per cent of petitioner’s time was spent in unloading trucks and
transferring potted plants to and between the beds. He also built
the beds and filled them with sand, made repairs to the green-
house, assisted in pruning, and occasionally prepared plants for
shipment. All watering, fertilizing and potting was done by other
employees.

a 101

Petitioner had little to do with the actual care of the plants,
and we think the employment clearly is not covered by the first
part of the definition quoted above. His activities fall within
the scope of the secondary meaning only if they pertained to
farming operations conducted by respondent. Practices which
are not in themselves farming are not exempt if the same relate
only to farming operations conducted by persons other than the
employer. Thus individuals working in an establishment where
plants and flowers are distributed at wholesale and retail are
employed in agriculture if substantially all of the products sold
are grown by their employer in greenhouses and gardens at
another location. Walling v. Rocklin, 8th Cir., 182 F. 2d 3.
But the exemption has no application to employees engaged in
handling and selling rosebushes grown by persons other than
their employer even though the latter is also engaged in the pro-
duction of horticultural commodities. Mitchell v. Huntsville Whole-
sale Nurseries, Inc., 5th Cir., 267 F. 2d 286.

It is necessary, therefore, to distinguish an agricultural or
horticultural enterprise from an operation in which cultivation
and care of growing things is merely incidental to wholesale or
retail distribution. Potted plants continue to grow while dis-
played for sale in a department store, but this does not make
the store a farm or its owner a farmer. In many cases the real
nature of the activity cannot be determined until the facts have
been fully developed.

Petitioner’s affidavit states that most of the plants with
which he dealt were not produced, cultivated or grown by
respondent. His deposition indicates that he may have meant
only that respondent did not place the seed in the ground and
then grow the plant to maturity. The definition of agriculture
is not to be so narrowly construed. Damutz v. Pinchbeck, 2nd
Cir., 158 F. 2d 882. On the other hand, the affidavit filed by
respondent in support of its motion for summary judgment states
that the plants were cared for, thrived and grew after being
transferred to the beds. This affidavit does not disclose how
long the plants remained in the greenhouse, and the affiant may
have been referring only to the growth which continued during
a rather brief period while they were being held for resale.

I Viewing the affidavits and deposition testimony in the light
most favorable to petitioner, it appears that respondent grew
some plants from cuttings. The remaining products it sold were
purchased from others, and many of these were in a substantial
state of maturity when received. Some of the plants so acquired

0

were held by respondent for only a short time, occasionally less
than twenty-four hours. Others remained and grew in the green-
house for varying periods until they were sold. The record is
not clear as to whether those in the last category were held by
respondent for the purpose of cultivation and growth, and there
is nothing to indicate what proportion of its receipts were from
products sold shortly after being purchased from other growers.
Petitioner’s employment may have been in conjunction with an
agricultural operation conducted by respondent, but this cannot
be determined without additional facts showing the extent to
which he was involved in the wholesale or retail distribution of
plants grown by others. The affidavits and depositions do not
establish conclusively that his activities were so related to the
production, cultivation and growth of horticultural products by
respondent as to bring him within the terms of the statutory
exception.

The judgments of the courts below are reverséd, and the
cause is remanded to the district court for trial.

Opinion delivered December 6, 1961.
[|

E. J. LUND, Petitioner

v.
STATE OF TEXAS, Respondent.
No. A-8607. Decided January 8, 1962

a 108
Alfred M. Scott, Austin, for petitioner.

Will Wilson, Attorney General, Austin, Robert L. Burns, Hous-
ton, for respondent.

PER CURIAM.

Petitioner was appellant in the Court of Civil Appeals. His
appeal was dismissed by that court because of his failure timely
to file a motion for new trial. 348 S.W. 2d 247. In his petition
for writ of error he asserts that the judgment of the trial court
is void and that the entry of a void judgment is fundamental
error which may be raised on appeal without the necessity of
complying with the applicable Rules of Civil Procedure for the
filing of a motion for new trial. We do not agree.

This case was tried to a jury and no exception to the necessity
for the timely filing of a motion for new trial is applicable. When
a number of the provisions contained in Rule 71a of the pre-1941
rules relating to practice in the district and county courts were
written into Rule 324 of the Texas Rules of Procedure, the refer-
ence to fundamental error as an exceptional situation not requir-
ing a motion for new trial was eliminated. See 126 Texas vii-
1936; 186 Texas 538, 1941, Vernon’s Annotated Texas Rules,
Part 2, p. 450, wherein the provisions of Rule 7la (now super-
seded) are set out. .

Because of the failure to file a timely motion for new trial,
the appeal failed and the Court of Civil Appeals was without juris-
diction to determine whether or not the trial court’s judgment
is void. Rules 5 and 324. A. F. Jones and Sons v. Republic Supply
Company, 151 Texas 90, 246 S.W. 2d 853.

The motion for rehearing of Application for Writ of Error
is overruled.

a
EX PARTE SHERMAN D. GEORGE

No. A-8518. Decided January 8, 1962
358 S.W. 2d 590

104

CHIEF JUSTICE CALVERT and ASSOCIATE JUSTICE
NORVELL dissented from denial of motion for rehearing.

Mandell & Wright, Tom Kirtley with firm, Houston, for
relators.

Baker, Botts, Andrews & Shepherd, John B. Abercrombie of
above firm, Houston, Armstrong, Bedford & Lambdin, Galveston,
for respondent.

—— ee 105
ORIGINAL HABEAS CORPUS PROCEEDING

ASSOCIATE JUSTICE SMITH delivered the opinion of the
Court.

This is an original habeas corpus proceeding wherein peti-
tioner S. D. George seeks release from a conviction for contempt.
George claims that the temporary injunction granted by the 10th

. Judicial District Court of Galveston County, Texas, is and was
void because the Court was without jurisdiction to order the in-
junction. George contends, therefore, that his single act of picket-
ing in “violation” of the injunction cannot be made the basis
of a contempt conviction, since it was, at most, a “violation”
of a void order.

The contempt proceeding originated in the district court upon
the motion of The American Oil Company, wherein it was
alleged that George and National Maritime Union of America,
AFL-CIO, were in contempt and disobedience of the Court’s prior
order granting a temporary injunction and of the writ of tem-
porary injunction issued pursuant thereto.

On July 8, 1961, the hearing on the motion proceeded to trial.
The matter was submitted to the Court on the pleadings and
stipulated facts.

After considering the motion alleging that George and Na-
tional Maritime Union of America, AFL-CIO, were in contempt
of court, and the lawful evidence, and stipulation of the parties,
the Court adjudged the Union not guilty of contempt. Although
American duly excepted to such action of the Court, the question
so far as the Union is concerned is not before this Court for
review.

However, the Court ordered, adjudged, and decreed George
guilty of contempt of court “* * * by intentional and wilful
disobedience and violation of a valid subsisting writ of tem-
porary injunction lawfully issued and theretofore duly served
upon him pursuant to a lawful subsisting order of this Court, in
that Sherman D. George, while said writ of temporary injunction
was in full force, * * * picketed The American Oil Company
refinery entrance located at and known as the Main Gate on
Fifth Avenue South in the City of Texas City, Galveston County,
Texas, by the said Sherman D. George repeatedly and continu-
ously walking back and forth on the roadway across and in close
proximity in front of that refinery entrance while carrying and

6

displaying a large sign on which the following words were printed
in large and clearly legible letters:

‘N. M. U. Members will not sail without a contract. This pro-
test against The American Oil Company only. NATIONAL
MARITIME UNION OF AMERICA, AFL-CIO.”

The court found that such picketing at that time by George
had been explicitly enjoined by the following provisions of the
temporary injunction:

“NOW, THEREFORE, you the said National Maritime Union
of America, AFL-CIO, Sherman D. George, and all of the
officers, agents, representatives and members of said National
Maritime Union of America, AFL-CIO, and those acting in
concert with you, are hereby restrained and enjoined from
picketing the refinery entrances located and known as the
Main Gate on Fifth Avenue South, and the Grant Avenue
Parking Lot Gate on Grant Avenue, both in the City of Texas
City, and County of Galveston, Texas, serving the refinery of
The American Oil Company at Texas City, Texas, * * *.”

The pertinent findings of fact by the trial court based upon
the record and the stipulated facts by the parties are these:

«3,

“At the time the order granting temporary injunction
referred to in 2, above was in open court rendered by the
Court, Sherman D. George was personally present in the court
room, and Sherman D. George fully understood the provisions
and effect of, and the reasons for, the aforesaid order granting
temporary injunction.”

“7,

“At 2:55 o’clock P.M., on June 28, 1961, R. F. Nunn, a
duly authorized Deputy of J. B. Kline, duly elected and quali-
fied Sheriff of Galveston County, Texas, personally served a
true copy of the aforesaid writ of temporary injunction re-
ferred to in 5. above on the N.M.U., and a similar copy on
Sherman D. George, by personally handing both of said copies
to Sherman D. George at Galveston, Texas, Sherman D. George
then being Port Agent at Galveston of the N. M. U. and as
such being a proper agent for service of such writ on the
N. M. U.

101

“8,

“Subsequent to the service on him of the writ of tem-
porary injunction, as referred to in 7. above, and on June
23, 1961, Sherman D. George read the provisions of the writ
of temporary injunction and fully understood the provisions
thereof; and thereafter, but prior to June 27, 1961, Sherman
D. George publicly announced in effect that he intended to
violate the provisions of the aforesaid temporary injunction
by picketing at The American Oil Company refinery at Texas
City because he did not believe that this Court had jurisdiction
to issue the order granting the temporary injunction.

«9,

“Therefore, and without any inducement or agreement
thereto by The American Oil Company, * * * on the 27th day
of June, 1961, Sherman D. George went to The American Oil
Company refinery entrance, located at and known as the Main
Gate on Fifth Avenue South” and picketed that refinery gate
as heretofore indicated.

“10.

“George at all times knew that the Court’s order and the
temporary injunction were in effect and had not been modified
or set aside either in whole or in part.

“15,

“The Court further finds that there is in the record before
the Court no circumstance in mitigation of the actions of
Sherman D. George * * *,

“16.

“The Court further finds that the following facts were true
on June 20, 1961, at the time The American Oil Company filed
in the above numbered and styled cause its petition seeking
the temporary injunction that is involved in this hearing, and
were true on June 22, 1961, at the time of the hearing on the
application for temporary injunction, and at the time of the
issuance and service on Sherman D. George and the N. M. U.
of the writ of temporary injunction that is involved in this
hearing, and were true at all intermediate times and at all
other times material to the issues involved in this hearing:

0

“a, The N. M. U. is and was an unincorporated volun-
tary association of members operating as a labor union, of
which Sherman D. George was a member and its Port Agent
in the City and County of Galveston, Texas, having authority
to supervise the affairs, including picketing, of the N. M. U.
in Galveston County, Texas, the said Sherman D. George then
and now being a resident citizen of Galveston County, Texas.

“b. The American Oil Company is and was a Texas Cor-
poration which owned and operated a refinery located on
approximately 860 acres of land at Texas City, Galveston
County, Texas, the entirety of which is surrounded by a fence,
and entrance to that refinery could be gained only through
six certain gates. Two of those gates were used exclusively
by employees of The American Oil Company, which gates
were located at and were known as the Main Gate on Fifth
Avenue South, and the Grant Avenue Parking Lot Gate on
Grant Avenue, both in Texas City, Texas. Of the four remain-
ing gates, one or more were used by employees of independent
contractors engaged in construction work on the refinery
property.

“e. The American Oil Company had in its employ ap-
proximately 1,500 employees working for it at the aforesaid
refinery, of whom approximately 1,100 were classified as
operation and maintenance employees, or production and main-
tenance employees, which is one and the same. The approximate
daily payroll of the approximately 1,100 operation and mainte-
nance employees was $25,000.00 per day.

“d. Oil, Chemical and Atomic Workers International
Union, Local 4-449 (hereafter called 0.C.A-W.) was a labor
union which had been selected by the operation and mainte-
nance employees of The American Oil Company at its Texas
City refinery for the purpose of collective bargaining.

“e. There was a valid and subsisting labor agreement
which had been arrived at between The American Oil Com-
pany and 0.C.A.W. relating to the approximately 1,100 opera-
tion and maintenance employees of The American Oil Com-
pany at its Texas City refinery, which agreement was entered
into on January 8, 1960, and will be effective until at least
June 30, 1962.

“f. There was no labor dispute between The American
Oil Company and 0.C.A.W. or the operation and maintenance

Ce ) 109

employees of The American Oil Company represented by
0.C.A.W.

“g. The N.M.U. had its pickets on 24-hour duty posted
at all six of the gates at the entrances to The American Oil
Company refinery at Texas City, including at the Main Gate
and the Grant Avenue Parking Lot Gate, which gates were
used exclusively by The American Oil Company refinery em-
ployees, including the approximately 1,100 operation and main-
tenance employees working for The American Oil Company
under the aforesaid valid subsisting labor agreement.

“h. A primary purpose of the N. M. U. and of Sherman
D. George, the Port Agent of N. M. U. whose duties included
supervising N. M. U. pickets in Galveston County, Texas, in
posting pickets at the Main Gate and at the Grant Avenue
Parking Lot Gate of The American Oil Company refinery at
Texas City as referred to in g. above, and a natural and
probable consequence thereof, was to secure the disregard,
breach or violation by O0.C.A.W. and by all or substantial num-
bers of the operation and maintenance employees of The Amer-
ican Oil Company at its Texas City refinery of the valid sub-
sisting labor agreement referred to in e. above.

“4. At the time the order granting the temporary injunc-
tion referred to in Finding 2. above was rendered, and at the
time of the issuance and service of the writ of temporary in-
junction referred to in Finding 5. above, there was a clear
and present danger that the picketing of the Main Gate and
Grant Avenue Parking Lot Gate would secure the disregard,
breach or violation of the aforesaid labor agreement between
The American Oil Company and 0.C.A.W. by 0.C.A.W. and
by all or substantial numbers of The American Oil Company
employees covered by that labor agreement, and in the event
of such disregard, breach or violation immediate and irre-
parable harm and damage would have resulted to The Amer-
ican Oil Company.

“j, The temporary injunction against picketing the Main
Gate and the Grant Avenue Parking Lot Gate of The American
Oil Company refinery at Texas City did not in any manner
interfere with any of the defendants picketing the other four
gates at that refinery.

“4, The Americon Oil Company is a wholly owned sub-
sidiary of American Oil Company, a Maryland corporation,

0

and said American Oil Company, a Maryland corporation,
directs and controls all of the activities of said The American
Oil Company and its Texas City, Texas, refinery. At all times
material hereto, American Oil Company, a Maryland corpora-
tion, was engaged in a labor dispute with its employees repre-
sented by the National Maritime Union of America, AFL-CIO.
The American Oil Company, a Texas corporation, and Ameri-
can Oil Company, a Maryland corporation, at all times mate-
rial hereto, were engaged in commerce within the meaning
of the National Labor Relations Act, as amended, and met
the existing monetary jurisdictional standards of the National
Labor Relations Board.”

The Court filed Conclusions of Law as follows:

“1. This Court has jurisdiction of the subject matter of
the contempt motion before this Court, and of the parties
thereto.

“2. This Court has, and since the inception of this suit
has had, jurisdiction of the subject matter of this suit by
The American Oil Company against the parties defendant
therein, and at the time of the hearing on the application for
temporary injunction had and has retained personal jurisdic-
tion over the parties thereto.

“3. The labor agreement between The American Oil
Company and Oil, Chemical and Atomic Workers Interna-
tional Union, Local 4-449, referred to in Finding of Fact
16.e above was a valid subsisting labor agreement within the
meaning of Article 5154d, Sec. 4, Vernon’s Texas Rev. Civ.
Stats., Ann.

“4, The picketing at the Main Gate and at the Grant
Avenue Parking Lot Gate was in direct violation of Article
5154d, Sec. 4, Vernon’s Texas Rev. Civ. Stats., Ann., in that
it was, within the language and meaning of that statute:

«« * * vicketing, the purpose of which, directly or indirectly,
is to secure the disregard, breach or violation of a valid sub-
sisting labor agreement arrived at between an employer and
the representative designated or selected by the employees
for the purpose of collective bargaining, or certified as the
bargaining unit under the provisions of the National Labor
Relations Act”, and as such was within the jurisdiction of
this Court to prohibit by temporary injunction.

eS 111

“5. The actions of Sherman D. George, as found in Find-
ing of Fact 9. above, constitute a disobedience by Sherman
D. George of the lawful writ of injunction duly issued by the
District Clerk of Galveston County, Texas, pursuant to the
valid subsisting order of this Court, as the term ‘disobedience
of an injunction’ is used in Rule 692 of Texas Rules of Civil
Procedure.

“6. The acts of disobedience referred to in Conclusion
5. above constitute a contempt of this Court by Sherman D.
George within the meaning of Texas Rules of Civil Pro-
cedure, Rule 692, and Article 1911, Vernon’s Texas Rev. Civ.
Stats., Ann.

“7, The motion of The American Oil Company and the
affidavit therein contained are in every respect legally suf-
ficient, and all procedural requirements have in every respect
lawfully been complied with, so as in every legal aspect to
authorize this hearing, and the findings, conclusions, orders
and commitment herein provided.”

IE George contends that the findings of fact by the trial court,
based largely upon stipulated facts, demonstrate conclusively that
both Relator’s conduct made the basis of his conviction for
contempt, and that of other pickets, previously made the basis
for the temporary injunction he “violated”, are arguably within
Section 7 1 or Section 8? of 29 U.S.C.A., the National Labor
Management Relations Act. He argues that conduct which argu-
ably is either within the protection or the prohibition of the

See. 7. “Employees shall have the right to self-organization, to form,
join, or assist labor organizations, to bargain collectively through representatives
of their own choosing, and to engage in other concerted activities for the purpose
of collective bargaining or other mutual aid or protection, and shall also have
the right to refrain from any or all of such activities except to the extent that
such right may be affected by an agreement requiring membership in a labor
organization as a condition of employment as authorized in section 158(a)(3).”

2. Sec. 8 “(b) It shall be an unfair labor practice for a labor organization
or its agents - - -
eed

“(4) to engage in, or to induce or encourage the employees of any employer
to engage in, a strike or a concerted refusal in the course of their employment
to use, manufacture, process, transport, or otherwise handle or work on any
goods, articles, materials, or commodities or to perform any services, where an
object thereof is: * * *

“(B) forcing or requiring any other employer to recognize or bargain with
a labor organization as the representative of his employees unless such labor
organization has been certified as the representative of such employees under
the provisions of section 159 of this title; * * #”

Ds

National Labor Management Relations Act lies in an area pre-
empted by the United States and therefore is beyond the power
of a state court to enjoin. However, George does not direct our
attention to any particular part of either Section 7 or Section 8
of the Act which arguably embraces his activities, and we find
none. A bare assertion of pre-emption does not deprive a state
court of jurisdiction. See Retail Clerks Union v. Superior Court,
52 Cal. 2d 222, 839 P. 2d 839 (1959), Cert. den. 361 U.S.
864 (1959). It is well settled that labor activity neither pro-
tected nor prohibited by the National Labor Relations Act is
within the power of the states to regulate by injunction. See
Auto Workers v. Wisconsin Board, 836 U.S. 245 (1949) ; Weber
v. Anheuser-Busch, Inc., 348 U.S. 468 (1955), 75 S. Ct. 480,
99 L. Ed. 546; Office Employees International Union v. Houston
Lighting & Power Company, Texas Civ. App. (1958), 314 S.W.
2d 815, er. ref. nr.e.

Hi When, in a case such as we have here, the plaintiff alleges
that the picketing sought to be enjoined is neither protected nor
prohibited by the National Labor Relations Act, it is the duty
of the trial court to determine initially whether it has jurisdic-
tion. Ex Parter Twedell, supra. The state courts in determining
the question of whether activity sought to be enjoined falls within
the neither-protected nor-prohibited category necessarily must
be guided by certain standards. The United States Supreme Court
in the “Second Garmon Decision”, Building Trades Council v.
Garmon, 359 U.S. 236, 79 S. Ct. 778, 780, 3 L. Ed. 2d 775,
specified the standards to be followed in determining this ques-
tion. Under these standards, the state courts are to determine
that they have no jurisdiction of labor activity which is “arguably
subject to Sec. 7 or Sec. 8 of the Act”. [Emphasis added.] Writ
of Certiorari, 357 U.S. 925, 2 L. Ed. 1369, 78 S. Ct. 1871, was
granted in the “Second Garmon Case” to determine whether a
California court had jurisdiction to award damages arising out
of peaceful union activity which it could not enjoin. The court
stated that the issue before it was a variant of a familiar theme.
The problems presented in cases beginning with Allen Bradley
Local, U.E.R.M.W. v. Wisconsin Employment Relations Board,
315 U.S. 740, 86 L. Ed. 1154, 62 8. Ct. 820, were reviewed. The
court recognized that many of these problems probably could
not have been foreseen by the Congress. The court, in reaffirming
what it had said in Weber v. Anheuser-Busch, Inc., 348 U.S.
. 468, 99 L. Ed. 546, 75 S. Ct. 480, said:

“When it is clear or may fairly be assumed that the activi-
ties which a state purports to regulate are protected by Sec.

| 118

7 of the National Labor Relations Act, or constitute an unfair
labor practice under Sec. 8, due regard for the federal enact-
ment requires that state jurisdiction must yield. * At times
it has not been clear whether the particular activity regulated
by the states was governed by Sec. 7 or Sec. 8, or was, perhaps,
outside both these sections. But courts are not primary tri-
bunals to adjudicate such issues. It is essential to the adminis-
tration of the Act that these determinations be left in the first
instance to the National Labor Relations Board. What is out-
side the scope of this Court’s authority cannot remain within
a state’s power and state jurisdiction too must yield to the
exclusive primary competence of the Board. * * * It is not
for us to decide whether the National Labor Relations Board
would have, or should have, decided these questions in the
same manner. When an activity is arguably subject to See.
7 or Sec. 8 of the Act, the states as well as the federal courts
must defer to the exclusive competence of the National Labor Re-
lations Board if the danger of state interference with national
policy is to be averted. To require the states to yield to the
primary jurisdiction of the National Board does not ensure
Board adjudication of the status of a disputed activity. If the
Board decides, subject to appropriate federal judicial review,
that conduct is protected by Sec. 7, or prohibited by Sec. 8.
then the matter is at an end, and the states are ousted of all
jurisdiction.” [Emphasis added].

i The failure of the Board to define the legal significance
under the Act of a particular activity does not give the states
the power to act. The controlling consideration, announced in
Garmon, is that to allow the states to control activities that are
potentially subject to federal regulation involves too great a
danger of conflict with National Labor policy. However, the fact
alone that the National Labor Relations Board has not adjudi-
cated the status of the conduct involved does not mean that the
state courts cannot act. We construe the Garmon case to mean,
and we so hold, that if the activity in question is not arguably
within the compass of Sec. 7 or Sec. 8 of the Act, the state’s
jurisdiction is not displaced even though the Board has not
adjudicated the status of the activity. To hold otherwise would
unduly frustrate the state courts in the exercise of their right
to adjudicate issues properly within the jurisdiction of such
courts. The very fact that the dividing line between what is
reasonably arguable and what is not is oftentimes difficult to
determine is a cogent reason for basing the determination upon
the particular facts of each given case. At the time of the picket-
ing made the basis of the temporary injunction, Relator’s union,

Se |

National Maritime Union (hereinafter called NMU), represent-
ed the seamen employed by the American Oil Company on its
seagoing tankers. After going on strike for a new contract NMU
set up picket lines at, among other places, American’s refinery
at Texas City, Texas. The employees of the refinery were repre-
sented by another union, Oil, Chemical & Atomic Workers
Union, Local 4-449 (hereinafter called “OCAW”). OCAW and
American at the time had a valid, subsisting labor agrement con-
taining a no-strike clause, and there was no labor dispute at
the refinery. Although aware of the existence of this no-strike
agreement, NMU picketed the gates of the refinery used by the
OCAW employees, with the intention of inducing such employees
to honor the picket line, thereby breaching their contract. Article
2 of this contract reads:

“There shall be no strikes or stoppages of work by the
Union, or lockouts by the Company, so long as this agreement
is in effect.”

A primary purpose, as found by the trial court, of the NMU
and of Sherman D. George, the Relator (whose duties included
supervising NMU pickets in Galveston County, Texas), in posting
pickets at the Main Gate and the Grant Avenue Parking Lot
Gate of the American Oil Company refinery, and a natural and
probable consequence thereof, was to secure the disregard, breach
or violation by OCAW, and by all or substantial numbers of the
production and maintenance employees of the American Oil Com-
pany at its Texas City refinery of the valid and subsisting labor
agreement that was then in force between them.

There was no dispute as to the evidence introduced at the
hearing on the temporary injunction relating to the irreparable
effects of work stoppage by OCAW at the refinery. The refinery
operates continuously, 24 hours a day, 7 days a week. It supplies
products essential to the operation of several other plants in
Texas City, and such plants have no readily available substitute
source for these materials. The continuous operation of the plant
depends on the presence of OCAW production and maintenance
workers on each eight-hour shift, and if a substantial part of
any shift had honored NMU’s picket line it would have necessi-
tated shutting down the entire operation. The evidence further
shows that shutting down the refinery is a complicated, time-
consuming, and extremely dangerous procedure. It would have
required at least a week to bring the refinery back to full pro-
duction following a shutdown, and would have required several
months to return to normal operations because of the inevitable

Pe 115

disruption in schedules and loss of business. The evidence amply
supports the trial court’s findings that at the time the injunction
was granted there was a clear and present danger of irreparable
harm and damage resulting had the picketing of the Main Gate
and the Grant Avenue Parking Lot Gate not been restrained
by injunction. In spite of this certain result, the Relator, George,
publicly announced that he intended to violate the provisions of
the injunction—this, solely because he did not believe that the
trial court had jurisdiction to issue the injunction. It should be
noted that the injunction here involved was limited in its terms
to picketing at the Main Gate and at the Grant Avenue Parking
Lot Gate, which gates were used exclusively by employees of
The American Oil Company, including those represented by
OCAW. The injunction did not in any manner interfere with
George or any others picketing at the other four gates of the
refinery. These gates were used by employees of independent con-
tractors working at the refinery, which gates are referred to
as the “construction gates”. With reference to the construction
gates, American filed a charge with the National Labor Relations
Board alleging that NMU was engaged in secondary picketing
in violation of Section 8, (b) (4) (B) of the Act (29 U.S.C.A,,
Sec. 158 (b) (4) (B)) by picketing the four construction gates
The National Labor Relations Board filed a complaint under
Section 10(1) of the Act to enjoin NMU’s picketing of only the
four construction gates. This charge was based on the theory
that such picketing induced or encouraged the employees of cer-
tain building contractors to engage in a work stoppage. This
controversy was settled and a stipulation was filed in Civil Action
No. 2783 in the United States District Court, whereby without
admitting any violation of the Act, NMU agreed not to picket the
construction gates so long as they were maintained for the ex-
clusive use of employees of the independent contractors.

Relator, George, insists that since American invoked the
jurisdiction of the National Labor Relations Board over the dis-
pute with reference to the construction gates, the Board also
has exclusive jurisdiction over the activity in picketing the Main
Gate and the Grant Avenue Parking Lot Gate. With this we
cannot agree. The matters involved in the complaint filed by
the National Labor Relations Board in no manner had reference
to the Main Gate and the Grant Avenue Parking Lot Gate, but
only had reference to the four construction gates. That complaint
had nothing to do with the injunction suit filed by American to
enjoin Relator, George, from picketing the Main Gate and Grant
Avenue Parking Lot Gate, and thereby bring about a breach
of the contract above mentioned.

1

HM George argues that no OCAW member employed by Ameri-
can actually refused to cross the NMU picket line, and that no
violence attended the picketing. The fact that the picketing was
without violence, and that no OCAW member actually refused
to cross the NMU picket line does not necessarily mean that the
temporary injunction was improvidently granted. The evidence
is sufficient to support the trial court’s action in granting the
injunction if it shows that the purpose of the picketing was to
directly or indirectly secure the disregard, breach, or violation
by OCAW members of a valid subsisting labor agreement.

The evidence of the activity of Relator, George, in the picket-
ing of the two gates shows that this test was met, and supports
the trial court’s unchallenged finding that such activity was in
direct violation of Article 5154d,8 Vernon’s Annotated Civil
Statutes. George admitted that he deliberately did what the
statute prohibits. His position presents a facet of the problem of
federal pre-emption of jurisdiction over labor activity, which
has not been previously considered by this Court. Certainly, the
precise question was not presented in either the Twedell or Dilley
cases. We have here a situation where the Relator, George, de-
liberately set about to picket and thereby cause a breach of a
labor agreement between the American and OCAW.

The case of Grunwald-Marx, Inc. v. Clothing Workers, 52
Cal. 2d 568, 843 P. 2d 23 (1959), by the California Supreme
Court, supports our conclusion that the labor activity here is
neither protected nor prohibited by the National Labor Relations
Act. In that case, the Court held that its jurisdiction to confirm
an arbitration award in favor of an employer was not pre-empted
by the Act, even though the employer had filed charges with the
Board alleging the Union had failed to bargain in good faith
on the controversy underlying the arbitration case. The Court’s
reasoning on the pre-emption issue is sound. The Court said:

“As already pointed out, in the instant case the state action
charges the breach of an express term of a collective bargain-
ing agreement. Such conduct does not involve a violation of
Sections 7 or 8 of the Act. The refusal to bargain collectively,
which is the gist of the proceeding before the National Labor
Relations Board, is involved, at most, indirectly in the state
action. There is no obvious conflict between them. The Union

3. “* # # picketing, the purpose of which, directly or indirectly, is to
secure the disregard, breach or violation of a valid subsisting labor agreement
arrived at between an employer and the representatives designated or selected
by the employees for the purpose of collective bargaining, or certified as the
bargaining unit under the provisions of the National Labor Relations Act.”

eS ut

contends that whenever there is a mere possibility of potential
conflict between the substantive law, remedies or procedures
of the state and federal authorities, the National Labor Rela-
tions Act pre-empts jurisdiction. That assertion is too broad.
The real test is to ascertain the nature of the activity or con-
duct that is involved. The Supreme Court of the United States
was most careful to point out that in cases of violent conduct
or threats to the peace, state courts have jurisdiction. Reference
is also made to an area ‘where the activity regulated was a
merely peripheral concern of the Labor Management Relations
Act’. These are referred to as situations touching interests
‘deeply rooted’ in ‘local feeling’ or ‘responshibility’. As to these,
state jurisdiction is retained. It is true that Garmon held that
when ‘an activity is arguably subject to Sec. 7 or Sec. 8 of
the Act’ the Board has exclusive jurisdiction in the first in-
stance. But certainly by using the term ‘arguably’ Mr. Justice
Frankfurter did not mean to imply that a litigant can cause
a state court to lose jurisdiction merely by the assertion that
the particular activity is either protected by Sec. 7 or prohibited
by Sec. 8. He must have meant ‘susceptible of reasonable argu-
ment’. Otherwise, completely specious claims of activities with-
in Board jurisdiction would automatically deprive state courts
of jurisdiction until the Board has acted. No such result was
intended. The fact that the dividing line between what is
reasonably arguable and what is not, may, in some cases, be
difficult to determine, is no reason for refusing to make the
determination. Courts constantly make such determination. No
doubt close cases should be determined, in the first instance,
to fall exclusively within Board jurisdiction. But this is not
such a case.

“Our analysis of the conduct here involved has already
been stated. The ‘activity arguably subject to Sec. 7 or Sec. 8
of the Act’, to use Mr. Justice Frankfurter’s words in Garmon,
is entirely distinct from the activity constituting the breach
of contract. State court or arbitration resolution of the alleged
breach of contract will not conflict with Board action on the
unfair labor practice. Indeed, the state does not purport to
regulate the latter. A Board ruling that there has not been a
refusal to bargain is not inconsistent with an award of dam-
ages or other relief for a breach of contract, and conversely,
a Board ruling that there has been a refusal to bargain is not
in conflict with a judicial determination or determination by
an arbitration board that the contract has not been breached.

“We emphasize that this is not a situation where the same

a

act constituting a breach of contract is also an unfair labor
practice. As to such a situation we express no opinion.

“Conflict between state and federal jurisdiction, actual and
potential, is the theme of Garmon. Lack of such conflict neces-
sarily precludes the possibility of pre-emption. State court
enforcement of the contract breach is consonant and not in-
consistent with the national policy of industrial relations. At
the very most, the contract breach ‘[is] a merely peripheral
concern’ of the federal statute. * * *.” See also Retail Clerks
Union v. Superior Court, 52 Cal. 2d 222, 339 P. 2d 839 (1959),
cert. den. 361 U.S. 864 (1959).

Relator refers to our opinion in Ex Parte Dilley, supra,
wherein we said: “There now seems to be four means or circum-
stances under which a state court will be held to have power to
regulate, although it would not or might not otherwise be em-
powered in light of federal pre-emption.” He contends that none
of the four circumstances exist in the instant case. It should be
noted that the four means or circumstances we mentioned were
stated in more or less general terms. We did not mean to place
a limitation upon the circumstances under which a state court
will be held to have power to regulate. However, an activity which
is designed to secure the disregard, breach, or violation of a valid
and subsisting labor agreement, falls well within circumstance
“(2) where the activity is of merely ‘peripheral concern’ of the
Labor Management Relations Act, * * *.” This simply means
that the instant case falls in a class where pre-emption does
not apply. A bare assertion of pre-emption did not and does not
oust a state court of jurisdiction. This case is one in which
Relator’s claim of pre-emption is not “susceptible of reasonable
argument”. Grumwald-Marx, Inc., supra.

I We find no basis for denying to Texas the power, in govern-
ing her internal affairs, to regulate a course of conduct about
which the National Labor Relations Board, at most, merely has
a “peripheral concern”. We find nothing in the Act which can
be regarded as protecting concerted activities which have as
their purpose possible and probable inducement of breach of
contract. The activities in the instant case, neither being pro-
tected nor prohibited by the Act, do not fall within any of the
categories in which the United States Supreme Court thus far
has said a state court may not act. See Auto Workers v. Wiscon-
sin Board, 836 U.S. 245, 265, 23 LRRM 2361 (1949).

The order adjudging Relator, Sherman D. George, guilty of

re 119

contempt of court, rendered by The Honorable Donald M. Markle,
Judge of the Tenth District Court of Galveston County, Texas,
and adjudging that Sherman D. George be imprisoned in the
County Jail of Galveston County, Texas, without bail, for a
period of seventy-two (72) hours, and until a fine of $100.00
is paid, or until discharged by further order of the Court, is not
void. Therefore, Relator, George, is remanded to the Sheriff of
Galveston County, Texas, until he has served the seventy-two
(72) hours and paid the $100.00 fine, as ordered by the trial court.

Opinion delivered January 3, 1962.
CHIEF JUSTICE CALVERT, dissenting.

Further consideration of this matter has convinced me that
relator should be discharged. Being thus convinced; I must dissent.

One may not be punished for contempt for violating a void
court order, and a temporary injunction granted by a court hav-
ing no jurisdiction of the subject matter is void. Ex Parte Twedell,
158 Texas 214, 309 S.W. 2d 834; Ex Parte Dilley, 160 Texas
522, 384 S.W. 2d 425.

There is in the record ample evidence to support the trial
court’s finding that a primary purpose of the picketing of the
refinery at Texas City by NMU members was to induce OCAW
members to breach their contract with their employer, and the
finding is not questioned by Relator. The picketing was, therefore,
in direct violation of Sec. 4 of Article 5154d, V.A.T.C.S., and
of the public policy of this state as declared by that statute. It is
my considered judgment, however, that the District Court was
without jurisdiction to enjoin the picketing, however unlawful
under state statute its primary purpose may have been.

It is now too well settled to admit of serious question, or to
require citation of decided cases, that exclusive primary jurisdic-
tion of labor-management controversies involving activities pro-
tected by Section 7 or prohibited by Section 8 of the Labor Man-
agement Relations Act, Title 29, Secs. 157, 158, U.S.C.A., is
pre-empted to and vested in the National Labor Relations Board.
The pre-emption extends not only to controversies involving those
activities which are expressly or clearly protected or prohibited,
but as well to controversies involving those which arguably may
be protected or prohibited. San Diego Bldg. Trades Council v.
Garmon, 359 U.S. 236, 79 S.Ct. 778, 8 L. Ed. 2d 775.

0

The majority here, using language from Grunwald-Marx,
Inc. v. Los Angeles Joint Board, Amalgamated Clothing Work-
ers of America, 52 Cal. 2d 568, 843 P. 2d 23, which in turn
quotes from San Diego Bldg. Trades Council v. Garmon, 359
USS. 236, 244, 79 S.Ct. 778, 8 L. Ed. 2d 775, conclude that juris-
diction to control the concerted activity by NMU is not pre-
empted because the matter at issue is a merely peripheral concern
of the Labor Management Relations Act. I can find no sound
basis for that conclusion.

The statement of the Supreme Court of the United States
that jurisdiction is not pre-empted in matters of merely peripheral
concern of the LMRA must be interpreted in the factual con-
text in which it was made. It was not intended as an escape
phrase for ceding to state courts jurisdiction to control peaceful
picketing. The statement was made in referring to International
Assoc. of Machinists v. Gonzales, 356 U.S. 617, 78 S.Ct. 928, 2
L. Ed. 2d 1018, in which it was held that jurisdiction of state
courts to award damages to a member against his union for
wrongful expulsion had not been pre-empted. It was pointed
out in the opinion in Gonzales that “the protection of union mem-
bers in their rights as members from arbitrary conduct by unions
and union officers has not been undertaken by federal law, and
indeed the assertion of any such power has been expressly
denied”; that “The National Labor Relations Board could not
have given respondent the relief that California gave him ac-
cording to its local law of contracts and damages,” and that the
possibility of conflict with remedies afforded under the LMRA
was “remote”. The predicate for denying pre-emption in Gon-
zales does not exist in this case. Far from being of merely peri-
pheral concern, regulation of strikes and picketing is the very
heart of the Labor Management Relations Act.

There is far more to the second Garmon decision than refer-
ence in the opinion of the majority to matters of “peripheral
concern”. Not a single Justice of the Supreme Court dissented
from the conclusion that the courts of California had no juris-
diction to adjudicate the issues raised in the case. The Court
divided five to four on the proper basis for the conclusion. Mr.
Justice Frankfurter wrote the opinion for the Court and Mr.
Justice Harlan wrote the opinion for the concurrers. Because
the division in the Court is so precarious, it may be well to
consider the issue in this case in the light of both opinions.?

1. There is an excellent analysis of the two opinions by Charles 0. Gregory,
Professor of Law at the University of Virginia, in 46 Va, Law Review 539.
See also case note in 58 Mich, Law Review 288,

121

The controlling part of the Frankfurter opinion, as relevant
to a decision of the issue of jurisdiction in this case, is found
in the following language (359 U.S, 244-246, 3 L. Ed. 2d 783-784) :

“At times it has not been clear whether the particular ac-
tivity regulated by the States was governed by Sec. 7 or Sec.
8 or was, perhaps, outside both these sections. But courts are
not primary tribunals to adjudicate such issues. It is essential
to the administration of the Act that these determinations be
left in the first instance to the National Labor Relations Board.
What is outside the scope of this Court’s authority cannot
remain within a State’s power and state jurisdiction too must
yield to the exclusive primary competence of the Board. [cases
cited] * * *.

“To require the States to yield to the primary jurisdiction
of the National Board does not insure Board adjudication of
the status of a disputed activity. If the Board decides, subject
to appropriate federal judicial review, that conduct is pro-
tected by Sec. 7, or prohibited by Sec. 8, then the matter is
at an end, and the States are ousted of all jurisdiction. Or,
the Board may decide that an activity is neither protected nor
prohibited, and thereby raise the question whether such ac-
tivity may be regulated by the States. * * * In the absence of
the Board’s clear determination that an activity is neither pro-
tected nor prohibited or of compelling precedent applied to
essentially undisputed facts, it is not for this Court to decide
whether such activities are subject to state jurisdiction. * * *”

The injunction put upon us by that clear and unmistakable
language is to yield to the N.L.R.B. primary jurisdiction to decide
whether a particular labor-management activity is protected or
prohibited by the LMRA umless it has already been decided by
“compelling precedent” that it is neither. As I read the Court’s
language, in the absence of “compelling precedent” that a par-
ticular activity is neither prohibited nor protected, primary juris-
diction to decide whether it is one or the other, or neither, rests
with the N.L.R.B. We are not told what is regarded as “compelling
precedent”. To me it means a decision by the Supreme Court
of the United States or such a series of unreversed or unchallenged
decisions by the N.L.R.B. of the identical question that the decisions
are accepted as foreclosing the question. Assuming that is a close
approximation of what the Court means by “compelling prece-
dent”, it would perhaps suffice as a dissent to observe at this point
that the N.L.R.B. was not afforded an opportunity to decide wheth-
er the activity enjoined by the trial court is prohibited or protected

122

by the LMRA, or neither, and there is no compelling precedent
establishing that it is neither. That, or its equivalent, is, in my
judgment, about all the Supreme Court of the United States
would say if this case were before it for decision. However,
since The American Oil Company strenuously challenges the cor-
rectness of that conclusion, I am inclined to do more than state
it as an ipse dixit.

The only prohibitory provisions of the LMRA which seem
in the least applicable are Section 8 (b) (1) (A) which makes it
an unfair labor practice for a labor organization or its agents
to coerce employees in the exercise of the right given them by
Section 7 to refrain from engaging in “concerted activities for
the purpose of collective bargaining or other mutual aid or pro-
tection”, and Section 8 (b) (4) (i) (B) which makes secondary
picketing an unfair labor practice.

The trial court found, that ‘a natural and probable conse-
quence” of the picketing, if continued, would have been a breach
by substantial numbers of OCAW members of their contract.
It might seem that an activity which would have such coercive
effect on the minds of men as to cause them to breach a contract
and thereby become subject to discharge, N.L.R.B. v. Rockaway
News Supply Co., 845 U.S. 71, 78 S.Ct. 519, 97 L. Ed. 832, would
fall within the prohibition of Sec. 8(b) (1) (A), but the Supreme
Court of the United States has held, in a slightly different factual
context, that peaceful picketing is not coercive within the mean-
ing of that Section. National Labor Relations Board v. Drivers,
Chauffeurs, Helpers, Local Union No. 689, etc., 862 U.S. 274,
80 S.Ct. 706, 4 L. Ed. 2d 710. There is a compelling precedent,
therefore, for holding that the picketing is not prohibited by Sec-
tion 8(b) (1) (A).

Whether it is prohibited by Section 8(b) (4) (i) (B) is not
quite so free of doubt. While here, again, the picketing seems to
be within the literal wording of the definition of the unfair labor
practice? if we regard the companies as separate legal entities,

2. “(b) It shall be an unfair labor practice for a labor organization or
its agents—(4)(i) * * * to induce or encourage any individual employed by
any person engaged in commerce or in an industry affecting commerce to
engage in, a strike or a refusal in the course of his employment to use, manu-
facture, process, transport, or otherwise handle or work on any goods, articles,
materials, or commodities or to perform any services * * * where * * * an
object thereof is— * * * (B) forcing or requiring any person to cease using,
selling, handling, transporting, or otherwise dealing in the products of any
other producer, processor, or manufacturer, or to cease doing business with any
other person, * * * Provided, That nothing contained in this clause (B) shall
be construed to make unlawful, where not otherwise unlawful, any primary
strike or primary picketing;”

ee] 128

it is generally held that the prohibition is directed at secondary
activity and is designed for the protection of neutrals. The find-
ing of the trial court negatives the status of The American Oil
Company as a neutral. The finding is: “The American Oil Com-
pany is a wholly owned subsidiary of American Oil Company, a
Maryland Corporation, and said American Oil Company, a Mary-
land Corporation, directs and controls all of the activities of said
The American Oil Company and its Texas City, Texas, Refin-
ery.” The finding is unchallenged and undisputed.

In the only factually similar case my research has disclosed,
the United States Court of Appeals for the 7th Circuit held
that picketing of a wholly-owned subsidiary was not prohibited
by Section 8(b) (4) (A), the applicable provision before amend-
ment of the Act in 1959. See Milwaukee Plywood Company v.
N.LRB.B., 285 F. 2d 325. The same conclusion was reached by the
United States District Court for the Eastern District of Wis-
consin in the same controversy. See Madden v. Warehouse and
Mail Order Employees Union, International Brotherhood of
Teamsters, etc., 36 Labor Cases 65,708.-The opinions disclose
that the NLRB thought the activity was not prohibited. In that
ease there was evidence of control by Aetna of practically all
operational details of Milwaukee’s business, including control
of its policy in dealing with the picketing. In somewhat analogous
fact situations where evidence of control was not so conclusive,
Courts of Appeals have reached a different conclusion from that
reached in Aetna-Milwaukee. In Bachman Machine Company v.
N.L.R.B., 8th Circuit, 266 F. 2d 599, the Court, with one judge
dissenting, held that a union representing the employees of a
family-owned corporation committed an unfair labor practice
in violation of Section 8 (b) (4) (A) when it picketed the separate
place of business of another corporation whose stock was wholly
owned by the same family and whose employees were represented
by a different union. There was considerable evidence of common
control, but the Court concluded that the “evidence fell short of
establishing that both companies were under such actual common
management or control as to make them allies and a single em-
ployer for the purposes of Section 8 (b) (4) (A) of the Act.”
To the same effect, see J. G. Roy & Sons Company v. N.L.R.B.,
Ast Circuit, 251 F. 2d 771. As holding that picketing of a separate
employer who is an “ally” of the primary employer does not vio-
late Section 8 (b) (4) (i) (B), see N.L.R.B. v. Business Machine,
etc., 2nd Circuit, 228 F. 2d 553. The cases on the subject would
seem to lead to a fairly firm conclusion that picketing by a union
representing employees of one corporation of the premises of
a second corporation is not a violation of Section 8 (b) (4) (i) (B)

ee

if the businesses of the two corporations represent a “straight-
line” operation or if the activities of the two corporations are .
under common ownership and actual common control. Irwin-
Lyons Lumber Co., 87 N.L.R.B. 54.

In this case the trial court found, and it is uncontroverted,
that The American Oil Company is a wholly-owned subsidiary of
American Oil Company and that all of its activities, presumably
including labor activities, were directed and controlled by the
parent corporation. Based on the cases noted, I am inclined to
the opinion that picketing of The American Oil Company refin-
ery by NMU was not prohibited by Section 8 (b) (4) (i) (B),
but I have found no compelling precedent to that effect. The
question remains as to whether there is any compelling precedent
for holding that the picketing is not protected by Section 7
which guarantees to employees and their union the right to en-
gage in “concerted activities for the purpose of collective bar-
gaining or other mutual aid or protection.”

It is to be remembered that the picketing was entirely peace-
ful. There was no violence or mass picketing, no name-calling,
threats or incitement to violence, no physical blocking of en-
trances and exits or of public passageways. The only possible
basis for concluding that the activity is not protected is the
finding that “a primary purpose” of the picketing was to induce
OCAW member-employees to breach their contract.

In just what sense the trial court used the words, “a primary
purpose”, is not entirely clear from the findings of fact and
conclusions of law, but analysis will make it clear. The word
“primary” may mean first in order of time, immediate, or it
may mean first in order of rank or importance, principal. In
the use of the phrase the trial court obviously referred to the
“immediate” purpose, for it goes without saying that the “prin-
cipal” purpose of the picketing was to exert pressure on American
Oil Company and thus to force settlement of the labor dispute
between the employer and NMU.

I have found no case by either the federal courts or the
N.L.R.B. in which it has been held that the protection afforded
by Section 7 does not shield the activity of a labor union repre-
senting one group of employees, who have a labor dispute with
their employer, in peacefully picketing the employer’s place or
places of business where other employees, represented by a dif-
ferent bargaining agent and having a no-strike, no-work-stoppage
contract, are working. The majority cite no such case and neither

es 125

does respondent, The American Oil Company. The cases relied
on as persuasive by The American Oil Company fall into two
categories. Cases in the first category need not be cited here.
They are cases decided by the N.L.R.B. and United States Courts
of Appeals which stand for the principle that Section 7 does not
protect strikes or picketing by employees in breach of their own
no-strike contract. We may accept those decisions as establishing
the principle of law for which they stand. If in this case OCAW
members had honored NMU’s picket line, I would be inclined
to say, on the strength of the cited cases, that such activity was
not protected. But that is not the issue here. The cases in the
second category were decided by state courts and while that
fact alone disqualifies them as compelling precedents in my view,
they are entitled to closer attention because they are closer to
the issue in this case, and the Supreme Court of the United States
may regard some state court decisions as compelling precedents.
They are: Office Employees International Union, etc. v. Hous-
ton Lighting & Power Company, Texas Civ. App., 314 S.W. 2d
315, writ refused, n.r.e.; Cooperative Refinery Association v.
Williams, 185 Kan. 410, 345 P. 2d 709; Standard Oil Company
v. Oil, Chemical & Atomic Workers Union, Ohio Ct. Common
Pleas, 144 N.E. 2d 517; Gulf Refining Company v. Oil Workers
International Union, Ohio Ct. Common Pleas, 114 N.E. 2d 534;
M & M Wood Working Company v. United Brotherhood of Car-
penters and Joiners, Oregon Circuit Ct., 26 Labor Cases 87,545;
American Brake Shoe Company v. Machinists Association, 373
Pa. 164, 94 A. 2d 884.

Standard Oil Company v. Oil, Chemical & Atomic Workers,
Gulf Refining Company v. Oil Workers International Union, and
M & M Wood Working Company v. United Brotherhood of Car-
penters and Joiners, were, indeed, suits to restrain and enjoin
labor organizations representing the employees of one business
of an employer from picketing another place of business of the
same employer where the employees of the second business were
represented by a different union and had a no-strike contract.
In each case the state court granted the relief sought. But these
decisions cannot be the type of compelling precedents of which
Garmon speaks. With all due deference, they are decisions of
trial courts, apparently the equivalent of our district courts, and
all were made before Garmon.

American Brake Shoe Company v. Machinists Association
was decided by the Supreme Court of Pennsylvania. The employer
sought to enjoin representatives of employees of an employer’s
place of business in St. Louis, Missouri, from picketing the em-

26

ployer’s place of business in Meadville, Pennsylvania, where the
employees were represented by a different union and had a no-
strike contract. The injunction was denied on the ground that it
was prohibited by state statute. The court’s statement that juris-
diction to grant relief had not been pre-empted to the N.L.R.B.
was strictly a dictum. The court stated that there was no evi-
dence before it that the employer was doing business in inter-
state commerce and that the question of jurisdiction had not been
raised. The decision was also before Garmon.

Office Employees International Union v. Houston Lighting
& Power Company was decided by the Austin Court of Civil Ap-
peals. Representatives of the Office Employees Union established
a picket line at a separate place of business of its employer, where
employees were represented by other unions, because of discharge
of an employee at the second place of business. State court juris-
diction to enjoin the picketing was upheld by the Court of Civil
Appeals on more than one ground, one of which was that the
purpose of the picketing was to induce employees at the second
place of business to breach their no-strike contract in violation of
Article 5154d. Our refusal of writ of error, no reversible error,
did not constitute approval of that holding. Moreover, this is
also a pre-Garmon decision.

Cooperative Refinery Association v. Williams is a post-
Garmon decision by the Supreme Court of Kansas. The court
upheld jurisdiction of the state courts to enjoin peaceful picket-
ing over protest that the picketing was either protected by Sec-
tion 7 or prohibited by Section 8. The Teamsters Union, repre-
sentatives of employees of Consumers Cooperative Association, a
Kansas corporation with its office and place of business in Kan-
sas City, Missouri, established a picket line at the place of busi-
ness in Lawrence, Kansas, of The Cooperative Farm Chemicals
Association, also a Kansas corporation, whose employees were
represented by Oil, Chemical and Atomic Workers Union. Con-
sumers Cooperative Association owned 75% of the stock of The
Cooperative Farm Chemicals Association and the same individual
was president of both corporations. The court held that the
picketing was not protected because there was no evidence that
the first corporation controlled the second or even that they were
doing business with each other. That finding is the exact opposite
of the finding in the case before us. The Kansas court held that
the picketing was not prohibited because the picketing union “had
no intention of inducing, encouraging or persuading such em-
ployees [of the second corporation] to engage in any concerted
or other activity * * *.” Here, again, the finding is the exact

eS 127

opposite of the finding in the case at bar. While this case can
hardly be persuasive in deciding the merits of the issue before
us, it does support jurisdiction of the state courts to decide it.

One other state decision deserves mention although it can-
not be regarded as of controlling significance. In Dooley v. Anton,
8 N.Y. 2d 91, 168 N-E. 2d 356, decided after second Garmon,
the New York Court of Appeals held that the effect of the Gar-
mon decision was to oust jurisdiction of state courts to enjoin
picketing for the purpose of coercing the employer into breaching
his contract with another union which represented a majority
of his employees. The Court concluded that Garmon required that
primary jurisdiction to decide whether the activity was protected
or prohibited he left to the N.L.R.B. The court overruled an earlier
decision that the identical activity was neither protected nor
prohibited and that the state courts therefore had jurisdiction to
enjoin it. The opinion is weakened by the fact that at the time
the court decided the case the LMRA had been amended to make
recognition picketing an unfair labor practice, thus expressly
bringing regulation of the activity within the exclusive jurisdic-
tion of the N.L.R.B.

It seems quite clear to me that the District Court was with-
out jurisdiction to grant the temporary injunction if its juris-
diction is tested by the opinion of the majority in second Garmon.
I am also satisfied that the court was without jurisdiction if its
jurisdiction is tested by the opinion of the concurring Justices.
The sense of the concurring opinion, as I understand it, is that
when it is clear to a state court that an activity is neither pro-
tected nor prohibited by the LMRA the court should be permitted
to take jurisdiction to control the activity, subject to review of
the correctness of its determination by the Supreme Court of
the United States, even though the question has not been sub-
mitted to or decided by the N.L.R.B. The concurring Justices joined
in approving the Court’s judgment in second Garmon solely be-
cause it was “fairly debatable” whether the conduct involved
was protected. On the basis of the decisions reviewed above, I
would be forced to conclude that it is fairly debatable whether
the picketing by NMU is prohibited and also fairly debatable
whether it is protected. Thus I would be forced to conclude here,
as did the concurring Justices in Garmon, that the District Court
was without jurisdiction to grant the injunction. Particularly
would I be compelled to do so considering that The American
Oil Company had a remedy to protect itself against harm by
obtaining a state court injunction against breach by OCAW
member-employees of their no-strike, no-work-stoppage contract.

0

Teamsters Union v. Lucas Flour Company, 82 S.Ct. 571, 7 L. Ed.
2d 593; Dowd Box Co. v. Courtney, 7 L. Ed. 2d 483; McCarroll
v. Los Angeles Dist. Council of Carpenters, etc., 49 Cal. 2d 45,
815 P. 2d 322; McLean Distributing Co. v. Brewery and Bever-
age Drivers, etc., 254 Minn. 204, 94 N.W. 2d 514; Philadelphia
Marine Trade Ass’n. v. International Longshoremen’s Ass’n., etc.,
382 Pa. 826, 115 A. 2d 733.

It seems clear to me that late decisions of the Supreme Court
of the United States in labor cases indicate two definite trends.
These trends are noticed also by Jeffers in his article in 36
T.L.R. 988. The first trend is represented by such cases as Inter-
national Brotherhood of Teamsters v. Vogt, 354 U.S. 284, 77
S. Ct. 1166, 1 L. Ed. 2d 1347, and is toward a broadening of the
power of the states to curb peaceful labor activity against em-
ployers in intrastate business when the activity violates basic
public policy of the states, whether the policy be enunciated by
the state legislature or by the judiciary. The process is one of
limiting the broad sweep of such cases as Thornhill v. Alabama,
810 U.S. 88, 60 S.Ct. 786, 84 L. Ed. 1098, in the protection of
the constitutional guaranty of free speech. It is in this field that
the purpose of the activity is of all-controlling importance. The
second trend is represented by such cases as the two Garmon
decisions and is toward a narrowing of the jurisdiction of state
courts to curb or control peaceful labor activity against employ-
ers in interstate business. The process is one of excluding state
jurisdiction in this field until the N.L.R.B. has first made a defini-
tive determination that the activity is neither protected nor pro-
hibited by the Labor Management Relations Act or until the
Supreme Court has decided the same issue in a case properly
before it. In this area the purpose of the activity is not of such
major consequence, at least until the question of jurisdiction
of the activity has been determined to be in the courts. Cases
decided by the Supreme Court since second Garmon confirm this
latter trend. See Hotel Employees v. Sax Enterprises, 358 U.S.
270, 79 S.Ct. 278, 8 L. Ed. 2d 289; Plumbers, ete. v. County of
Door, 359 U.S. 354, 79 S.Ct. 844, 3 L. Ed. 2d 872. It was
recognized by this Court in Ex Parte Twedell, 158 Texas 214,
309 S.W. 2d 834, in which we held the state courts were without
jurisdiction to enjoin peaceful picketing even though the pur-
pose was to bring about a violation of state right to work laws.

Relator should be discharged.
ASSOCIATE JUSTICE NORVELL joins in this dissent.
Opinion delivered May 30, 1962.

CC 129
J. A. HonsA, Petitioner
Vv.

Eumo LEE Er AL, Respondents

No. A-8663. Decided December 6, 1961
Rehearing Denied January 6, 1962
352 S.W. 2d 717

ee
Cc. O. McMillan, Stephenville, Abney, Hammett & Lynch,
Lampasas, for petitioner.

Sam Cleveland, Joseph A. Chandler, Stephenville, for re-
spondents.

PER CURIAM.

The opinion of the Court of Civil Appeals (349 S.W. 2d
110) reflects that the Court sustained Lee et al., appellants, in
their contention that the trial court erred in failing to render
judgment in their favor against Honea for $4,000.00, being one-
half of the proceeds of a fire insurance policy covering a house
destroyed by fire.

Jurisdiction of this Court has been properly invoked by
Honea’s application for writ of error wherein the point is pre-
sented that the Court of Civil Appeals erred in rendering judg-
ment that Lee et al were entitled to any of the proceeds from
the first insurance policy on the house. We approve the holding
of the Court of Civil Appeals on this point, and, had this been

0

the only point decided by the Court of Civil Appeals, this Court
would refuse the application for writ of error without comment. |
However, the Court passed upon two points adversely to Lee
et al. No application for writ of error has been filed in this Court
complaining of such rulings, therefore, we have no authority
to decide the questions. Accordingly, the application for writ of
error is refused, no reversible error.

Opinion delivered December 6, 1961.
P|

THE UNIVERSITY OF TEXAS ET AL, Petitioners
v.
CHESTER R. Morris, Respondent

No. A-8624. Decided January 10, 1962
352 S.W. 2d 947

Pe) 131

Will Wilson, Attorney General, Lawrence Hargrove and Pat
Bailey, Assistant Attorneys General, Taylor & Taylor, Austin,
for petitioner.

Chester R. Morris, pro se.

JUSTICE FRANK P. CULVER delivered the opinion of
the Court.

Respondent, Morris, brought this suit in damages for false
imprisonment, deprivation of liberty without due process of law,
libel and conspiracy against The State of Texas, The University
of Texas and certain officials and employees of the University.
The suit grew out of a temporary commitment of Morris to the
Austin State Hospital and certain alleged related occurrences.
The trial court rendered summary judgment in favor of the peti-
tioners. The Court of Civil Appeals reformed the judgment of
the trial court in one particular and affirmed it as reformed. 348
S.W. 2d 644,

The petitioners assert that the Court of Civil Appeals erred
in refusing to dismiss the appeal for want of jurisdiction for
the reason that the same was not timely perfected.

Petitioners’ motion for summary judgment was heard before
Judge Gardner of the 58rd District Court of Travis County on
the 22nd day of December, 1960. He entered judgment granting
the motion on the 29th day of December. It contained the recita-
tion that Morris excepted and gave notice of appeal. On Decem-
ber 30 Morris filed a motion for new trial which was overruled
by Judge Gardner on the same day. The motion for new trial
was verified by Morris on the 27th day of December, 1960, evi-
dencing the fact that the judge indicated in open court his de-
cision to grant the motion for summary judgment prior to the
actual entry of the judgment.

Judge Gardner’s term of office ended on the 1st day of Jan-
uary, 1961, and on that date he was succeeded by the Honorable
Herman Jones. On the 16th day of January, 1961, Judge Jones,
evidently at the request of Morris, set for hearing Morris’ motion
for new trial for the 27th day of January. On the 27th day of
January Morris filed a motion to set aside the order of Decem-
ber 30, 1960, entered by Judge Gardner overruling respondent’s
motion for new trial.

13

On that date, namely, the 27th day of January, 1961, Judge
Jones entered the following order:

“On this 27th day of January, 1961, came on to be heard
the Motion of Plaintiff Chester R. Morris, styled ‘Motion to
Set Aside Purported Final Judgment’, to set aside the Court’s
Order of December 30, 1960, entered by The Honorable J.
Harris Gardner, Judge, which Order overruled Plaintiff’s Mo-
tion for New Trial. It appearing to the Court that such Order
is entirely regular on its face, it is accordingly

“ORDERED that Plaintiff’s Motion to set aside said Order
is in all things overruled and that the Court’s Order of Jan-
uary 16, 1961, setting a date for hearing on Plaintiff’s Motion
for New Trial, is hereby set aside and held for naught, such
Motion for New Trial having been overruled before Plaintiff's
request for hearing on such Motion was presented to the Court.”’

Respondent then filed his affidavit in lieu of appeal bond
on February 2, 1961.

Hl Petitioners’ motion to dismiss was based on the failure of
Morris to file his affidavit within 20 days after the order over-
ruling the motion for a new trial as provided by Rule 356, Rules of
Civil Procedure.

The Court of Civil Appeals held that the order of December
80, 1960, overruling Morris’ motion for new trial was arbitrary
and is null and void and accordingly overruled the motion to
dismiss the appeal for want of jurisdiction. We hold that the
order was not null and void. Therefore, the affidavit in lieu of
cost bond was not timely filed and the appeal should have been
dismissed.

The Court of Civil Appeals takes the position that the action
of the court in overruling the motion was arbitrary and void
because the respondent was deprived of an opportunity to present
his motion to the court and bases its decision on its interpreta-
tion of Rule 329b, Sec. 4, which provides that “It shall be the
duty of the proponent of an original or amended motion for new
trial to present the same to the court within thirty (30) days
after the same is filed.” The rule further provides:

“In the event an original motion or amended motion for
new trial be not presented within thirty (30) days after the
date of the filing thereof, and the district judge in his discre-

es 138

tion refuses to consider the same or refuses to hear evidence
relating thereto, such motion will be overruled by operation
of law forty-five (45) days after the same is filed, unless dis-
posed of by an order rendered on or before said date.”

The Court of Civil Appeals holds that the rule places upon
the movant for a new trial the duty “to present the same to the
Court” and by the same token places the duty upon the trial
judge to afford the movant an opportunity to perform that duty.
As we understand this holding it would follow that a trial court
must allow the movant to present his motion and is otherwise
without jurisdiction to act even though as in this case nothing
could be asserted in the motion other than an error of law and
on which presumably all parties had been heard fully before the
entry of the judgment.

HE Actually Morris’ complaint is predicated not on the fact that
he was not afforded an opportunity to present his motion, but
that it was acted upon and overruled without his knowledge so
that he failed to perfect his appeal by not having filed his affi-
davit of inability to pay the cost within the 20 days after the motion
was overruled and this notwithstanding the fact that the deputy
clerk told him on the 16th day of January that she “thought” the
motion had been overruled. If he had proceeded with diligence
then, he still had ample time within which to file his affidavit.
There is no rule that requires that the movant be given notice
of the court’s action on the motion for new trial.

Furthermore, in our opinion the term “to present the same
to the court” does not mean that a formal presentation and hear-
ing are required. Certainly it would not be error for the court
to refuse to hold a hearing on a motion for a new trial except
where it would be necessary to hear evidence upon a matter such
as jury misconduct. Suppose in this case Morris had filed his
affidavit on the 16th day of January when he first had reason
to believe that the motion had been overruled. It could hardly
be contended then that the order entered on the 80th day of
December was void because Morris had not been afforded an
opportunity to present his motion to the Court. On appeal he
could not be heard to complain of the failure of the court to
afford him an opportunity to “present” the motion or of the
refusal of the court to hear him again respecting the matters
of law that had been previously argued.

In our opinion the proper meaning of the word “present”
as used in Rule 329b is no more than that the movant must call

1

the motion to the court’s attention and ask for a ruling upon
the same or face the possibility that the court will not act and
allow the motion to be overruled by operation of law. As to
whether the court will hear the movant on his motion is a matter
within the discretion of the trial court when it presents solely
a question of law. In this respect we approve the statement found
in Texas Livestock Marketing Ass’n. v. Rogers, Texas Civ. App.,
1951, wr. ref. n.r.e., 244 S.W. 2d 859, as follows:

« = * When an attorney for the party appealing files his
motion or amended motion for a new trial and calls it to the
attention of the trial court, and informs him that he is ready
to present it for the court’s action, he has done about all that
he can do. As to just when and how the motion is heard by
the court is a matter addressed to the discretion of the court
and one which the litigant can not control. It is true that the
litigant must present the motion to the court without quali-
fication or reservation, and if the court immediately passes on
the motion he is not in a position to complain.”

To be sure the course taken by Judge Gardner in overruling
the motion on the same day it was filed was unusual, yet so was
the situation confronting Judge Gardner unusual. He had com-
pleted the hearing on this case during the last few days of his
term of office. The judgment was entered on the 29th day of
December. The case had been pending for a considerable length
of time. This is the second appeal. The pleadings in this case
‘were many and lengthy. Numerous motions were filed, including
one for bill of discovery, one for change of venue, and one to
consolidate causes of action. Several motions for summary judg-
ment appear in the record, together with affidavits in support
of same, the transcript comprising over 250 pages.

Before the incoming judge could pass intelligently upon the
motion for a new trial he would necessarily have to review the
entire record and familiarize himself with the pleadings and
affidavits. Thus there would be imposed upon him an unnecessary
burden of work and a repetition of the judicial functions already
performed and discharged by his predecessor.

The judgment of the Court of Civil Appeals is reversed and
the appeal is hereby dismissed.

Opinion delivered January 10, 1962.

18!

or

TEXAS EMPLOYMENT COMMISSION AND GENERAL ELECTRIC
CoMPANY, Petitioners
v.
INTERNATIONAL UNION OF ELECTRIC RADIO AND MACHINE
WORKERS, LOCAL UNION NO. 782, AFL-CIO ET AL, Respondents
No. A-8454, Decided November 22, 1961

Rehearing Denied January 10, 1962
852 S.W. 2d 252

Will Wilson, Atty. Gen., C. K. Richards, Sam Lane, Asst.
Attys. Gen., for Texas Employment Commission.

Ramey, Breisford, Hull & Flock, Tyler, Wm. J. Barron, New
York City, L. Mason Harter, De Witt, N. Y., and Jack W. Flock,
Tyler, of counsel, for General Electric Company.

Sam Houston Clinton, Jr., Austin, for respondents.

ASSOCIATE JUSTICE STEAKLEY delivered the opinion
of the Court.

This case as it reaches us with the Texas Employment Com-
mission and General Electric Company as petitioners involves
the right of eighty-eight respondents to unemployment compensa-
tion benefits for the week of August 4, 1957, during which the
plant of General Electric Company at Tyler was shut down.
The facts common to all of the respondents require a construc-
tion of certain provisions of their collective bargaining contract
in the light of the applicable provisions of the Texas Unemploy-
ment Compensation Act. The claims of the respondents were
denied by the Commission in one proceeding and suit was brought
by all the respondents in the District Court of Smith County
to review the adverse decision. The district court sustained the
Commission. The Court of Civil Appeals reversed the district
court and entered judgment “directing the Texas Employment
Commission to grant the claims of the eighty-eight claimants
* * #” 346 S.W. 2d 649.

137

ff Preliminarily, petitioners urge two jurisdictional pleas. The
first is that the district court was without jurisdiction in the
fact that the claim of each respondent was approximately $25.00
although aggregating, of course, more than $500.00. This plea
to the jurisdiction was not raised in the trial court but was urged
in the Court of Civil Appeals, and is urged here, as fundamental
error. Lack of jurisdiction in the district court would be funda-
mental error and a plea to such effect is subject to review al-
though first presented on appeal. We hold, however, that the
plea is without merit.

There was proper joinder of the claimants under Rule 40,
Texas Rules of Civil Procedure. Hindman v. Texas Lime Co.,
157 Texas 592, 305 S.W. 2d 947, 954. The rights jointly asserted
by the several claimants arose out of the same transactions and
occurrences within the purview and purposes of the Rule. The
determining questions of law and of fact are common to all.

Article 1906a, V.A.C.S., provides:

“Where two or more persons originally and properly join
in one suit, the suit for jurisdictional purposes shall be treated
as if one party were suing for the aggregate amount of all
their claims added together, exclusive of interest and cost;
provided that this statute shall not prevent jurisdiction from
attaching on any other ground. Provided further, that the
passage of this Act shall not affect any pending litigation.”
Acts 1945, 49th Leg., p. 548, ch. 329, Sec. 1.

Article V, Section 8 of the Constitution provides that “The
District Court * * * shall have * * * such other jurisdiction,
original and appellate, as may be provided by law.” See Oil-
men’s Reciprocal Ass'n. v. Franklin, 116 Texas 59, 286 S.W.
195, 197.

Respondents were originally and properly joined and the
statute makes the aggregate amount controlling for jurisdic-
tional purposes. Article 1906a was enacted for the express pur-
pose of curing what the Legislature described as a “jurisdictional
defect” in Long v. City of Wichita Falls, 142 Texas 202, 176
S.W. 2d 986; the “defect” was the holding in Long that the
claims of several plaintiffs cannot be added together to achieve
a jurisdictional amount. Southwestern Drug Co. v. Webster, 246
S.W. 2d 241 (no writ hist.), and Kasishke v. Ekern, 278 S.W.
2d 274 (ref., nr.e.), cited by petitioners, are not in point be-
cause of their reliance on Long and under their facts. In the case

Bo as

before us there is proper joinder of claims aggregating more
than $500.00 giving the district court jurisdiction under the ex-
press provisions of Article 1906a.

i The second jurisdictional plea of petitioners asserts want
of jurisdiction in the District Court of Smith County with re-
spect to twelve of the respondents joining in the appeal suit
who were not residents of Smith County, and is based on Article
5221b-4(i)+ providing for court review of decisions of the Texas
Employment Commission as follows:

“(i) Court review: Within ten (10) days after the de-
cision of the Commission has become final, and not before,
any party aggrieved thereby may secure judicial review thereof
by commencing an action in any court of competent jurisdiction
in the county of claimant’s residence against the Commission
for the review of its decision, in which action any other party
to the proceeding before the Commission shall be made a de-
fendant, provided that if a claimant is a non-resident of the
State of Texas such action may be filed in a court of competent
jurisdiction in Travis County, Texas, or in the county in Texas
in which the last employer has his principal place of business,
or in the county of claimant’s last residence in Texas. * * *.”

HEME The right of an appeal thus created by the Act is express-
ly limited, as to residents of Texas, to a court of competent juris-
diction in the county of the claimant’s residence, and as to non-
residents of Texas, to one of the specified counties. These pro-
visions are exclusive and come under the accepted rule that
statutory proceedings are strictly governed by the statute of
their creation. Those availing themselves of the statutory remedy
are not free to select a forum not authorized by the statute creat-
ing the remedy. Mingus v. Wadley, 115 Texas 551, 285 S.W. 1084;
Alpha Petroleum Co. v. Terrell, 122 Texas 257, 59 S.W. 2d 364;
Oilmen’s Reciprocal Ass’n v. Franklin, 116 Texas 59, 286 S.W.
195; Texas Employment Commission v. Daniel, 241 S.W. 2d
969 (Civ. App., no writ hist.). The trial court correctly dis-
missed the twelve respondents who were residents of counties
of Texas other than.Smith in which the appeal suit was brought.

IE We come now to the merits of the case. Respondents were
employees of petitioner, General Electric Company, in its plant
at Tyler. General Electric and the International Union of Elec-
trical, Radio and Machine Workers, Local Union No. 782, AFL-

1. Acts 1936, 44th Leg., ‘ard C.S., p. 1993, codified as Article 5221b, V.A.C.S.,
and as referred to herein.

eS 189

CIO, representing the employees, entered into a collective bar-
gaining contract for the period 1955 to 1960 containing the fol-
lowing provisions pertinent to the question before us:

“Article IX.
“T, Scheduling of Vacations
(a) At time of annual shutdowns

Those Works shutting down annually shall consider the
vacation season for eligible employees to run concurrently with
the shutdown period * * *,

[  d
(c) Postponement or Division of Vacation

It will not be permissible to postpone vacations from one
year to another, or to omit vacations and draw vacation pay
allowances in lieu thereof, except with the written approval
of the Manager.”

“8, Time of Vacation Payment

Except as otherwise provided in this Article, vacation al-
Jowances shall be paid to an employee on or about the last
day worked by him prior to the vacation scheduled for him.
An employee who takes his vacation prior to the date upon
which he becomes eligible, will receive payment (computed in
accordance with Section 6 above) after he becomes eligible.
Additional day or days for which an employee may qualify
later in the year may be taken at the time of the regular vaca-
tion and payment for such time of the regular vacation and
payment for such time (computed in accordance with Section
6 above) will be made after the employee has qualified.”

The plant commenced preliminary operations about June
1, 1956, and approached normal operations by the following
January or February, 1957. On February 20, 1957, General Elec-
tric announced that it would shut down the plant beginning
August 2, 1957, and until August 19, 1957, and did so. The shut-
down was pursuant to paragraph 7(a) of Article IX of the
collective bargaining contract, above quoted, and was not agreed
to—in fact was protested—by the Union.

0

The respondents received no vacation pay on or before August
2, 1957, for the first week of the shutdown (the last two weeks
are not involved in this case) because they had not passed their
first anniversary date on August 2, 1957, and under the contract
were not eligible for vacation, and for vacation pay, on such date.
All of the respondents, however, could have reached their first
anniversary date subsequent to August 2, 1957, and during the
calendar year of 1957.

Respondents filed their claims for benefits for the week of
August 4, 1957, which were denied by the Commission upon the
basis of the contractual provisions herein quoted, the crucial
reasoning of the Commission being stated as follows:

“Those employees whose service anniversary date was sub-
sequent to the shutdown period and before the end of the calen-
dar year, took their vacation during the first week of the
shutdown and under the contract will receive pay for such
vacation after their service anniversary date.”

It was established upon the appeal trial in the district court
(over the objection of respondents) that all of the respondents
did in fact reach their first anniversary date subsequent to August
2, 1957, and during the year 1957, and were in fact paid vaca-
tion pay for the week of August 4, 1957, at the time they became
eligible therefor.

Article 5221b-17(1) and (n) define “Total unemployment”
and “Wages” as follows: “An individual shall be deemed ‘totally
unemployed’ in any benefit period during which he performs no
services and with respect to which no wages are payable to him”;
“‘Wages’ means all remuneration for personal services, includ-
ing commissions and bonuses * * *,”

Respondents contend, first, that evidence of the actual pay-
ments to them subsequent to August 2, 1957, is inadmissible
since these were “transactions and events which occur after the
erucial date that fixes the status of a claimant before an admin-
istrative agency”, and which “supply support for the adminis-
trative decision which itself shows that the agency did not con-
sider the evidence”; and, second, that if the sums paid to re-
spondents are wages, “they are not payable with respect to the
first week of the shutdown.”

The three companion cases of Texas Employment Commission
». Huey, 842 S.W. 2r 544, Texas Employment Commission v.

ES 1

Hansen, 342 S.W. 2d 551, and Texas Employment Commission
v. Amlin, 343 S.W. 2d 249, considered questions of statutory con-
struction in the light of the collective bargaining contracts and
facts there involved, and it was held in each case that the em-
ployees were entitled to benefits. Recitations in the opinions
point out the controlling difference between these cases, and the
ease at bar:

In Huey: “Others, including Clara Huey et al who had not
worked long enough to be entitled to vacations, were laid off
during the shutdown * * *. There is no provision for any vaca-
tion for those like Clara Huey who had worked less time.”

In Hansen: “The contract is not one of voluntary unemploy-
ment for those without seniority during a layoff period but deals
with the treatment of employees with seniority during the shut-
down.”

In Amlin: “Those with less than a year of seniority received
no pay.”

In the case now before us the collective bargaining contract
specifically provides for a vacation period to run concurrently
with a plant shutdown ordered by General Electric; that the
employees will take their vacation at such time whether eligible
or not; and that both employees eligible at the time and those
becoming eligible later in the calendar year will receive pay for
the vacation. Under such contract circumstances we are of the
view that the right to benefits, or not, of those employees not
eligible at the time of the shutdown-vacation necessarily must
be determined by facts subsequent during the remainder of the
calendar year.

It is to be emphasized that the contract is one voluntarily
entered into by, and in the interest of, the employees through
their Union representative; that the contract, among other things,
guarantees payment to the employees for a vacation running
concurrently with a plant shutdown, with such payment to be
either at the time of the vacation or later during the calendar
year; and that all employees are treated alike, compensation-
wise, in the overall contractual plan.

We are therefore clear in the view that the sums so received
by all the employees are wages paid with respect to the vacation-
shutdown period; and that proof of the receipt of vacation pay
subsequent to the vacation period, in connection with claims for

2

unemployment benefits for the vacation period, is proper and
necessary in adjudicating the claims.

It is a concomitant to the above holdings that an employee
who does not in fact reach the required anniversary date dur-
ing the calendar year, and who does not therefore receive pay
for the vacation period, would be entitled to establish such facts
subsequent, and to be paid benefits, since he has received no
wages with respect to the vacation period. In this connection it
may be noted that Article 5221b-4(a) provides that “Claims for
benefits shall be made in accordance with such regulations as the
Commission may prescribe.” Thereunder the Commission may
establish an appropriate procedure for the filing of claims by
such employees.

Respondents cite Western Union Telegraph Co. v. Texas Em-
ployment Commission, 243 S.W. 2d 217 (Dismissed by this Court
as without jurisdiction with per curiam opinion, 243 S.W. 2d
154) for what they say is “the controlling principle”, namely,
“that vacation pay is allocable to the period in which services are
performed. Since no services were performed the first week of
the shutdown, the pay is allocable to other periods.”

Apart from the fact that the Western Union case concerned
severance pay only, it is readily apparent that if carried to its
logical conclusion, the argument of respondents based on West-
ern Union would mean that employees would be entitled to bene-
fits for all vacation periods (during which, of course, no services
are actually performed) notwithstanding eligibility for, and pay-
ment of, vacation pay at the time of the vacation period. It is
noted, for example, that the record in the case at bar reflects the
fact that there was a group of employees of General Electric
with sufficient seniority to be eligible for, and who received,
vacation pay on August 2, 1957, for the week in question. No
appeal is here for them on the ground that the services performed
to reach seniority were allocable to the period in which the serv-
ices were performed, rather than to the vacation period, but
under the reasoning advanced by respondents these employees
would also be entitled to benefits for the vacation upon the same
basis as that claimed by respondents, namely, that under Western
Union wages paid for vacation are not “with respect to” the
vacation but to the time when services were actually performed,
under the statutory definition of “total unemployment”.

We hold, therefore, under the contract of the parties and
the facts we have reviewed, that wages were paid to respondents

eS 14s

for the vacation period in question, and that during such time
respondents were not totally unemployed under the Act.

IE The fourth counterpoint of respondents is as follows:

“The Court of Civil Appeals correctly held that the Collec-
tive Bargaining Agreement between IUE [the Union] and GE
[General Electric Company] could not operate to waive claimants’
rights under the Texas Unemployment Compensation Act,” re-
ferring to Article 5221b-18(a), which provides that “No agree-
ment by an individual to waive, release, or commute his rights
to benefits or any other rights under this Act shall be valid.”

There is nothing in the collective bargaining agreement which
constitutes a waiver of rights to benefits, or other rights, of the
individual employee. It cannot be said that an agreement for a
vacation period coincident with a plant shutdown which may
be ordered by management, and for vacation pay therefor upon
reaching the requisite seniority, is an agreement waiving benefits
or rights within the contemplation and purposes of the above-
quoted prohibitions of the Act. To hold that such an agreement
is prohibited would mean that an employee (and the Union for
him) is restrained by the Act from contracting for vacations
with pay. See Jackson v. Minneapolis-Honeywell Regulator Co.,
AT N.W. 2d 449; I. M. Dach Underwear Co. v. Michigan Employ-
ment Security Commission, 80 N.W. 2d 193.

The judgment of the Court of Civil Appeals awarding re-
covery to the twelve respondents who are not residents of Smith
County is reversed and the judgment of the District Court dis-
missing them from this suit is affirmed. The judgment of the
Court of Civil Appeals awarding recovery to the remaining re-
spondents is reversed and the judgment of the District Court is
affirmed.

Associate Justice Culver not sitting.

Opinion delivered November 22, 1961.

Se

OLD CoLoNy INSURANCE COMPANY, Petitioner

v.
City OF QUITMAN, Respondent.

No, A-8414. Decided December 18, 1961
Rehearing Denied January 17, 1962
352 S.W. 2d 452

Malone, Seay & Gwinn, Dallas, for petitioner.

W. D. Brown, Quitman, Fulton, Hancock & McClain, Gilmer,
for respondent.

ASSOCIATE JUSTICE GRIFFIN delivered the opinion of
the Court.

The respondent, City of Quitman, hereinafter called “City”,
brought this suit in the District Court of Wood County, Texas,
against Johnny Folmar Drilling Company, Inc., and petitioner,

Ss

Old Colony Insurance Company, as defendants. The City alleged
that it entered into a contract with the drilling company to drill
and equip a water well for a sum of money and that the insurance
company was surety on the drilling company’s performance bond
given to the City. City further alleged that drilling company was
to drill a test well to a depth of 400 feet, or the Carrizo Sand;
that drilling company was to have a test made of the water in
this test well in accordance with the instructions and under the
supervision of the City’s engineer, and to inform the City’s
engineer of the results of that test; that if the test made showed
the water had an iron content of not more than .8 parts of iron
to 1,000,000 parts of water, then the engineer would give the
drilling company an order authorizing the drilling and comple-
tion of the water well to be used by the City. It was further
alleged that the drilling company guaranteed and warranted that
the completed well would produce water of no greater iron con-
tent than that produced by the test well. City alleged that the
analysis report of the water from the test well furnished to them
by the drilling company showed water within the permissible
iron content; that acting upon such report, its engineer ordered
the drilling company to proceed with the drilling of the City’s
well; that upon completion of the City’s well, the drilling com-
pany pumped the large well and it produced the number of gal-
Jons per minute as required by the contract; and drilling com-
pany represented the iron content of the water was the same as
that taken from the test well. Acting on such belief, and without
demanding a test of the water in the completed well as the con-
tract required, the City engineer gave a completion certificate
to the drilling company and the City paid the drilling company
the balance of $7,151.04 due under the contract for a total of
$25,243.35, being the contract price. The City alleged that the
water from the City’s well had a much higher iron content than
the water in the test well and could not be used in its mains for
domestic use, and as a result the City sought recovery from the
drilling company and the insurance company, as surety, for the
full amount paid.

The insurance company and drilling company each filed a
separate answer denying liability on various grounds and each
adopted in full the answer of its co-defendant. Depositions were
taken of Johnny Folmar, president and active manager of the
drilling company, of the City’s engineer, the City’s secretary,
mayor, water superintendent and others.

After answers were filed and depositions taken the City filed

0

a motion for summary judgment supported by an affidavit of
the City Secretary.

The insurance company filed a sworn reply to the City’s
motion for summary judgment and attached thereto an affidavit
from one purporting to be an experienced water engineer. The’
insurance company also filed a supplemental reply to the City’s
motion for summary judgment. Insurance company also adopted
in full the drilling company’s reply to the motion for summary
judgment.

The drilling company also filed a sworn answer to the City’s
motion fer summary judgment and pointed out what it consid-
ered issues of fact. Attached to its answer was an affidavit of
Johnny Folmar.

All parties appeared before the trial court on October 23,
1959; and after considering all of the pleadings filed, together
with depositions and affidavits, the trial court held there were
no genuine fact issues as to the liability of the drilling company
and its surety insurance company, and entered an interlocutory
summary judgment in favor of the City against the drilling com-
pany and the insurance company that the latter two were liable
to the City for its damages suffered. The question of the amount
of damages was left for a trial on the merits. At this trial, before
the Court and without a jury, on May 19, 1960, the court made
the summary judgment on liability final, and gave the City
judgment against the drilling company and the insurance com-
pany for $25,248.85 with interest thereon at 6% from date of
entry, August 13, 1960.

On appeal by the drilling company and the insurance com-
pany the Court of Civil Appeals reformed the trial court’s judg-
ment so as to give the insurance company a judgment over
against the drilling company, but otherwise affirmed. 345 S.W.
2d 439. The insurance company filed an application for writ of
error, but the drilling company did not appeal from the judg-
ment of the Court of Civil Appeals.

Complaint is also made that the Court of Civil Appeals erred
in affirming the trial court’s action in granting the summary
judgment for City. For the reasons hereinafter set out, we hold
the granting of the summary judgment was error.

About July 1 the drilling company finished installing the
pump and other equipment the contract required and the City

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engineer, without having been furnished a test of the water from
the completed well as required by the contract, issued the neces-
sary completion certificate upon which the City, on July 17,
1957, paid the drilling company the balance of $7,151.04 due on
the contract price.

Due to inability to secure certain needed electrical equipment
and to construct certain necessary facilities, the City did not
pump the well until about November 10, 1957, some five months
after Johnny Folmar had test pumped the well and made his
iron content tests.

By its fourth point, insurance company makes the contention
that it was released from liability because the City paid out the
final $7,051.04 due the drilling company before a sample of the
water from the completed well had been analyzed and the water
found acceptable.

In the contract, the drilling company guaranteed a chemical
analysis of water equal to that of a sample taken from the test
well. The contract provided that the drilling company “shall
collect a one gallon sample of water from the finished well and
submit same to the Laboratories of the Texas State Health De-
partment, Austin, Texas, for a complete chemical analysis”, and
that drilling company would furnish the City five certified copies
of the chemical analysis. Upon completion of the test pumping
of the City’s well about June 2, and after the water had cleared,
the drilling company did collect a gallon of water from the
well to be tested as provided by contract. This sample was given
to the City Secretary on June 4, 1957, and he undertook to pack
it and mail it to the State Health Department at Austin for a
chemical analysis. The drilling company paid the postage on the
shipment. At the time the City engineer issued his final com-
pletion certificate and authorized the final payment (about July
5), he had received no chemical analysis of the water from the
completed well. On July 17, 1957, when final payment was made
to the drilling company by the City, no report from the State
Health Department had been received, nor had any inquiry been
made of the Health Department about the sample. Nothing was
done by the City to secure a chemical analysis, nor was any de-
mand made on the drilling company for a chemical analysis of
the water from the well, until the water was turned into the
City mains during November of 1957 and complaints were made.
At this time the City did take a sample and submit it to the
State Health Department. This analysis showed an iron content
of the water greatly in excess of the permissible limits.

Ge

Under the provisions of the contract, the drilling company
had not completed its contract with the City and was not en-
titled to payment until it had furnished the City with a chemical
analysis of the water from the completed well, and that analysis
showed an iron content not in excess of that in the water from
the test well. This the drilling company did not do. Knowing of
this failure the City engineer certified and the City paid the
drilling company in full for the completed well.

As said in Bullard v. Norton, 107 Texas 571, 182 S.W.
668 (1916) :

“It is well settled that sureties are only bound by the precise
terms of the contract whose performance they secure, and that
any material alterations in the terms of the contract without
their consent will release them from liability. * * *”

The above case also holds that the surety is not obligated to
make inquiry or to keep watch over the parties to see that no
changes are made. .

Also see: Ryan v. Morton, 65 Texas 258-262, (1886); Lon-
ergan v. San Antonio Loan & Trust Co., 101 Texas 63, 104
S.W. 1061, (1907) ; Hess & Skinner Engineering Co. v. Turney,
110 Texas 148, 216 S.W. 621, (1919); Standard Acc. Ins. Co.
v. Knox, 144 Texas 296, 184 S.W. 2d 612(8), (1944); Wil-
liams v. Baldwin, Comm. App. 1921, 228 S.W. 554; Wright v.
A. G. McAdams Lbr. Co., Comm. App., 1921, 234 S.W. 878;
Mingus v. Employers’ Liability Assur. Co. Comm. App., 1933,
65 S.W. 2d 292; Larkin v. Pruett Lumber Co., Texas Civ. App.,
1919, 209 S.W. 443, no writ history; Porter v. Hope, Texas
Civ. App., 1926, 279 S.W. 585, writ refused; Aetna Casualty &
Surety Co. v. Robertson, Texas Civ. App., 1928, 8 S.W. 2d
895(4), no writ history; Annotations in 12 A.L.R. 382, 127
ALR. 10, 77 ALR. 222; 48 Am. Jur. 912, Sec. 170; 50 Am.
Jur. 932, Sec. 41, et seq.; Id. p. 987, Sec. 48, et seq.

The City cites the case of Mercantile Trust Co. v. Hensey,
205 U.S. 298, 27 S. Ct. 535, 51 L. Ed. 811, 10 Ann. Cas. 572,
(1907), as supporting its position that it is entitled to recover
its damages for failure of the drilling company to bring in a
well with iron content of water same as that in the test well. The
point in the Hensey case was that the final certificate of the
architect on which payment was made to the contractor did not
preclude the filing of suit for damages for failure of workman-

a  !

ship or materials. It had nothing to do with changes in the con-
tract between owner and contractor.

City also cites United States v. Walsh, CCA 2d Cir., 115
F. 697, (1902). That case involved a suit between the United
States, as owner, and Walsh, as contractor, and the sureties
on his performance bond for damages resulting from faulty con-
struction. Walsh claimed that by accepting the work with knowl-
edge of the defects the United States could not sue for damages.
The trial judge agreed with this view and directed a verdict for
the defendant. The appellate court reversed for a new trial, hold-
ing that where the final test of the completed structure was made
under conditions which did not permit those making the tests
to discover the structural departures from the specifications, the
government was not chargeable with the notice of such defects.
The court held there were facts which would warrant a jury
in so holding; therefore, the instructed verdict was improper.

I In our case there are no facts which would excuse the City’s
making final payment when it was well known to the engineer
and City secretary that no chemical analysis of the water from
the completed well had been made. This is a classic example of
the reason for the rule that sureties are released when there is a
material alteration in, and deviation from, the terms of the con-
tract without their consent and to their prejudice. Here, for
example, from the standpoint of the surety, there is no way of
knowing the chemical content of the water in the finished well
at the time it was accepted by respondent, and whether or not
that which intervened in the succeeding months before City
turned the water into its mains affected the chemical content of
the water. It is apparent that had the water been tested at the
time the well was finished and before acceptance by City there
could have been one of two results, either of which would have
obviated the question of City looking to petitioner under the
performance bond: the water at that time might have equaled
the test hole water analysis; or, if not, the contractor might at
that time have been able to find water, or to treat the water, so
as to meet the contract requirements. Had the test been made
and the water found to be of too high chemical content, and
which situation could not be corrected by the contractor, the
City would not have made the final payment. Respondent, by
its acts, in not requiring compliance with the contract, prevented
the happening of either of these possibilities and thereby pre-
judiced a right of petitioner as surety going to the whole con-
tract. The situation is therefore not one where the contract

50

deviations failed to prejudice or damage the surety but is one
where there is injury to the surety as a matter of law going to
the whole contract obligation.

To hold the insurance company liable in spite of these de-
partures from the terms of the contract and bond, the City
(owner) relies on the following provisions of the contract:

“Neither the Certificate of acceptance nor the final pay-
ment, nor any provision in the Contract Documents, shall
relieve the Contractor of the obligation for fulfillment of any
warranty which may be required in the Special Conditions of
the Specifications.”

“Preliminary approval. The engineer shall not have the
power to waive the obligations of this contract for the furnish-
ing by the contractor of good material, and of his performing
good work as herein described, and in full accordance with the
plans .and specifications.”

The argument of City is that in all events the contractor was
under obligation to complete and deliver a well with water cor-
responding in chemical analysis to the test well, from which the
contractor was not relieved by the acceptance and final payment,
or by any act of the engineer acting for City, and that this is
likewise determinative of the obligation of petitioner as surety
on the performance bond.

Hf It is at once manifest that the adoption of this line of rea-
soning would abrogate altogether the rights of petitioner as a
surety in the respects previously discussed, and would subject
the petitioner to surety liability regardless of any and all con-
tract deviations and alterations. There is a difference between
binding the surety to a guaranty of performance without excep-
tion where the other party for whom the work is being done
adheres to the contract, and where, as here, it is sought to hold
the surety regardless of substantial deviations from the contract
by the party for whom the work is being performed. The cases
cited by City recognize that contract provisions such as those
under review entitled the owner to hold the contractor for de-
fective work or improper materials even though accepted by
the architect or engineer; these cases do not, however, consider
contract deviations of the nature of the case at bar and do not
support the proposition that a surety remains bound notwith-
standing such contract deviations and alterations.

es

The obvious purposes of the contract provisions are that the
contractor shall not escape liability to the owner for defective
work or improper materials which may come to light subsequent
to acceptance and final payment; and, for the same reason, that
preliminary approval of the engineer shall not have the effect
of releasing the contractor from the obligations of furnishing
good materials, performing good work and complying with the
plans and specifications.

The City further seeks to hold insurance company surety
by virtue of the following provision found in the performance
bond signed by the surety:

“PROVIDED FURTHER that no final settlement between
the Owner and the Contractor shall abridge the right of any
beneficiary hereunder whose claim may be unsatisfied, but
the certificate of the Engineer that any progress payment or
final payment is due the Contractor or his assigns shall, when
accepted and acted upon in good faith by the Owner, be con-
clusive upon the Surety and its successors and assigns.” (Em-
phasis added.)

We notice that this provision discusses the rights of the
“beneficiaries hereunder” (being those subcontractors, workmen,
laborers, mechanics, and furnishers of material as set out by class
in an earlier portion of the bond) and is clearly for their pro-
tection. The first clause so shows and is not capable of any other
reasonable construction. This provision makes certain that the
beneficiaries will get their money so long as any beneficiary
shall have an unsatisfied claim. This is true regardless of the
fact that the owner may have paid out to the contractor the full
contract price. The rest of the paragraph, beginning with the
“but”, sets out the liability to the beneficiaries only as between
the owner and the surety. What this last provision says is that
if the owner—in good faith and upon the certificate of the
engineer that any progress or final payment is due the contractor
—pays in accordance with such engineer’s certificate, then
the owner is released from further payments but the surety is
conclusively bound to those beneficiaries holding unsatisfied
claims. This is consistent with the right of the owner to have
the contract fulfilled at a cost not exceeding the contract price.
If there are excess costs they shall fall upon the surety. This
is the obligation the surety contracted to discharge.

Here again this provision in no manner attempts to set aside
any obligation of the owner upon the contract either with the

02

contractor or the surety, nor is anything said about binding the
surety to the owner. The provision merely says:

1. No settlement will abridge the right of an unpaid
beneficiary to recover his unpaid claim.

2. The owner is not liable to the beneficiary if he has
paid in good faith.

8. However, the surety remains liable to the beneficiaries
on their claims.

The drilling company not having appealed from the Court
of Civil Appeals’ affirmance of the trial court’s judgment in
favor of the City against the drilling company, that part of the
Court of Civil Appeals’ judgment must be affirmed. There hav-
ing been no motion for summary judgment by the contractor or
insurance company, the cause must be remanded to the trial court
for further proceedings consistent with this opinion.

Opinion delivered December 18, 1961.
a
TRAVELERS INSURANCE COMPANY, Petitioner

v.
JOHN C. Dycus, Respondent

No. A-8584. Decided December 6, 1961
Rehearing Denied January 17, 1962
852 S.W. 2d 458

153

Thompson, Knight, Wright & Simmons, Dallas. Timothy E.
Kelley and David S. Kidder, Dallas, with above firm, for petitioner.

John H. Holloway, Houston, for respondent.

MR. JUSTICE STEAKLEY delivered the opinion of the
Court.

This is a Workmen’s Compensation case with a judgment
for the injured employee. Both the compensation carrier and the
claimant appealed to the Court of Civil Appeals without a
statement of facts pursuant to Rule 807, Texas Rules of
Civil Procedure. The Court of Civil Appeals in an opinion ordered
not published held that the filing of a statement of facts is
necessary to a decision, overruled all points of error of both
parties, and affirmed the judgment of the trial court.

Petitioner here is the compensation carrier urging two points
of error: that the Court of Civil Appeals erred in holding that
a statement of facts was necessary to a determination of its
one point of error in the Court of Civil Appeals; and that “The
trial court erred in computing the recovery to which respondent
was entitled based upon the answers of the jury to special issues.”
We sustain both points.

Respondent submitted two crosspoints of error in the Court
of Civil Appeals, but did not file application for writ of error.
His points in the Court of Civil Appeals complained of the
refusal of the trial court to declare a mistrial because of certain
argument by petitioner, and of the charge of the court in certain
respects not involved here.

0

Petitioner’s point of error in the Court of Civil Appeals, and
here, is, in effect, that the trial court erred in not computing
the award to respondent pursuant to subdivision (1) of Section
1 of Article 8309, V.A.C.S. The case was submitted in terms of
subdivision (1) of Section 1 of Article 8809 prior to the 1959
amendment (Acts 1959, 56th Leg., R. S., Ch. 355, p. 799) since
the injury occurred prior to the effective date of the amendment;
however, the computation problem is the same under Subdivision
(1) of Section 1, Article 3309, prior to the amendment average
annual wages consisted of 300 times the average daily wage and,
under Subdivision (5) of Section 1, average weekly wages are
“one-fifty-second part of the average annual wages”. See Texas
Employers’ Insurance Assn. v. Clack (Comm. App.), 132 S.W.
2d 399.

As pertinent here, the jury found that respondent suffered
partial incapacity for 28 weeks; that he had worked in the
employment in which he was working at the time of the injury
“substantially the whole of the year” immediately before the
injury the court having charged the jury that “substantially
the whole of the year means 800 days or substantially near to
800 days”; that the average daily wage earned by respondent
“during the days when so employed for the whole of the year”
was “$18.00 per day”; and that his average weekly wage earning
capacity during his partial incapacity was $99.00 per week.

The trial court submitted issues under subdivisions (1),
(2) and (8) of Section 1 of Article $309, but the finding of
the jury was under subdivision (1), ie., that respondent “was
working at the time of the injury * * *, whether for the same
employer or not, substantially the whole of the year * * *, im-
mediately before the date of said [his] injury.” As previously
noted, the trial court charged the jury that “The term ‘sub-
stantially the whole of the year’, as used in this charge, means
300 days or substantially near to 800 days.” Respondent pointed
out in his brief in the Court of Civil Appeals that he “had ob-
jected to the charge of the court * * * which submitted to the
jury appellee’s wage earnings under all subdivisions under Art.
8309”; however, he did not carry this specific objection into his
Motion to Disregard the Jury Findings and for Judgment Non
Obstante Veredicto, nor did he urge this as a point of error in
the Court of Civil Appeals. The charge and submission to the
jury in such respects, and the finding of the jury rendering sub-
division (1) applicable in determining the average weekly wages
of respondent, are therefore unchallenged by respondent in his
appeal, and must stand.

ee) 155

The trial court, however, entered judgment as follows:

“Based on the jury verdict, the Court further finds that
the plaintiff’s earning capacity prior to his injuries was $18.00
per day, or $126.00 per week, and the jury further found that
the plaintiff: was temporarily partially incapacitated for 28
weeks beginning August 2, 1959 and that during said period
of temporary incapacity the plaintiff had an earning capacity
of $99.00 per week, being a weekly loss of earning capacity
in the sum of $27.00 per week, 60% of said amount being
$16.20 per week for a total of 28 weeks, being the sum of
$458.60.”

WE This was error since computation of the award pursuant
to subdivision (1) of Section 1 of Article 8309 requires the jury
finding of average daily wage of $18.00 to be multiplied by 300
and divided by 52, with the resulting figure of $103.84 consti-
tuting the average weekly wage of respondent before his injury.
The average weekly wage earning capacity of respondent after
the injury having been found by the jury to be $99.00, under
Section 11 of Article 8306 the loss of earning capacity was $4.84
weekly, 60 per cent of which is $2.90. Respondent should have
been awarded $2.90 per week for the 28 weeks found by the
jury to have been the period of partial incapacity, with a result-
ing award of $81.20.

The judgment of the Court of Civil Appeals is reversed and
the judgment of the district court is reformed to award respondent
the sum of $81.20 for the period of his temporary partial inca-
pacity, and such judgment as reformed is affirmed.

Opinion delivered December 6, 1961.
[|

R. E. NEVILLE ET AL, Relators

v.
JUDGE HARRIS BREWSTER ET AL, Respondents
No, A-8524. Decided December 2, 1961

Rehearing Denied January 17, 1962
352 S.W. 2d 449

156

Spurlock, Schattman & Jacobs, Fort Worth, (Kenneth M. Cole,
Jr., Fort Worth, with above firm), for relator.

Baily & Williams, Dallas, for respondent Texas Bitulithic
Company.

Crumley & Green, Fort Worth, for respondent Bridge Build-
ers, Inc. .

Crowley, Wright, Miller & Garrett, Fort Worth, for respond-
ent City of Arlington.

CHIEF JUSTICE CALVERT delivered the opinion of the
Court.

181

Relators, Neville and Drs. Key and Doss, seek a writ of man-
damus directing the Honorable Harris Brewster, Judge of the
67th District Court of Tarrant County, Texas, to vacate an
order requiring the two physicians to produce certain medical
records in their possession and to deliver the same to the court
reporter taking their depositions for the purpose of photostating
the same and attaching the copies to the depositions.

Neville had filed a personal injury suit in the 67th District
Court against Texas Bitulithic Company and the City of Arling-
ton. The defendants in that case filed notice to take depositions
of Doctors Key and Doss upon written interrogatories. The in-
terrogatories propounded merely sought to identify the witnesses
as having examined and treated Neville and then requested that
the witnesses deliver to the court reporter “all written records
that you have in connection with such treatment or examination,
including bills, or reports, office notes or anything else in writing
concerning this patient” for the purpose of photostating the same
and attaching to the depositions. Subpoenas duces tecum had
been issued and served, requiring each doctor to produce “all
written records in connection with the treatment of R. E. Neville,
including bills, reports, office notes, or anything else in writing
concerning such patient”. The doctors refused to deliver over
these records on the ground that they were confidential.

Thereafter, the respondent, Bitulithic Company, moved that
the court order the doctors “to produce the medical records”
which they had in their possession “concerning the plaintiff,
R. E. Neville”, for copying and for use in the trial of the case.
Notice of this motion was served upon Neville and his attorney,
but not upon the medical witnesses. On a hearing the court
ordered that the doctors produce the “medical records which
they have in their possession concerning the plaintiff, R. E.
Neville” for the purpose stated in the motion.

Hi Relators advance several grounds for their conclusion that
the court’s order is unauthorized and void. They first say that
the Rules of Civil Procedure cannot be construed so as to require
a nonparty witness to produce his private records for copying
or for any other purpose. In other words, they seem to take the
position that the term “produce” would not even comprehend
an examination of the records by the attorneys for the respond-
ents-defendants. This interpretation would render “the order to
produce” wholly useless and accomplish nothing. The production
of the documents is required for the purpose of examination and

Bo

if the documents may be examined then under proper safeguards
there is no apparent reason why they may not be copied.

Next, they say that this procedure would effectively deny the
relator, Neville, the right of cross-examination. We think this
contention is also without merit. Under Rule 189 there is af-
forded to Neville the right of filing interrogatories, though we
agree with him that the direct interrogatories as submitted af-
forded nothing on which to base meaningful cross interrogatories.
The taking of the depositions was obviously for the purpose of
discovering matters that might lead to the disclosure of admissi-
ple evidence as provided by Rule 186a, Texas Rules of Civil
Procedure. In this connection relators raise the objection that
the medical records should not be produced, examined and copied
because they may be in memorandum form and subject to in-
terpretation or explanation. We think this objection is not valid
because if any interpretation or explanation is needed this may
be given in further pretrial procedure or upon the trial on the
merits.

In their third point relators say that this procedure would
work a greater hardship upon the witnesses than parties to a
lawsuit are required to endure for the reason that they are not
accorded the protection afforded by Rule 167. In this connection
they cite our decision in Crane v. Tunks, 328 S.W. 2d 4384,
where we held that in a discovery proceeding the trial court
had the duty to examine the documents in question so as to ascer-
tain what parts are material and relevant to the main cause and
to prevent the adversary from having access to information of
a private nature that is not relevant or material to any issue in
the case.

In the Crane case the adverse party had sought under Rule
737, Texas Rules of Civil Procedure, to compel the production
for his examination of Mrs. Crane’s income tax records for the
years 1939 to date. It was shown that these returns contained
information of a purely private nature. We held that to require
the delivery of these documents over to Mrs. Crane’s adversary
would be an unreasonable invasion of her right of privacy, and
that it was incumbent upon the court to exclude those matters
which were irrelevant and yet afford to the adversary all in-
formation that might be relevant and material to his cause of
action.

The relator, Neville, makes the point that the procedure
followed here compels the inspection and copying of these med-

eee] 159

ical records before he or his attorney has had an opportunity
to examine them and determine what, if anything, is not material
or is privileged. We think this contention is rather superficial
since Neville’s attorney has also been engaged to represent the
doctor witnesses, and surely neither Neville nor his attorney
are taking the position here that the doctors would refuse them
the privilege of an examination of these records if requested.

Relators further contend that written reports and communi-
cations made subsequent to the injury and passing between
Neville and the doctors are privileged and are protected from
disclosure under Rules 186a and 167. If any of relators’ records
are privileged it is only because of a privilege established by
the proviso in Rules 167 and 186a. The records were not privileged
at common law and have not been made so in this state by statute.
See Texas Law of Evidence, MeCormick and Ray, 2nd Ed., Sec.
491; Steagald v. State, 22 Ct. of App. of Texas 464, 3 S.W. 771;
Consolidated Underwriters v. Foxworth, Texas Civ. App., 196
S.W. 2d 87, no writ history; Caddo Grocery & Ice Co. v. Car-
penter, Texas Civ. App., 285 S.W. 2d 470, no writ history.
But, in any event, relators are not in position to raise in this
court the question of privilege under Rules 167 and 186a.

In attempting to raise the question of privilege here, as in
their attempt to raise a question of harassment, relators mis-
conceive the nature of this proceeding and the limitations which
are imposed by it, and misconceive the extent of the respective
areas in which this Court and trial courts operate. Before this
Court may issue a writ of mandamus to compel the trial court
to vacate its order it must appear that the trial court’s order is
void. The trial court’s order in this case is valid on its face.
It is a rather broad order, to be true, but breadth alone does not
render it void. But relators say that it is void as representing
an abuse of discretion if it requires that they produce for copy-
ing records which have not been shown by respondents to be
relevant and material or which are privileged under the proviso
of Rules 167 and 186a. The difficulty is that Rule 186b imposes
the duty on relators first to present these matters to the trial
judge by motion. Until that is done, this Court cannot know
whether relators have any medical records concerning Neville
which are irrelevant or immaterial in his present suit, nor can
it know whether they have any records which are privileged
under Rules 167 and 186a.

HM The trial court did not abuse its discretion by entering
the broad order it did enter. When the interrogatories and the

0

subpoenas duces tecum were served on relators, Rule 186b re-
quired that they file a motion with the trial court if they needed
protection against disclosure of matters which, under law or
the Rules of Civil Procedure, should “not be inquired into” or
would result in “undue annoyance, embarrassment, oppression,
or expense”. They did not do so. Instead, they simply refused
to comply. Thereupon, the defendants filed their motion. Rela-
tors had an opportunity at that hearing to show and contend
that there were privileged written statements or communications
among their records. Apparently they made no such showing.
There is nothing in the Rules of Civil Procedure which would
prevent their making the showing, on motion, even at this late
hour. In the absence of such a showing, relators have not estab-
lished that the order entered by the trial court represents an
abuse of discretion in any respect.

HE Rule 186b provides a specific procedure by which parties
and witnesses may seek from the trial court the very type of
relief which relators seek from this Court. Until they have
exhausted that procedure and can show that the trial court has
abused its discretion in denying them specific relief to which
the record shows they are entitled, they can make no showing
here of a clear legal right to have the trial court’s order de-
clared invalid.

The writ of mandamus is denied.

Opinion delivered December 2, 1961.

THE Crry oF EL PAso, Petitioner
v.
GENE DONOHUE, TRUSTEE, ET AL., Respondents

No. A-8378. Decided January 8, 1962
Rehearing Denied January 21, 1962
352 S/W. 2d 713

161

Travis White, City Attorney, El Paso, Robert J. Galvan and
John-C. Ross, Jr., Assistants City Attorney, El Paso, for peti-
tioner.

Kemp, Smith, Brown, Goggin & White, Joseph J. Rey, El Paso,
for respondents.

ASSOCIATE JUSTICE ROBERT W. HAMILTON delivered
the opinion of the Court.

The respondents, Gene Donohue, Trustee, et al., applied to the
City Planning Commission of El] Paso to have Lots 18 to 82 in
Block 30, Woodlawn Addition to the City of El Paso, rezoned
from A-8, which is restricted to residences and apartments, to
C-4, which provides for commercial construction. The City
Planning Commission denied the rezoning application. Respond-
ents appealed to the City Council of El Paso. The City Council
denied the application. Respondents then brought suit in the
District Court of El Paso County to have the ordinance declared
invalid as to respondents’ property. That court held that the
action of the City in refusing the application was arbitrary and
unreasonable, and entered judgment decreeing that the zoning
ordinance in so far as it applies to respondents’ property in
Block 80, Woodlawn Addition to the City of El Paso, El Paso
County, is unreasonable, arbitrary and void. From this judgment
the City of El Paso prosecuted its appeal to the Court of Civil
Appeals, which court affirmed the judgment of the trial court.
344 S.W. 2d 185. The City of El Paso perfected its appeal to
this court.

1

The question before this court is whether under the record
in this case there were any issuable facts or conditions which
would authorize the City Council of El Paso to exercise its dis-
eretion in determining whether or not respondents’ property
should be rezoned from residential and apartments to business.
The trial court and the Court of Civil Appeals have held that
the City Council had no discretion in the matter, and held as a
matter of law that the ordinance was invalid as to respondents’
property. We do not agree with these holdings.

The respondents contend that the property in question under
its present zoning, that is, for residences and apartments only,
is unsuitable for such purposes, and that under such zoning re-
striction the property has little or no practical value, which
amounts to a confiscation of the property. In support of these
contentions the respondents rely on the testimony of a number
of real estate and mortgage loan company men.

The real estate men testified in effect that the property is
unsuitable for such purposes because of the following conditions
and circumstances: Block 30, in which the property in question
is located, adjoins Paisano Drive; Paisano Drive is a six-lane,
divided thoroughfare which is designed to carry fast traffic,
and the speed limit on said drive is forty-five miles per hour
for approximately a mile east and a mile west of Block 30; a
drainage ditch located some one hundred feet to the southwest
of the property at times gives off unpleasant odors; the city
sewage disposal plant, which gives off unpleasant odors, is some
seven or eight blocks southeast; a baseball park and Washington
Park, which has various recreational and amusement facilities,
are located nearby; the Cordova Bridge across the Rio Grande
into Mexico is some eight or nine blocks south. There are also
some five or six non-conforming small businesses located within
the area. Directly to the west of Block 80 and across a street is
a gasoline filling station and truck stop which is zoned commer-
cial. Some several blocks to the east on Paisano Drive is located
the City Coliseum, where various forms of entertainment, in-
eluding rodeos, from time to time are held.

In the opinion of the real estate witnesses the large volume
of traffic which Paisano carried and the speed at which the
traffic was allowed to move, the unpleasant odors from the city
sewage disposal plant and the drainage ditch, as well as the
large crowds gathering at the coliseum and the baseball park,
made the area undesirable for residential purposes. They testified
that the market value of 25-foot lots in Block 30 was from

| 163

$500.00 to $750.00 under the present zoning, that if said prop-
erty were commercially zoned it would be worth from $2500
to $5000 per lot. The mortgage and loan company people testified
that the area was unsuitable for individual residences and apart-
ments, and that they would not recommend that loans be made
for building under the present zoning.

The city contends that the area is suitable for the purposes
for which it is presently zoned and that the zoning of the prop-
erty in Block 30 for commercial purposes would be detrimental
to the residents of the area in question. The city further con-
tends that the zoning of property on Paisano as commercial would
cause traffic congestion and would defeat the purpose for which
Paisano was built, that is, to facilitate the movement of traffic
into the downtown section and out of the downtown section, as
well as traffic through the city.

In addition to several witnesses who were residents living
near Block 30 testifying that they objected to the rezoning of
Block 30 because it would be detrimental to their homes, the
city used one witness who had been a member of the City Plan-
ning Commission for ten years and was at the time of testifying
its chairman. Another witness used was the Director of Plan-
ning of the City of El Paso. He had been executive secretary
of Walla Walla, Washington, Planning Commission from 1947
to 1952, was a Director of Planning of Spokane County, Wash-
ington, from 1952 to 1957, was Planning Director of the Puget
Sound Governmental Conference in 1957, and was consultant
to a number of cities and to legislative committees of the State
of Oregon. The City also used a city building official who had
had several years’ experience in engineering and design field
supervision.

The Chairman of the Planning Commission testified that
Paisano Drive was built about ten years previously at a cost
of several million dollars for the purpose of relieving traffic on
Alameda Street, which carried U. S. Highway 80 traffic, and
was designed to move the traffic rapidly through the city; that
to zone property on Paisano as commercial would lead to con-
gestion of traffic and defeat the purpose for which Paisano Drive
was built at such a tremendous cost. He testified that he had
made a study of zoning problems in El Paso for ten years, that
the area in question is properly zoned as residential, and that
it is suitable for such purposes; that it was imperative to main-
tain Paisano Drive for fast moving traffic and that it was a
policy of the Planning Commission to recommend that it be so

I |

maintained at least until an expressway is provided through
the city.

The director of city planning testified that the plan and pur-
pose of the city in building Paisano Drive was for a major traffic
carrying facility, and that purpose has been accomplished rea-
sonably well. It was his opinion that the area in question was
zoned suitably, that it was a growing residential section, that
many new houses were being built in the area and in fact at
the time of trial plans were being made for the building of a
new school at a location several blocks southeast of the respond-
ents’ property to take care of the growing needs of the children
of school age; that individual residences were located on the
property across Paisano Drive to the north, to the south across
Central Avenue from Block 30 were a number of residences.
On the very property which is sought to be rezoned are a number
of residences which are occupied and have been for many years.
Across Hammett Drive to the east is a housing project composed
of some forty apartment buildings occupied by some three hun-
dred families, with a total of approximately eleven hundred occu-
pants; that in addition to the new school being planned there
are two schools a short distance east, one a high school and the
other an elementary school. Washington Park is available for
recreation for children in the area. It was his opinion that to
serve the best interests of the people living in the area and the
welfare of the public in general the zoning should be maintained
for residences and for apartments.

The city building official testified that the area was suitable
for residences and apartments. He said the area was composed
of residents of low income and modest homes, that similar areas
have been able to get financing for new buildings.

The Executive Director of the Housing Authority which
operates the project just east of respondents’ property and the
Sherman project farther east on Paisano, testified that he had
been engaged in that type of work for seven years and that he
was familiar with the area, that he appeared before the Planning
Commission and the City Council protesting any change in the
zoning of the lots in Block 30 from A-3 apartments and multiple
residential and dwellings to C-4 commercial; that he was repre-
senting the Board of Directors of the housing authority which
opposed such rezoning; that these housing authority projects
were located in this area because it was a residential area and
it was desired that it be kept that way. He testified that the
zoning which the area had was suitable and that the granting of

es 165

this application for rezoning of the property in Block 30 would
be detrimental to the neighborhood. He testified that in his
opinion the area was suitable for privately owned apartments;
it is close to town, close to schools, and has many advantages for
residential purposes for low income families.

The Court of Civil Appeals in reaching its decision in this
ease necessarily had to disregard the testimony of the witnesses
for the City of El Paso. The opinion states:

“There was no contradicting testimony by other real estate
or mortgage company experts—only the testimony of the City
representatives as outlined above. This does not, we think,
present a situation where reasonable minds could or should
differ, but presents, rather, a situation where the experts in
the field say one thing and three City representatives another.”

Hf No authority is cited supporting the proposition that only real
estate and mortgage company experts are qualified to testify
about matters affecting the validity of a zoning ordinance, and
we know of none. The governing body of a city, in discharging
its legislative functions with regard to city planning and zoning,
is entitled to consider all the facts and circumstances which may
affect the property and occupants of the area involved, as well
as the general welfare of the people of the city as a whole, and
is entitled to consider the opinions of experts in the field of city
planning as well as the opinions of real estate and mortgage com-
pany experts. It follows, that in determining whether or not a
governing body of a city has abused its discretion in the exercise
of its legislative functions dealing with city planning and zoning,
the courts are not limited to the testimony of real estate and loan
company experts.

HM in City of Waxahachie v. Watkins, 154 Texas 206, 275
S.W. 2d 477, at page 480, this court said:

«* * * And the ‘extraordinary burden’ rests on one at-
tacking the ordinance ‘to show that no conclusive, or even con-
troversial or issuable, facts or conditions existed which would
authorize the governing board of the municipality to exercise
the discretion confided to it’ ”

To uphold the position of the respondents in this case we
must hold that there were no controversial or issuable facts or
conditions existing which would authorize the City Council of
El Paso to exercise a discretion in determining whether or not

6 ee

respondent’s application for rezoning should be granted. We
must say as a matter of law that the property in question is
unsuitable for residential purposes and is in fact business prop-
erty. This we cannot say when we consider all of the testimony
in the record before us.

Probably the case most directly in point with the instant
case is the City of Dallas v. Lively, 161 S.W. 2d 895, (Texas
Civ. App.) error refused. There the property was bounded by
two heavily traveled highways. The adjacent property on one
side was an old residence abandoned and uninhabitable. Across
the street was a Magnolia service station. The property was
valued from nothing to $1500 as residential property, but by
rezoning for a filling station it would be worth $12,500 to $15,000.
There was evidence that it was unfit for residential purposes
on account of the traffic on the two highways. The question of
confiscation was raised. The district court in that case held the
zoning void, as did the district court in the instant case. The
Court of Civil Appeals in the Lively case, however, reversed and
rendered on the ground that the plaintiffs had not carried their
“extraordinary burden” of showing that reasonable minds could
not differ under the facts of the situation. See also the case of
Edge v. City of Bellaire, 200 S.W. 2d 224, (Texas Civ. App.)
error refused.

Hf Respondents argue in effect that since the property in ques-
tion would be much more valuable commercially zoned, the failure
of the city to rezone amounts to a confiscation of respondents’
property. In support of this argument they cite the case of City
of West University Place v. Ellis, 184 Texas 222, 134 S/W.
2d 1038. That case involved the zoning of a 50-foot lot as resi-
dential, when at the time it was actually in the business district.
The lot faced on a main thoroughfare of the city and had a
beauty parlor located on one side of it and a liquor store on the
other. The court held that where the zoning of a business lot as
residential results in destroying its value, such action amounts
to confiscation. In the instant case the property in question was
in a residential area when first zoned as residential and the
area is still predominantly residential, with residential property
on three sides and even with residences on some of the property
itself. Furthermore, there was evidence that this property has
substantial value under the present zoning. The evidence, how-
ever, was uncontroverted that it would be much more valuable
if changed from residential to commercial zoning. This in itself
does not amount to confiscation. The argument made here was
rejected in Dallas v. Lively, supra.

ee 167
We reverse the judgment of the Court of Civil Appeals and
of the district court and render judgment that respondents Gene
Donohue, Trustee, et al. take nothing.
Opinion delivered January 3, 1962.
as
BrAzOs RIVER AUTHORITY, Petitioner

v.
Ciry oF GRAHAM, Respondent

No. A-7912. Decided October 8, 1961
Rehearing Denied January 24, 1962
854 S.W. 2d 99

2
©
a

169

JUSTICES SMITH, GRIFFIN and HAMILTON dissented.

Roger Tyler, Austin, J. R. Creighton, Mineral Wells, Brown,
Herman, Scott & Young, Fort Worth, J. Robert Howard, Lub-
bock, Martin Harris, and Clark, Mathews, Thomas, Harris &
Denius, Austin, for petitioner.

Jennings & Montgomery, Graham, for respondent.
MR. JUSTICE NORVELL delivered the opinion of the Court.

Based upon special findings of a jury, the District Court of
Young County, Texas, rendered judgment for the sum of $430,-
750.00 in favor of the City of Graham and against the Brazos
River Authority. The Court of Civil Appeals affirmed. 335 S.W.
2d 247.

. The City’s theory of recovery was that the River Authority
* had taken or damaged three pieces of property owned and used
by it in carrying out its municipal functions. Article 1, Sec. 17,
Texas Constitution. The jury found that the City’s sewage dis-
posal plant, its water treatment plant and its Salt Creek “channel
reservoir” had all been rendered subject to flooding as a result
of the “construction, maintenance and operation of Possum
Kingdom Dam and the siltation * * * resulting therefrom”. It also
found that the intrinsic value of the sewage disposal plant “at
the present time had Possum Kingdom Dam not been constructed
and maintained and operated” would have been $140,000.00, but
that by reason of the construction, maintenance and operation
of such dam, the value of the sewage disposal plant was only
$750.00 at the present time; a difference of $139,250.00. Similar
findings were made with reference to the water treatment plant,
(before, intrinsic value—$250,000.00; after—$1500.00—differ-
ence — $248,500.00), and the “channel reservoir” (before, in-
trinsic value—$43,000.00; after—none—difference—$43,000.00).

The River Authority as petitioner in this Court attacks the
judgments of the courts below by nine points of error wherein
it asserts that the Authority is not liable in law for injuries
sulting from the flooding of any of the respondent City’s facili-

1

ties; that as a matter of law, the evidence relating to damages
will not support a recovery for the damaging or taking of the
water treatment plant or the “channel reservoir”; that the City’s
action is barred by the two year statute of limitations, Article
5526, Vernon’s Ann. Texas Stats.; that the District Court erron-
eously excluded from evidence a purported release executed by
the City to the Authority, and that the trial court erroneously
instructed the jury as to the measure of damages and improperly
commented upon the weight of the evidence.

Petitioner under its first contention above mentioned asserts
that the City as an upper riparian on the Brazos has no vested
right to have the waters of the Brazos and its tributary, Salt
Creek, flow by its land at undiminished speed and that it is the
checking of the flow of the river by the operation of the Possum
Kingdom Dam that causes siltation which in turn brings about
a rise in the water level of the Brazos and Salt. Creek and results
in the flooding of respondent’s property; that petitioner is en-
titled to use the bed and banks of the Brazos for the storage
and flow of water under the statutory direction of the State,
and that respondent’s lands are subject to a servitude whereby
damages resulting from the State’s efforts to control flood waters
cannot be recovered from the State.

The pertinent facts of the case, particularly those relating
to the first argument or contention of the petitioner above men-
tioned, are:

The Brazos River Authority, formerly the Brazos River
Conservation and Reclamation District, is a public governmental
agency created directly by legislative enactment under authority
of the Conservation Amendment to the Texas Constitution. See
Article 16, Sec. 59, Texas Constitution, Article 8280-101, Ver-
non’s Ann. Texas Stats. In 1941, the Authority constructed the
Possum Kingdom Dam across the Brazos in Palo Pinto County.
This dam is located to the west and upstream from the City of
Mineral Wells. The spillway of the dam is one thousand feet
above sea level. The construction of the dam resulted in the
formation of Possum Kingdom Lake which covers some 26,000
acres and extends from the dam in a generally westerly and
northerly direction for some sixty-five miles up the Brazos.
In order to provide for the bed and banks of such lake, the
Authority secured, by purchase or condemnation, lands and ease-
ments over lands for permanent or intermittent flooding up to
the 1100 foot contour mark, although this was not the invariable
practice or rule. Gooseneck Bend on the Brazos is a large ox-bow

a

loop located approximately fifty-five miles up the Brazos from
the Possum Kingdom Dam. Salt Creek flows approximately north
to south and joins the Brazos at Gooseneck Bend. The City of
Graham is located on the east side of Salt Creek. Its sewage
disposal plant is located near the southwest corner of the city
limits on the west side of the creek and about three miles up
stream from the Salt Creek-Brazos confluence. This plant was
built in 1928, long before the construction of the Possum King-
dom Dam, and has been improved and modernized since that
time. The “channel dam” heretofore mentioned is located across
Salt Creek approximately one and a quarter miles above the
sewage disposal plant. This dam was built in 1908 and enlarged
in 1923. It creates a small channel reservoir in Salt Creek which
holds about ten acre feet of water and is used as an emergency
or standby water supply for the City. The City’s water treat-
ment plant is located on the east side of Salt Creek about 1200
feet upstream from the channel dam and about a mile and a half
above the sewage disposal plant. The main source of the City’s
water supply comes from two reservoirs, Lake Graham and
Lake Eddleman, which are upstream from the water treatment
plant and located on separate branches of Salt Creek. These
lakes are connected by a canal and water is taken from them
through Lake Eddleman to the water treatment plant by means
of a 16 inch pipe line.

The elevation of the clarifier outlet of the sewage disposal
plant is 1008.94 feet above sea level. The clarifier wall is two
feet higher in elevation. The elevation of the top of the channel
dam is 1009.97 feet while the engine room floor of water treat-
ment plant is at an elevation of 1019.09 feet. When the water
in Salt Creek rises above an elevation of 1003.94 feet, the sewage
disposal plant is rendered inoperative with the result that raw
sewage flows into the creek. When the water rises above the
top of the channel dam, 1009.97, the water behind and im-
pounded by the dam is rendered unfit for municipal use, and
cannot be processed by the water treatment plant. When the
water mark exceeds 1019.09 feet, the operation of the water
treatment plant is severely hampered and it cannot effectively
process waters from the city reservoir.

It appears that all these facilities of the City have been
flooded to a more or less extent upon one or more occasions.
The sewage disposal plant has been repeatedly flooded.

The nature and extent of the siltation problem in Possum
Kingdom Lake is fully developed by the testimony. The head-

2

waters of the Brazos are located in New Mexico but little or
none of the water which falls in the Brazos watershed west of
the caprock in West Texas reaches Possum Kingdom Lake.
The Brazos watershed lying between the caprock and Goose-
neck Bend is approximately 18,000 square miles. The area is
semiarid and the waters drained from the basin are heavily
Jaden with silt. For a ten-year period extending from 1924 to
1934, the river carried annually about 9,900,000 tons of silt
past the Mineral Wells gauging station (about 65 miles below
Gooseneck Bend) according to the measurements of the United
States Geological Survey. One witness described the silt carriage
load of this period as being the equivalent of 6,506 acre feet
per year. For an approximate 13-year period from 1941 to 1954,
the annual silt carriage measured at the South Bend gauging
station (about ten miles above Gooseneck Bend and above the
backwater of Possum Kingdom Lake) was considerably less,
being 3,760,220 tons per year. This was explained by the presence
of drought conditions during the 1941-54 period in which the
water drained from the river basin was reduced from an average
of 953,550 acre feet per annum for the 1924-34 period to 467,179
acre feet annually for the 1941-54 period. The average annual
silt load carried over the Possum Kingdom Dam for the 1941-54
period was 88,065 tons as compared to 3,760,220 tons of silt
carried into the reservoir. In other words, during a 12.71 year
period ending in 1954, some 46,673,090 tons of silt was de-
posited in Possum Kingdom Lake. Less than three per cent of
the silt carried into the Lake was taken out.

This process of siltation has resulted in the raising of the
floor of the Lake above the elevation of the original bed of the
river and the narrowing of the channel of the stream of the
current running through the waters of the Lake. At and near
the head of the Lake—around Gooseneck Bend—the siltation
and sedimentation has been extremely heavy. When the flowing
water of the Brazos reaches the static water of the Lake, with
the consequent slowing of the speed of the waters, the heavy
particles of silt known as the “bed load” are deposited resulting
in the formation of sandbars and similar barriers in the bed and
shores of the upper portions of the Lake.

The rise in the elevation of the level of the waters in the
river and in the Lake at Gooseneck Bend is indicated by the
testimony of the witness Robert Gooch. His testimony and charts
showed the following water elevations in 1938—before the con-
struction of the dam;—in 1941,—immediately after the con-
struction of the dam,—and in 1954, after the dam had been in

Se :

operation for some thirteen years, according to various quantities
of water which would pass by a given point on the river measured
in cubic feet per second.

Difference in
Water flow 1938 before 1941 immediate 1954—damin elevation

cubic feet dam wascon- ly after dam operation between 1941

per second structed wasconstructed forl8years and 1954
10,000 990.7 1000.3 1003.4 3.1
20,000 995.3 1001.0 1006.2 5.2
30,000 998.4 1002.0 1008.5 6.5
40,000 1000.9 1003.5 1010.6 T1
50,000 1003.9 1005.0 1012.3 7.3

This rather graphically represents the effects of the siltation
occurring in the Lake. The witness Gooch also testified that
based upon 19 years of data relating to the water flow of the
Brazos, he estimated that under conditions as they existed in
1954-55, the water level of the Lake at the location of the
City’s sewage disposal plant on Salt Creek (about three miles
upstream from Gooseneck Bend) and in the vicinity of the City’s
other installations, would reach an elevation of 1005 (1.1 feet
above the clarifier outlet) whenever the Brazos carried a water
flow of 15,000 cubic feet per second, and that a flow of 15,000
second feet or more would occur once every eight or nine months
on an average. Other estimates of the witness were that a flow
of 19,000 second feet would raise the elevation to 1006 feet and
occur on an average of once every 11 months, that a flow of
37,000 second feet would raise the water elevation to 1010 feet
(above 1009.97 feet, the elevation of the top of the channel
dam) and occur on an average of once every two years and
five months; that under 1954-55 lake and riverbed conditions,
a flow of 100,000 cubic feet would result in a water level of
1019 feet, the approximate level of the floor of the City’s water
treatment plant. Mr. Gooch stated that he had no record of a
100,000 second foot flow during the 19-year period immediately
before 1954, but that “within the memory of people living in
this area there have been floods on the Brazos of 100 thousand
cubic feet per second, although it was not measured by the U. S.
Geological Survey at that time.” He also stated on the basis of
engineering knowledge of rivers, that much larger floods have
occurred on rivers the size of the Brazos and that a flow of 100
thousand cubic feet per second is not much of a flow for that
river because of the enormous drainage area involved, some
18,000 square miles.

Obviously the estimates as to water elevations and average

|

periods of flooding are approximate only. There are variables
of a minor nature that also enter into these estimates and pre-
dictions. Undoubtedly the flow from the Salt Creek watershed
between Lake Graham and Lake Eddleman and the creek’s con-
fluence with the Brazos—approximately six miles—has some
effect upon the water levels in Salt Creek opposite the City’s
installations, and there are minor differences in the position of
the sewer disposal plant and the water treatment plant on Salt
Creek which would affect in a small way the calculations of
water levels. However, there is no serious conflict in the testi-
mony relating to the rise in water elevation caused by the silta-
tion process taking place in Possum Kingdom Lake and what
has been said above gives an accurate though approximate pic-
ture of the situation.

We consider first that portion of the judgment relating to
the sewage disposal plant. This represents a recovery of $139,-
250.00 in damages. The court considered that a “taking” of
the plant had resulted because of its being subjected to repeated
floodings as a result of the construction, maintenance and opera-
tion of Possum Kingdom Dam. The judgment specifically describes
the tract of land upon which the plant is located, together with
easements incident thereto, and then provides that such property
by force of the judgment is subjected “to an easement or servi-
tude in favor of the Brazos River Authority so that (the Author-
ity) may, without further liability, flood, overflow, inundate
or submerge said properties by reason of the construction, main-
tenance and operation of Possum Kingdom Dam with the crest
of the spillway gates at elevation of 1000 feet above mean sea
level; and that the easement or servitude herein awarded (shall)
become effective upon and only upon the payment of the damages
herein awarded.”

It therefore appears that we have a proceeding in the nature
of an inverse condemnation in that the Authority has taken the
property of the City and now the City is attempting to recover
compensation for such taking. Unless it can be said, as contended
for by the petitioner, that the Authority was legally entitled to
flood the City’s water disposal plant in carrying out its flood
control and kindred activities, the fact of a taking can hardly be
questioned. The plant was constructed before Possum Kingdom
Lake came into existence. When constructed it was not subject
to flood damage, except in case of the highest waters in Salt
Creek, but now as a result of the existence of the Lake and its
heavy siltation, the plant is subject to repeated overflows which,
when present, render its operations impossible and cause raw

Ss

sewage to be discharged into the Creek and by backwater action
carried up the stream along the western border of the town.
Fort Worth Imp. Dist. No. 1 v. City of Fort Worth, 106 Texas
148, 158 S.W. 164, 48 L.R.A. (N.S.) 994; Chicago Rock Island
& Guif Ry. Co. v. Tarrant County Water Control and Improve-
ment Dist. No. 1, 123 Texas 482, 73 S.W. 2d 55; Tarrant County
Water Control and Improvement Dist. No. 1 v. Fowler, Tex.
Civ. App., 175 S.W. 2d 694, wr. ref. w.o.m.; 2 Nichols on Emi-
nent Domain (8rd Ed.), 236, 258, Secs. 6(1), 6.22, 6.28; 16 Tex.
Jur. 436, Eminent Domain Sec. 251.

Petitioner contends that an upper riparian owner such as
the City of Graham has no legal right to have the water in a
stream flow at its customary rate of speed in coursing by or
through his or its premises. As a corollary to this position, it is
asserted that as most of the siltation in the Lake is caused by
particles of soil being deposited on the bed and banks of the
Lake as a result of of the diminution in the speed of the water
flow, such injury as may result to the upper riparian is non-
compensable. It is also urged as essentially a part of the same
argument, that the bed and banks of the river are owned or
subject to the control of the State and hence may be used by the
Authority for water storage and flood control purposes without
its being liable to the owners of the upland along the shores
of the stream.

This argument so far as we have been able to ascertain has
never been accepted in any jurisdiction. What it amounts to
is the assertion that although the Authority would have to pay
compensation under Article 1, Sec. 17 of the Constitution for
those lands which would be covered with water immediately
after the construction of the dam—the first filling of the lake,
-——any subsequent inundations caused by the maintenance and
operation of the dam would be damnum absque injuria. In other
words, it is an assertion that the taking and damaging of lands
in addition to the taking for the original bed of the lake is
justified under the police power. This question then naturally
arises: The surface elevation of the Jake when full in 1941,
immediately after the construction of the dam would be approxi-
mately 1005 feet above sea level at a flow of 50,000 second feet,*
why then did the Authority adopt the general policy of acquiring
lands for overflow purposes up to the 1010 line? The answer
to this question is that, from an engineering standpoint, it may
be reasonably anticipated that as the dam is used and operated

1. The 50,000 second foot figures are used because of the Authority’s
assertion that a water flow in this magnitude on the Brazos is most unusual.

0

throughout the years the high water contour lines of the lake
will rise,2 and that from a legal standpoint, there has been no
recognition of, nor can there be a rational line of demarcation
drawn distinguishing periods of high water which occur within
a few days or months after the completion of the dam and are
occasioned solely by the construction thereof, and floods which
take place some years thereafter as a result of the operation and
use of the dam for water impounding purposes. To attempt a
distinction between the power of eminent domain and an exercise
of the police power along this line would, as intimated by the
Court of Civil Appeals, involve us in a sophistic Miltonian Ser-
bonian Bog.

Governmental agencies and authorities are necessities. They
are capable of rendering great and beneficent public services.
But any appeal to the tradition of our laws which omits a decent.
regard for private property rights is both inaccurate and dis-
torted. It is because of this regard that our governmental agencies
and authorities in acquiring properties for their public purposes
are generally required to proceed under the power of eminent
domain rather than under the police power. Such a policy has
not resulted in a destruction of flood control and improvement
agencies in the past and there is no reason to apprehend that the
continuation of such policy will prove overly costly or inimical
to the American way of life in the future.

The geographical location of the City’s sewage disposal plant
with reference to the artificial lake created by the erection of
the dam is unusual, but the problem of damages created thereby
should not operate to vary the established rule of compensation
contemplated by the Constitution. It would be manifestly unjust
to say that because much land and property in the lower reaches
of the river and below a flood control dam would be saved from
damage and destruction, the dam constructing authority should
be allowed to take Jands lying above the dam for water storage
purposes under the police power without paying compensation
therefor.

It may be that a riparian is in no position to complain of the
slowing of the waters running in a stream adjoining his land—
when this is his sole complaint. But, that is not the case before
us, nor are we concerned with the rights of riparians in and to

2. The life of the lake under present operating conditions, eg. without
the erection of silt screening dams or the conducting of dredging operations, is
estimated at approximately seventy years. At that time its abandonment would
be forced because of the shallowness of the lake and spread of its waters like
the proverbial Powder River—‘a mile wide and an inch deep”.

Se

flood waters as was the case in Motl v. Boyd, 116 Tex. 82, 286
S.W. 458. Our problem here need not be pulverized into molecular
parts in an attempt to fit it into the dictum of some particular
case which was essentially concerned with a wholly different
question than that now before us. Our questions may be simply
restated thus: Does the operation of the dam and the consequent
formation of the Lake cause the flooding of respondent’s prop-
erty? This must be answered in the affirmative and thus a
second question is raised: Can a valid distinction be drawn be-
tween flooding which results from the building of the dam only
and flooding which occurs as a result of the construction of the
dam and the resulting siltation of the reservoir acting together?
Keeping the critical elevation of the sewage disposal plant in
mind—1003.94 feet, and referring to the table in the forepart
of this opinion, it will be seen that a flow of more than 40,000
second feet would be required to flood the sewage disposal plant
immediately after the dam was constructed. By 1954, because
of siltation, a flow of slightly more than 10,000 second feet would
bring the water level above the clarifier outlet of the sewage
disposal plant.

In our opinion, the siltation of a reservoir to some extent is
clearly foreseeable. It is indicated by the engineering testimony
that the formation of silt depositions is taken into consideration
as a part of the engineering problem. In Tarrant County Water
Control and Improvement Dist. No. 1 v. Fowler, Tex. Civ. App.,
175 S.W. 2d 694, wr. ref., w.om., 142 Tex. 375, 179 S.W. 2d
250, the court mentioned the problem of the filling in of the
channel of a stream by soil and gravel. The court said:

“This condition, (of flooding) in our opinion, will become
progressively more serious, as it was shown that during the
last few years, the bed of Ash Creek has half filled with sand
and gravel, diminishing its carrying capacity, and, obviously,
in times of heavy rainfall, will cause the water to leave its bed
and spread out over the adjacent land. That these results were
contemplated when the dam was erected is shown, we think,
by the evidence of the engineer upon whose plans and advice
the dams and reservoir were constructed.”

lf As to the sewage disposal plant, we are in agreement with
the Court of Civil Appeals. The record establishes the fact that
this installation or portions thereof will be repeatedly inundated
by the back waters of the Brazos and Salt Creek. A “taking”
under the constitutional provision is involved, and under our
constitution the Authority is liable to pay just compensation

fo

ee

therefor. Article 1, Sec. 17, Texas Constitution; United States
v. Dickinson, 831 U.S. 745, 67 S. Ct. 1882, 91 L. ed. 1789; Hidal-
go County Water Improvement District No. 2 v. Holderbaum,
Texas Com. App., 11 8.W. 2d 506.

It seems however that under the evidence, the water treat-
ment plant and the channel reservoir are not in the same cate-
gory as the sewage disposal plant. The judgment of the trial
court relating to all of the City’s facilities proceeds upon the
theory that they have been taken by the Authority and hence
upon payment of compensation—that is, the damages assessed
by the jury—the Authority is entitled to a perpetual easement
over the lands occupied by such installations of the City. The
Authority here persuasively presents the contention that when
the sewage disposal plant of the City ceases operations, the only
damage shown to the water treatment plant is a mere possibility
of flooding which will not support the recovery allowed by the
jury.

It is pointed out that one of the deleterious effects of the
flooding of the sewage disposal plant is the contamination of the
waters of Salt Creek with raw sewage. When the backwater in
the creek rises above 1009.97, it flows over the dam of the
channel reservoir and destroys the City’s emergency or standby
water supply. In the event a break in the conduit from Lake
Eddleman to the City’s water treatment plant should occur at
the same time the channel reservoir was contaminated by sewage,
the City would be without a safe supply of water for domestic
use. At the present time there is an inter-relation between the
three municipal facilities, ic, the sewage disposal plant, the
channel reservoir and the water treatment plant, but in consider-
ing damages for the taking or damaging of such properties, they
must be considered separately as urged by the Authority. The
City, after having been paid the sum of $139,250.00 (the amount
of damages found by the jury) for the taking of its sewage dis-
posal plant, would not be entitled to claim further damages to
its channel reservoir and its water treatment plant because the
City continued to operate the sewage disposal plant despite its
susceptibility to repeated floodings. In arriving at the monetary
recovery for the taking or damaging of the channel reservoir
and the water treatment plant, we must consider the situation
as if the sewage disposal plant were not in existence. Once the
sewage disposal plant has been paid for by the Authority, the
element of sewage contamination is removed from the picture.
What we have left is damage to the channel dam and the water
treatment plant caused by the rise in the level of the water (un-

Ps

contaminated by raw sewage) occasioned by the construction,
maintenance and operation of Possum Kingdom Dam.

I There is a species of damage to land that is probably non-
recurring, or at least may not recur for some substantial length
of time. Examples of this type are floods occasioned by extremely
heavy or unprecedented rainfalls, coupled with some obstruction
of a water course. The person responsible for the obstruction of
the water course may be liable, in part at least, for the damages
caused by the type of flood described. He would not however be
liable to the same extent that he would be in cases of continuous
or repeated floodings of land. This would be particularly so when
such floodings occurred at widely spaced intervals in point of
time. It is conceivable that the factual situation in this case
points to a time in the future when the waters of Salt Creek
would repeatedly inundate the City’s water treatment plant with
its critical elevation of 1019.09 feet, but the situation has not
as yet become “stabilized”, that is, it has not become sufficiently
definite and certain to support the trial court’s theory of recovery.

In United States v. Dickinson, 331 U.S. 745, 67 S. Ct. 1882,
91 L. ed. 1789, the Supreme Court of ‘the United States, in con-
nection with a limitation question, considered a problem similar
to that now before us. The United States Government did not
condemn lands needed for the basin of a lake caused by the con-
struction of a dam but “left the taking to physical events, thereby
putting on the owner the onus of determining the decisive moment
in the process of acquisition by the United States when the fact
of taking could no longer be in controversy.” In the course of
its opinion, the Court said:

“The source of the entire claim—the overflow due to rises
in the level of the river—is not a single event, it is continuous.
And as there is nothing in reason, so there is nothing in legal
doctrine, to preclude the law from meeting such a process by
postponing suit until the situation becomes stabilized. An owner
of land flooded by the Government would not unnaturally post-
pone bringing a suit against the Government for the flooding
until the consequences of inundation have so manifested them-
selves that a final account may be struck.”

By analogy, what was said in the Dickinson case has some
application here. An admittedly difficult problem is presented
and some additional statement is required. As pointed out in
the forepart of this opinion, there was expert testimony that
under river and lake bed conditions as they existed in 1954, a

180

flow of 100,000 second feet in the Brazos would be necessary to
raise the water level in Salt Creek adjacent to the City’s in-
stallations to an elevation of 1019 feet, near the floor elevation
of the water treatment plant, and that in the 19-year period
prior to 1954, a flow of such dimensions had not occurred. There
is some evidence that in 1957 the water in Salt Creek arose
above the floor of the water treatment plant, although the Author-
ity disputes the occurrence. It appears that heavy precipitation
on the comparatively short watershed of Salt Creek acting in
conjunction with a rise on the Brazos contributed to this rise in
the level of the water. However, conceding that the watershed of
the Brazos is fully capable of procuring and the river has in
times past experienced a flow of 100,000 second feet in the
vicinity of Possum Kingdom Lake and that the Lake’s level to
some extent is affected by heavy local precipitation in the Salt
Creek vicinity, that is not evidence that 1019 foot floods have
become recurring and certain phenomena to the extent that we
may say that a permanent, as distinguished from a sporadic dam-
age, has taken place. There is evidence that the danger of flood-
ing may increase with the passage of years and that engineers
have advised the City to remove its water treatment plant to
another location, particularly in view of the fact that much of
the plant will have to be replaced because of obsolescence and an
enlarged installation is required by the growth of the City. On
the other hand, the plant is now in operation. It was not destroyed
by the 1957 high water. The jury’s findings of damages were
predicated upon an estimate which practically accounted for
the entire value of the plant. In order to support the jury’s find-
ings in this regard, it would be necessary to say that one flood-
ing of the plant, coupled with the possibility of further floodings
at uncertain and perhaps widely spaced intervals, is sufficient
in law to support the award. This we cannot do without entering
the realm of conjecture, speculation and guess work. It may be
entirely possible that the water treatment plant could be used
for years to come without another re-flooding or until, by ordinary
wear and tear and natural obsolescence, it had become unsuitable
for the purpose for which it was constructed. It would seem
that the safer rule to follow is one requiring the plaintiff in
actions such as this to establish definitely by evidence above
the dignity of conjecture that the damage claimed is the result
of a repeated and recurring injury rather than a sporadic one.
Until a plaintiff is in position so to establish the repetitious
nature of the injury, he should be confined in his demand for
damages to those flowing directly from the single injury or
flooding.

es

The evidence here relied upon to establish a complete de-
struction (for all practical purposes) of respondent’s water treat-
ment plant “fails to give any certain or reliable basis for the
recovery sought and the verdict rendered but left the jury to
wander through the domain of surmise and speculation in order
to reach the verdict rendered.” Fort Worth & Denver City Ry.
Co. v. Speer, Texas Civ App., 212 S.W. 762, 765, no wr. hist.

In Austin & N. W. Ry. Co. v. Anderson, 79 Texas 427, 15
S.W. 484, a case dealing primarily with a limitation question,
this Court discussed the various types of actions arising from
the flooding of lands because of the erection of structures along
or across water courses. In speaking of occasional injuries result-
ing from sporadic high waters the Court said: “But where it
(the damage) is not permanent, but depends on accidents and
contingencies so that it is of a transient character, successive ac-
tions may be brought for injury as it occurs; * * *.” This tem-
porary type of injury mentioned in the Austin case is all that
the evidence here suggests. A case for permanent injury such
as envisioned by the jury verdict has not yet matured. See also,
Baker v. City of Fort Worth, 146 Texas 600, 210 S.W. 2d 564,
5- ALR. 2d 297.

While the evidence shows that the channel reservoir by reason
of the lower elevation of its dam will be flooded more often
than the water treatment plant, it is not shown that in the
absence of the creek’s backwater being contaminated with sewage,
the channel reservoir would be seriously affected by the presence
of ordinary flood waters therein. It certainly would not be totally
destroyed as found by the jury.

Hl We next consider the Authority’s claim that the City’s action
is barred by the two year statute of limitations. Article 5526,
Vernon’s Ann. Texas Stats. The City, in turn, points out that
in 1958 the Legislature amended Article 5517 of the Revised
Statutes so as to read as follows:

“The right of the State, all counties, incorporated cities and
all school districts shall not be barred by any of the provisions
of this Title, nor shall any person ever acquire, by occupancy
or adverse possession, any right or title to any part or portion
of any road, street, alley, sidewalk, or grounds which belong
to any town, city, or county, or which have been donated or
dedicated for public use to any such town, city or county by
the owner thereof, or which have been laid out or dedicated in
any manner to public use in any town, city or county in this

2

State.” (Italics supplied.) See Article 5517, Vernon’s Ann.
Texas Stats.

The Title referred to in said Article 5517 is Title 91 relating
to Limitations. The Authority argues that the Legislature meant
to refer to Chapter 1 of Title 91 which contains only the limita-
tion articles relating to suits for land. This brings to mind the
maxim that “If Parliament does not mean what it says, it must
say so.”* Newton v. Barnes, Texas Civ. App., 150 8.W. 2d 72,
wr. ref. If we were to approach the problem from the standpoint
of the wisdom of the Legislature enactment, we could perhaps
conclude that the Legislature may have had real property lim-
itations only in mind. But this is an approach which may not be
employed by the courts. We may not invade the legislative field.
50 Am. Jur., 212, Sec. 228. There is nothing ambiguous or un-
certain about the literal meaning of the Act and hence no need
to explore its legislative history. The Act simply states that, “The
right of the State, all counties, incorporated cities and all school
districts shall not be barred by any of the provisions of this
Title, * * *.” Article 5526 is a part of the Title of the Revised
Statues referred to. “The rule permitting departure from the
literal meaning has no application at all where the statute is
unambiguous and embodies a definite meaning and the intention
of the legislature as expressed in the law is reasonably free from
doubt.” 50 Am. Jur. 239, Statutes, Sec. 241. The amended act
has remained on the statute books unchanged in wording since
1953, and we are not at liberty to depart from the literal mean-
ing of the article at this time.

We might add, however, that insofar as the sewage disposal
plant is concerned, we have a taking by inverse condemnation
and the great weight of American authority supports the position
that, absent a particular statute covering the situation, the land
limitation rather than the general limitation statutes apply to
such inverse condemnation proceedings. Ackerman yv. Port of
Seattle, 55 Wash. 2d 400, 348 P. 2d 664; Aylmore v. City of
Seattle, 100 Wash. 515, 171 Pac. 659; Oklahoma City v. Wells,
185 Okl. 369, 91 P. 2d 1077; cases collected in Annot., 123
ALR. 676; 18 Am. Jur., Eminent Domain, Sec. 394. The Texas

3. This expressive phrase probably originated with the Honorable A. P.
Herbert, M.P., (Uncommon Law, p. 192). Mr. Herbert also suggested that
judge-made law is often superior to all other types. (Id. 84) However that
may be from an empirical standpoint, operating as we are under a_ strict
theoretical division of governmental powers, it would take a bit of doing on
the part of the judiciary to say, in the absence of ambiguous and uncertain
statement or patent and manifest absurdity, that the Legislature intended
something different from the clear import of the words chosen by it, ie. that
the Legislature intended “Chapter” when it used the word “Title”,

|:

rule is in accord. In case of a “taking” of property, the City’s
right thereto would not be barred if ever until the expiration of
the ten year period necessary to acquire lands by adverse pos-
session under Art. 5510, Vernon’s Ann. Texas Stats. Tarrant
County Water Control and Improvement Dist. No. 1 v. Fowler,
175 S.W. 2d 694, Texas Civ. App., wr. ref. w.o.m., 179 S.W. 2d
250. See also, Tarrant County Water Control and Improvement
Dist. No. 1 v. Reid, 203 S.W. 2d 290, wr. ref. n.r.e.

i There was no error in the trial court’s action in excluding
from evidence a deed from the City to the Authority which con-
tained a purported release. The conveyance of a small tract of
8.94 acres described in the deed is immaterial to any issue in
the present case. Such deed was evidently prepared by using a
printed form and was dated in January of 1939. It bore the
signature of the then mayor of the City of Graham. The release
provision contained therein read as follows:

“The Grantor, for himself and his successors in title, hereby
releases the Grantee from liability for damages resulting from
overflowing or flooding any other lands owned by him oc-
casioned by the construction, operation or maintenance of said
Possum Kingdom Dam, including, but not limited to, the
following lands:”

It was recited in the deed that the mayor was acting under
authority of a resolution by the City Council. This resolution
authorizes the mayor to “execute a proper deed of conveyance
of the interest of the City of Graham to said property (the 3.94
acres), the same to be duly attested by the city secretary and
the corporate seal thereto affixed”. The deed was not signed by
the city secretary nor was the corporate seal affixed thereto.
These circumstances are probably immaterial in that the resolu-
tion does not authorize the mayor to execute any release, cove-
nant, contract or other written instrument than a conveyance
of the specified property. It has been held that an authorization
to “make a deed” empowered a mayor to insert a covenant of
general warranty into the deed. Abbott v. City of Galveston, 97
Texas 474, 79 S.W. 1064. However, we find no authority and
know of no general agency principles which would empower a
mayor, authorized simply to “execute a deed”, to also execute
such a sweeping release from liability for flooding all of re-
spondent’s other lands as asserted here by petitioner. To the
contrary, it appears that whenever a mayor exceeds his delegated
authority to contract, the city is not bound, except perhaps in
certain cases to the extent of benefits already received. City of

1

Bryan v. Page, 51 Texas 582; City of Laredo v. Macdonnell, 52
Texas 511; Penn v. City of Laredo, Texas Civ. App., 26 S.W.
636, no writ hist.; City of Tyler v. Adams, Texas Civ. App.,
62 S.W. 119, no writ hist.; Indiana Road Mach. Co. v. City of
Sulphur Springs, Texas Civ. App., 63 S.W. 908, no writ hist.;
80-A Tex. Jur.; Municipal Corporations, Sec. 449. There is nothing
in the record which would support a finding of estoppel or rati-
fication by respondent city of the unauthorized release. Article
974d-5 has no relevance to the present factual situation.

We are further of the opinion that no reversible error is
shown in connection with the special instructions given by the
trial court with reference to the damage issues. As heretofore
pointed out, special issues were submitted to the jury relating
to the depreciation in the intrinsic value of the sewage disposal
plant and the water treatment plant of the City caused by the
construction, maintenance and operation of the Possum Kingdom
Dam. In this connection, the trial court defined “intrinsic value”
so as to authorize the jury to consider such matters as replace-
ment cost, depreciation, anticipated serviceable life, general use-
fulness, and such other matters as have a bearing upon the actual
value of the property. The jury was further instructed that in
considering the value of these plants it was “not to consider
the possibility of constructing levees or dykes around the plaintiff's
sewage disposal plant or water treatment plant”. Petitioner
claims that this latter instruction was prejudicial and constituted
a comment upon the evidence. We do not agree.

HI Had petitioner been entitled to any issues on mitigation
of damages, it may well have been relevant to consider the possi-
bility of erecting protective dykes and levees around respondent’s
plants. But nothing in petitioner’s trial pleadings pertains to
mitigation of damages, and thus the right to demand a submis-
sion of this affirmative defense was waived. Rule 94, Texas
Rules of Civil Procedure. Indeed, petitioner seems to have recog-
nized this in the trial court, as its attorneys expressly stated that
evidence of the feasibility of dykes and levees was being proferred
solely to show that respondent was not maintaining “up-to-date”
plants.

In seeking to determine the actual intrinsic value of these
plants, it was not relevant to consider what respondent might
hhave done to make them more or less valuable. The jury was
properly instructed to consider the value of the plants as they
were, and not as they could have been. No one disputes the fact
that these plants have been operated without levees for many

Se 1s

years, and it was quite possible for the jury to find that this
absence of levees lowered the intrinsic value of the plants. Nothing
in the trial court’s instructions would have prevented it from
so doing and hence no prejudicial error is presented.

ff The cause of action relating to the taking of the City’s sewage
disposal plant is severable from those asserting a claim for
damages to the City’s channel reservoir and water treatment
plant. The judgment of the Court of Civil Appeals insofar as it
affirms the judgment of the trial court for a recovery of $139,-
250.00 as and for the taking of the City’s sewage disposal plant
is affirmed. As to the claims asserted against the Authority by
reason of alleged injuries to the City’s channel reservoir and
water treatment plant, the judgments of the Court of Civil Ap-
peals and the trial court are reversed and this cause insofar
as it embraces such claims is remanded to the trial court for
further proceeding not inconsistent with this opinion.

Opinion delivered October 8, 1961.
MR. JUSTICE SMITH, dissenting.
I respectfully dissent.

Brazos presents three related points, which, if sustained
would settle this lawsuit in favor of Brazos. The substance of
these points is that the City of Graham, as a riparian landowner,
has no vested right to have the water flow by its land with un-
diminished speed; that the Brazos River Authority is not liable
for consequential damages where such damage was caused solely
by using the bed and banks of the Brazos River for the storage
and flow of water under the statutory direction of the State;
and that the city, as the owner of land bordering a navigable
stream holds its land under a servitude imposed on it by the
grant of the patent whereby damage resulting indirectly from
the State’s work in the control of floods may not be recovered
from the State. See Brazos’ motion for judgment non obstante
veredicto.

In oral argument, counsel for City of Graham responded to
a question from the court by stating the siltation had resulted
in the deposit of silt in areas outside the channel of the river.
This statement is not in harmony with the City of Graham’s
pleadings or proof. The city’s pleadings clearly set forth that
the cause of action alleged depends solely upon the allegation—
“this retardation in the flow of the river causes the silt which

156

is suspended in the water to settle out and be deposited, in the
channel of the river,”! and the further allegation that the damage
occurred “because the sediment now occupies much of what was
formerly the river channel, and the water must now flow on top
of the deposit of silt.” There is no allegation in the pleadings
that sand was deposited on the property of the city, or that the
silt was in any way relevant as a cause of damage except that
it was deposited in the channel of the river.

Brazos has contended throughout that the city, as a riparian
landowner, had no vested right to have the water of the river
flow by his land with undiminished speed. Brazos contends further
that it was not liable for consequential damages to the city, a
riparian landowner, where the alleged damage was caused
solely by its use of the bed and banks of the Brazos River for the
storage and flow of water under statutory direction of the State.

Brazos is correct in that contention. As a matter of law, the
Brazos River Authority is not liable to the City of Graham where
the damage claimed by the city resulted solely, as it did here,
from siltation in the channel of the Brazos River resulting from
the creation of the flood control reservoir impounded by the
dam which was located 55 miles down river from the confluence
of Salt Creek and the Brazos. The City of Graham is bounded
on its west side by Salt Creek, which flows into the Brazos River

1, “* * * This retardation in the flow of the river causes the silt which
is suspended in the water to settle out and be deposited in the channel of the
river. Only a small percentage of the silt which reaches Possum Kingdom Lake
continues downstream below Possum Kingdom Dam. The vast majority of the
silt is deposited in the lake, principally in the upper portion of the lake. This
sedimentation commenced with the completion of the lake in 1941, and has
continued without interruption and unabated up to and including the present
time, and will continue for the life of Possum Kingdom Lake * * *.”

2. “The vast amount of sedimentation described above has caused an aggra-
dation or filling in of most of the channel of the Brazos River in the upper
part of Possum Kingdom Lake. Consequently, as water flows down the Brazos
River and into Possum Kingdom Lake, it attains a much higher stage or eleva-
tion than it did prior to the construction of Possum Kingdom Dam, because
the sediment now occupies much of what was formerly the river channel, and
the water must flow on top of the deposits of silt. The stage or elevation of
the water is further raised by the static body of water with which it comes into
contact as it enters the lake. The amount by which the clevation of the water
in the upper part of Possum Kingdom Lake is raised depends upon the rate of
flow down the Brazos River, and, in part, upon the water level at Possum
Kingdom Dam. As the sedimentation of silt continues, the elevation of the
water impounded in Possum Kingdom Lake during period of moderate to
heavy flow down the Brazos River continues to increase in the upper part of
the lake. Furthermore, water flowing down Salt Creek is greatly restricted
and retarded when there is simultaneous moderate to heavy flow down the
Brazos River, thus causing the water flowing down Salt Creek to accumulate
and build up along the west part of the City of Graham.”

Ss

about three miles South of Graham. The dam (Possum King-
dom) was completed in 1941.

The city contends that beginning with the creation of Pos-
sum Kingdom Lake in 1941, the flow of the Brazos River and
its tributary, Salt Creek, has been retarded in such degree by
the static body of water in the lake as to increase the deposit
of silt in the river channel thereby causing flood water to attain
increasingly higher elevations above the reservoir. The city did
not plead that the Brazos River Authority was negligent. The
city did not plead or contend that Possum Kingdom Dam was a
nuisance.

The pleading of the city makes it plain that the sole function
of the dam in so far as the cause of action is concerned is to
slow the flow of the river at its confluence with Salt Creek caus-
ing a deposit of silt at that point. The effect of the dam is stated
to be to slow the river. Thus, we do not have a pleading that the
dam of itself backed water upon or directly diverted water over
the land of the city.

The Brazos River Authority does not contend that in every
instance of the exercise of the police power of the State the private
citizen is left without redress in damages. Brazos does contend,
however, that in the control of floods under the police power of
the State, the riparian landowner is not entitled to recover for
consequential and indirect damage caused by siltation of the
river bed.

It is without dispute that the State owns the bed and banks
of the Brazos River, as well as the waters which flow therein,
“to be controlled and disposed of by the State for the best in-
terests of all the people”. Motl v. Boyd, 116 Texas 82, 286 S.W.
458. In this connection, I am sure the Court has examined plain-
tiff’s Exhibit 26 (a map of Possum Kingdom Reservoir) and
plaintiffs Exhibit 35. The former shows the reservoir at eleva~
tion 1000 feet, the maximum elevation of impoundment by the
dam. Exhibit 26 makes plain the fact that the Brazos River and
its channel constitute the “reservoir”. While the plaintiff’s plead-
ing speaks of siltation in the upper portions of the reservoir,
in fact the siltation of which plaintiff complains occurs in the
channel of the river itself, at the point where Salt Creek comes
into the river. The evidence reveals that the main body of water
constituting the “lake” is located a considerable distance down-
stream with the great bulk of it in Palo Pinto County rather than
in Young County.

88

Plaintiff’s Exhibit 35 makes it clear that the City of Graham
complains only of siltation in the river bed as the cause of its
damage. In fact, there is no evidence to the contrary.

The true question is:

Does the State have the right to store water in the channel of
the river where the natural consequence of such right is the de-
posit of sediment (siltation) therein?

I agree with Brazos that the State has every right in the use
of its property which a private owner would have and that under
the authorities, the use of land for its natural purpose by an owner
cannot give rise to legal injury, unless negligence or nuisance is
established. In this case the City of Graham did not plead and
does not contend either that Possum Kingdom Dam was a nuisance
or that Brazos was negligent. The city has never denied the legal
right of Brazos to use the river bed for storage but has main-
tained that all damages attributable to the use of the river bed may
be recovered by the neighboring landowner.

The city has led the Court of Civil Appeals to adopt the er-
roneous theory that without proving negligence or breach of duty,
or establishing that the maintenance of Possum Kingdom Dam
was a nuisance, Brazos assumed liability for the operation of the
forces of nature and must respond in damages.

The Court of Civil Appeals has declined to say whether the
city pleaded an action for damages or for a “taking” under Article
I, Sec. 17, of the Constitution.

It appears that the Court here is holding that the city’s cause
of action as to the sewage disposal plant is one for a “taking”,
but that “the water treatment plant and the channel reservoir are
not in the same category as the sewage disposal plant.” In either
event, the Brazos River Authority cannot be held liable.

If the cause of action is construed as a “taking”, as is being
held by this Court, then I believe the rule announced by our Court
in State v. Richards, 157 Texas 166, 301 8.W. 2d 597 (1957), is
applicable and prevents a recovery of compensation. In that case,
we said:

“Police regulations are not unconstitutional merely because
they operate as a restraint upon private rights of person or
property or will result in loss to individuals. Damage to or loss

|!

of property resulting from a proper exercise of such power does
not constitute a taking of property under the right of eminent
domain, and compensation is not required to be made therefor.”
Citing Houston & T. C. Ry. Co. v. City of Dallas, 98 Texas 396,
84 S.W. 648, 70 L.R.A. 850; and, Lombardo v. City of Dallas,
124 Texas 1, 73 S.W. 2d 475.

Article 1, Section 17, of the Constitution, does not create a
cause of action against the State or a state agency such as the
Brazos River Authority unless such a cause of action would have
existed against a private owner under the same circumstances.
Since this Article of the Constitution only allows an action to be
maintained if it could have been brought between private persons,
I respectfully insist that under the record in this case, the State
being a “landowner” and the city being a “neighboring land-
owner’, fundamental land law applies. Therefore, in storing water
in the channel of the Brazos River, the State (Brazos) is using
public property for a public purpose and the right of the public
so to use its property is to be measured against the right of the
neighboring landowner to use his property under common law
principles of legal right and duty.

“A loss caused by unlawful act, is within the meaning of the
Jaw, an injury for which damages may be recovered, and when
through such an act threatened it is made to appear that a nuis-
ance will be created, the act may be prevented by injunction; but
a loss resulting from an act lawful within itself furnishes no
ground for the recovery of compensation nor for restraining the
actor from the exercise of a legal right.” This principle of law
was announced in the early case (1889) of Dunn v. City of Austin,
TT Texas 139, 11 S.W. 1125. In this connection, it should be kept
in mind that the siltation of the river bed does not involve, of
itself, the “taking or damaging of private property’.

In 16 Texas Jur. 450, Sec. 160, it is said:

“The constitutional provision was not intended to give an
action against those constructing public works for acts
which would not have been actionable if done by persons in
pursuance of a private enterprise.”

The general rule, and the one applicable here, is that liability
does not arise from the mere exercise of a legal right, though in-
jury may result from it, if such resulting injury “could not have
been avoided except by abandoning the right”. This principle as
well as that stated in Dunn v. City of Austin, supra, is supported

10

in a number of Texas cases. See Mexican National Construction
Co. v. Middlegge, 75 Texas 634, 13 S.W. 257 (1890); Gulf C. &
S.F. Ry. Co. v. Oakes, 94 Texas 155, 58 S.W. 999, Galveston H.
&S.A. Ry. Co. v. Currie, 100 Texas 136, 96 S.W. 1078, 10 L.R.A.
(N.S.) 367; Cosden Oil Co. v. Sides, Texas Civ. App., 35 S.W.
815, wr. ref.; Missouri Pac. Ry. Co. v. Platzer, 73 Texas 117,
11 S.W. 160, 3 L.R.A. 639; Houston & T.C. Ry. Co. v. Anderson,
44 Texas Civ. App. 394, 98 S.W. 440, no wr. hist.; Rigdon v.
Temple Water Works Co., 11 Texas Civ. App. 542, 32 S.W. 828,
no wr. hist.; State v. Brewer, 141 Texas 1, 169 S.W. 2d 468;
Texas & N. O. R. Co. v. Davis, Texas Civ. App., 60 S.W. 2d 505,
no wr. hist.; City of Dallas v. Lawler, Texas Civ. App., 287
S.W. 187; Gainesville H. & W. R. Co. v. Hall, 78 Texas 169, 14
S.W, 259, 9 L.R.A. 298,

The city seems to rest its position squarely on the contention
that because Possum Kingdom Dam slowed the flow of water and
caused the deposit of silt in the channel of the river, the State is
liable for the consequential damage that resulted to the City of
Graham as the river channel gradually diminished in usefulness.
In other words, the city contends that because the speed of the
river at its confluence with Salt Creek was slowed by Possum
Kingdom Dam, the city is entitled to maintain a suit for damages
which it could attribute to the dam whether directly or indirectly
resulting. The city treats the case as though it involves a direct
diversion of water by the dam structure, and places the case in
the same category as City of Austin v. Howard, Texas Civ. App.,
158 S.W. 2d 556, wr. ref. w.o.m, and Ft. Worth Imp. Dist. No. 1
v. City of Fort Worth, 106 Texas 148, 158 S.W. 164, 48 L.R.A.
(N.S.) 994. These cases are not in point. There the agency erected
a levee which of itself immediately diverted the flow of the river
directly onto the land of the plaintiff. In the present case Possum
Kingdom Dam did not directly divert water onto the land of the
city. The effect of the dam was to create the lake, which in turn
caused the flow of the river above the lake to be slowed, thereby
causing the natural silt to be deposited in the bed of the river.

The Court says, in effect, that there can be no valid distinc-
tion between a situation where flooding results from the building
of the dam only and flooding which occurs as a result of the con-
struction of the dam and the resulting siltation of the reservoir
acting together. With this I cannot agree. The Court has failed
to recognize that in Texas the river bed is owned by the State
and that the accumulation of silt in the bed of the river as the
result of the lawful construction of the dam does not amount to a
trespass. The city relies upon cases from other jurisdictions. In

a  !

those States the river beds are owned by the adjoining landowner
to the center of the stream. The river bed, therefore, is not public
property. Clearly, a different legal relationship exists. On the
one hand, where the river bed is not owned by the State, the de-
posit of sand or siltation would be a trespass, whereas, in Texas,
the river bed is owned by the State, and the State as any other
landowner has a right to use its property (in this case, the chan-
nel of the river) so long as the dam is not a nuisance per se and
is not negligently operated.

The Court seems to give some weight to the fact that the
siltation of the river bed is foreseeable. In this connection, I
re-emphasize that no legal right of the city has been invaded by
Brazos. The city does not contend that Brazos has trespassed upon
its property or that the authority has directly invaded its land.
The conclusion is inescapable that the city must stand or fall on
its only pleadings and proof that as a consequence of the con-
struction of a public work, the waters of the river have been
slowed so that silt is deposited to the point that subsequent floods
are not contained within the banks of the river as in a state of
nature. By such pleadings, the city unquestionably is maintaining
that it has the legal right to have the water of the river flow by
its point of confluence with Salt Creek at undiminished speed.
Unless the city has such vested legal right, it cannot possibly
establish a cause of action resting solely upon the deposit of silt
in the bed of the stream. Whether the Authority could foresee that
the river would continue to carry its load of silt through the years,
and that the silt would be deposited at the confluence of Salt
Creek and the Brazos River, or whether it could not foresee such
deposit, the fact remains that the deposit of silt in the bed re-
sulted solely from the slowing of the river. It is my position that
the Authority’s control of floods under the police power of the
State which naturally results in siltation of the river bed
cannot be the basis for the city’s recovery of consequential and
indirect damage.

The principles of law announced by this Court in Motl v. Boyd,
supra, in 1926, are controlling here. Those principles should not
be brushed aside with the mere statement that we have some-
thing here which involves more than “the slowing of the waters
running in the stream adjoining his (riparian owner’s) land”.
Brazos is not attempting to pulverize the problem into “mole-
cular parts”, but on the other hand is following cases which
have long recognized that rivers such as the Brazos are public
navigable streams under the statute, and that the title to the
waters of such streams is in the State in trust for the public.

SE

It is inconceivable that this Court is now ready to forget that
the rivers of Texas have “certain characteristics which must be
observed in determining the rights of the people’ where such
streams are involved. Are we going to forget that the Brazos
River Authority is basically a public enterprise, created by the
legislature for the general governmental purpose of effectuating
adequate protection for the lives of the people, as well as for the
property within the Brazos River watershed?

The City of Graham has convinced a jury and trial court that
it is entitled to the sum of $430,750.00 in damages for the taking
of its sewage disposal plant, water treatment plant, and channel
reservoir. The finding of the jury is that these plants now have
only a salvage value of $750.00, $1500.00, and “none”, respectively,
whereas, the truth is that all of these plants are still in use. This
tremendous award has been made in spite of this fact, and in the
face of the city’s pleadings that “the siltation, past, present and
future, of Possum Kingdom Lake is the natural result and conse-
quence of the construction, maintenance and operation of Possum
Kingdom Dam * * *.” This Court in affirming the judgment for
the taking of the sewage disposal plant completely overlooks the
economic importance of the Brazos River Authority and its water-
shed, and the tremendous benefits which have resulted as a conse-
quence of the construction of the dam.

The case of Brazos River Conservation & Reclamation Dis-
trict v. McCraw, 126 Texas 506, 91 S.W. 2d 665 (1936), was an
original proceeding brought by the Authority against the At-
torney General for writ of mandamus directing that officer to ap-
prove the proposed bonds of the district in the sum of $3,600,000.
The record in that case shows that in 1936 the Brazos River water-
shed comprised:

«* © * one of the largest agricultural regions of Texas, and
contains extensive natural gas and oil fields. It contains within
its bounds more than 3,500 miles of main line railroad, and in
excess of this mileage of federal and state highways. Within
this watershed there is nearly 10,000,000 acres of land in cul-
tivation, the cotton acreage alone is more than 4,500,000 acres;
within the area there are more than 1,500,000 head of cattle,
more than 500,000 head of sheep, and more than a quarter of
a million head of hogs; the annual production of minerals runs
into millions of dollars; and within the area there are many
towns and cities, factories, etc.

“The agreed statement of facts not only shows that the

—(!

state not only owns and operates a great many miles of state
highways in the watershed of the Brazos, but a great number
of expensive bridges as well, ‘which are constantly imperiled and
frequently damaged or destroyed on account of said flood
waters; that the soil in parts of the watershed is becoming
badly eroded due to lack of control of said waters’. The state
through its prison system also owns and operates 57,000 acres
in prison farms in Fort Bend and Brazoria counties which are
subject to periodical overflows of the Brazos, which have oc-
casioned the loss of $3,000,000 in property to the state during
the last fifteen years.”

The record further shows:

“The United States government has made a grant to the
relator district in the amount of $80,092,345 to finance or aid
in financing some thirteen reclamation projects, each con-
sisting in the erection of a dam across the Brazos River or one
of its tributaries, and the equipment of certain of said dams for
the manufacture of hydro-electric power. This grant is contin-
gent upon the district’s securing funds sufficient to purchase
the lands, etc., needed for said purposes.

“The board of directors of the district has adopted a resolu-
tion authorizing the issuance of $3,600,000 of bonds, and has
provided therein that said bonds shall be secured by and shall be
payable out of the state taxes granted to the district by Senate
Bill 3. Inasmuch as the revenues from the operation of the vari-
ous projects could not be forecast with a reasonable degree of
accuracy at this time, the board decided first to issue the bonds
secured primarily by a pledge of the allocated taxes, and sec-
ondarily by current revenues; and at a later date to issue
$5,000,000 of bonds secured primarily by the revenues from the
operation of the projects.

“To aid the district in carrying out its purposes the state
by chapter 368, General and Special Laws of the First Called
Session of the 44th Legislature 1935 (Vernon’s Ann. Civ. St.
art. 8194 note), allocated to the district for twenty years the
state ad valorem taxes to be collected for general revenue pur-
poses upon the property and from persons in Austin, Brazoria,
Burleson, Fort Bend, Grimes, Waller, Washington, Brazos,
Milam, and Robertson counties, each of which is within the
section of periodic overflows of the Brazos river; provided,
however, that in no event should the amount granted exceed in
any one year a total sum of $309,000.”

9s

“Sec. 5. The District shall have the authority and it is
hereby authorized to issue its negotiable bonds, secured only by
pledge of the sums granted and/or donated by the State of
Texas and/or out of any other current revenues of the District
in any such amounts as may be authorized by the Directors of
such District, which sums shall be paid to the legal holders of
said bonds, for the purpose of purchasing, acquiring and/or

- condemning lands, leases, easements and/or acquittances, rights-
of-way, structures and/or buildings, equipment and/or opera-
tion of proper structures, dams, reservoirs, suitable for the
control of the recurrent, devastating floods in the valley of
the Brazos River, which have over a long period of years,
caused a deplorable loss of life and property, and the erosion
of the soil and a depletion of the fertility of the lands in said
valley and the watershed served by the Brazos River in Texas,
and the public highways and structures and lands belonging
to the State of Texas situated within said watershed; all of
which is hereby declared to be a public calamity, and doing
all things necessary in the execution of the purposes for
which the District is created and exists. The moneys herein
and hereby granted and/or donated to the Brazos River Con-
servation and Reclamation District are declared to be for the
purposes of discharging obligations herein authorized. [Italics
supplied.]

Obviously, direct damage to property involved must be paid
for. Brazos fully appreciates this fact. It does not claim that it
is exempt from Article I, Section 17 of the Constitution. Its posi-
tion is limited to the contention that gradual and indirect damage
attributable in part to the construction of the dam by the State for
flood control and in part to the slow and gradual work of the forces
of nature may not be recovered by the city, a riparian owner.

If the City of Graham is sustained in its unprecedented posi-
tion, then a similar cause of action will exist in all of the Jand-
owners above the reservoir as the process of siltation inevitably
continues. It is not unreasonable to say that the collection of silt
in the flood control reservoir at Possum Kingdom Dam, not only
affects landowners above the dam, but those below as well. The silt
no longer goes down the river below the dam. Formerly the peri-
odic floods spread the rich deposits over the bottom lands in the
lower river. Unquestionably, the State has prevented the process
of nature and has stopped the annual deposits in the lower farms.
If the City of Graham has a cause of action, why not the lower
landowners? If the city has the right to have the river flow by its
Jand as in the state of nature, do not lower landowners have a

ST

similar right? In any event, if the riparian landowners have such
right, then the only sure way to secure them that right would
be for Brazos to cease exercising its legal right to perform the
functions for which it was created which is to control the re-
current, devastating floods in the valley of the Brazos River.

The Brazos River Authority, from the time of its creation,
has relied upon the doctrine of riparian rights and burdens under
Texas law peculiar to its geography and legal heritage. The State’s
ownership of the bed and the banks of our navigable rivers is an
inherent tradition of our legal system, necessary for the develop-
ment of the large areas of the State which are semi-arid. The
correct application of the principles of Texas law which apply
to this case are most important to the people of the State. The
recurring floods on Texas rivers with attendant devastation led
to the adoption of Article 16, Sections 59(a), (b), and (c) of the
Constitution. This amendment declares the preservation and con-
servation of the water resources of the State to be “public rights
and duties” and commanding the Legislature to “pass all such
Jaws as may be appropriate thereto”.

Subsection (b) of the Conservation Amendment, supra, pro-
vides:

“(b) There may be created within the State of Texas, or the
State may be divided into, such number of conservation and re-
clamation districts as may be determined to be essential to the
accomplishment of the purposes of this amendment to the Con-
stitution, which districts shall be governmental agencies and
bodies politic and corporate with such powers of government and
with the authority to exercise such rights, privileges and func-
tions concerning the subject matter of this amendment as may be
conferred by law.”

Under authority of these provisions of the Constitution, the
Texas Legislature has created many districts and authorities, in-
cluding the Brazos River Authority, to conserve, control, and
utilize to beneficial service the storm and flood waters of the
rivers and streams of the State. As a result many projects have
been constructed, including Possum Kingdom Dam, by the Brazos
River Authority. This amendment is a command and mandate to
the State that the State control the floods which ravish the river
valleys.

The City of Graham is a riparian landowner just like any
other owner along the banks of the Brazos River. The city holds

10

its lands subject to a burden which was a part of the grant by
the State in the patent, the burden of consequential damage to its
land occasioned by the flood controls of the State. If the indirect
and consequential damage which may be traced in some degree to
the reservoir or the dam is compensable under Article I, Section
17 of the Constitution, then the Authority will do well to meet
the demands of riparian landowners much less perform the only
service for which it was created. The McCraw case, supra, points
out the tremendous responsibility which rested upon the Brazos
River Authority in 1936. The Act creating the Brazos River Au-
thority (Art. 8280-101, Sec. 2, Vernon’s Annotated Civil Statutes)
declares that the Authority “shall have and be recognized to ex-
ercise such authority and power of control and regulation over
such storm and flood waters of the Brazos River and its tribu-
taries as may be exercised by the State of Texas, subject to the
provisions of the Constitution and the Acts of the Legislature.”
[Emphasis added.]

In further recognition of the State’s responsibility in the field
of water resources development and use, the people, in 1957, voted
overwhelmingly to further amend the Texas Constitution by add-
ing Section 49c to Article 8, creating the Texas Water Develop-
ment Board and providing for the issuance and sale of general
obligation bonds of the State in the amount of $200 million “for
the purpose of aiding or making funds available to the various
political subdivisions or bodies politic and corporate of the State
of Texas including river authorities, conservation and reclama-
tion districts and districts created or organized or authorized to
be created or organized under Article XVI, Section 59 or Article
III, Section 52, of this Constitution, interstate compact commis-
sions to which the State of Texas is a party and municipal cor-
porations, in the conservation and development of the water re-
sources of this State, including the control, storing and preserva-
tion of its storm and flood waters and the waters of its rivers and
streams, for all useful and lawful purposes * * *.” [Emphasis
added.]

The State’s financial assistance is given in the form of in-
terest bearing loans after determination of eligibility of the dis-
trict, municipality or authority for a loan, together with the need
for, and the economic and engineering feasibility of, the project.

In order to properly finance construction of such a project, the
state water districts and authorities engaged in building dams and
reservoirs must know in advance of construction the total cost.
The Texas Water Development Board must have the same in-

|

formation in passing on applications for loans from the State.
This would be virtually impossible if the trial court and the Court
of Civil Appeals judgments are allowed to stand, even to the
extent of affirming the judgment for $189,250.000. For example,
if the City of Graham, located some 55 miles upstream from the
dam, can file suit some 16 years after the dam has been completed
for damages alleged to have occurred some 12 years after com-
pletion, and recover as damages full value of its sewage disposal
plant, water treatment plant, and channel reservoir, and continue
to use said facilities as before alleged damages occurred, Texas
will be through financing dam and reservoir projects at the State
and local level.

The Texas Board of Water Engineers has recently published
its plan for meeting the 1980 water requirements of Texas.

Is the Brazos River Authority to be permitted to carry out
the mandate of the people? Or, is this Court going to place in
the hands of the riparian landowners the power to destroy the Au-
thority itself by depriving it of the funds intended for lawful use?

I respectfully ask: Is the Brazos River Authority to be per-
mitted to carry out the mandate of the people? Or, is this Court
going to place in the hands of the riparian landowners the power
to destroy the Authority itself by depriving it of the funds in-
tended for lawful use?

Granting, for the sake of argument, that the Court is correct
in its conclusion that the case of Motl v. Boyd, supra, did not
require an analysis of the land law of Texas and the determina-
tion of the precise question of whether the riparian landowner
had the right asserted in the present case, nevertheless, this Court
in that case pronounced the law in accordance with the conten-
tions of Brazos. I particularly refer to that portion of the opinion
which is applicable here:

“Flood waters are all waters which may contribute to an
overflow or flood; and all waters above the highest normal
flow of the stream are potentially flood waters, and we believe
subject to regulation and control by the state, regardless of
the riparian’s land which may border upon the stream. If we
say that the riparian has a vested right in the flood waters of
a stream, then we effectually deny the right of the state to
control the floods, a holding which would for all practical pur-
poses invalidate the conservation amendment and all our irri-
gation and reclamation statutes.” [Emphasis supplied.]

1

I contend that flood waters are to be treated as a common
enemy, the control of which is a public right and duty so far
as the Brazos River Authority is concerned. If the City of
Graham prevails, then effective flood control by the Brazos River
Authority would become impossible. The Court in the Motl case
said:

“The construction, therefore, which we have given the
statutes, is one consistent with the effective control of floods
and one absolutely essential if flood prevention and control
is to be successfully carried out along the rivers of this State.”

I cannot agree with the Court’s conclusion that the case of
United States v. Dickinson, 331 U.S. 745, 67 S. Ct. 1882, 91
L. Ed. 1789; decided June 16, 1947, by analogy or otherwise, is
in the least controlling here. That case was brought under the
“Tucker Act”. The Tucker Act, Title 28 U.S.C. Sec. 41(20),
Jud. Code Sec. 24(20), was combined in 1948 with provisions
of the Tort Claims Act (formerly Title 28, Sec. 931(a); its
new citation is Title 28, Secs. 1846, 2401-2. As used by the United
States Supreme Court in this case (1947), the Act related to
the jurisdiction conferred upon the U.S. district courts in actions
against the United States, and the procedures therein involved.

It should be noted that the Court of Civil Appeals and this
Court fail to give the background of the Dickinson case. Neither
opinion clearly points out that the Government without con-
demning the land, dammed a river and raised the water level by
successive stages until it flooded part of the respondent’s land.

In that case, the Government chose not to condemn the land
but to bring about a taking by a continuing process of physical
events. The U.S. Supreme Court held that in such a situation,
the owner was not required to resort either to piecemeal or to
premature litigation to ascertain the just compensation for what
really is “taken”.

The court held:

“ATl that we are here holding is that when the Government
chooses not to condemn land but to bring about a taking by a
continuing process of physical events, the owner is not required
to resort either to piecemeal or to premature litigation to ascer-

399

tain the just compensation for what is really ‘taken’.

es |}!

What was the “continuing process of physical events” in
that case?

Since no condemnation proceedings were ever instigated, no
time was fixed by legal proceedings as to when the land was
“taken”.

The dam was constructed. The ultimate elevation of the river
to 566 feet above sea level was reached on September 22, 1938.
This elevation was accomplished as a direct result of the con-
struction of the dam. Nothing resulted from operation or mainte-
nance of the dam. These are the “physical events” which led
immediately after September 22, 1988, to the raising of the
river to the stage where the land belonging to Dickinson was
“permanently flooded”. In addition, erosion attributable to the
construction of the dam damaged the land which formed the
new bank of the “pool”. No comparable facts exist in our case.

The question of limitation was invoked by the Government.
It seems that 6 years was the limitation period.

The court on this said:

“We find that the taking which was the basis of these
suits was not complete six years prior to April 1, 1948, nor
at a time preceding Dickinson’s ownership.”

The “taking” undoubtedly was attributable to the construc-
tion of the dam.

It seems plausible to conclude that in our case we have a
lawful construction of a dam which caused no “taking” of
the City of Graham’s land by permanent flooding or inundation.
We simply have a case which is a suit for consequential damages
as a result of the operation and maintenance of Possum Kingdom
Lake. It is also difficult for me to accept the proposition as stated
in Bauman v. Ross, 167 U.S. 548, 574, as being applicable here.

Do we have the same situation here as in that case? Can it
be said that the City of Graham’s land involved here is land
“not taken” at the time of the construction, and that Brazos
River Authority is liable under the theory that—

“When part only of a parcel of land is taken for a high-
way [lake], the value of that part is not the sole measure of
the compensation or damages to be paid to the owner; but

200

the incidental injury or benefit to the part not taken is also
to be considered?”

I think not.

In our case, the land does not lie within the reservoir pool
itself. Nor is it contended that the dam directly diverts water
over the land of the respondent city.

Nor does the City contend that the liability of the Brazos
River Authority is exactly the same under law as if the Brazos
River Authority were a power company constructing a dam for
private profit. Of course, the rules of law deny that.

The Court of Civil Appeals has assumed that the slowing of
the river past the City’s land, and the resulting deposit of silt
or sediment in the bed of the river, was a legal wrong to the
plaintiff which entitles it to maintain a claim for damages be-
cause the silt was deposited in the river. Such assumption of the
Court of Civil Appeals is erroneous and the court is in error in
affirming the judgment for $189,250.00.

Another question is presented.

“When the floods are brought under control by flood reser-
voirs are those who claim a benefit (City of Graham) from
the free flow of the flood waters entitled to damages when
they are slowed and thereby cause a gradual diminishing of
the channel’s capacity?”

Mere ownership of riparian land along the banks of the
Brazos River does not give the plaintiff a right of action for
injury to the land, unless the injury is inflicted in violation of
a legal right held by the plaintiff as such riparian owner.

The Court of Civil: Appeals in this case has erroneously as-
sumed that in any case where private property is injured by
public construction, the Constitution in Article I, Section 17,
creates a right of action and a claim for damages in the property
owner. This is not the law. See Tex. Jur. Sec. 160, p. 450; Texas
& Sabine Railway Co. v. Meadows (1889), 73 Tex. 32, 11 S.W.
145; City of Amarillo v. Gray, Texas Civ. App., 304 S.W. 2d
742; City of Amarillo v. Stockton, 158 Texas 275, 310 S.W. 2d
787; see also State v. Brewer, 141 Texas 1, 169 S.W. 2d 468.

The trial court submitted the Gray case, supra, to the jury

Pee ee

on the absolute liability theory under Art. 1, Sec. 17 of the
Constitution. The Court of Civil Appeals reversed and remanded
holding that the trial court erred. We approved this judgment
of the Court of Civil Appeals in City of Amarillo v. Stockton,
supra.

In the present case, the City of Graham, just as Gray, supra,
alleged liability for its damage arose out of the constitutional
inhibition that “no person’s property shall be taken, damaged
or destroyed for or applied to public use without adequate com-
pensation being made * * *,

The trial court, just as in Gray, applied this absolute liability
theory, and submitted to the jury only the issues inquiring as
to damages.

The motion for summary judgment filed by Brazos should
have been granted. That motion reads in part as follows:

“Tn accomplishing according to law the purposes for which
it was created, this defendant completed construction of Pos-
sum Kingdom Reservoir in the year 1941, and has since such
time been engaged in the governmental duty of operating said
reservoir for and on behalf of the State of Texas. Said water
reservoir has been in operation since its completion and Brazos
River Authority in operating Possum Kingdom Reservoir is,
and at all times has been engaged in a governmental function
for which, as a matter of law, there can be no liability for
damages alleged to have resulted by reason of the complained
of sedimentation of said reservoir caused by natural phenomena
during a period of over fourteen years.”

“Plaintiff has stated no cause of action against defendant,
Brazos River Authority, because mere allegations and proof
that Possum Kingdom reservoir caused water to back upon
and flow certain lands of plaintiff, and without allegations
and proof of a negligent tort by defendant, are insufficient
in order to render defendant liable for claims of compensation
asserted under Article 1, Section 17 of the Texas Constitution
because:

“(a) The principle of ‘Damnum Absque Injuria’ has
not been modified by the provision of Article 1, Section 17
of the Texas Constitution.

«# * %* (ce) Article 1, Section 17 of the Texas Constitution

200

allows recovery for damages, or takings, only when the dam-
ages alleged against the State would be compensable for wrongs
done in private enterprise; that the said constitutional pro-
vision is a ‘waiver of State immunity’ and that as a matter
of law no liability can exist under the facts alleged since
negligence is neither alleged, nor could allegation and proof
thereof render this defendant liable under any theory of law.”

Since it clearly appears as a matter of law that the Brazos
River Authority had the legal right to construct Possum Kingdom
Dam and store water in the channel of the Brazos River, and
since any damage which resulted from the deposit of silt in the
channel of the river is a natural consequence of the exercise of
legal rights conferred and duties imposed upon the Brazos River
Authority by the laws of the State of Texas, I would reverse
the judgments of the trial court and the Court of Civil Appeals
and render judgment that the City of Graham take nothing
by its suit.

Although I am convinced that judgment should be rendered
in favor of Brazos on the points heretofore discussed, I deem
it necessary, in view of the Court’s opinion, to state additional
reasons for either rendering judgment in favor of Brazos, or
reversing the judgment of the courts below and remanding the
entire case to the trial court for a new trial.

First, I shall discuss the limitation question. Granting for
the sake of argument that the existence of a cause of action for
this indirect and consequential sort of damage, resulting from
the siltation of the river bed of the Brazos, the instant suit,
brought by the City of Graham in September, 1957, is neverthe-
less barred by the Statute of Limitation.

The determination of the limitation question depends, in
turn, upon the determination of three subsidiary questions. First,
is the suit brought by the City of Graham one for “damage”
to its facilities, to which the two-year Statute of Limitation is
applicable rather than one for the “taking” of such facilities?
Second, if the City’s suit is one for “damage”, when did such
cause of action arise? The third question involves the City’s
contention that because of the 1953 amendment to Article 5517,
Vernon’s Annotated Civil Statutes, the City of Graham has
been granted immunity from the laws of limitation.

(a) THE SUIT IS ONE FOR “DAMAGE” TO PROPERTY
RATHER THAN FOR A “TAKING” THEREOF.

Ss

I disagree with this Court’s holding that this is a suit for
a “taking”. Even the Court of Civil Appeals in affirming the
trial court’s judgment declined to hold that the instant suit was
one for a “taking” of the plaintiff’s property. It did not decide
but brushed off the defense of limitation by saying that the
two-year Statute probably did not apply to incorporated cities
and that even if it did, the cause of action pleaded by the City
was not shown to have accrued more than two years before the
suit was filed on September 19, 1957. The Court of Civil Appeals
comments additionally that “no issue was submitted or requested
touching the defense of limitation” thereby inferring some sort
of waiver of the defense. The court cited as authority for its
holding Baker v. City of Fort Worth, 146 Texas 600, 210 S.W.
2d 564, 5 A.L.R. 2d 297.

The constitutional provision involved, Article 1, Section 17,
reads in part as follows:

“No person’s property shall be taken, damaged or destroyed
for or applied to public use without adequate compensation
being made, unless by the consent of such person; and, when
taken, except for the use of the State, such compensation shall
be first made, or secured by a deposit of money; * * *.” (Em-
phasis added.)

Because of the fact that the Constitution itself distinguishes
between a “damaging” of land, and a “taking” thereof and re-
quires pre-compensation in case of the latter, the courts have
had frequent occasion to construe Article I, Section 17 and to
give effect to the distinction therein made.

The early case of McCammon vy. Trinity & B.V. Ry. Co.,
104 Texas 8, 183 S.W. 247, decided by the Supreme Court in
1911, and the others which have followed it, establish the pro-
position that a “taking” must result from an actual physical
invasion of property and that damage to land not actually and
physically taken or used affords a cause of action for damage
to land only.

This distinction between a “taking” of land and a “damaging”
thereof has been followed without departure for so many years
that the law involved has become elementary. Stevens v. City
of Dublin, 169 S.W. 188, no wr. hist.; City of Port Arthur v.
Fant, 193 S.W. 384, no wr. hist.; City of Orange v. Rector, 205
S.W. 508, no wr. hist.; Dallas County v. Barr, 231 S.W. 453,
no wy. hist.; Dallas Hunting & Fishing Club v. Levee Improve-

206

ment District, 235 S.W. 607; Fry v. Jackson, 264 S.W. 612;
Johnson v. Lancaster, 266 S.W. 565; Donna Irrigation District
v. Piper, 269 S.W. 157; City of Houston v. Wynne, 279 S.W.
916; Holderbaum vy. Hidalgo County Water Improvement Dis-
trict, 297 S.W. 865, affirmed Hidalgo County Water Improve-
ment District v. Holderbaum, Texas Comm. App., 11 S.W. 506;
Duvall v. City of Dallas, Texas Civ. App., 27 S.W. 2d 1105,
wr. ref.; Kahn v. City of Houston, Texas Comm. App., 48 S.W.
2d 595; Shelton v. City of Abilene, Texas Civ. App., 80 S.W.
2d 351, no wr. hist.; Brazos River Authority v. Costello, 142
S.W. 2d 414, 185 Texas 307, 143 S.W. 2d 577; Boyd v. Dillard,
151 S.W. 2d 847, dism. cor. judgment; Tarrant County Water
Control & Improvement District Number One v. Reid, 203 S.W.
2d 290, wr. ref. n.r.e.; Webb v. Dameron, Texas Civ. App., 219
S.W. 2d 581, wr. ref. n.r.e.; City of Dallas v. Winans, Texas Civ.
App., 262 S.W. 2d 256, no wr. hist.

Writing on this precise question, the Dallas Court of Civil
Appeals in Duvall v. City of Dallas, supra, stated as follows:

“Construing this provision of the Constitution our courts
have consistently held that a taking of property, within its
meaning, is an appropriation, and not simply the infliction of
an incidental injury * * *.”

It is appropriate to observe at this point that the lands and
facilities belonging to the City of Graham have not been physically
appropriated. The plaintiff’s property is not located within the
basin of Possum Kingdom Lake nor has the property of the
City been destroyed in the physical sense by inundation. The
City, in answer to questions from the bench, admitted that all
three of the City’s facilities, its Sewage Disposal Plant, Channel
Reservoir, and its Water Treatment Plant were still being used
daily by the City of Graham. The gravamen of the plaintiff’s
complaint is therefore seen to be, not that its facilities have been
physically taken and appropriated, but only that the recurrent
flooding of which the City complains has interfered with the
use of these facilities to such extent as to destroy completely
their value to the City.

The case of Tarrant County Water Control & Improvement
District Number One v. Reid, 203 S.W. 2d 290, wr. ref. n.r.e.,
is the only prior case in Texas involving a claim of damage
because of the siltation of the State’s river beds brought about
by the construction of the great flood control and conservation

Ss

storage projects which are essential to the economy of this semi-
arid region.

The Reid case, although it involved a claim of damage to a
pecan grove rather than to a municipal facility, is on all fours
with the case at bar. Reid contended, as does the City of Graham
in this case, that the overflow damage to his land amounted
to a “taking” thereof because such overflow had been caused
by the deposit of silt in the river channel brought about by the
slowing of the velocity of the flow in the West Fork of the
Trinity which had been caused by the construction of Eagle
Mountain Dam and Lake in 1934.

Reid alleged that the damage to his land began in the year
1941. The Fort Worth Court of Civil Appeals, declining to decide
whether Reid had a valid cause of action or not, held that in
any event Reid’s claim was based upon a “damaging” of his
property rather than a “taking” thereof, and that a suit to
recover such damage brought in 1945 was barred by the two-
year Statute of Limitation. The Court distinguished the case
before it from the holding in Tarrant County Water Control &
Improvement District Number One v. Fowler, Texas Civ. App.,
175 S.W. 2d 694, wr. ref. w.om by the Supreme Court, 142
Texas 375, 179 S.W. 2d 250, saying:

“An analysis of the holding in the Fowler case, supra,
reveals that the dam under discussion in that case was con-
structed so as to ‘take’ Fowler’s land by submersion. It was to

be a part of the lake basin * * *,” [Emphasis added.]

This same distinction exists with reference to the present
case. The Reid case therefore is direct authority for the proposi-
tion that siltation cases, such as the one here, involve a claim
for “damage” to land and not a “taking” thereof. It was probably
for this reason that the present Fort Worth court, recognizing
the possibility of conflict, refused in the instant case to hold
contrary to its earlier decision.

(b) THE INSTANT CAUSE OF ACTION TO RECOVER
FOR PERMANENT DAMAGE TO THE PLAIN-
TIFF’S FACILITIES ACCRUED MORE THAN TWO
YEARS PRIOR TO THE TIME SUIT WAS FILED.

Before the Court of Civil Appeals wrote its opinion, all of
the parties, including respondent and its attorneys, assumed
that the City’s cause of action arose in July, 1953. There was

206

no argument on this point. Respondent had affirmately asserted
in its brief in the Court of Civil Appeals that the cause of action
has arisen in July, 1953, making this assertion as a part of
its argument that the cause of action had not arisen at a date
earlier in point of time so as to put in motion the ten-year
Statute of Limitation.

This ground of the Court of Civil Appeals opinion, that it
was not shown that the cause of action arose more than two
years before the suit was brought, was therefore a ground which
had never been urged by the City. As a matter of fact, the
holding is not only directly at variance with the City’s theory
of the case but it is based upon Baker v. City of Fort Worth, a
case not in point and not even referred to in respondent’s brief
in the Court of Civil Appeals. The Court of Civil Appeals mis-
applied to the case at bar the rule laid down in the Baker case.
The same error was made by the Austin Court of Civil Appeals
in Fromme v. Tennessee Gas Transmission Company, 263 S.W.
2d 574, and the error was corrected by this Court in Tennessee
Gas Transmission Company v. Fromme, 153 Texas 352, 269
S.W. 2d 336. We reversed the judgment and specifically held
that the Baker doctrine was not applicable and that the cause
of action asserted by Fromme was barred by the two-year
Statute of Limitation.

As is made plain in the Fromme opinion, the difference be-
tween the Baker case and the Fromme case is the fundamental
difference between an action to recover for temporary or transient
damage and one to recover for permanent damage to land. The
same difference exists between the Baker case and the present
case.

Having reviewed the City’s pleadings, the testimony of its
witnesses and the written arguments filed by it both in the
Court of Civil Appeals and in this Court, I am convinced that
the cause of action sought to be alleged by the City is one for
the recovery of permanent damage to its lands and facilities
brought about by the siltation occurring in the Brazos River
bed and Possum Kingdom Reservoir following the construction
in 1941 of the Possum Kingdom Dam. I am equally convinced
that the City took the position in its pleadings and supported
it by the testimony of its witnesses that although the dam was
completed in 1941, the onset of the injury to its lands and facili-
ties began in July, 1953.

As pointed out in the Fromme opinion, the rule laid down

ee 207

by Judge Stayton in Houston Water-Works v. Kennedy, 70 Texas
233, 8 S.W. 86 (a case basic to the decision in the Baker and
Fromme cases, as well as the case at bar) gives rise to two
distinct classes of action. One class of action, that involving a
claim for permanent damage to land, arises from the time of
the first injury to the plaintiff “be the damage however slight”.
This was the rule applied in the Fromme case. The second class
of action involves a claim for intermittent or recurrent injury
to land resulting in temporary damage. In such cases, separate
causes of action arise from the date of each injury and plaintiff
may recover such damage as has been suffered within the two-
year period next preceding the filing of the suit. This was the
rule applied in the Baker case.

To what classification of cases does the cause of action here
asserted by the City of Graham belong? Even in the brief filed
by respondent in this Court it is frankly admitted that the instant
cause of action is one to recover for permanent injury to the
plaintiff's facilities. At page 48 of its brief in the Supreme Court,
the City says:

“Both the Brazos River Authority and the City’s witnesses
have predicted that the flood hazard from Possum Kingdom
Lake will continue to increase. Nevertheless, this being a suit
for permanent injury to the City’s facilities, the City has but
one cause of action and may have but one recovery. City of
Waco v. Rook, Civ. App., 1932, 55 S.W..2d 649, * * *.” [Em-
phasis ours.]

Under the pleading, the testimony, the judicial admissions
of the City and the applicable law, the instant cause is one to
recover for permanent damage to land. The plaintiff itself al-
leged that the injury complained of began in July, 1953. The
testimony of its own witnesses substantiated this date. There
had never been, between Brazos and the City, any dispute or
difference on this point. Under these circumstances, the state-
ment in the Court of Civil Appeals opinion that “no issue was
submitted or requested touching the defense of limitations” is
erroneous if it means to imply some sort of waiver of this de-
fense. A fact established by the testimony or admitted by the
pleadings is no longer a fact in issue and requires no further
proof. Ogden and Johnson v. Bosse, 86 Texas 336, 344, 24 S.W.
798; Houston E. & W. T. R. Co. v. Dewalt, 96 Texas 121, 70
S.W. 531, 17 Texas Jur. 576.

(c) THE 1953 AMENDMENT TO ARTICLE 5517 DOES

20

NOT EXEMPT THE CITY OF GRAHAM FROM
THE TWO-YEAR STATUTE OF LIMITATION.

In 1958, the Legislature amended Article 5517, Vernon’s
Annotated Civil Statutes, to read as follows:

“The right of the state, all counties, incorporated cities
and all school districts shall not be barred by any of the pro-
visions of this Title, nor shall any person acquire, by occu-
pancy or adverse possession, any right or title to any part
or portion of any road, street, alley, sidewalk, or grounds which
belong to any town, city or county, or which have been donated
or dedicated for public use to any such town, city or county
by the owner thereof or which has been laid out or dedicated
in any manner to public use in any town, city or county in
this state.”

This 1953 amendment which added the italicized words, re-
tained the word “Title” which had been substituted in Article
5517 by the Codification of 1925, in lieu of the word “Chapter”
which had been used in all of the codifications of the statutes
prior to 1925.

The question is whether, by the insertion of the words “all
counties, incorporated cities and all school districts”, preceding
the words “shall not be barred by any of the provisions of this
Title’, the Legislature intended to extend to these particular
governmental subdivisions a complete immunity from all the
laws of limitations embraced in Title 91, or whether the Legisla-
ture merely intended by the 1953 amendment to exempt such
subdivisions from the provisions of the first part of Title 91,
which bears the title “Limitations of Actions for Land”.

The cardinal rule in statutory construction is the determina-
tion of the legislative intent. As stated in Mills County v. Lam-
pasas County, 90 Texas 608, 40 S.W. 403:

“Strictly speaking, there is but one rule of construction,
that is, that the legislative intent must govern. All cannons of
interpretation so called are but grounds of argument resorted
to for the purpose of ascertaining the true meaning of the law.”

Our task therefore is simply to find out what the Legisla-
ture intended and to give effect to that intention. The rules of
statutory construction do not compel the court to come blindly
to an unintended result.

a —(f

In a situation somewhat similar to the one presented here,
the Supreme Court of Alabama in Touart v. American Cyanamid
Company, 35 So. 2d 484, 488, held that the word “Chapter”
as used in Section 6 of an Act in a proviso exempting certain
plants from ad valorem tax, would be constructed as referring
to “Section” and as not applying to Section 10, exempting plants
manufacturing calcium cyanamide, aluminum or aluminum pro-
ducts from state, county, and municipal taxation for ten years,
notwithstanding that both sections were located in the same
chapter.

In Southwestern Gas & Electric Company v. State, 190 S.W.
2d 132, affirmed by the Supreme Court, 145 Texas 24, 198
S.W. 2d 675, the court said that the terms “Section” and “Article”
are interchangeable if that is discerned to be the legislative in-
tent. Other courts have held that “Section” sometimes means
“Subdivision”, State v. Babcock, 836 N.W. 348; that “Paragraph”
can be synonymous with “Section”. Lehmann v. Revell, 188
N.E. 531; that “Section” may sometimes mean “Sections”, Ellis
v. Whitlock, 10 Mo. 781, and at other times a subdivision of a
section, Spring v. Collector of City of Olney, 78 Ill. 101, State
v. Zimmerman, 204 N.W. 808; that “Section” may mean “pro-
vision” and hence not relate to all of the provisions of an entire
section, U.S. v. Healey, 160 U.S. 136, 16 S. Ct. 247, 40 Law
Edition 369.

Reference to the House and Senate Journals for the Regular
Session of the 58rd Legislature indicate quite clearly that the
Legislature did not intend to provide blanket exemption from
the Statute of Limitations to counties, cities and school districts
by the 1953 amendment to Article 5517, Vernon’s Annotated
Civil Statutes.

In Volume II of the House Journal for the 53rd Legislature,
Regular Session, at page 3151 under the title “History of House
Bills”, the following description of the bill appears.

“House Bill 898. By Mr. Garrett of Nueces: To amend Art.
5517 of RCS of Texas, 1925, as amended, so as to provide that
the right of the state, all counties, incorporated cities and all
sehool districts shall not be barred by any of the provisions
of this title, ete.: Concerns right or title to roads or streets,
etc., by adverse possession.” (Emphasis added.)

At page 2272 of the House Journal is recorded the action
of the House in placing House Bill 398 on the Local and Uncon-

20

tested Bill calendar. On the same day, May 14, 1953, the bill
was finally passed in the House with only two dissenting votes.
(House Journal p. 2281.)

The Senate Journal at page 1393 under the caption “History
of House Bills” likewise identified House Bill No. 398 as one
which concerned only the matter of limitation of actions for lands.
This is made plain by the following description of the subject
matter of the bill:

“398. Amending Statute of Limitations as to rights of
state, county, incorporated cities and school districts to lands.”
(Emphasis added.)

The House Bill was received by the Senate on May 18 (Senate
Journal p. 933); immediately referred to committee (Senate
Journal p. 951); reported favorably by the committee the fol-
lowing day (Senate Journal p. 954); and on this same day,
May 19, 1953, laid out before the Senate and passed unanimously
on second and third readings. (Senate Journal p. 1017.)

The foregoing journal references make it certain that the
Legislature conceived the amendment to Article 5517 as apply-
ing only to Limitation with reference to actions for lands. The
ease with which the bill passed the Legislature is evidence of
the fact that it was so understood by the members of both the
House and Senate. The bill was considered noncontroversial in
character and was placed on the Local and Uncontested Bill
calendar of the House on May 14. In the next five days of the
waning session the measure passed both Houses of the Legisla-
ture with only two dissenting votes and was placed on the gov-
ernor’s desk for signature. The bill was signed by him on May
25, 1958. The Legislature adjourned on May 27.

Had House Bill 398 been intended to extend to all incorporated
cities, counties, and school districts complete immunity from all
Statutes of Limitation, as the City of Graham contends, a more
controversial bill could hardly have been presented. A measure
introduced for the express purpose of repealing the law of Limi-
tations with respect to counties, incorporated cities, and school
districts would undoubtedly have encountered some opposition,
at least enough to keep the bill off the Local and Uncontested
Bill calendar. A bill of this scope and magnitude surely would
have encountered enough difficulty in the Legislature to have
prevented it from being steam-rollered through both Houses of

Ss  (

the Legislature within the space of five days as an “Uncontested
Bill’.

If the amendment of 1953 was not intended to exempt the
named governmental subdivisions from the bar of limitations
in personal actions as well as in actions for the recovery of
land, then what was the intent of the Legislature? A review of
the background and history of Article 5517, Vernon’s Annotated
Civil Statutes, together with the history of the 1953 amend-
ment taken from the Legislature Journals, makes it quite certain
that the Legislature intended, and only intended, to extend the
exemption contained in Article 5517 to cover all lands owned
by counties and incorporated cities rather than just such lands
as had been dedicated or donated to public use as roads, streets,
sidewalks, or grounds, and intended further to extend the exemp-
tion, in actions for lands, to school districts.

Under this construction the amendment would take care of
such cases as Brown v. Fisher, Texas Civ. App. (1917), 193
S.W. 357, wr. ref., holding that limitation title could ripen
against the city as to outlying wild and unimproved land; and
Texas Company v. Davis, Texas Civ. App. (19386), 93 S.W.
2d 180, wr. ref., holding that school districts were not exempt
from the operation of the Statute in actions to recover realty.

In summary, the suit brought by the City of Graham, if it
states a cause of action, states one for the recovery of “damage”
to its property and facilities rather than for a “taking” thereof.
Being a suit for the recovery of permanent damages to land, the
case is governed by the rule laid down by the Supreme Court in
Tennessee Gas Transmission Company v. Fromme, supra, and
the cause of action to recover such damage accrued in July 1953.
The instant suit brought in September, 1957, is therefore barred
by the Two-year Statute of Limitation. This Court should spe-
cifically hold that the amendment to Article 5517, supra, did
not exempt the City from the Two-year Statute of Limitations.

The remaining point is the contention of Brazos that the
trial court erred in excluding from evidence a deed from the
City to the Authority. Clearly this was error. On January 24,
1939, the Mayor of the City of Graham executed a deed to the
Brazos River Authority conveying a tract of 3.94 acres of land
which deed contained a covenant releasing the Authority for
damages resulting from the overflowing or flooding any other
Jands owned by the City occasioned by the construction, mainte-
nance, or operation of Possum Kingdom Dam. The deed contain-

22

ing the release was filed of record in 1940 and had never been
repudiated or questioned by the City until the filing of the instant
suit almost eighteen years later. The trial court refused to sus-
tain the plaintiff’s exceptions to the pleading of this release
but on the trial of the case excluded the deed from evidence.

The deed involved represented a conveyance of property in
lieu of condemnation and the City of Graham had the authority
to execute this deed and the release embodied within it. Kings-
ville Independent School District v. Crenshaw, Texas Civ. App.
(1942), 164 S.W. 2d 49, wr. ref. w.o.m.

The voluntary conveyance by the City of Graham including
the release of damage to its remaining land was neither invalid
nor void. There is a presumption that the mayor acted with
authority, City of San Antonio v. Newman, Texas Civ. App.
(1919), 218 S.W. 128, wr. den.; State v. City of McAllen, Texas
Civ. App. (1933), 56 S.W. 2d 297, Texas Comm. App., 91 S.W.
2d 688; 1 McCormick and Ray, Texas Law of Evidence 117.
And if that authority had not been formally conferred on the
mayor, as plaintiff has contended, the circumstances do not
foreclose the possibility that the instrument including the release
had been ratified and confirmed by the City’s acquiescence over
a period of almost eighteen years. Interstate Materials Corp. v.
City of Houston, Texas Civ. App. (1951), 286 S.W. 2d 653,
wr. ref. n.xr.e. The conveyance having been of record more than
ten years was, of course, admissible without proof of its execu-
tion. Article 8726, Vernon’s Annotated Civil Statutes.

Whether the release was included in the deed by reason of
mutual mistake or whether the consideration paid by the Author-
ity therefor was inadequate, present issues which the trial court
had no right unilaterally to determine as a question of law.
Olvey v. Jones, 187 Texas 689, 156 S.W. 2d 977.

The deed was admissible. The release as to damage to other
lands owned by the City is recited in the deed. It was no doubt
a part of the consideration. At least, it was a question of fact.
The City has never repudiated the deed. How can it be said that
a separate resolution was necessary?

Plaintiff’s Exhibit No. 24 shows the general location of the
tract conveyed relative to the location of plaintiffs facilities
which are the subject matter of this suit. The 3.94 acres was
acquired for the purpose of constructing, operating, and main-
taining Possum Kingdom Dam on the Brazos—and the City’s

Ss —

contract of sale so recites. The resolution of the City dated August
11, 1988, the contract of sale executed by the mayor, dated
October 4, 1938, and the deed dated January 24, 1939, were ten-
dered as Exhibits 40, 41, and 42.

The trial court overruled all objections to the introduction
of these instruments. But, in spite of such action, the court ex-
cluded the instruments. The court justfied his action on the
theory that one administration could not bind another, etc. This
theory was the product of the court’s vivid imagination. It was
not advanced by either party. The theory was without regard
to the record.

The resolution dated August 11, 1988, states the purpose of
Brazos River Authority in acquiring the 3.94 acres, a part of
the M. Dunn and the M. McGary surveys. It authorized the con-
tract of sale and the deed.

The contract of sale dated October 4, 1938, and the deed were
ratified and confirmed. The resolution and deed were filed for
record in Young County as one instrument on February 9, 1940.
The record shows that prior to the execution of the resolution,
contract of sale and the deed, the city officials and representa-
tives of Brazos River Authority discussed the question of flooding
the sewage plant, etc. They discussed the elevation at spillway
level, etc. The contract of sale and the deed contains the following:

“The grantee contemplates constructing, maintaining and
operating Possum Kingdom Dam across the Brazos River
in Palo Pinto County, Texas, situated downstream from the
property herein conveyed, at an elevation at spillway level
1000 feet above mean sea level. The Grantor, for himself and
his successors in title hereby releases the Grantee from lia~
bility for damages resulting from overflowing or flooding any
other lands owned by him occasioned by the construction, opera-
tion or maintenance of said Possum Kingdom Dam, including,
but not limited to, the following lands: * * *.”

The deed and contract then specifically mention the same
two surveys as the ones of which the 3.94 acres is a part. The
sewage plant is situated an another survey, the N. White Survey.
The Water Treatment Plant and Pump Station (not inundated)
are situated on the George Cox Survey. The Channel Reservoir
is located on Salt Creek at a point “which bears South 168 feet;
Thence North 252 feet from the Northeast corner of the M.
McGary Survey, (this is the same survey as the 3.94 acres)

2

which point on Salt Creek is approximately 1200 feet down-
stream from the Water Treatment Plant.”

I briefly refer to some of the United States Supreme Court
cases cited by the Court of Civil Appeals:

Penn v. Mahon, 260 U.S. 393; Pumpelly v. Green Bay Co.
18 Wall 166, 80 U.S. 166, and Mugler v. Kansas, 123 U.S. 623.

The Pumpelly case and the Holderbaum case (Texas case)
are cited for the proposition that “It is settled that one who
obstructs the flow of the stream so as to make the water flow
onto and injure the lands of another is liable.” I have no quarrel
with such proposition. These cases and the others cited simply
have no application here.

Penn v. Mahon, 260 U.S. 398. This case cited by the Court
of Civil Appeals is another U. S. Supreme Court case which
has no bearing upon the question here. That case involved rights
under the Kohler Act. Briefly, the Act provided that it shall be
unlawful “so to conduct the operation of mining anthracite coal
as to cause the cave-in, collapse or subsidence of (a) any public
building or any structure customarily used by the public * * *;
(b) any street, road, bridge, etc.; (c) any track, roadbed, right
of way, pipe, etc.; (d) any dwelling, etc.; (e) any cemetery or
other public burial ground.”

This case speaks about regulation under police power, and
that if regulation goes too far it will be recognized as a “taking’’.

Mugler v. Kansas, 128 U.S. 628. This is another U. S. Supreme
Court case cited by the Court of Civil Appeals. That case held
that state legislation which prohibits the manufacture of spirit-
uous, malt, vinous, etc., intoxicating liquors, does not necessarily
infringe any right, privilege, or immunity secured by the Con-
stitution of the United States or by the Amendments thereto.

This case should be reversed and judgment here rendered for
Brazos. In any event, the action of the trial court in excluding
the deed from evidence deprived the Authority of one of its
meritorious defenses. This error alone requires that the entire
cause be remanded to the trial court for a new trial.

ASSOCIATE JUSTICES GRIFFIN and HAMILTON join
in this dissent.

Opinion delivered October 8, 1961.

(2
ON MOTION FOR REHEARING
NORVELL, Justice.

Both petitioner and respondent have filed motions for rehear-
ing. We first consider that filed by the petitioner.

It is again urged that the evidence does not show a taking
of the City’s sewage disposal plant. In the leading case of Pum-
pelly v. Green Bay Company, 18 Wall. 166, 20 L. ed. 557, Mr.
Justice Miller, speaking for the Supreme Court of the United
States, said: “[W]here real estate is actually invaded by super-
induced additions of water, earth, sand or other materials, or
by having any artificial structure placed on it, so as to effectually
destroy or impair its usefulness, it is a taking within the mean-
ing of the Constitution, * * * this proposition is not in conflict
with the weight of judicial authority in this country, and certainly
not with sound principle.”

The evidence in this case (set forth in abridged form in the
original opinion) supports the jury’s findings which lead to the
conclusion that there was a taking of property insofar as the
sewage disposal plant is concerned. This plant was constructed
before Possum Kingdom Dam was built. It was designed for a
highly specialized use and this factor is one which must be taken
into consideration in determining whether a constitutional taking
has occurred. We are not here dealing with soil or land alone or
property that is being used for agricultural purposes, as was the
case in Tennessee Gas Transmission Co. v. Fromme, 158 Texas
352, 269 S.W. 2d 336 and Tarrant County Water Control &
Improvement No. 1 v. Reid, Texas Civ. App., 208 S.W. 2d 290,
wr. ref. n.xv.e. There obviously is a difference in the frequency
of floodings which effectually destroy the utility of a sewage
disposal plant and the frequency which would impair the useful-
ness of farming land to the point where such floodings could be
regarded as a “taking” of property. The circumstance that such
property was taken, in the sense of being appropriated to the
use of the Authority, prior to the institution of condemnation
proceedings does not change the legal situation. The constitutional
provision contained in Article 1, Section 17 of the Texas Con-
stitution, like that contained in the Fifth amendment to the
federal constitution, has application to cases of inverse condemna-
tion, e.g., that is, cases in which private property is taken or
appropriated for public use prior to the institution of formal
condemnation proceedings. In such cases, a recovery of com-
pensation may be had by an action in the nature of a damage

2

suit. See, United States v. Lynah, 188 U. S. 445, 23 S. Ct. 349,
47 L. ed. 589, which deals with an inverse condemnation, follows
Pumpelly as to a taking, and states that, “[W]hile the govern-
ment does not directly proceed to appropriate the title, yet it
takes away the use and value; when that is done it is of little
consequence in whom the fee may be vested.”

HMMM The petitioner repeats that this is a case of damnum
absque injuria. A number of authorities are cited as supporting
this position. There is in the law relating to waters a class of
cases which hold that certain injuries to land caused by artificial
changes in the channel of a stream in aid of navigation, or the
construction of revetment works designed to prevent water
erosion are noncompensable. The true basis of the holdings of
the navigation cases seems to rest in the police power. See,
Hollister v. Union Company, 9 Conn. 435, Fitchburg R. Co. v.
The Boston and Maine R. Co., 57 Mass. 58. Then there is a well
recognized rule that one may protect his own land by revetment
works even though the indirect result of this action may be an
injury to another. Henry v. The Vermont Central R. Co., 30
Vt. 688, Lamb v. Reclamation District No. 108, —. Cal. __, 14
P. 625. The decisions based upon the principles stated are readily
distinguishable from the case before us.

In United States v. Lynah, 188 U.S. 445, 28 S. Ct. 349, 47
L. ed. 589, the government placed dams and other obstructions
in a river so as to raise the elevation of the waters and cause
them to overflow the plaintiff’s rice plantation. The government’s
action in placing dams in the stream and causing the waters
thereof to rise and flood was considered a taking under the fifth
amendment. Here there was something more than a mere straight-
ening of a channel or the construction of revetment works. See
also, Henry v. Vermont Central R. Co., 30 Vt. 638.

In Archer v. City of Los Angeles, __.. Cal. _..., 119 P. 2d 1,
the distinction between obstructing the flow of a stream and an-
other form of injury to property was clearly pointed out. The
gravamen of the claim against the City was the construction of
drainage improvements in an urban area without providing for
additional outlets to carry off the concentration of water. A
claim of damages, among others, was made because of the con-
struction of a bridge which impeded the flow of waters in a
natural drainage course. The Supreme Court of California made
a clear distinction between this claim and the others which were
asserted. It was said with reference to the claim based upon the
construction of the bridge that “any damage caused by an ob-

st

struction to the natural flow of the waters is * * * actionable.”
The plaintiffs did not recover because of a failure to prove that
the presence of the bridge actually caused damage.

The distinction is also clearly pointed up in Bedford v. United
States, 192 U.S. 217, 24 S. Ct. 238, 48 L. ed. 414, a revetment
case, wherein it was said that:

“In the case at bar the damage was strictly consequential.
It was the result of the action of the river through a course
of years. The case at bar, therefore, is distinguishable from
the Lynah case in the cause and manner of the injury. In the
Lynah case the works were constructed in the bed of the river,
obstructed the natural flow of its water, and were held to have
caused, as a direct consequence, the overflow of Lynah’s plan-
tation. In the case at bar the works were constructed along
the banks of the river, and their effect was to resist erosion
of the banks by the waters of the river. There was no other
interference with natural conditions. Therefore, the damage
to appellants’ land, if it can be assigned to the works at all,
was but an incidental consequence of them.”

See also, Franklin v. United States, 16 F. Supp. 258 and cases
therein cited.

In our opinion damage resulting from siltation of a reservoir
and consequent flooding of additional lands is comprehended by
the rule of United States v. Lynah, 188 U.S. 445, 28 S. Ct. 349,
47 L. ed. 589. We adhere to our holdings upon the point expressed
in our original opinion.

Hl It is also argued that we erred in our construction of Article
5517, Vernon’s Ann. Texas Stats. This limitation point is per-
tinent only if the flooding of the sewage disposal plant be con-
sidered a “damaging” rather than a “taking” under Article 1,
Section 17 of the Constitution. Petitioner points out that in many
instances the word “Title” was substituted for the word “Chapter”
(1911 R.S.) in the 1925 revision of the Texas statutes. This
occurred with reference to Article 5683 of the 1911 revision
which read, “The right of the State shall not be barred by any
of the provisions of this Chapter, * * *.” This article was re-
written as Article 5517 of the 1925 revision so as to provide that,
“The right of the State shall not be barred by any of the pro-
visions of this Title, * * *.” It seems inescapable to us that if
the meaning of a statute is to be determined by the words used
by the Legislature, it must be concluded that it was the intention

215

of the 39th Legislature (1925) to broaden the limitation ex-
emption of the State by substituting the word title for chapter.
It must likewise be concluded that the 53rd Legislature, by the
1953 amendment, intended to place counties and certain other
governmental entities on a parity with the State insofar as
limitation was concerned, for at that time, the italicized words
were added to the article, viz:

“The right of the State, all counties, incorporated cities and
all school districts shall not be barred by any of the provisions
of this Title, * * *.”

Other matters raised in petitioner’s motion for rehearing
were adequately discussed in the original opinion.

The City of Graham complains of our holding that no more
than a temporary damage to its water treatment plant was shown.
It is said that even the Brazos River Authority recognized that
the damage, if any, was permanent. This position was taken by
the Authority in support of its contention that the City’s action
was barred by the two-year statute of limitations. Article 5526,
Vernon’s Ann. Tex. Stats. It would in no way militate against
nor preclude this Court from holding that the City had failed
to establish its claim of a taking or permanent damage to the
water treatment plant.

Some objection is made by the City to the sufficiency of
petitioner’s points to raise the issue of temporary damage only.
The points and arguments thereunder present the contention that
there is no evidence supporting findings that the water treatment
plant had either been taken or permanently damaged and hence
it was improper to allow a recovery for substantially the whole
of the intrinsic value of the plant, particularly in view of the fact
that the City continues to control and use the installation. Tech-
nically, the theory of temporary or sporatic damage only is in
rebuttal of the claim for a taking or permanent damaging. This
Court has adopted a liberal rule with reference to the construc-
tion of points contained in appellate briefs and applications for
writ of error. In Fambrough v. Wagley, 140 Texas 577, 169
S.W. 2d 478 it was said that, “If a point is sufficient to direct
the Court’s attention to the matter complained of, the Court will
look to the ‘point’ and the statement and argument thereunder
to determine the question of reversible error. Simply stated, the
Court will pass on both the sufficiency and the merits of the
‘point’ in the light of the statement and argument thereunder.”

a

We hold that under the rule of the Fambrough case, petitioner’s
points are sufficient.

MM In its attack upon our holding that nothing more than a
temporary damage to the water treatment plant was shown, the
respondent again argues a question which is difficult of satis-
factory solution. The matter is rendered complex by the very
nature of cities and the complications connected with their growth
and development. As pointed out in the discussion relating to
the sewage disposal plant, the design, nature and use of the
property said to be taken or damaged is an important factor in
the problem before us. The respondent points out that the City
of Graham is a growing municipality; that its utility installa-
tions must, as a consequence, be enlarged; that an efficient and
effective water treatment plant is an essential to an urban com-
munity; that the City at the present time is confronted with
the problem of enlarging its water treatment plant and replacing
certain parts and portions thereof which have become obsolete or
worn out; that the City has sought competent technical advice
in regard to its problems and its engineers have advised the City
to abandon the present site and erect a new and larger plant
upon a site which would not be subjected to the dangers of
flooding by the waters of Salt Creek and the Brazos. It is further
argued that portions of the water treatment plant were under
water on two occasions—in 1955 and 1957—because of a com-
bination of heavy precipitation in the Salt Creek watershed and
simultaneous high water in Possum Kingdom Lake, and that the
situation from the City’s standpoint is progressively worsening
because of the continuing siltation of the reservoir. The City
contends that it should not be required to accept the hazard of
continuing to operate the present water treatment plant and that
the City could not from a financial standpoint, and should not,
in view of the threatened flooding occasioned by the construction
and operation of the Possum Kingdom Dam by the River Au-
thority, be called upon to erect a new water treatment plant at
a, suitable location at its own expense.

On the other hand there is a substantial difference between
the elevation of the sewage disposal plant—1003.94 feet—and
the elevation of the water treatment plant—1019.09 feet. This
difference of approximately 15 feet would roughly account for
at least 195,000 acre feet of water; that is, some 195,000 more
acre feet of water would have to be in the lake in order to flood
the water treatment installation than would be required to flood

220

the sewage disposal plant.’ Of course, unusual and freakish rain-
fall conditions in the Salt Creek basin might change the situation
somewhat, but the prognosis of repeated recurring floods in the
future is not sufficiently established to support the jury’s findings
which are patently based upon the hypothesis that the water treat-
ment plant has been in effect reduced to a status of no value.
While the situation includes elements of possible hardship for the
municipality, we cannot say that there is evidence supporting
the jury’s findings as to the virtual destruction of the water treat-
ment plant.

A somewhat similar, although not identical situation to the
present case was considered by the Supreme Court of the United
States in Sanguinette v. United States, 264 U.S. 146, 44 8. Ct.
264, 68 L. ed. 608. While the property involved in Sanguinette
was farming land, this circumstance does not entirely destroy
the analogy. The Supreme Court distinguished the case from
Pumpelly and Lynah, supra, (which are applicable to the sewage
disposal plant), upon the ground that a constitutional taking was
not involved and plaintiff’s complaint, if any he had, rested in
tort. The Court pointed out that as the result of the construction
of a canal by the government and consequent intermittent flood-
ing of plaintiff’s lands that plaintiff “was not ousted nor was his
customary use of the land prevented, unless for short periods
of time. If there was any permanent impairment of value, the
extent thereof does not appear. * * * The most that can be said
is that there was probably some increased flooding due to the
canal and that a greater injury may have resulted than other-
wise would have been the case.” The Court also said that, “It
was not shown that the overflow was the direct or necessary
result of the structure; nor that it was within the contemplation
of or reasonably to be anticipated by the Government. If the
case were one against a private individual, his liability, if any,
would be in tort. There is no remedy in such case against the
United States.”

The provisions of Article 1, Section 17 are broader than those
of the federal fifth amendment which mentions only private
property taken for public use. However, we believe Sanguinette
does suggest a distinction which is indicated by the evidence
in this case, that is, a difference between a taking or destruction
of property on one hand and a temporary or sporadic damage
thereto on the other.

1, This is a rough calculation obtained by multiplying the 7.5 (one half
of 15) by 26,000, the normal acreage area of the lake.

Cee ee

We adhere to our holdings expressed in the original opinion
and further discussion is deemed unnecessary.

All motions for rehearing are overruled.

Opinion delivered January 24, 1962.
Le

E. L. FITCH, DOING BUSINESS AS E. L. FITCH TRUCKING Co.
EY AL, Petitioner
v.
INTERNATIONAL HARVESTER COMPANY, Respondent

No. A-8722. Decided January 31, 1962
354 S.W. 2d 872

enn!
Murray J. Howze, Monahans, for petitioner.
McGowen & Magee, Monahans, for respondent.

PER CURIAM.

The Court of Civil Appeals dismissed the appeal to that Court
for want of prosecution. 350 S.W. 2d 395. This action was not
erroneous. Rules 414 and 415, Texas Rules of Civil Procedure.
The appeal having been dismissed, discussion by the Court of
Civil Appeals of the merits of the appeal and its affirmance of
the trial court’s judgment may be regarded as mere surplusage
inasmuch as the judgment of the trial court stands unimpaired
upon the dismissal of the appeal therefrom.

The application for writ of error is refused, no reversible error.

City oF SAN ANTONIO, Petitioner

v.
HOMER ESQUIVEL, INDIVIDUALLY AND AS NEXT FRIEND OF HIS
MINOR DAUGHTER, TERESA ESQUIVEL, Respondents

No, A-8665. Decided February 7, 1962
858 S.W. 2d 410

Crawford B, Reeder, City Atty., Arthur C. Troilo, Jr., Asst.
City Atty., San Antonio, for petitioner.

Arthur A. Domangue, San Antonio, for respondents.
JUSTICE CULVER delivered the opinion of the Court.

The respondent, Esquivel, brought this suit individually and
in behalf of his minor daughter eleven years of age, against
the City of San Antonio for damages, alleging an injury to the
child caused by the collapse of a sidewalk on which she was
walking.

228

The trial judge found that the City of San Antonio was
negligent in failing to keep the sidewalk and storm sewer in
a reasonably safe condition and also negligent in failing to inspect
the premises for at least two years prior to the time of the
accident. The judge further found that each of these acts of
negligence was a proximate cause of the injury sustained. As a
matter of law he concluded that the doctrine of res ipsa loquitur
is not applicable to the facts in this case. Judgment was accord-
ingly entered for the respondent and the Court of Civil Appeals
has affirmed. 349 S.W. 2d 295.

The City maintains that there is no evidence to support the
findings of the trial court, namely, that the failure to keep the
sidewalk in a reasonably safe condition was negligence and that
the failure to inspect was a proximate cause. By his cross point
respondent urges that the trial court erred in concluding that the
doctrine of res ipsa loquitur does not apply. We agree with the
contentions of the City and with the trial court’s action in re-
jecting the application of res ipsa loquitur. Therefore the cause
must be reversed.

The evidence shows that the portion of the sidewalk in ques-
tion lay over a storm sewer and had been constructed some years
before. The record is wholly silent as to what caused the sidewalk
to collapse nor does it appear that prior to the collapse there were
any visible defects. It is shown that there had been no inspection
by the agents of the City for at least two years.

If The rule of evidence, generally known as res ipsa loquitur,
cannot be invoked in this case because the City does not have
exclusive control over its sidewalks. San Juan Light & Transit
Co. v. Requena, 224 U. S. 89, 82 S. Ct. 399, 56 L. ed. 680;
Wichita Falls Traction Co. v. Elliott, 125 Texas 248, 81 S.W.
2d 659; Honea v. Coca Cola Bottling Co., 143 Texas 272, 183
S.W. 2d 968; Washington v. Missouri, K. & T. Ry. Co., 90 Texas
814, 38 S.W. 764. For, as said in Morrow v. City of Harlan,
—_. _ Ky. _., 844 S.W. 2d 401, there is great opportunity for
intervening and independent causes.

It is a well recognized rule of law that before a city may be
held liable for injury caused by a defect in the city sidewalks
or street the City must have had actual or constructive notice
of such defect. Hanks v. Port Arthur, 121 Texas 202, 48 S.W.
2d 944, 1932; Texas Co. v. Grant, 143 Texas 145, 182 S.W. 2d
996, 1944; City of Fort Worth v. Lee, 148 Texas 551, 186 S.W.
2d 954, 1945. Here the City had no notice of either character.

2

It is not known what the defect was nor how long it had existed.
In apt language, the law in this respect is stated in City of Gal-
veston v. Smith, 80 Texas 69, 15 S.W. 589:

«« * % In order to charge the defendant (City) with negli-
gence, it must appear from the evidence, not only that the said
covering to the drain was defective at the time of the alleged
injury, but also either that such defect was actually known to
the defendant, through some of its officers or servants having
charge of such matters, or that the defect had existed for such
a length of time prior to the alleged injury that the city au-
thorities, if exercising ordinary diligence, would or should
have known of its existence.”

In that case the suit was brought to recover damages for
personal injuries caused by a defective covering over a culvert,
quite similar to the facts in the case here.

I Conceding that there exists a duty on the part of the City
of San Antonio to inspect the condition of the many miles of
streets and sidewalks within the city limits, in order for the
failure to perform that duty to constitute a proximate cause of
the injury in such a case as this, it must be shown that such a
reasonable inspection would have disclosed the defect that existed.
Since there was a total absence of any evidence showing or tend-
ing to show the nature of the defect or how long it had existed,
it cannot be said that, had the City made a reasonable inspection
from time to time, the defects would have been discovered.

The judgments of the courts below are reversed and judgment
rendered that the plaintiff take nothing.

Opinion delivered February 7, 1962.
P|
CHARLES V. BLANTON ET AL, Petitioners

v.
Crry oF Houston, Respondent

No. A-8752. Decided February 7, 1962
858 S.W. 2d 412.

225

Croom & Barnes, Smith & Lehmann, Cyril J. Smith, Houston,
for petitioners.

R. H. Burks, City Attorney, Houston, Charles F. Weaver, John
Gano, Assistants City Attorney, Houston, for respondent.

PER CURIAM.

The opinion of the Court of Civil Appeals is reported in Vol.
350 at page 947 of the Southwestern Reporter, Second Series.
It being made known to this Court by stipulation of the parties
that this cause is now moot, it is accordingly ordered that writ
of error be granted without reference to the merits; that the
judgment of the trial court and the Court of Civil Appeals be
vacated, and that this cause be dismissed. Danciger Oil & Refin-
ing Company of Texas v. Railroad Commission of Texas, 122
Texas 243, 56 S.W. 2d 1075; Tarpley v. Epperson, 125 Texas
63, 79 S.W. 2d 1081; Texas & New Orleans R. Co. v. Priddie,
127 Texas 629, 95 S.W. 2d 1290; Iles v. Walker, 182 Texas 6,
120 S.W. 2d 418; University Interscholastic League v. Sims,
133 Texas 605, 181 S.W. 2d 94; Freeman v. Burrows, 141 Texas
318, 171 S.W. 2d 863; Guajardo v. Alamo Lumber Co., 159 Texas
225, 817 S.W. 2d 725; Parr v. Stockwell, 159 Texas 440, 322
S.W. 2d 615; Cameron v. Saathoff, 162 Texas 124, 345 S.W.
2d 281; Connell v. B. L. McFarland Drilling Contractor, 162
Texas 345, 347 S.W. 2d 565.

COMBINED AMERICAN INSURANCE COMPANY, Petitioner
v.
Rusby LEE BLANTON, Respondent

No. A-8539. Decided February 7, 1962
853 S.W. 2a 847

no

26

Brundidge, Fountain, Elliott & Bateman, Roger A. Hansen,
Dallas, for petitioner.

Allen Clark, Harold F. Curtis, Jv., Greenville, for respondent.

ASSOCIATE JUSTICE SMITH delivered the opinion of the
Court.

This suit was brought by the Respondent, Ruby Lee Blanton,
hereinafter referred to as Plaintiff, against Petitioner, Combined
American Insurance Company, hereinafter referred to as De-
fendant, to recover the face value of a policy of insurance, in-
suring the life of her husband, J. O. Blanton, who died on August
8, 1958, as a result of a shotgun wound. The policy of insurance
in question insured Blanton against loss of life caused by bodily
injuries effected exclusively of all other causes by accidental
means. The trial court, without the intervention of a jury, ren-
dered judgment for the Plaintiff. The Court of Civil Appeals
has affirmed. 348 S.W. 2d 85.

We have concluded to reverse the judgments of both the trial
court and the Court of Civil Appeals and render judgment that
Plaintiff take nothing.

re 2a

The Court of Civil Appeals concedes that the facts and cir-
cumstances of the record “lead to a strong belief that Blanton
committed suicide”, but has held that the judgment of the trial
court must stand, unless the evidence established that the “shoot-
ing was intentional to that degree of conclusiveness which pre-
cludes a reasonable doubt to the contrary.”

The Court of Civil Appeals has held that the evidence of
suicide “does not overcome the well-known presumption against
suicide, and therefore leaves a presumption that Jasper O. Blan-
ton died as a result of an accident unassailed.”

HM The judgment in favor of the Plaintiff must fall unless
the implied finding (no findings of fact or conclusions of law
were filed) of the trial court that Blanton died by accidental
means is supported by probative evidence. The burden of pleading
and proving that the death of Blanton was by accidental means
rested with the Plaintiff. International Travelers’ Association
v. Bettis, 120 Texas 67, 35 S.W. 2d 1040; Langlitz v. American
National Insurance Co., Texas Civ. App., 146 S.W. 2d 484, er.
dism., judgment correct. The Plaintiff has failed to discharge
this burden. Since the opinion of the Court of Civil Appeals
recites the facts in detail, we deem it unnecessary to extensively
detail the evidence here. It is sufficient to say that none of the
facts tend to show death by accidental means. All of the evidence
is inconsistent with the theory that death was by accident. There-
fore, the implied finding that death was by accident cannot stand.
While it is true there is a presumption of law against suicide,
nevertheless, presumptions may be overcome by testimony. When
the only reasonable inference which can be drawn from all the
evidence is that death was the result of suicide, the presumption
against suicide is rebutted. In the present case, suicide is the
only reasonable hypothesis that is consistent with the evidence
and the presumption against suicide cannot prevail against such
evidence. Mutual Life Insurance Co. v. Tillman, 84 Texas 31,
19 S.W. 294; Empire Gas & Fuel Co. v. Muegge, 185 Texas 520,
143 S.W. 2d 763. A legal presumption of the type involved here
is a true presumption, which has been defined as a rule of law
laid down by the courts which attaches to facts certain procedural
consequences. McCormick & Ray’s Texas Law of Evidence, 2d
Ed. Sec. 51, p. 57. It places on the party against whom it operates.
the burden of producing evidence. The defendant has rebutted
this presumption with facts showing suicide. Therefore, the pre-
sumption is not evidence and is not to be weighed or treated as
evidence. McCormick & Ray’s, supra, pp. 60, 69, Sections 53,
56; 20 Amer. Jr. pp. 170, 171, Sec. 166.

228 ee

IB The facts have been shown in this case. Ordinarily, presump-
tions must give way when in conflict with clear evidence such
as we have here. In Jones on Evidence (2d Ed.), Sec. 32, it is
thus stated:

«x %* % Courts have frequently remarked that presumptions
are only intended to take the place of facts and cannot be
relied upon where the facts are shown; or that no presumption
can stand in the face of facts. According to such authorities
a presumption is an artificial thing, a mere house of cards,
which one moment stands with sufficient force to determine
an issue, but at the next, by reason of the slightest rebutting
evidence, topples utterly out of consideration of the trier of
facts.”

_ The Plaintiff relies upon the case of United Fidelity Life
Ins. Co. v. Adair, Texas Civ. App., 29 S.W. 2d 940, Comm. App.,
29 S.W. 2d 944. That case involved a life policy which contained
a provision that if the insured, whether sane or insane, should
die by self destruction within one year from the date of the
policy, the amount of payment under the policy would be limited
to the amount of the premiums actually paid. The insurer relied
upon the defense of suicide or self-destruction. The Court refused
to follow the defendant’s contention that its evidence showed as
a matter of law that the insured fired the pistol with suicidal
intent. In the present case, the Plaintiff is suing on a policy limit-
ing liability to death by accidental means. Suicide was not an
affirmative defense. The negative of suicide was an element of
Plaintiff’s case. In other words, the burden of proof was upon
Plaintiff to show that the death was within the terms of the
policy and that Blanton was insured against “loss caused by bodily
injuries * * * effected exclusively of all other causes by accidental
means * * *?

Plaintiff cites the recent case of Great Southern Life Insur-
ance Company v. Watson, Texas Civ. App., 343 S.W. 2d 921,
wr. ref. n.r.e., as being controlling here. In determining whether
or not the Watson case is controlling, it is well to bear in mind
that the ultimate conclusion reached by a court in a case of this
type must necessarily rest upon the facts. The Court of Civil
Appeals concluded there were facts introduced to support the
finding of the trial court that Watson’s death was caused by acci-
dental means. In the present case, as heretofore stated, there is
no evidence which would support a reasonable inference that
Blanton’s death was caused by accidental means.

229

Since the Plaintiff has sued here on a policy of insurance

limiting liability to death by accidental means, and since there
is no evidence of death by accidental means, the judgments of
the trial court and the Court of Civil Appeals are both reversed,

and judgment is rendered that Plaintiff take nothing.
Opinion delivered February 7, 1962.
|

Jon JONES, JR., ET AL, Petitioners
v.
M-State Homss, INc., Respondent

No. A-8642. Decided February 14, 1962
856 S.W. 24 923

Robert G. Carter, Marlin, for petitioners.

20

Tom Bartlett, Jr., Marlin, for respondent.

ASSOCIATE JUSTICE SMITH delivered the opinion of the
Court.

This is a suit in trespass to try title. Mid-State Homes, Inc.,
was the plaintiff in the trial court, and Joe Jones, Jr., and Della
Jones were the defendants. For convenience, the parties will
hereinafter be designated as in the trial court.

The case was tried to the court without the aid of a jury.
A take-nothing judgment was entered for the defendants. No
findings of fact or conclusions of law were filed, and no request
for such filing was made. The judgment of the trial court has
been reversed and the cause remanded to the trial court for a
new trial. 348 S.W. 2d 420.

We have concluded to reverse the judgment of the Court of
Civil Appeals and affirm the judgment of the trial court for
the reasons now to be stated.

Hl Where the parties stipulate common source, the burden rests
upon the plaintiff to connect each party with the common source,
and to establish a superior title from such source. See Bosse v.
Cadwallader, 86 Texas 336, 24 S.W. 798; Tommie Davis, et ux
v. Louis Gale, 160 Texas 309, 330 S.W. 2d 610. In this case the
common ‘source agreed upon was the defendants. The plaintiff
introduced no deed or other valid conveyance from the defendants
to itself. The plaintiff did offer in evidence the following instru-
ments: a mechanic’s and materialmen’s lien and a deed of trust
executed by Joe Jones, Jr., and Della Jones to the Jim Walter
Corporation; an assignment of lien from Jim Walter Corporation
to the Mid-State Investment Corporation; assignment from Mid-
State Investment Corporation to the plaintiff; resignation of
trustee and appointment of a substitute trustee; and a trustee’s
deed to plaintiff dated July 9, 1959. The same description is con-
tained in each instrument, and is as follows:

“A certain lot in the Oltorf Addition of Marlin, Falls
County, Texas, and being recorded in the City Hall at Marlin,
Texas, and said lot being in Block No. 7 of said addition and
being north of Roosevelt Street south of the City of Marlin,
and being west of the Sally Dunbar property. Said property
is about 52 by 150 feet in size.”

I The trial court sustained the defendants’ objection to the

Ss =

introduction of these instruments on the ground that each instru-
ment was void for want of an adequate description, in that the
description was so defective that the land could not be located
on the ground.

The plaintiff then sought to identify the land by introducing
in evidence field notes prepared by the County Surveyor on
August 14, 1959. The petition upon which the plaintiff went to
trial contains the field notes furnished by the County Surveyor.
The Surveyor’s field notes are the basis for the plaintiff’s con-
tention that the description contained in the tendered instruments
sufficiently identified the land. We are not called upon to decide
whether or not the Surveyor’s field notes constitute a valid
description of the land. It is sufficient to say that the description
contained in the excluded instruments was so defective that it
failed to furnish a nucleus of description sufficient to identify
any particular property. The County Surveyor testified that the
only way he could locate the land was by the use of a plat in the
Tax Collector’s Office. No reference to this plat is contained in
any of the instruments upon which plaintiff relies to connect
itself with the agreed common source. The Surveyor testified
that there was more than one “Oltorf Addition”, and that he
could not tell from the description contained in the trustee’s deed
and other instruments “what Oltorf Addition to go to”; that
according to that description [the description in the trustee’s
deed] the 52x150 foot lot could be located in any of “approxi-
mately six different locations in the block * * *”, assuming that
the block contained 300 square feet. The witness further testified :

“Q. And from a description 52 feet by 150 feet in size,
with no point or corner to tie to, that lot could be shifted any-
where in the block at will, could it not?

“A. 52 x 150—usually the first number is the width.

“Q. I have a square here. But we could locate that lot
anywhere in the block. We could put it where it was not touch-
ing any boundaries. You could locate a lot 52 x 150 anywhere.
You could shift it into any number of positions, couldn’t you?

“A. Yes, sir, according to that description.

“Q. And you couldn’t go on the ground and definitely tie
that floating 52 feet by 150 feet to any point in that block with-
out some additional description as to where it was located,
could you?

25.

“A. Like I said, I located it according to the plat in the
Tax Collector’s office. And it showed it. That is the only way
I located it.

“Q. But you could locate it from the description contained
in these exhibits, could you?

“A. No, sir, I couldn’t.

“Q. It couldn’t be located at any particular point in that
block, could it?

“A. Not from that description it couldn’t.
“Q. That is all.”

It was stipulated that the map of the addition on file in the
City Hall did not show a lot 7.

HI The burden was upon the plaintiff to identify the land which
it claimed, to establish its location, and to show the extent of
its interest in the land claimed. The plaintiff must connect itself
with the common source. See Tapp v. Corey, 64 Tex. 594; Tasher
v. Foster Lbr. Co., Texas Civ. App., 205 S.W. 2d 665, no wr.
hist.; Tommie Davis v. Gale, supra; Permian Oil Co. v. Smith,
129 Texas 418, 73 S.W. 2d 490; motion for rehearing denied
129 Texas 418, 446, 107 S.W. 2d 564; Simonds et al v. Stanolind
Oil & Gas Co., 184 Texas 332, 114 S.W. 2d 226; Mills v. Pitts,
121 Texas 196, 48 S.W. 2d 941, 84 A.L.R. 319, and cases there
cited.

The description contained in each of the instruments offered
by the plaintiff is wholly defective and fails to furnish a nucleus
of description sufficient to identify the land claimed. The plaintiff
having failed to offer any evidence locating and identifying the
Jand sued for and having failed to connect itself with the common
source, it follows that plaintiff showed no right, title, or interest
in the land involved in this suit.

The Court of Civil Appeals has held that the description
“shown in each of the eight exhibits, together with the extrinsic
evidence offered under this record, is sufficient for them to be
admitted in evidence.” We do not agree.

In the case of Smith v. Sorelle, 126 Texas 353, 87 S.W. 2d

es 238

703, this Court, in holding the description under consideration
defective and insufficient to admit parol testimony, said:

“The rule is well settled that parol evidence cannot be
introduced to vary or contradict the descriptive data of a deed.
14 Texas Jurisprudence, Sec. 251, pp. 1045, 1046. The descrip-
tive words in an instrument should be given a liberal construc-
tion, in order that the writing may be upheld, and parol evi-
dence is admitted to explain the descriptive words and to
identify the land; but the instrument itself must contain a
nucleus of description. The parol testimony must directly be
connected with the descriptive data, and when more than this
is required, the description is insufficient. 14 Texas Jurispru-
dence, Sec. 204, pp. 992, 998, and authorities cited.”

The descriptive data contained in the instruments under con-
sideration does not meet this test.

The plaintiff contends that the doctrine of estoppel applies
in this case. The Court of Civil Appeals has held that “since
appellees [the defendants] executed instruments and designated
the place where the house was to be erected, and since appellees
proceeded to occupy the house built by appellant, [plaintiff] they
are estopped to claim that the description in the instruments is
insufficient.”

I The doctrine of estoppel has no application here. There is
no proof of the essential elements of estoppel. There is no proof
that the plaintiff, or Jim Walter Corporation, the contractor,
relied upon any representation of either of the defendants, Joe
Jones or Della Jones, or that they acted upon any such repre-
sentation. It is only where conduct or statements are calculated
to mislead a party, and are acted upon by him in good faith to
his prejudice, that the doctrine of estoppel can be invoked. See
Hunter v. Malone, 49 Texas Civ. App. 116, 108 S.W. 709, 712,
cited with approval in Great Plains Oil and Gas Company v.
Foundation Oil Co., 187 Texas 324, 153 S.W. 2d 452, 458; Tucker
v. Smith, 68 Texas 473, 482, 8 S.W. 671; Duval County Ranch
Co. v. Foster, Texas Civ. App., 318 S.W. 2d 25, 81, wr. ref. n.r.e.

The judgment of the Court of Civil Appeals is reversed and
that of the trial court is affirmed.

Opinion delivered February 14, 1962.

THE STATE OF TEXAS
v.
Hon. Roy C. ARCHER, CHIEF JUSTICE, ET AL

No. A-8849. Decided February 14, 1962
853 S.W. 2d 841

Will Wilson, Atty. Gen., Jack N. Price, Asst. Atty, Gen., for
relator.

No appearance for respondents.
PER CURIAM.

The Court of Civil Appeals dismissed an appeal by writ of
error from a trial court judgment in this quo warranto case.
The State of Texas asks leave to file a petition for writ of man-
damus to compel the Court of Civil Appeals to reinstate the appeal.

Dismissal of the appeal by the Court of Civil Appeals was
reviewable by this Court on application for writ of error. A writ
of mandamus will not be issued by this Court to require a Court
of Civil Appeals to correct an error which can be reviewed on
application for writ of error. We therefore overrule the motion
for leave to file petition for writ of mandamus without passing
on the correctness of the action of the Court of Civil Appeals in
dismissing the appeal.

235

EpNA MAE BLAYLOCK ET AL, Petitioners
v.
CLARA RISER ET AL, Respondents

No. A-8614. Decided February 21, 1962
354 S.W. 2d 134

Odeneal & Odeneal, Dallas, for petitioners. |. .

236

Clifford S. Dillard, Dallas, for respondents.

MR. JUSTICE GREENHILL delivered the opinion of the
Court.

In a former suit, a piece of property was condemned in the
county court of Dallas County for a public improvement. While
‘that court had the power to allocate the moneys paid for the
property, it had no power to determine who owned the land.
It is here claimed that the judgment of the county court, in the
condemnation proceeding, is void because that court did ad-
judicate the title to the property. The trial court entered sum-
mary judgment upholding the former decree of the county court.
That judgment was affirmed by the Dallas Court of Civil Appeals.
348 S.W. 2d 217.

Fred and Willie Mae Riser, who were husband and wife,
purchased the property in question on June 18, 1928. The price
was $1,000. A cash payment of $10 was made. It is presumed
that the purchase was made for the community estate of Fred
and Willie Mae and that the down payment was made with com-
munity funds. Fred and Willie Mae had two daughters, Edna
Mae Blaylock and Almeda Anderson. The daughters brought this
present suit as heirs of their mother and father.

A few days after the property was purchased, the mother,
Willie Mae Riser, died. The father, Fred, continued to make
payments on the property. He made payments totaling $240 be-
fore he remarried.

On October 26, 1927, Fred married Clara. From their com-
munity funds, Fred and Clara thereafter paid $750, the balance
owed on the property.

Fred and Clara had one child, a daughter named Shirley
Jean. Fred died intestate in April of 1954. At that time, Clara,
his surviving wife, and Shirley Jean were living on the property
and claiming it to be homestead.

The property was condemned in 1957. It had been purchased
for $1,000 in the manner set out above; and the amount allocated
for it in the condemnation was, $8,550. There was no dispute
over the power to condemn the property or the amount paid for
it. The dispute arose over the division of the proceeds. That, in
turn, evoked a dispute as to who owned the property. On one
side were Edna Mae Blaylock and Almeda Anderson, the daugh-

Ce) 287

ters of Fred Riser and his first wife, Willie Mae. On the other
side were the second wife, Clara, and the child of the second
marriage, Shirley Jean Riser, a minor.

In the condemnation proceedings in 1957, the daughters of
the first marriage (Edna Mae Blaylock and Almeda Anderson)
contended that the title to the property vested in their parents,
Willie Mae and Fred Riser, at the time it was purchased; that
it was the community property of that marriage; and that those
making payments thereafter had equitable rights for reimburse-
ment for the payments made.’ In the alternative, the daughters
of the first marriage prayed for an award of one-half of the
proceeds which were in the registry of the court.

The surviving widow, Clara, and the daughter of the second
marriage, Shirley Jean, on the other hand, contended that only
$10 of the $1,000 purchase price had been paid from the com-
munity of the first marriage. That is 1%. They argued that the
interest of the first wife, Willie Mae, was 14 of 1%, or $5.00.
That being true, it was their contention that this was all that
her daughters should receive. They wanted the balance invested
in a new homestead for the widow, Clara, and for Shirley Jean.

The county court, in the first proceeding in September of
1957, found that 1% [$10] of the purchase price had been paid
by the community of the first marriage; that 24% [$240] had
been paid from the separate property of Fred Riser after Willie
Mae’s death; and that during the marriage of Fred and Clara
(the second wife), “$750 was paid on the condemned premises,
or 75% of the total purchase price, and which the Court now
finds to be the community estate of Fred Riser and Clara Riser.”
(Emphasis ours.)

The court gave the daughters of the former marriage 14
of 1% of $8,550, or $42.75. The court found that Clara, the
second wife, was entitled to 8714% “which is her separate prop-
erty and she has a homestead interest in all of said proceeds”

1. It appears from the opinion of the Court of Civil Appeals in this case
that the pleadings in the former trial were furnished to the trial court by agree-
ment. 348 S.W. 2d at 219. From the brief of Clara Riser et al. in the Court of
Civil Appeals in this case it is stated: “The lower court, by agreement, was also
furnished the record in Cause No. 15,467 (the former case) which it considered.
Appellants refer this court to the record in the earlier cause, Appellees join in
such reference.” Thus counsel for all parties treated the former pleadings as being
before the courts in this case. Exercising our power under Rule 379, Texas Rules
of Civil Procedure, we directed the clerk of the court below, the Court of Civil
Appeals, to send these papers to us. He did so,

8

‘except the $42.75 set aside to the daughters by the former mar-
riage. (Emphasis ours.)

The county court entered two orders at later dates setting
aside ‘all of the proceeds except the $42.75 as homestead and
affirming the purchase of another homestead for Clara and
Shirley Jean.

Counsel for the daughters by the former marriage filed a
motion for new trial. Error was claimed in failing to award
them one-half of the entire proceeds (instead of 1% of 1%),
because the land was community property of their mother and
father, and under the laws of descent and distribution the title
to one-half of it therefore vested in them upon their mother’s
death. In another pleading, the daughters asked the court to fix
with certainty their interests in the homestead purchased for
the surviving widow.

These daughters attempted to appeal from the judgment of
the county court. But their appeal was not filed in time and was
dismissed by the Court of Civil Appeals. The order is set out in
348 S.W. 2d at 218.

Thereafter the daughters brought this suit to set aside the
previous order of the county court on the ground that the county
court had adjudicated the title to the land; that this was beyond
the power of the county court; that the funds were allocated
in accordance with what the court determined the title to be;
and that the judgment was therefore void. The surviving widow
and her child answered with a general denial and a plea that the
former judgment was res adjudicata. They filed a motion for
summary judgment on that ground. And, as stated, the motion
was sustained. We granted writ of error on the point that it
was error for the trial court to have entered the summary judg-
ment.

Hf Sections 8 and 16 of Article 5 of the Texas Constitution make
it plain that county courts are without power to try title to land
and that this subject matter is exclusively within the jurisdiction
of the district court. Hein v. De Busk, 277 S.W. 1058 (Texas
Comm. App. 1925); Thompson v. Janes, 151 Texas 495, 251
S.W. 2d 953 (1952).

When counsel for the defendants in this case, the surviving
widow and her daughter, moved for summary judgment, it was
their burden to prove, as a matter of law, that the former judg-

eS 289

ment was not void; that it did not adjudicate title to real prop-
erty; and that it was therefore res adjudicata of this issue in
this case. Rule 166-A, Texas Rules of Civil Procedure; Tigner
v. First National Bank of Angleton, 153 Texas 69, 264 S.W. 2d
85 (1954); Gulbenkian v. Penn, 151 Texas 412, 252 S.W. 2d
929 (1952).

Hi The pleadings in the condemnation suit indicated that it was
an adversary proceeding. One side claimed that the title was
in the community of the first marriage and that the daughters
of the first marriage were therefore entitled to at least a half of
the proceeds. The other side claimed the property to be the com-
munity property of the second marriage and that the children
of the first marriage had an interest of only 14 of 1%. The
court adopted the latter view in its judgment. Where an issue
of title is raised in a condemnation proceeding, the county court
is without jurisdiction to try such a dispute. Thompson v. Janes,
cited just above. And see the reasoning of the courts in the recent
Texas Court of Civil Appeals opinion in Casey v. State, 331 S.W.
2d 950 (1959, no writ), and Gandy v. State, 319 S.W. 2d 875
(1958, no writ).

When counsel for the surviving widow moved for summary
judgment in this case, the matters before the trial court were
the pleadings in this case (wherein the plaintiffs asserted that the
county court in the first trial did adjudicate title), a transcript
containing a part of the pleadings and orders in the condemna-
tion case, and the judgment in the condemnation case. Under
that state of the record, the movant for the summary judgment
did not establish as a matter of law that the county court in
the condemnation case did not adjudicate title to land. The burden
was on the movant to establish this to sustain his motion. We
therefore hold that the trial court erred in granting this motion
for summary judgment. .

HM As previously stated, there is no dispute here as to the
power of the City of Dallas to condemn the property or the amount
paid by it for the property. The City is not a party to these pro-
ceedings, and its interests will not be affected. Its interests are
clearly severable. Compare Hunt v. .Ramsey, Texas 345 S.W.
2d 260 (1961). A judgment may be void as to a severable por-
tion over which the court has no jurisdiction and valid as to the
portion remaining over which it does have jurisdiction. Cooksey
v. Jordan, 104 Texas 618, 143 S.W. 141 (1912) ; Kubena v. Hatch,
144 Texas 627, 193 S.W. 2d 175 (1946) ; 30 American Jurispru-

i<)

0

dence 178, Judgments Sec. 20; 1 Freeman, Judgments (5th ed.),
p. 648; 25 Texas Jur. 695, Judgments Sec. 255.

The judgments of the courts below are reversed and the
cause is remanded to the district court for further proceedings
in accordance with this opinion.

Opinion delivered February 21, 1962.

as
STATE OF TEXAS, Petitioner

v.
Stars MuTUAL Lire ASSURANCE COMPANY OF AMERICA,
Respondent.
No. A-8417. Decided January 17, 1962

Rehearing Denied February 21, 1962
853 S.W. 2d 412

rs eat

Will Wilson, Atty. Gen., Fred B. Werkenthin and C. Dean
Davis, Assts. Atty. Gen., for petitioner.

Dan Moody, Austin, Webster Atwell, Dallas, for respondent.

Hi
CHIEF JUSTICE ROBERT W. CALVERT delivered the
opinion of the Court.

Suit is by The State of Texas to cancel the license or certifi-
cate of authority of respondent to do business in this state. Can-
cellation is sought because of alleged violation of Sec. 4, Art.
3.50, Texas Insurance Code, in the making of contracts of in-
surance, unauthorized by Art. 3.50, “covering a group in this
State”.

The trial court ordered all permits, certificates of authority,
etc., heretofore issued to respondent cancelled, but further pro-
vided in its judgment that the order of cancellation should not
issue if, “after' thirty (30) days from the date” the judgment
became final, or, in case of appeal, thirty days after mandate of
affirmance was received from the appellate court, respondent
should cancel and withdraw “all present coverage of group life
insurance extended to Texas citizens who are members of the
National Association of Securities Dealers”. The Court of Civil
Appeals reversed the judgment of the trial court and rendered
judgment that the State take nothing by its suit. 845 S.W. 2d 325.

State Mutual is a Massachusetts corporation with its home
office in that state. It writes all standard forms of ordinary
and group life, individual and group accident and health, and
other types of insurance contracts. It has held a permit or certi-
ficate of authority to do business in this State since 1935, and
since that time has engaged in the business in this State of selling
contracts of life insurance, health and accident insurance, and
annuities through agents maintained in this State. The National
Association of Securities Dealers is incorporated under the laws

1. The court surely meant within rather than after; otherwise there would
be no limitation of time.

2

of Delaware, as a national securities association. It has offices
in Delaware and Washington, D. C. As of November 30, 1958,
it was comprised of 8870 member firms in 49 states and the
District of Columbia, with 192 member firms in Texas.

In 1948 National Association of Securities Dealers and certain
named individuals, as Trustees, executed a Declaration of Trust
by the terms of which an insurance trust was created for the
purpose of effecting and administering a plan of group insur-
ance, submitted and proposed by respondent, for NASD’s mem-
ber firms and their employees. The Trustees mailed applications
for group life insurance and group accident and health insurance
from NASD’s office in Delaware to State Mutual’s office in
Massachusetts, where the applications were accepted and group
policies were issued and mailed to the Trustees in Delaware.
Twenty-five Texas member firms of NASD have applied for and
received coverage under the group policies for their firm mem-
bers and their employees. The group policies were, and are, valid
under the laws of both Massachusetts and Delaware. They would
not have been valid in Texas had they been executed and deliv-
ered in this State because Art. 3.50 does not authorize group
insurance for members and employees of members of a trade
association.?

Under the provisions of Section 1, Art. 8.50, Texas Insurance
Code, group insurance may be written in Texas for only four
groups: 1. For employers with, and insuring, 10 or more em-
ployees. 2. For labor unions insuring their members. 3. For in-
dependent school districts and other agencies, departments, etc.,
of the State government insuring their employees. 4. For creditors

2. Since the trial court’s judgment was entered and was reversed by the
Court of Civil Appeals, the Legislature has amended Art. 3.50 to authorize
group insurance for trade association members and their employees with the
limitation that “(£) No policy may be issued * * (ii) to insure employees of
any employer which is not located in this state, unless the majority of the em-
ployers whose employees are to be insured are located in this state * * *.”
Acts 1961, 57th Leg., p. 563, Ch. 263, Sec. 1.

‘The parties were requested to file written statements indicating their opin-
ions as to whether and to what extent the amendment affects the issues or
the rights of the parties in this case. They have complied and are agreed that
neither is substantially affected. Accordingly, we treat the case as though the
amendment had not been enacted, but we are not to be understood as agreeing
or disagreeing with the view of the parties.

The amendment raises these questions which may be relevant but which we
do not decide. Is the limitation constitutional and valid? If it is not, can the
remainder ‘of the amendment be valid? If it is, could the court permit a judg-
ment cancelling respondent’s permit, but not yet final, to stand when the judg-
ment is conditioned on the cancellation by respondent of group coverage now
authorized in this state but unauthorized when written? These questions and
any others raised by the amendment are put aside.

ee 248

insuring their debtors. This court has held expressly that con-
tracts insuring the employees of members of trade associations
are unauthorized. Board of Ins. Com’rs. v. Great Southern Life
Ins. Co., 150 Texas 258, 239 S.W. 2d 803.

HI But it is the contention of State Mutual that although the
Texas statute may prohibit the execution or delivery in Texas
of contracts of insurance covering trade association groups in
Texas, the statute does not prohibit the coverage of trade asso-
ciation groups in Texas by contracts of insurance executed and
delivered in states where that type of group insurance is legal.
This contention is negated by the plain and unambiguous language
of Sec. 4, Art. 3.50. The section reads:

“Except as may be provided in this Article, it shall be
unlawful to make a contract of life insurance covering a group
in this State, and the license to do business in Texas of any
company making a contract of life insurance covering a group
in this State except as may be provided in this article may be
forfeited by a suit brought for that purpose by the Attorney
General of the State of Texas at the request of the Board of
Insurance Commissioners.”

Moreover, to sustain State Mutual’s contention would be to
destroy the effectiveness of Art. 3.50 and to make a mockery
of its purpose and intent. It is not suggested that State Mutual
and NASD undertook to evade the requirements of Art. 3.50 by
selecting states where insurance contracts covering trade asso-
ciation groups are lawful as the situs of their principal con-
tractual activities. Obviously they did not do so. But the neces-
sary net effect of sustaining the contention would be to send all
parties wishing to effect non-conforming group coverage in Texas
scurrying for states for contract execution where the contract
would be lawful and valid. We reject respondent’s contention
and hold that Sec. 4 of Art. 8.50 authorizes cancellation of the
license to do business in Texas of any company which executes
and delivers anywhere a contract of insurance covering an un-
authorized group in Texas, irrespective of the validity of the
contract where executed and delivered.

Respondent asserts that construction and application of Art.
3.50 to the facts before us so as to authorize cancellation of its
permit to do business in Texas violates the due process, full
faith and credit, and commerce clauses of the United States
Constitution. That contention must be rejected. Pertinent to our

244 es

consideration of the contention in addition to Art. 3.50 is that
part of Art. 21.48, Texas Insurance Code which reads:

“The provisions of this code are conditions upon which
foreign insurance corporations shall be permitted to do busi-
ness within this state, and any such foreign corporation en-
gaged in issuing contracts or policies within this state shall
be held to have assented thereto as a condition precedent to
its right to engage in such business within this state.”

The problem posed is as to the power of The State of Texas
to condition State Mutual’s right to continue to do business in
Texas on its cancellation of coverage as to groups in Texas of
group insurance policies which are not authorized by Art. 3.50.
With the problem thus stated it seems in order to observe that
such cases as Allgeyer v. Louisiana, 165 U.S. 578, 17 S. Ct.
427, 41 L. Ed. 882, New York Life Ins. Co. v. Head, 234 U.S.
149, 34 S. Ct. 897, 58 L. Ed. 1259, St. Louis Compress Co. v.
State of Arkansas, 260 U.S. 346, 43 S. Ct. 125, 67 L. Ed. 297,
Hartford Accident and Indemnity Co. v. Delta Pine Land Co.,
292 U.S. 148, 54 S. Ct. 634, 78 L. Ed. 1178, Boseman v. Conn.
Gen. Life Ins. Co., 801 U.S. 196, 57 S. Ct. 686, 81 L. Ed. 1036,
and State Board of Ins. v. Todd Shipyards Corp., Texas Civ.
App., 340 S.W. 2d 389, writ refused, nr.e., with per curiam
opinion, 343 S.W. 2d 241, certiorari granted, 82 S. Ct. 40, cited
by State Mutual, and Metropolitan Life Ins. Co. v. Wann, 180
Texas 400, 109 S.W. 2d 470, International Brotherhood of Boil-
ermakers, etc. v. Huval, 140 Texas 21, 166 S.W. 2d 107, and
Watson v. Employers Liability Assur. Corp., 348 U.S. 66, 75
S. Ct. 166, 99 L. Ed. 74, cited by the State, are not strictly
apposite. None of them are cases which call into question the
power of a state to refuse to grant a local permit to do business
to a foreign insurer, or to cancel a granted permit, because of
violation of, or failure or refusal to comply with, local regula-
tions. These and other like decisions bear only indirectly on the
problem before us. They are only important in determining what
local regulations as applied to foreign insurance contracts im-
pinge upon constitutional rights, and are relevant to the problem
here, if at all, only because the granting or continuance of a
Jocal permit to do business may not be conditioned on compli-
ance with unconstitutional regulations or on surrender of con-
stitutional rights. Allgeyer v. Louisiana, St. Louis Compress Co.
v. State of Arkansas and State Board of Ins. v. Todd Shipyards
Corp. each involved an effort by a state to enforce a penalty
or a tax in the nature of a penalty against a local citizen or cor-
poration for making a contract of insurance in another state

Le 245

with a foreign insurer not having a local permit to do business.
All of the other cited cases involved efforts in suits on foreign
contracts of insurance to enforce local statutory rights of the
insured which, if enforced, would have had the effect of modify-
ing contractual rights of the insurer which were valid in the
state where the contract was made or was to be performed.

Somewhat more directly related to the problem as we have
stated it are Osborn v. Ozlin, 310 U.S. 58, 60 S. Ct. 758, 84 L. Ed.
1074, and Hoopeston Canning Co. v. Cullen, 318 U.S. 318, 63
S. Ct. 602, 87 L. Ed. 777, cited by the State. Osborn v. Ozlin
was a suit to enjoin the enforcement of penalties, including re-
vocation of the license of a corporation to do business in Virginia,
because of failure to comply with statutes regulating the writing
of certain types of insurance and the payment of commissions to
agents in Virginia. Hoopeston Canning Co. v. Cullen was a
declaratory judgment suit in which foreign reciprocal insurance
companies sought a declaration that they were not required to
comply with certain New York regulatory statutes as a condi-
tion to their right to do business in that state. In each of the
eases the power of the state to require compliance with the local
regulations as a condition to the right to do business in the state
was upheld.

I The specific problem confronting us has been considered by
the Supreme Court of the United States in a number of cases.
From them we may conclude, as did the Court in Washington ex.
rel. Bond & Goodwin & Tucker v. Superior Court, 289 U.S. 361,
53 8. Ct. 624, 77 L. Ed. 1256, 89 A.L.R. 653, that a state may
condition the right of a foreign corporation to do business in
the state on compliance with, and agreement to, all reasonable
regulations. This is the sense of the concise and logical concurring
opinion of Mr. Justice Frankfurter in Watson v. Employers Lia-
bility Assur. Corp., 348 U.S. 66, 75 S. Ct. 166, 99 L. Bd 74.
The right may not be conditioned, of course, upon compliance
with regulations which are repugnant to the Constitution of the
United States, Power Manufacturing Co. v. Saunders, 274 U.S.
490, 47 S. Ct. 678, 71 L. Ed. 1165, and Wheeling Steel Corp.
v. Glander, 337 U.S. 562, 69 S. Ct. 1291, 98 L. Ed. 1544 (Statutes
denying equal protection of the laws in violation of the Four-
teenth Amendment through unreasonable and arbitrary dis-
crimination in favor of domestic corporations), or with those
which require the surrender of constitutional rights. Terral v.
Burke Construction Co., 257 U.S. 529, 42 S. Ct. 188, 66 L. Ed.
352 (The right to litigate in Federal Courts); Fidelity & De-
posit Co. v. Tafoya, 270 U.S. 426, 46 S. Ct. 331, 70 L. Ed. 664

246

(The right to pay commissions to agents outside of the state
for services rendered outside of the state); Hanover Fire Ins.
Co. v. Harding, 272 U.S. 494, 47 S. Ct. 179, 71 L. Ed. 372 (The
right to refuse to pay an unconstitutional tax).

The Supreme Court of the United States has consistently
recognized the right of the states to regulate the insurance in-
dustry in its operations affecting the public welfare, both before
and since passage of the McCarran Act. 15 U.S.C. Secs. 1011-
1015. This is manifest from Osborn v. Ozlin, 8310 U.S. 53, 60 S.
Ct. 758, 84 L. Ed. 1074, Hoopeston Canning Co. v. Cullen, 318
U.S. 318, 63 S. Ct. 602, 87 L. Ed. 777, Watson v. Employers
Liability Assur. Corp., 348 U.S. 66, 75 S. Ct. 166, 99 L. Ed. 74,
Robertson v. California, 328 U.S. 440, 66 S. Ct. 1160, 90 L. Ed.
1866, Travelers Health Ass’n. v. Virginia, 389 U.S. 648, 70 8. Ct.
927, 94 L. Ed. 1154, California State Auto Ass’n. v. Maloney,
341 US. 105, 71 S. Ct. 601, 95 L. Ed. 788, Federal Trade Com.
v. National Cas. Co., 357 U.S. 560, 78 S. Ct. 1260, 2 L. Ed. 2d
1540, and a host of other cases. Indeed, the Congress has ex-
pressly recognized the right, as limited by Supreme Court de-
cisions, by passage of the McCarran Act. In speaking of that
Act and its purpose in Prudential Ins. Co. v. Benjamin, 328
US. 408, 66 S. Ct. 1142, 90 L. Ed. 1342, 164 A.L.R. 476, 494,
the Court said:

“Obviously Congress’ purpose was broadly to give support
to the existing and future state systems for regulating and
taxing the business of insurance. This was done in two ways.
One was by removing obstructions which might be thought to
flow from its own power, whether dormant or exercised, ex-
cept as otherwise expressly provided in the Act itself or in
future legislation. The other was by declaring expressly and
affirmatively that continued state regulation and taxation of
this business is in the public interest and that the business
and all who engage in it ‘shall be subject to’ the laws of the
several states in these respects. .

“Moreover, in taking this action Congress must have had
full knowledge of the nation-wide existence of state systems
of regulation and taxation; of the fact that they differ greatly
in the scope and character of the regulations imposed and of
the taxes exacted; and of the further fact that many, if not
all, include features which, to some extent, have not been
applied generally to other interstate business. Congress could
not have been unacquainted with these facts and its purpose

| 247

was evidently to throw the whole weight of its power behind
the state systems, notwithstanding these variations.”

The writing of group insurance is a comparatively new but
rapidly expanding form of underwriting in the field of life and
health and accident insurance. Its cost is low and its appeal is
great. As is pointed out in Board of Ins. Com’rs v. Great Southern
Life Ins. Co., 150 Texas 258, 239 S.W. 2d 803, 808, whereas the
Legislature of this state moved into the field of individual life
insurance contracts with regulations as early as 1909, it did not
recognize an existing necessity for regulation of the writing of
group insurance until 1931. It was in that year that Art 4764a,
V.A.T.C.S., the forerunner of Art. 3.50, Texas Insurance Code,
was enacted. See Acts 42d Leg., Reg. Ses., Ch. 101, p. 172. The
power of the Legislature to regulate group underwriting is not
in question here, but the problem considered necessarily raises
the question of the power of the Legislature to exclude members
of trade associations and their employees from the groups made
eligible for group insurance in this state. For, as we view the
matter, if, and only if, the Legislature was without constitutional
power to exclude them from the eligible groups is the cancella-
tion of Respondent’s permit a denial of due process or a viola-
tion of the full faith and credit clause of the Constitution.

While ordinarily there are only two parties to a contract
of group insurance, it affects the interests of four parties—the
insurer, the employer, labor union, creditor, trade association or
other contracting party, the insured and the beneficiary. Rivers
v. State Capital Life Ins. Co., 245 N.C. 461, 96 S.E. 2d 481,
68 A.L.R. 2d 205. The manner in which it affects the interests
of the insured and the beneficiary is no less vital than the manner
in which it affects the interests of the contracting parties. It
“fs not indemnity insurance for the benefit of the employer, but
insurance upon the life of the employee for his personal benefit
and the protection of those depending upon him, * * *.” 29A Am.
Jur. 884, Sec. 1758. More often than not the nature of the cov-
erage and its continued existence bears importantly upon the
insured’s decision of whether to purchase or to keep in force
other insurance to protect those closest to him against debt and
hardship. Under the rule followed in many jurisdictions a group
policy may be cancelled without the consent of the insured, and
in some even without notice to him. 29A Am. Jur. 856, Sec.
1788; 68 A.L.R. 2d 249. By the time of cancellation the insured
may have become uninsurable, or at the very least the premium
he must pay for an individual contract will have increased. Often
the insured pays a part of the premium on the group policy.

6

Rarely will he have an opportunity to examine the master policy
personally, and neither will he have its intricate and complicated
coverages, exclusions and exceptions explained by a local agent
in whom, as a friend or neighbor, he has confidence and upon
whose judgment as to the type of coverage best meeting his needs
he would normally rely. All of these factors also weigh heavily
upon the interests of the beneficiary.

It is not pure speculation to say that usually the beneficiary
and the insured are residents of the same state. The staté of
residence of the insured and beneficiary thus has the interests
of two of the four parties affected by the contract to protect.
The manner in which the state seeks by regulations to protect
their interests should not be confined within narrow boundaries
by strict limitations merely because the group insurance contract
is made or is to be performed in another state. This is the sense
of the statement made by the Supreme Court of the United States
in Travelers Health Ass’n v. Virginia, 839 U. S. 648, 647-648,
70'S. Ct. 927, 94 L. Ed. 1154, 1161, when it said:

“In Osborn y. Ozlin, 310 U.S. 53, 62, 84 L. Ed. 1074, 1077,
60 S. Ct. 758, we recognized that a state has a legitimate
interest in all insurance policies protecting its residents against
risks, an interest which the state can protect even though the
‘state action may have repercussions beyond state lines * * * .’
And in Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 316,
87 L. Ed. 777, 781, 68 S. Ct. 602, 145 A.L.R. 1118, we rejected
the contention, based on the Benn case among others, that a
state’s power to regulate must be determined by a ‘conceptual-
istic discussion of theories of the place of contracting or of
performance’. Instead we accorded ‘great weight’ to the ‘con-
sequences’ of the contractual obligations in the state where the
insured resided and the ‘degree of interest’ that state had in
seeing that those obligations were faithfully carried out.”

Not all states will view the problems of the affected parties
alike. As indicated by the quotation from Prudential Ins. Co.
v. Benjamin, supra, the nature of regulations may be expected
to vary somewhat from state to state. Usually there is sound basis
for variation. In this state, for example, if the premium contri-
bution made by a married insured is from ordinary income, one
half of the contibution is the property of the spouse, and if the
spouse is the beneficiary, he or she has a two-fold interest in the
policy. This is not true in most other states.

Much of what is said here was in our thinking when we sus-

ee 249

tained the constitutionality of Art. 4764a (Art. 3.50) in Great
Southern in the face of a charge that it denied equal protection
of the law in violation of the Fourteenth Amendment by author-
izing group insurance for members of labor unions while deny-
ing it to employees of members of trade associations. Our holding
in that case was predicated on the right of the Legislature to
limit the writing of group insurance to situations where there
was “a close relationship and an affinity of interests” between
those making up the insured group and the person or agency
contracting with the insurer for the insurance.

IE We do not believe, and are not prepared to say, that the
Legislature of this state was without constitutional power to
exclude trade association members and their employees from
the groups made eligible for group insurance. There is not the
same need for loyalty from the insured that exists on the part
of the employer or labor union groups and the corresponding
obligation for obtaining and retaining the best coverage available
at the lowest cost does not exist. Therefore, Art. 3.50 is not
repugnant to the equal protection clause of the Constitution of
the United States. And inasmuch as the statute represents a
reasonable exercise of the power of the state to protect the vital
interests of its citizens, respondent has no constitutional right to
violate it. It follows that conditioning the right of respondent
to continue to do business in this state upon cancellation of its
group coverage of NASD members and employees in this state
violates neither the due process nor the full faith and credit
provisions of the Constitution. The State of Texas does not seek
by enforcement of Sec. 4 of Art. 3.50 to prohibit respondent from
keeping in force the group insurance contract it made with the
Trustees, nor does it seek to invalidate that contract or to modify
any of its terms. It does not even seek to deny respondent the
right to apply the coverage of the contract to residents of Texas.
It seeks only to take away from a foreign insurance corporation
what is finally and essentially a privilege if it insists upon apply-
ing the contract, which would be unlawful if made in this state,
to residents of the state. This does not deny full faith and credit
to the laws of the state where the contract was made.

II Respondent’s contention that conditioning its right to continue
to do business in this state on cancellation of the coverage of
the group in this state imposes an undue burden on interstate
commerce may be disposed of in short order. Foreign and do-
mestic insurers alike are prohibited from writing group insur-
ance covering trade association members and employees; Art.
3.50 admits of no discrimination against respondent. Only 192

250

of the 8870 member firms of NASD are Texas firms; of 7989
lives covered by the group policy only 198 are Texas lives; and
the insurance coverage of Texas lives is only $1,427,500 of a
total coverage under the policy of $87,885,600 in the United
States. Impact of cancellation of the Texas coverage on inter-
state commerce is minuscule. The statute being constitutional
and not unreasonable, its impact on interstate commerce is
authorized by the McCarran Act.

The judgment of the Court of Civil Appeals is reversed and
the judgment of the trial court is affirmed.

Opinion delivered January 7, 1962.
De

PARAMOUNT FIRE INSURANCE COMPANY, Petitioner
ve
AETNA CASUALTY & SURETY COMPANY, Respondent

No. A-8459. Delivered January 81, 1962
Rehearing Denied February 28, 1962
853 S.W. 2d 841

251

JUSTICES GRIFFIN, WALKER and NORVELL dissent.

Strasburger, Price, Kelton, Miller & Martin, Royal H. Brin,
Jv., with above firm, Dallas, for petitioner.

Johnson, Guthrie & Stanfield, Dallas, for respondent.
JUSTICE GREENHILL delivered the opinion of the Court.

This case is an appeal from a summary judgment. The ques-
tion is one of first impression in Texas and involves the liability
of two insurance companies, each issuing a policy covering im-
provements which were destroyed by fire.

On July 17, 1957, the heirs of Mrs. R. L. Cameron entered
into a written agreement labeled “Contract of sale and receipt
for earnest money”, whereby the seller(s) “sells and agrees to
convey” and the purchaser(s), Mr. and Mrs. Sterling D. Holmes

30

and Pauline Reece, “agrees to consummate the sale within fifteen
days from date title company approves title” of a tract of land
upon which were situated the improvements later destroyed. The
contract specified the total. purchase price, a down-payment,
and terms of $125 monthly until the final closing date one year
later, July 17, 1958, when the balance was due. Both seller and
purchaser were given the right of specific performance. Pur-
chasers had the right to occupy the premises from the inception
of the contract, which they did, and had the right to make all
desired improvements on the property.

On October 12, 1957, sellers procured from petitioner, Para-
mount Fire Insurance Company, an insurance policy for $15,000
covering improvements on the contracted land and payable only
to sellers. A clause extending protection to purchasers under this
policy was specifically rejected by sellers.

The fire involved occurred on July 7, 1958. By this time, the
title company had issued the title insurance policy. The sellers
had prepared a warranty deed conveying the property to the
purchasers. Some, but not all of the sellers had already signed
the deed, and it was being sent to the others for their signatures
and acknowledgments. Purchasers had made the monthly pay-
ments of $125 and had procured a sufficient loan from Richard-
son Savings and Loan Association to pay the balance of the
purchase price. Purchasers had also procured an $18,000 fire in-
surance policy from respondent, Aetna Casualty & Surety Com-
pany, in their favor with loss payable clause to the mortgagee
as its interest might appear. This policy was dated June 25,
1958. All these and related papers, including the Aetna policy,
were deposited in escrow with National Title & Abstract Com-
pany for final closing of the transaction on July 8, 1958. Because
of the July 7 fire, this meeting was postponed until September
8, 1958. At the latter date, purchasers paid the contract price
and received the warranty deed. Sellers, at the same time, as-
signed all their rights and claims under the Paramount policy
to the purchasers.

Thereafter, purchasers and their mortgagee filed suit against
both insurance companies, claiming property loss of $14,000.
This suit was settled as to the plaintiffs by each insurance com-
pany’s contributing a prorata share of the loss based on the
amount of its respective policy, reserving its rights against the
other. The suit then proceeded between the two insurance com-
panies to determine liability as against each other. The trial court
rendered summary judgment against Aetna, awarding Para-

| 258

mount the amount of money it contributed in the settlement with
purchasers. Aetna’s motion for summary judgment was conse-
quently denied. On appeal, the judgment was reversed and the
loss prorated between both companies in proportion to the face
amount of the respective policies. 347 S.W. 2d 281.

Both companies filed applications for writ of error to this
Court. Paramount, of course, seeks to have the trial court’s judg-
ment affirmed. Aetna asks that the full loss be imposed upon
Paramount, or, alternatnely, that the judgment of the Court of
Civil Appeals be affirmed.

Aetna’s contentions require us at the outset to determine the
legal nature of the written contract in this case. It concedes that
if, as the lower courts have held, this was an absolute contract
of sale with the vendees in possession and the vendors entitled to
specific performance, then the loss would fall on vendees, at
least partially. It is Aetna’s position, however, that this contract
was only a rental agreement with option to purchase and that
the option was not exercised prior to the fire. Therefore, it argues
that the loss should be entirely Paramount’s. In support of this
position, Aetna stresses primarily the contract provision that
should vendee “fail to pay the balance due herein on or before
July 17, 1958, then all moneys paid hereon shall be forfeited as
rents and purchaser will vacate the premises on letter written
by the seller to the purchaser addressed to the address of the
property.” (Emphasis supplied.) Aetna also points to the fact
that no note, deed of trust, or deed prior to the date of the fire
was provided for in the contract; that the authorization of pur-
chasers to make improvements would be surplusage in a sales
contract; and that the purchasers sometimes referred to their
payments as “rents” for further evidence to support its position.

We agree with the courts below that the contract is one
of sale and did not create a landlord-tenant relationship. The in-
strument itself is designated a contract of sale and its language
throughout is of sale and purchase. The forfeiture provision
quoted above does not alter the nature of the contract, in the
absence of a provision that the vendor must accept such sum in
full settlement of the buyer’s liabilities for default. Moss & Raley
v. Wren, 102 Texas 567, 113 S.W. 739; Id., 120 S.W. 847;
Redwine v. Hudman, 104 Texas 21, 183 S.W. 426; Stevens v.
Karr, 119 Texas 479, 88 S.W. 2d 725; Texlouana Producing &
Refining Co. v. Wall, Texas Comm. App., 257 S.W. 875; LaPrelle
v. Brown, Texas Civ. App., 220 S.W. 151 (wr. dism. w.o.j.).
There is no such provision here. On the contrary, the vendors

254

had a right to specific performance of the contract of sale. Aetna
being the insurer of purchasers in possession under a contract
of sale, it must bear all the loss unless it has a right to require
Paramount to bear a prorata share as held by the Court of Civil
Appeals.

= Paramount’s application attacks this proration holding, argu-
ing that the vendors suffered no actual pecuniary loss from the
fire and that, therefore, the vendees’ insurance company should
incur the total liability. Paramount’s position is based on the
generally accepted principle that:

“Since a contract for insurance against fire ordinarily is
a.contract of indemnity * * * insured is entitled to receive
the sum necessary to indemnify him, or to be put, as far as
practicable, in the same condition pecuniarily in which he
would have been had there been no fire; that is, he may recover
to the extent of his loss occasioned by the fire, but no more,
and he cannot recover if he sustained no loss.” 45 C.J.S., In-
surance, Sec. 915, p. 1010.

Aetna does not challenge this principle. Instead, the contro-
versy is as to whether or not the insureds of Paramount suffered
any “loss” in a legal sense.

The Court of Civil Appeals regarded the date of the fire as
controlling and found that the vendors did incur a loss, despite
the fact that they received the full contract price from the
vendees after the fire. There is a line of cases which supports
this viewpoint; e.g., State Mutual Fire Insurance Co. v. Upde-
graff, 21 Pa. 5183; Dubin Paper Co. v. Insurance Co. of North
America, 861 Pa. 68, 63 A. 2d 85; Insurance Co. of North America
v. Alberstadt, 383 Pa. 556, 119 A. 2d 83; Milwaukee Mechanics
Insurance Co. v. Maples, 87 Ala. App. 74, 66 So. 2d 159; First
National Bank of Highland Park v. Boston Insurance Co., 17
Ill. 2d 147, 160 N.E. 2d 802; Kahn v. American Insurance Co.,
137 Minn. 16, 162 N.W. 685. See generally 8 A.L.R. 2d 1416,
Sec. 6. The rationale of these cases is that an insurance company
contracts to protect an insured against destruction by fire of
his property and that liability is fixed if such fire occurs, all
other contract terms being met. Any compensation to the insured
from third parties, such as payment from the vendees here, is
regarded as being unrelated to the insurance contract, of no con-
cern to the insurance company, and in the nature of a windfall
to the insured.

re 256

On the other hand, there is also a line of cases which sup-
ports Paramount’s argument that its insureds ultimately suffered
no pecuniary loss from the fire and are therefore not entitled
to recover on their insurance contract. In Ramsdell v. Insurance
Company of North America, 197 Wis. 136, 221 N.W. 654, it
was said:

“The court looks to the substance of the whole transaction
rather than to seek a metaphysical hypothesis‘ upon which to
justify a loss that is no loss. This is not a case where a stranger
to the transaction, out of charity, or for other reason, might
make good the loss. * * * The loss has been made good out of
a related transaction. * * *”

Accord, Tauriello v. Aetna Insurance Co., 14 N.J. Super. 530,
82 A. 2d 226; Smith v. Jim Dandy Markets, 172 F. 2d 616 (9th
Cir.). We are inclined toward this latter view.

The complexity of the present problem is heightened, however,
by another widely accepted principle upon which the Court of
Civil Appeals relied in ordering a proration between Paramount
and Aetna. In 64 A.L.R. 2d 1406, Sec. 4, it is said:

“Where the purchaser as equitable owner will bear the loss
occasioned by a destruction of the property pending completion
of the sale, and the contract is silent as to insurance, the rule
quite generally followed is that the proceeds of the vendor’s in-
surance policies, even though the purchaser did not contribute
to their maintenance, constitute a trust fund for the benefit
of the purchaser to be credited on the purchase price of the
destroyed property, the theory being that the vendor is a trustee
of the property for the purchaser.”

The difficulty is that in some jurisdictions, even where the
vendor is regarded as having suffered no loss from a fire, he
is allowed to collect on his insurance policy subject to a construc-
tive trust for the vendee’s benefit. E.g., Wm. Skinner & Sons’
Ship-Building and Dry-Dock Co. v. Houghton, 92 Md. 68, 48 Atl.
85. Obviously, this result does violence to the indemnity theory
of insurance, but as one commentator observed, it represents an
attempt by the courts to “accommodate the contract to lay ex-
pectation without tarnishing the ideal of freedom of contract”.
Young, Some “Windfall Coverages” in Property and Liability
Insurance, 60 Colum. L. Rev. 1063. The rationale is that if a
vendee pays the full contract price for property which has been
damaged or destroyed by fire, it is only equitable to allow him

6 ee

the benefit of any insurance proceeds rather than to give the
vendor both the insurance proceeds and the proceeds of sale.

Paramount concedes that it is difficult to quarrel with the
equity of this rule, but strenuously argues that the rule should
have no application when the vendees have secured their own
insurance policy. We agree.

Although none of the decisions applying the constructive trust
theory purport to base the result on the fact that the vendee had
no insurance, yet it appears that such was the situation in all
but two cases. The two exceptions are Vogel v. Northern Assur-
ance Co., 219 F. 2d 409 (8rd Cir.), and Insurance Company of
North America v. Alberstadt, 888 Pa. 556, 119 A. 2d 83. In these
cases, the vendee was allowed to benefit from both his and the
vendor’s policies, even to the extent of being allowed to profit
from the fire in the Vogel case. It must be observed, however,
that both cases applied Pennsylvania law that an insured’s loss
is determined as of the date of the fire regardless of any sub-
sequent developments. See Dubin Paper Co. v. Insurance Company
of North America and State Mutual Fire Insurance Co. v. Upde-
graff, supra.

Hl We believe the better result to be that if a vendor is entitled
to specific performance under a contract of sale and thereby
collects the full purchase price despite fire damage to improve-
ments, he has suffered no legal loss. As it is not before us here,
we leave open the question of whether, where the vendee has
no insurance, there can be recovery on the vendor’s policy subject
to a constructive trust for the vendee, who is often ignorant of
his legal liability in such a situation. We believe that there is
nothing in the present case, however, which would require such
an exception to the principle that an insurance policy is basically
a personal, indemnity contract.

Here we are not dealing with an unwitting risk bearer, but
rather with vendees who are protected by their own insurance.
Also, we do not have a situation where the vendors originally
intended for their policy to protect the vendees, for they specifi-
eally rejected such a provision. Further we note that in the
vendors’ own policy there is a provision that Paramount’s lia-
bility should not exceed “the interest of the insured”. After the
contract of sale, the interest of Paramount’s insured became
the amount of the unpaid purchase price and, as to that interest,
they suffered no loss. Accordingly, there is no liability under

| 251

the Paramount policy, and Paramount’s insureds had’ no rights
to assign to the vendees.

I Aetna also makes the contention that the entire loss must
fall on Paramount because the Aetna policy was in escrow and
had not taken effect at the time of the fire of July 7, 1958. The
policy is dated June 25, 1958, and was delivered to the vendees
on that date. It is undisputed that the vendees had an insurable
interest when the policy was issued, and the fact that all the
papers were being held in escrow pending closing of the sale
would not render the policy ineffective as between insurer and
insureds.

As an alternative point, Aetna urges that the trial court’s
summary judgment must be reversed to determine, as issues of
fact, whether the contract here was one of sale and whether
the Aetna policy was in escrow and of no effect. We find no
conflict in the facts. The depositions of the witnesses and Para~
mount’s uncontroverted affidavits set out the facts surrounding
the transaction from the date of the signing of the contract until
the date of closing. The legal nature of the contract was a ques-
tion of law, as was the effect of Aetna’s policy being in escrow.

For the reasons stated herein, the judgment of the Court of
Civil Appeals is reversed and the judgment of the trial court is
affirmed.

Opinion delivered January 31, 1962.
GRIFFIN, JUSTICE, dissenting.

I do not agree that all of the loss from the destruction of the
improvements by fire should fall on Aetna. I believe the law
vequires that the loss be prorated between Aetna and Paramount
as decreed by the Court of Civil Appeals.

The majority opinion recognizes that Paramount’s insured
had an insurable interest in the property at the time of the
issuance of that policy. The majority reasons that the liability
of Paramount to the insured is to be determined by events hap-
pening after the loss by fire has occurred. The majority say
“we note that in the vendors’ own policy there is a provision
that Paramount’s liability should not exceed ‘the interest of the
insured’. After the contract of sale, the interest of Paramount’s
insured became the amount of the unpaid purchase price and,
as to that interest, they suffered no loss.” This statement is based

8

upon the theory that the vendors’ debt was paid by the purchaser
after the fire.

Such a holding is in direct violation of and contrary to the
language of the policy. The policy provides: “Loss on building
items shall be payable to ASSURED address-____ as
Mortgagee or Trustee, as their interest may appear at time of
loss, subject to Mortgage Clause (without contribution) printed
elsewhere in this policy.” (Emphasis mine.) Clearly the loss of
the building and the time of the fire are contemporary and
simultaneous. The mortgage clause referred to above has no
application to our cause. Further, the policy also contained a
provision that the liability of the company “shall not exceed
the actual cash value of the property at the time of loss”. (Em-
phasis mine.) Thus again this clearly fixes the date of the fire
as the date on which liability is to be determined.

Let us apply the majority reasoning that Paramount only
insured the vendor for the unpaid balance of his purchase price
to the fact situation in this cause. Take the date fixed by the
policy for determining this interest—which is the “time of loss”
—we find that on the date of the loss, which is the date of the
fire, the purchaser owed the vendor $12,675.00, plus the con-
tract interest. This figure is computed by subtracting from the
total contract price of $15,250.00 the sum of $1,200.00 paid at
the time the contract was signed, less eleven monthly payments
of $125.00 each totalling $1,375.00. By the terms of the policy
contract between the vendor and Paramount, Paramount’s lia~
bility became fixed to vendor for this sum of $12,675.00. Pur-
chasers hold an assignment from vendor of all his rights against
Paramount. Paramount has never paid this liability. Therefore,
I maintain that Paramount is still liable on its policy to the
assignees of vendor, and its liability is to be prorated in accord-
ance with the terms of the policy.

No public policy is violated; no statute is offended by the
parties to the insurance contract making the contract which they
did make. Suppose the vendor and purchaser had entered into a
contract providing for $5,000.00 cash payment, the balance to
be paid in monthly instalments of $125.00 each due on the 10th
day of each successive succeeding month. This would require 82
months, or approximately seven years, to pay the deferred pay-
ments. Vendor could not be forced to take his balance in one
lump sum. He could insist on the monthly payments as set out
in the contract in order to earn the interest. Under the majority
holding Paramount’s liability would not be known until the last

es 259

payment had been made. This example illustrates very clearly
the fallacy of the reasoning of the majority opinion.

The interests of the vendors and the purchasers were separate
and distinct interests. Appleman, Insurance Law and Practice,
Vol. 5, Sec. 8057 at p. 180, et seq. The assignee of a claim under
the policy after a loss stands in the same position as the as-
signor, Id., Sec. 3462 at p. 648; Id., Vol. 4, Sec. 2181 at p. 53.
The vendor, under the contract of sale herein, had an insurable
interest in the property destroyed. 24B Texas Jur. 284, Sec. 95.
Vendor retained the legal title to the property until the purchase
price was paid. 483A Texas Jur. 290, Sec. 258, and authorities
there cited.

There is an exhaustive annotation entitled “Rights of vendor
and purchaser, as between themselves, in insurance proceeds”
in 64 A.L.R. 2d., pp. 1402-1420. Section 4 therein states the
general rule to be that “where the purchaser as equitable owner
will bear the loss occasioned by a destruction of the property
pending completion of the sale, and the contract of sale is silent
as to insurance (as our contract here is), * * * the proceeds
of the vendor’s insurance policies, even though the purchaser
did not contribute to their maintenance, constitute a trust fund
for the benefit of the purchaser to be credited on the purchase
price of the destroyed property, the theory being that the vendor
-is a trustee of the property for the purchaser.” Supporting this
rule cases are cited from Alabama, California, Georgia, Iowa,
Kentucky, Maryland, Missouri, Nebraska, New Jersey, New
York, North Dakota, Ohio, Pennsylvania, South Dakota, Wash-
ington and Canada. For this result to be reached, the vendor’s
policy must be valid as of the date of the fire. We have been
cited to no Texas cases in point, nor have we found any in our
research.

I would affirm the judgment of the Court of Civil Appeals.

ASSOCIATE JUSTICES WALKER and NORVELL join in
this dissent.

Opinion delivered January 31, 1962.

260
GULF LIQUID FERTILIZER COMPANY D/B/A WESTERN CHEMICALS,
Petitioner
v.

JAMES Trrus, Respondent

No. A-8481. Decided February 28, 1962
354 S.W. 2d 378

261

Dennison & Naylor, Pecos, for petitioner.
Russell & Tomlin, Pecos, for respondent.
ON MOTION FOR REHEARING

ASSOCIATE JUSTICE JOE GREENHILL delivered the
opinion of the Court.

The opinion heretofore rendered on November 15, 1961, is
withdrawn and the following is substituted therefor.

The Statute of Frauds states, among other things, that no
action shall be brought in any court to charge any person upon
a promise to answer for the debt, default, or miscarriage of an-
other unless the promise be in writing.t In this case, James
Titus was sued by Gulf Liquid Fertilizer Company for merchan-
dise which he purchased for the “Titus & Stracner Farm”, a
partnership, and also on his oral promise to pay a pre-existing
debt of his partner, Lonzo Stracner. Lonzo Stracner was also
sued, but he filed no answer and did not appear. The trial court,
sitting without a jury, rendered judgment against Titus and
Stracner, jointly and severally, for the merchandise Titus had
purchased and also for the debt of Stracner. Titus alone appealed.
The El Paso Court of Civil Appeals, in effect, reversed and ren-
dered that judgment as to Titus on the Statute of Frauds point.
It held that Titus’s oral promise to pay the debt of his partner
Stracner was unenforceable under the Statute of Frauds, and
that the payments on the Stracner note out of the funds of the
Titus and Stracner partnership were invalid. 345 S.W. 2d 422.

The facts are these: Lonzo Stracner accumulated an indebt-
edness of $7,183.58 with Gulf Liquid Fertilizer Company, for
merchandise purchased in connection with his 1957 crop. On
January 29, 1958, he gave his note to Gulf Liquid to evidence
this debt. The note was payable in four installments of $1,500

1. Section 2, Art. 3995, V.A.C.S.

26.

on the 15th of each month, beginning in July, 1958. The fifth
and last payment, in an odd amount, was due on November 15,
1958.

Early in 1958, Stracner and Titus entered into a farming
partnership. On March 8, 1958, a check was drawn from the ac-
count of the “Titus & Stracner Farm” (the partnership) for
$1,500. It was prepared by Titus’ wife who kept the books for
the partnership, and was signed by Stracner. The only notation
on the check was that it was for “fertilizer”. On June 5, 1958,
a second check, in the amount of $1,308, was sent to Gulf Liquid.
It was signed by Titus. The check bore a notation that it was
for “fertilizer and poison for June”. Up to this point, the part-
nership had made no purchases. The amounts of these checks
were credited as received by Gulf Liquid on the note of Stracner.

On June 24, 1958, the partnership made its first purchase
of $339.60 on account from plaintiff, Gulf Liquid, doing busi-
ness as Western Chemicals.

On July 9, 1958, a third check was sent to Gulf Liquid. It
was drawn on the “Titus & Stracner Farm” account for $1,500
and was executed by Titus. The only notation on the check was
that it was for “fertilizer and poison”. It likewise was credited
on the Stracner note.

After June 24, 1958, Titus made various purchases on open
account from Gulf Liquid for fertilizer and poisons. The total
amount purchased on credit in 1958 was $5,000.80. This account
forms part of the amount in litigation, but there is no dispute
as to the amount purchased or the charges made thereon. At
least a part of this sale on credit in 1958 was made before Titus’s
oral promise to pay the Stracner note. Titus contends that the
two checks for $1,500 and the third check for $1,308 should not
have been credited on Stracner’s note, but should have been ap-
plied on the debt created by the open account purchases on and
after June 24, 1958. He concedes that there was no agreement
to pay in advance for 1958 purchases. Ferguson, assistant man-
ager of Gulf Liquid, testified that there was no agreement that
the partnership would pay in advance; that no one told him
or his company to do otherwise than to credit the payments on
the Stracner note.

During 1958 Stracner disappeared, and Titus was left to run
the farm and the partnership. The time of his departure was
not fixed with certainty. Titus admitted that Stracner was not

] 268

back when he had his conversation with Ferguson. It was during
this conversation that the oral promise was made by Titus. Titus
testified that this conversation took place on or about July 15,
1958. Ferguson testified that it was earlier, at least as early
as July 9, 1958 (by which time the partnership had purchased
$725 of goods on credit).

Ferguson testified that in this conversation Titus specifically
agreed to pay the Stracner note; that the promise was made in
return for a continuation of credit by Gulf Liquid for the Titus
& Straener partnership for the 1958 crop year and for an ex-
tension of additional credit at the end of 1958 if needed. He
also testified that Gulf Liquid would not have continued credit
except for Titus’s promise to pay the Stracner note, and at that
time he had to decide whether to file suit. At another place in
his testimony, Ferguson testified that Titus agreed “to take
care of” the Stracner debt; that “he would pay that [mote] out
* * * and * * * if he needed additional credit, I agreed to give
it to him.” At another place, Ferguson testified that Titus
promised that he would “see that the note was paid”. Then again
on direct examination, Ferguson said Titus said “I will pay”
the note.

Titus testified that he agreed only to see that the Stracner
note was paid, and that he meant by this that he would see that
Stracner himself paid it; that he, Titus, was not going to get
himself obligated, but that he would see that Stracner paid his
debt. He also testified that he had no discussion with the officers
of Gulf Liquid concerning credit for the partnership’s 1958 crop
or of credit being stopped if the promise to pay the Stracner
note was not given; that he had no knowledge of the Stracner
note until it was showed to him by Ferguson in mid-July of 1958,
when he had already started buying on credit from Gulf Liquid;
that it was not necessary for him to establish credit with Gulf
Liquid because the financing of the 1958 crop had already been
arranged with Western Cotton Oil Company which had advanced
money to the partnership for the 1958 crop, and that a budget
for fertilizer and insecticides and a bank account had already
been set up.

The findings of fact of the trial court were these: that
Stracner executed the note on January 29, 1958; that prior to
June 24, 1958, (when Titus first purchased merchandise from
Gulf Liquid for the partnership) the only debt owed by either
Stracner or Titus to Gulf Liquid was the Stracner note; that
the Stracner note was given in satisfaction of an open account

6

owing by Stracner to Gulf Liquid for fertilizer and insecticides
purchased during 1957; that at the beginning of the 1958 cotton
crop year, Stracner and Titus entered into a farming partner-
ship for the 1958 crop year; that the “Titus & Stracner Farm”
partnership paid by check $1,500 on March 8, 1958, and $1,303
on June 5, 1958, on the Stracner note; and that on those dates,
neither Stracner nor Titus owed any debt other than the Stracner
note to Gulf Liquid; that the “Titus & Stracner Farm” paid
$1,500 by check on July 9, 1958, on the Stracner note, and that
on that date Stracner and Titus were indebted to Gulf Liquid
for $725 on open account and not otherwise except on the Strac-
ner note; that there was no agreement between Gulf Liquid and
Titus & Stracner that the latter would pay in advance for in-
secticides and fertilizers used during the 1958 crop year; that
the balance at the time of trial owing on the Stracner note was
$2,880.58 together with interest and attorney fees; that Gulf
Liquid continued to sell Titus & Stracner fertilizer and insecti-
cides from June 24, 1958, throughout the 1958 crop year on
eredit, and that the amount owing at the end of the 1958 cotton
erop year was $5,000.80.

Regarding the oral promise of Titus, the court made these
findings of fact:

“5, That Plaintiff Gulf Liquid Fertilizer Company, through
its authorized employee, W. T. Ferguson, Jr., informed the
Defendant James Titus that it did not desire to sell insecti-
cides and fertilizer to the partnership of Lonzo Stracner and
James Titus during the 1958 crop year on a credit basis until
the indebtedness owing by Lonzo Straener, represented by the
promissory note dated January 29, 1958, had been taken care
of and satisfied.

“6. That the Defendant James Titus, in order to obtain
credit for the partnership of Stracner and Titus from Plaintiff
during the 1958 crop year, agreed to pay to Plaintiff the in-
debtedness represented by the said note dated January 29, 1958,
in the sum of $7,183.58, or to see that same was paid. (Em-
phasis ours.)

“9, On June 24, 1958, Plaintiff Gulf Liquid Fertilizer
Company, relying upon the agreement of Defendant James
Titus to pay the said note dated January 29, 1958, or to see
that same was paid, and the partial performance by Defendant
James Titus of said agreement, began to sell fertilizer and in-
secticides to the partnership of James Titus and Lonzo Stracner

es 265

on credit and continued to do so during the 1958 cotton crop
year.”

The trial court’s conclusions of law were that the Stracner
note is a valid obligation; that the agreement of Titus to pay
the Stracner note is not barred by the Statute of Frauds because
it has been fully performed by Gulf Liquid and partially per-
formed by Titus; that Gulf Liquid is entitled to judgment against
Titus and Stracner for the sums specified in the judgment.

Because of their importance, these additional conclusions of
Jaw are set out in full:

“2. That the Defendant James Titus made an uncondi-
tional promise to pay the indebtedness owning to Plaintiff by
Defendant Lonzo Stracner as evidenced by said note dated
January 29, 1958.

“3. That the promise of Defendant James Titus to pay
the indebtedness owing by Defendant Lonzo Stracner on said
note was an original obligation and was supported by a new
and independent consideration; that is, that Plaintiff would
sell fertilizer and insecticides to the partnership of Stracner
and Titus during the 1958 cotton crop year on credit.

“4, That the promise and agreement of the Defendant
James Titus to pay the obligation of Defendant Lonzo Stracner
as represented by said promissory note, was not within the
prohibition of the Statute of Frauds since said promise and
agreement was an original obligation and supported by a new
and independent consideration.” (Emphasis ours.)

HI One of the problems here is the meaning of the trial court’s
finding of fact Number 6, that Titus “agreed to pay to plaintiff
the indebtedness represented by the said note * * * or to see that
same was paid.” The trial court’s “conclusion of law” was that
Titus agreed unconditionally to pay the note. Nevertheless, the
Court of Civil Appeals treated the trial court’s findings of fact
as a finding of a “collateral” and “conditional” promise, and
therefore barred by the Statute of Frauds. The case for Titus
is well presented in the opinion of the Court of Civil Appeals
and need not be repeated here. We have concluded, however, that
there is evidence to support the finding of the trial court that
Titus intended to accept primary responsibility for the Stracner
note and that the consideration he received in return for his
promise satisfied the “leading object” or “main purpose” rule.

266

We therefore hold that his promise is outside the Statute and
enforceable.

The Statute of Frauds was first enacted in England in 1677.
Considering modern rules of evidence and business practice, there
are some who believe that insofar as applicable to facts similar
to those here, such statute has outlived its usefulness? It is a
two-edged sword. It is argued that it may be used to perpetrate
frauds as well as to prevent them. Under it a person may obtain
a substantial benefit for himself under an oral promise to pay
the debt of a third person and then resist payment on the ground
that his promise is oral and therefore unenforceable under the
Statute of Frauds. Because of this and other dangers, the courts
of England and this country have sought to keep the Statute
within its intended purpose.’

The Statute has given rise to literally thousands of cases.
Yet on the problem before us, no clear, settled rules for its con-
struction have been devised. The problem is not finding authori-
ties but of attempting to find the “true or better rule”. There
are many different factual circumstances under which the Statute
is invoked. We shall attempt to limit this opinion to the general
factual situation here presented.

i In determining whether a promise to pay the debt of another
is within or without the Statute of Frauds, one test devised by
the courts is whether the promisor, by his promise, is a surety
and is therefore secondarily liable, or whether he has accepted
primary responsibility for the debt of another. By this test if
an oral promise creates the relationship of surety and principal
between the promisor and the original debtor, and if the fact
is known to the creditor-promisee, it is within the Statute and
is therefore unenforceable. An oral promise creating primary
responsibility in the promisor to the creditor-promisee is with-
out the Statute and is therefore enforceable. Professor Williston
suggests that:

“The test which it is submitted is the accurate one * * * is
whether a promisor is, to the actual or presumed knowledge
of the creditor, a surety; if so, his promise is within the

2. See Grether, “Caveat Promisees; Nebraska’s ‘New Consideration’ Test and
the Anachronistic Statute of Frauds”, 33 Nebraska Law Rey. 577, 600 (1954).

8. All sections of the Statute of Frauds have now been repealed in England
except those covering promises to pay the debt, default, or miscarriage of an-
other, and contracts for the sale of land. 68 Harv. L. Rev. 383,

eS 267

Statute.” 2 Williston, Contracts (Rev. ed. 1936), p- 1835,
Sec. 462.

Professor Corbin agrees:

“Wherever the relation between the two obligors is that
of principal and surety and this fact is known to the creditor,
the case is within the statute. Supposed distinctions between
a ‘surety’ and a ‘guarantor’ are not material in this connec-
tion.” 2 Corbin, Contracts (1950 ed.), p. 247, Sec. 358.

Thus the courts have denied a recovery as being within the
Statute where the promisor has promised to pay the debt of
another only as a surety, but hold promises to be enforceable
where the promisor has in effect made the debt his own and
has assumed primary responsibility. The fundamental idea be-
hind this is that a person should not be able to escape perform-
ance of oral promises to pay his own debts by use of the Statute
of Frauds.

The courts have sometimes formulated rules which state
that “original” promises to pay the debt of another are without
the Statute, while “collateral” promises are within. These terms
have been defined in so many and conflicting ways that they
are of no real value except perhaps to express a result already
reached, i.e., that a promise is or is not within the Statute.t For
this reason, they will not be used in this opinion except where
it is unavoidable.

In reading the cases and the texts, it appears to us that most
cases have turned upon two or more of the following inquiries
which are made to determine whether an oral promise to pay
the debt of another is without the Statute and enforceable. They
are phrased in different ways by different courts, but in sub-
stance they are:

Hf 1. Did the promisor intend to create primary responsibility
in himself to pay the debt, or did he intend merely to be a
surety? The courts may answer this question by saying that the
words used in making the oral promise are, themselves, so clear
as to be unsusceptible of any other intent than to be, or not to be,
only a surety as a matter of law. Or the courts may find that
the words are not clear and that the question of intent is one
for the finder of fact, taking into account all the facts and
circumstances of the case, including the words used by the

4, 2 Corbin, Contracts (1950 ed.). p, 218, Sec. 348,

268

promisor. Closely allied with this test is number 8 set out below:
was the promise given to subserve some desire of the promisor,
or was his purpose merely or only to act as a surety?

2. Was there consideration for the promise? This inquiry
is the same that would be made for any other promise, oral or
written. Sufficient consideration is necessary to create a bind-
ing contract, generally speaking.

I 3. Is the consideration given for the promise the sort of
consideration which the courts say is necessary to take the
promise out of the Statute? Not all consideration, though suf-
ficient in law, is sufficient for this purpose; and a majority
of the courts have applied, in this regard, a rule called the “main
purpose” or “leading object” rule. This rule places the promise
without the Statute, and therefore enforceable, if the considera-
tion given for the promise is primarily for the promisor’s own
use and benefit. In this area the terms “collateral” and “orig-
inal” are also sometimes used: “collateral” referring to a promise
for which the promisor does not get the main benefit; and “orig-
inal” referring to one where he does.

‘We now apply these three tests to this case.

I. Was there a promise of primary responsibility to pay,
or was there a promise of suretyship?

This Court said in Bank of Garvin v. Freeman, 107 Texas
523, 181 S.W. 187:

“The meaning of that statute is to require a promise as
surety for another’s debt, or guarantor of another’s debt,
to be in writing. It never was intended to prohibit one person
from assuniing the payment of another’s debt, as his own debt,
where there is a valid consideration moving between the parties
to such contract. In other words, one person for a valuable
consideration may assume as his own debt the debt of another,
and it need not be in writing, but he cannot contract with one
person to become’ surety or guarantor for the debt of another
person except it be in writing.” (p. 191.)

HI Unless reasonable minds could not differ as to the intent
of the promisor,to be a surety or not, the precise words or form
used are not controlling. 2 Corbin, Contracts (1950 ed.) 247,
Sec. 358; 2 Williston, Contracts (Rev. ed.), p. 1889, Sec. 465.
If the words used are not clear and are susceptible of more than

a 269

one meaning, the question of intent to be primarily responsible
for another’s debt is one for the finder of fact, taking into ac-
count all the facts and circumstances of the case including the
words used by the promisor. Warren v. Smith, 24 Texas 484,
(1859) ; Higginbotham-Bartlett Co. v. Dickey, 27 S.W. 2d 248
(Texas Civ. App. 1980, error dismissed) ; Shahan-Taylor Co. v.
Foremost Dairies, Inc., 233 S.W. 2d 885 (Texas Civ. App., n.r.e.,
1950); Moraz v. Melton (Ark. Sup.) 268 S.W. 41 (1925);
annotation, 20 A.L.R. 2d 246 at 248; 2 Williston, Contracts (Rev.
ed.) 1840, Sec. 465; Stearns, Law of Suretyship (5th ed.) 36,
Sec. 3.7. As was stated in the Dickey case, cited just above:

“We cannot say, as a question of law, that the agreement
pleaded and as found by the court is an original agreement
not within the statute as distinguished from a collateral agree-
ment within the statute. This we would have to do, to be justi-
fied in disturbing the judgment of the trial court. If the
evidence raised an issue of fact as to whether it was one or
the other, then the trial judge trying the case without a jury
must be deemed to have found the agreement was collateral.
The appeal does not challenge the findings of fact, but only
a conclusion of law. We at least cannot say that that con-
clusion was wrong.” 27 S.W. 2d 248, 250.

The Supreme Court of Arkansas had a similar question in
the Melton case, cited just above, where the promisor said “he
would see” that the debt was paid. That court concluded:

“In determining whether an oral promise is original or
collateral, the intention of the parties at the time it was made
must be regarded; and in determining such intention the words
of the promise, the situation of the parties, and all of the cir-
cumstances attending the transaction should be taken into con-
sideration.” 268 S.W. 41, 42.

The Arkansas Court concluded that although the words were
“to see that the debt was paid”, the promise was construed to
be one “to pay” and was held to be enforceable.

We have a fact finding by the trial court that Titus agreed
to pay or to see that the debt was paid. The Court of Civil Ap-
peals has treated the character or nature of Titus’s promise as
“conditional” and “collateral”, and based its decision upon an
emphasis on the portion of the trial court’s finding of fact that
Titus agreed “to see that same was paid’. In effect, that Court

0

concluded that the words used evidence an intent not to assume
primary responsibility but rather to be a surety.

There is, however, evidence that Titus agreed “to pay”. Those
words indicate an. intention to accept primary responsibility.
There is also evidence that he agreed “to see that the debt was
paid”. These words are subject to several interpretations as to
intent. The additional words, “or see that the debt was paid”,
particularly when accompanied by other words of promise to
pay, could be interpreted to mean that he, Titus, would arrange
for payment if he were unable to pay the note as he had promised.
This is still a promise of the nature or character of one to accept
primary responsibility.

li The findings of fact and the conclusions of law will be con-
strued together; and if the findings of fact are susceptible of
different constructions they will be construed, if possible, to
be in harmony with the judgment and to support it. Elder, Demp-
ster & Co. v. Weld-Neville Cotton Co., 231 S.W. 102 (Tex. Comm.
App. 1921) ; Cook v. Mann, 40 S.W. 2d 72 (Texas Comm. App.
1931) ; Daniels v. Wight, 249 S.W. 454 (Tex. Comm. App. 1928) ;
State v. Macken, 162 S.W. 1160, (Texas Civ. App., writ ref.,
1914).

We think the words used by Titus, in the context in which
they were used, are not so clear as to be capable of only one
construction. The trial court concluded that the promise of Titus
was “an unconditional promise to pay” and that “the promise
of Titus to pay was an original obligation.” While we think
reasonable minds could differ on the meaning and intent of Titus,
we cannot say as a matter of law that the trial court was wrong
in its interpretation.

Il. Was there sufficient consideration to support the
promise to pay?

I The next inquiry is whether there was sufficient consider-
ation to support Titus’s promise to pay Stracner’s note. Muller
v. Riviere, 59 Texas 640 (1883). There must of course be suf-
ficient consideration to make any promise a binding and en-
forceable one. 1 Corbin, Contracts (1950 ed.), Sec. 110. The
Court of Civil Appeals held that the consideration passing to
Titus was not sufficient. We conclude that it was.

There ‘was conflicting evidence on whether consideration
passed in return for Titus’s promise. On the one hand, Titus

es am

testified that the partnership had already arranged a loan to
pay for the 1958 crop with a third party, Western Cotton Oil
Company, and that they therefore did not need credit from Gulf
Liquid. On the other hand, Ferguson testified that credit for
the partnership would not have been extended for its 1958 crop
except for Titus’s promise to pay; that Titus did want credit;
that he, Ferguson, promised to extend credit in return for Titus’s
promise; and that the partnership was in fact extended credit
to the extent of $5,000 in reliance on the promise. The trial court
resolved this question in favor of Gulf Liquid. It decided by its
findings of fact numbered 5, 6, and 9, that there was considera-
tion in the form of credit extended by Gulf Liquid to the “Titus
& Stracner Farm” for its 1958 crop. The determination left for
this Court is only as to the sufficiency of that consideration.

As to that question, there would seem to be little doubt. The
eases have frequently held that a promise to extend credit is
sufficient consideration for another promise in a bilateral con-
tract. Muller v. Riviere, 59 Texas 640 (1888); Binge v. Gulf
Coast Orchards Co., 67 S.W. 2d 1045 (Texas Civ. App., no writ,
1934) ; Universal C.I.T. Credit Corporation v. De Lisle, 287 P.
2d 302 (Wash. Sup., 1955) ; National Refining Co. v. McDowell,
201 S.W. 2d 342 (Mo. Sup., 1947). We therefore hold that there
was consideration for Titus’s promise.

III. Was the consideration such as to remove the promise
from the Statute of Frauds?

There is a difference between adequacy of consideration in
law and the sort of consideration which the courts say is neces-
sary to take the promise out of the Statute. Professor Corbin
explains this difference:

“Tt should be noted in the beginning that a consideration
may be sufficient to satisfy the requirements of the common
law of contracts without being sufficient to satisfy the ‘lead-
ing object’ rule and take the promise out of the statute of
frauds. A promise is not out of the statute merely because
there is a consideration for it. * * * The statute is applicable
to promises to answer for the debt of another for which there
is some sufficient consideration. It appears, however, that cer-
tain kinds of consideration will prevent a promise from being
one ‘to answer for the debt of another’ and will make the
promisor a debtor on his own account”. 2 Corbin, Contracts
(1950 ed.), 279, Sec. 367.

OO

Corbin continues :

“The ‘leading object’ that is sufficient to take a promise
out of the statute must be found in the consideration for the
promise and not in the promise itself or in the result of its
performance. The promise is itself a promise to a creditor to
pay a debt due to him from a third party; if it is not such a
promise, it is certainly not within the statute. The perform-
ance of the promise will clearly benefit the creditor; and it
will benefit the debtor too by discharging his duty to that
creditor. * * * The promisor is not in the least benefited by
the performance of his own promise. In order to take his
promise out of the statute, he must be bargaining for a consider-
ation that is beneficial to himself and that constitutes his pri-
mary object of desire.” (Emphasis added.) Ibid., 284.

The “leading object” or “main purpose” rule has been adopted
by the American Law Institute in its Restatement of the Law of
Contracts, Sec. 184. This rule was announced by this court in
Lemmon v. Bow, 20 Texas 829 (1857), where it said:

«* ® * that wherever the main purpose and object of the
promisor is, not to answer for another, but to subserve some
purpose of his own, his promise is not within the statute, al-
though it may be in form a promise to pay the debt of another,
and although the performance of it may incidentally have the
effect of extinguishing the liability of another.

“Here the leading object of the plaintiff (as charged in
the plea) was not to guarantee or to secure the debt of the
Carpenters * * * but it was to subserve some purpose of his
own.” (p. 333.)

The rule was followed in Muller v. Riviere, 59 Texas 640
(1883), and by a number of opinions of the Courts of Civil
Appeals.>

There is one case by the Commission of Appeals which has
language in it contrary to this rule. In Housley v. Strawn Mer-
chandise Co., 291 S.W. 864 (1927, opinion not adopted by this
Court), it was said that the “main purpose rule” is not applied
in this State. The promisor in that case “guaranteed” the pay-

5. Enterprise Trading Co. v. Bank of Crowell, 167 S.W. 296 (Texas Civ.
App., no writ, 1914); Kollatt v. Clements, 3 S.W. 2d 855 (Texas Civ. App. error
dismissed, 1928); Hllington v. Pirtle, 102 S.W. 2d 524 (Texas Civ. App., error
dismissed, 1937); Brown v. Majors, 251 S.W. 2d 786, (Texas Civ. App., no
writ, 1952).

es 278

ment of the debt of another. Under the facts of that case the
court concluded that the promise was therefore “collateral” or
“conditional”.

Whether therefore we regard the statement in the Housley
case as dictum, or whether we consider it to be out of line with
Lemmon v. Box, 20 Texas 329, Muller v. Riviere, 59 Texas 640,
and the more recent opinions of the Courts of Civil Appeals, we
here hold that the “leading object” or “main purpose” doctrine
announced in Lemmon v. Bow should and does apply in this state.

‘We now apply the “main purpose” doctrine to this case. As-
suming as we have that Titus, for a consideration, made a
promise to pay the debt of Stracner, was his main purpose and
object to subserve some purpose of his own? The trial court
found as a fact that the promise was made “in order to obtain
credit for the partnership of Stracner and Titus”. The trial
court also concluded that the promise was supported by a new
and independent consideration, the sale of merchandise on credit
during 1958, but for which the credit would not have been ex-
tended. We find no evidence that the promise was made for
Stracner’s benefit. The fact that Stracner had left him and that
Titus was trying to produce a crop in 1958 without his partner
is evidence that he gave the promise primarily to benefit himself.
Assuming as we have that he made the promise to obtain the
credit, the crucial point is that the consideration necessarily
benefited him as a member of the partnership because he shared
in the partnership’s ultimate profits, if any, and the benefit he
xeceived as a member of the partnership is considered sufficient
to satisfy the “main purpose” rule. We think there are facts to
\support the findings and conclusions of the trial court. We there-
fore hold that the oral promise of Titus is enforceable and is not
barred by the Statute of Frauds.

This opinion has stated that the courts have used two or more
of the following tests to determine whether an oral promise is
outside of the Statute of Frauds: (1) the promise was made to
subserve some main purpose of the promisor, Titus; (2) the
promisor, Titus, agreed to become primarily liable for the debt of
the debtor, Stracner, and not simply or only to act as a guarantor
or surety; and (8) the promise was supported by consideration.
We have also held that there is evidence to satisfy all three tests

6, In reviewing the authorities, Corbin recognized the Housley case as
being critical of the “leading object” rule. But he also correctly observed that
the court in that opinion “did not review the Texas decisions on the point
excepting to distinguish Lemmon v. Bow.” 2 Corbin, Contracts (1950 ed.) 276,
See. 866, fn, 4. .

2

es

in this case. We are safe in saying that whatever test is used,
the promise must be supported by consideration. It is unneces-
sary for us to decide here whether the other two elements must
also be present at the same time. We have here held that the “main
purpose” doctrine is applicable in this State.

One point remains: The Court of Civil Appeals held that
Gulf Liquid was not authorized to apply the checks of the part-
nership of $1,500 and $1,303 on the debt of Stracner. Under
the facts and holding of this case, that point becomes immaterial.
Since Stracner and Titus are jointly and severally liable for the
full amount of the note and the merchandise purchased in 1958,
the payments are credited on the total debt of both.

The judgment of the Court of Civil Appeals is reversed and
that of the trial court is affirmed.

The motion for rehearing is overruled.
Opinion delivered February 28, 1962.
; —

P. J. HAGINAS ET UX, Petitioners

v.
MALBis MEMORIAL FoUNDATION, Respondent

No. A-8718. Decided February 28, 1962
854 S.W. 2d 368

a 2

ee
Ellis F. Morris, Houston, for petitioners.

Bracewell, Reynolds & Patterson, Houston, Robert I. Peoples,
Houston, with firm, for respondent.

MR. JUSTICE CLYDE E. SMITH delivered the opinion of
the Court.

The question presented on this appeal is whether or not the
County Court on an appeal from the Justice Court in a forcible
entry and detainer suit has the authority and jurisdiction to
render a judgment in excess of $1,000 for damages suffered for
the withholding or defending possession of the premises during
the pendency of the appeal from the Justice Court to the County
Court.

On October 18, 1959, in the Justice Court of Harris County,
Texas, a judgment of forcible entry and detainer and costs was
awarded to the Malbis Memorial Foundation against P. J. Hag-
inas and wife concerning the possession of real property. Haginas
and wife perfected an appeal to the County Court at Law of
Harris County, Texas, on October 16, 1959, by the timely filing
of an appeal bond.

Haginas and wife filed no written pleas, either in the Justice
Court or in the County Court at Law.

On May 12, 1960, Malbis Memorial filed its First Amended
Original Petition in the County Court at Law alleging, for the
first time, damages incurred by Malbis Memorial during the
pendency of the appeal from the Justice Court. It was alleged
that the damages for the wrongful withholding of possession of

6 ee

the premises during appeal amounted to $5,880.00 and that the
expense incident to the prosecution of the suit in the County
Court was the sum of $1,500.00.

On May 26, 1960, judgment was entered by the County Court
at Law awarding possession of the real property and a money
judgment in favor of Malbis Memorial for the sum of $2,400.00
and costs.

The judgment of the Court reflects that the Court based its
judgment, awarding this aggregate sum of money in damages,
on the findings that the sum of $1,750.00 was shown to be the
reasonable rental market value of the premises during the pend-
ency of the appeal from the Justice Court to the time of the trial
of the case in the County Court; that the sum of $400.00 was
incurred by Malbis Memorial as reasonable attorney’s fees for
the prosecution of the suit and the further finding that the sum
of $250.00 was shown to have been the reasonable additional
expenses incurred by Malbis Memorial in the prosecution of the
suit in the County Court. The agreed statement of factst on
file in this cause reflects that the parties have agreed and stipu-
lated that the evidence adduced at the trial in the County Court
was sufficient to support the judgment entered.

The Court of Civil Appeals has affirmed the judgment of
the County Court at Law. 849 S.W. 2d 957.

Haginas and wife contend that the amount of damages allow-

1. “On October 18, 1959, in the Justice Court of Harris County, Texas,
Precinct No. One, a judgment of forcible entry and detainer and costs was
awarded to Malbis Memorial Foundation against P. J. Haginas, et ux, con-
cerning the possession of real property. Appeal bond was filed timely, and
appeal was perfected to the County Court at Law of Harris County, Texas,
on October 16, 1959.

“P. J. Haginas, et ux, have filed no written pleas, either in the Justice
Court or in the County Court at Law.

“Plaintiff's First Amended Original Petition was filed on May 12, 1960,
in the County Court at Law, alleging damages incurred by plaintiff during the
pendency of the appeal from Justice Court and the case was duly called to trial.

“On May 26, 1960, judgment was entered by the County Court at Law,
awarding possession of the real property and a money judgment in favor of
Malbis Memorial Foundation for the sum of Two Thousand Four Hundred
Dollars ($2,400.00) and costs.

“It is agreed and stipulated by and between the parties hereto that the
evidence adduced at the trial in the County Court at Law was sufficient to
support the judgment entered therein.”

2

able under Rule 752,2 Texas Rules of Civil Procedure, is limited
to a sum of money within the jurisdictional amount set forth in
Article 5, Section 16, of the Texas Constitution and that any
judgment for a sum in excess of $1,000.00 rendered in the County
Court would be void.

Malbis Memorial contends that the jurisdictional limit stated
in Article 5, Section 16, supra, refers only to the amount in
controversy at the time the suit is filed and that the monetary
limit provided in the Constitution has no application to the
appellate jurisdiction of the County Court. It is argued that when
Article 5, Section 16, supra, of the Constitution and the applicable
statutes and rules are read together, it is evident that the dam-
ages contemplated under Rule 752, supra, are not limited to
the jurisdictional limit prescribed for the original jurisdiction
of the County Court. We agree with this contention.

HM An action of forcible entry and detainer is a special pro-
ceeding and as such is governed by the special statutes and rules
applicable thereto. See Lowe and Archer, Texas Practice, In-
junctions and Extraordinary Proceedings (1957), Section 121;
Rules 738 through 755, Texas Rules of Civil Procedure; Ring-
gold v. Graham, Comm. App., 13 S.W. 2d 355 (1929) ; Simmons
v. Brannum, Texas Civ. App., 182 S.W. 2d 1020 (1944), no wr.
hist.; Ragsdale v. Ward, Texas Civ. App., 173 S.W. 2d 765
(1938), no wr. hist. Under the provisions of Article 3978, Ver-
non’s Annotated Civil Statutes, an action of forcible entry and
detainer must be instituted in the Justice Court. Forcible entry
and detainer is an action for possession and the question of right
of possession is the only issue involved in the Justice Court. It
is true, however, that Rule 738, Texas Rules of Civil Procedure,
permits the plaintiff to join with his action of forcible entry and
detainer, a suit for rent, but the rule specifically limits the amount
of rent which may be recovered in the Justice Court to the juris-
dictional limit placed on the Justice Court by Article 5, Section
16, supra. Under Rule 749, Texas Rules of Civil Procedure, an
appeal can be taken only to the County Court from a judgment
of the Justice Court. This rule provides in effect that either

2. Rule 752, Texas Rules of Civil Procedure,

“On the trial of the cause in the county court the appellant or appellee
shall be permitted to plead and prove his damages if any suffered for with-
holding or defending possession of the premises during the pendency of the
appeal and also all necessary and reasonable expenses incurred in prosecuting
or defending the cause in the county court; provided that only the party pre-
vailing in the county court shall be entitled to recover against the adverse
party such damages, expenses, and costs. He shall also be entitled to recover
against the sureties on the appeal bond in cases where the adverse party has
executed such bond.” (Emphasis added.)

ee

party may appeal to the County Court by filing a bond payable
to the adverse party on the condition he will prosecute his appeal
with effect or pay all costs and damages which may be adjudged
against him. The form of the bond set out in Rule 750 conforms
to the conditions required under the Rules. Neither Rule 749
nor 750. state or imply that the appealing party’s bond is to be
conditioned that the appealing party will prosecute his appeal
with effect and pay all costs and damages not in excess of
$1,000.00. We note that there is absent from Rule 752, supra,
any specific reference to or implication of any limitation that
is to be placed upon the amount of damages that may be awarded
by the County Court under the rule. We attribute the absence
of such limitation to the fact that the jurisdiction of the County
Court in a forcible entry and detainer suit is appellate as op-
posed to original based on any amount in controversy. The
County Court acquired appellate jurisdiction over the subject
matter of this case and the subject matter was the primary
issue of possession. It is the general rule that once jurisdiction
is lawfully and properly acquired, no subsequent fact or event
in the particular case serves to defeat the jurisdiction. See Isbell,
et al v. Kenyon-Warner Dredging Co., 118 Texas 528, 261 S.W.
762. This case, while not a case dealing with forcible entry and
detainer, sustains, in principle, our holding here. The Isbell case
was filed in the County Court for the recovery of a dragline
bucket, or its value, alleged to be $750.00. Prior to the trial of
the case, plaintiff amended its petition in which a like recovery
as prayed for in the original petition was sought, and, in addi-
tion thereto, the reasonable rental value of bucket during the
time the bucket remained in the hands of the defendant by virtue
of a replevy bond. Judgment was rendered in plaintiff’s favor
against defendants for $750.00 as the value of the bucket and
for $1,047.50 as damages for rents plaintiffs were entitled to
for the “detention of the bucket’.

HI The question presented in the Isbell case was: Did the
County Court have the power to render judgment for a sum in
excess of $1,000.00? This Court, in holding that the County
Court was clothed with such power, announced the general rule
that where jurisdiction is once lawfully and properly acquired,
no subsequent fact or event in the particular case serves to
defeat that jurisdiction. The Court reasoned that:

“Ordinarily the very conferring of jurisdiction upon a court,
with nothing further said, empowers it inherently to use statu-
tory and recognized means of enforcing its jurisdiction without

re 279

regard to the value, the amounts, or the subject-matter involved
in the process. * * *

“It is characteristic of inherent, auxiliary, and exceptional
jurisdictions that it is not confined by the provisions that limit
the scope of ordinary jurisdiction.”

The reasoning of the Court in the Isbell case is equally ap-
plicable where the problem is to determine the scope of Rule 752,
supra. Article 8990, Vernon’s Annotated Civil Statutes, the
source of Rule 752, supra, was enacted by the Legislature for
the protection of the winning party in the Justice Court. Speci-
fically applied here, the rule was meant to protect Malbis Memo-
rial and enable it to ultimately recover from Haginas and wife
whatever damages it may have suffered by virtue of their with-
holding possession of the premises, regardless of the amount.
“so long as it can prove such damages. A contrary holding would,
in effect, mean that the only damages contemplated by Rule 752,
supra, would be those damages that fall within the jurisdictional
limits prescribed in Article 5, Section 16, supra, for the County
Court’s original jurisdiction. This untenable position, if adopted,
would have the effect of rendering the County Court powerless
to render judgment for any amount in the event the damages
pending appeal from the Justice Court to the County Court
were less than $200.00.

i The primary object of the present forcible entry and detainer
suit was to obtain possession of certain real property due to
the failure of Haginas and wife to pay rent in accordance with
a lease agreement between the parties. Possession has been with-
held pending appeal and the amount of damages has been stipu-
lated to be the sum of $2,400.00. The recovery of damages pend-
ing the appeal authorized by Rule 752, supra, is ancillary to the
cause of action for possession. Since Haginas and wife elected
to remain in possession of the premises pending appeal, they
subjected themselves to liability under the appeal bond and under
Rule 752, supra, for all damages accruing to Malbis Memorial
by reason of their wrongfully withholding of the premises. The
damages awarded by the trial court was due solely to the wrong-
ful withholding of the premises by Haginas and wife.

The judgment of the Court of Civil Appeals is affirmed.
Opinion delivered February 28, 1962.

280

DEPARTMENT OF PUBLIC SAFETY OF THE STATE OF TEXAS,
Petitioner
v.
VIRGIL CLINE AUSTIN, Respondent

No. A-8643. Decided February 28, 1962
854 S.W. 2d 376

Alton R. Griffin, County Attorney, EZ. M. Fulton, Jr., Asst
County Atty., Lubbock, Will Wilson, Atty. Gen., Leon F. Pesek
and Tom I. McFarling, Assts. Atty. Gen., Austin, for petitioner.

Treadaway & Blumrosen, Lubbock, for respondent.
MR. JUSTICE CULVER delivered the opinion of the Court.

On December 12, 1959, Austin’s chauffeur’s license was sus-
pended for a period of six months pursuant to Article 6687b,
Sec. 22, Subsection b(4). On May 21 Austin was convicted in
the Justice of Peace Court for speeding. Therefore, he committed
not only the offense of “speeding”, but also the offense of “driv-
ing while license suspended”, as well. On August 8, 1960, the
Department, after an administrative hearing as provided under
Sec. 22-1a, Article 6687b, Vernon’s Civil Statutes, entered its
order again suspending Austin’s license for a period of six months.
On appeal the County Court at Law held there was insufficient

es 281

evidence to support the Department’s order of suspension. On
February 24, 1961, the Department renewed the operator’s
license. Thereafter the Court of Civil Appeals dismissed the
appeal of the Department of Public Safety on the ground that
the case had become moot. 348 S.W. 2d 854.

I In that respect we are of the opinion that the Court of Civil
Appeals erred. The Court based its decision on our holding in
Boston v. Garrison, 152 Texas 258, 256 S.W. 2d 67. In that
case the license had expired and an application for renewal had
been refused. Therein lies the distinction. In this case the De-
partment taking note of the judgment of the County Court at
Law and pending appeal therefrom, had issued a renewal license
to Austin upon his application and thus followed the rule an-
nounced in Texas Department of Public Safety v. Azar, 1954,
Texas Civ. App., 274 S.W. 2d 911, error refused n.r.e., namely
that the only restriction that may be placed on the renewal of
a license, according to the statute, is that the department must
renew the license without an examination, unless it has reason
to believe that licensee is no longer qualified. Under the pro-
visions of Sec. 18, Article 6687b, as construed in Azar, the De-
partment had no alternative but to renew Austin’s license.

When Austin appealed from the order of the Department
suspending his license the suspension of the license was itself
suspended until a final judgment was rendered. Article 6687b,
Sec. 22(c).

The only reaonable construction of Article 6687b, Sec. 18,
is that the original license can be extended from time to time by
proper application for a renewal, but where there is no timely
renewal then the license expires and a new license is required
to enable one to operate motor vehicles legally upon the highways.

In Boston v. Garrison, the appeal was from a judgment of
the District Court upholding the suspension. A reversal of that
judgment would have accomplished no more than to terminate
a suspension that had already terminated by its own terms. In
the case here the suspension was set aside by the County Court
and the dismissal by the Court of Civil Appeals would result in
the suspension being finally made null and void. See Isbell v.
Brown, Texas Civ. App., 196 S.W. 2d 691, wr. ref. To hold this
case moot would effectively nullify the right of the Department
to appeal from such an adverse decision of the trial court, or to
enforce a suspension that had been properly ordered due to the
lapse of time incident to court procedure.

rp

2S

Hi Incidentally the respondent filed no brief in the Court of
Civil Appeals nor one in this Court, nor did he appear by counsel
when the cause was submitted. An amicus curiae challenges the
jurisdiction of this Court. We have jurisdiction under Sec. 3
of Art. 1728, V.A.C.S., since the case involves the construction
of a statute necessary to a determination of the case.

The judgment of the Court of Civil Appeals is reversed and
the cause remanded to that court for a decision upon the merits
of the appeal.

Opinion delivered February 28, 1962.
as

E. M. RUSSELL AND P. L, ALLEN, Petitioners
v.
ALMA DoBBS, ADMINISTRATRIX OF THE ESTATE OF J. A. DOBBS,
Deceased, Respondent

No, A-8564. Decided February 28, 1962
354 S.W. 2d 373

288

Borden & Hand, Weatherford, for petitioners.

Spurlock, Schattman & Jacobs, Fort Worth, for respondent.
WALKER, Justice.

This action was brought by E. M. Russell and P. L. Allen,
petitioners, against Alma Dobbs, Administratrix of the Estate
of J. A. Dobbs, deceased, respondent, to establish a claim against
the Estate. The claim was not presented to the Administratrix
in person but was deposited with the County Clerk on August
24, 1957, as authorized by Section 308 of the Texas Probate
Code.1 It was never formally allowed or rejected by the Adminis-
tratrix, and this suit was instituted on June 10, 1958.

In response to the three special issues submitted, the jury
found: (1) that the attorney for the Administratrix by his acts,
representations and conduct led petitioners to believe that the
Administratrix would approve and pay the claim; (2) that such
acts, representations and conduct would have led a reasonably
prudent person to believe the Administratrix would approve and
pay the claim; and (8) that in reliance thereon petitioners de-
layed in filing suit until after April 8, 1958. Judgment was en-
tered by the trial court establishing the claim as filed and direct-
ing that a copy of the decree be certified to the Probate Court.
The Court of Civil Appeals reversed and rendered, holding: (a)

1. Except as otherwise indicated all statutes are referred to by the section
number under which they appear in V.A.T-S, Probate Code.

8 ee

that the claim was rejected by operation of Jaw at the end of
thirty days after it was filed with the Clerk; (b) that the debt
was extinguished when petitioners did not institute suit within
ninety days thereafter; and (c) that equitable estoppel could not
save petitioners from the consequences of their delay. 347 S.W.
2d 796.

I Section 308 authorizes claims to be presented by depositing
same with the clerk. It also provides that a claim shall be pre-
sumed to be rejected in the event the representative fails to act
thereon within thirty days after it is filed, and that the failure
of the clerk to notify the representative or his attorney shall not
affect the validity of the presentment or the presumption of
rejection. Petitioners contend that the presumption created by
the statute is rebuttable and was overcome in this case by the
jury findings mentioned above. We do not agree.

Prior to the adoption of the Probate Code, an executor, ad-
ministrator or guardian was required to endorse his allowance
or rejection on any claim presented to him. The failure to do so
operated as a rejection of the claim and authorized the claimant
to institute suit. See Articles 3516, 3517, 4242, 4243, Texas Rev.
Civ. Stat. 1925. The statutes did not prescribe a time within
which the representative must act, and it was held that the claim
would be deemed rejected at the expiration of a reasonable time
after presentment. See Chandler v. Warlick, Texas Civ. App.,
821 S.W. 2d 897 (wr. ref. nr.e.); Dent v. A. Harris & Co.,
Texas Civ. App., 255 S.W. 221 (no writ). What constituted a
reasonable time was ordinarily a question of fact, and it was
necessary for a creditor to decide that question at his peril.
No suit could be instituted more than ninety days after expira-
tion of a reasonable period, while one brought before the repre-
sentative had a fair opportunity to investigate the claim was
subject to being abated. See Burke v. Guilford Mortgage Co.,
Texas Civ. App., 161 S.W. 2d 574 (wr. ref. w. m.).

Much of the uncertainty as to the timing of the steps that
must be taken by a claimant to protect his rights was eliminated
by the provisions of the Probate Code. The representative is now
required to endorse his allowance or rejection on the claim within
thirty days after it is presented to him or filed with the clerk.
Section 309. His failure to act within the prescribed period on
a claim presented to him constitutes a rejection of the claim,
and subjects the representative to liability for court costs and
to removal from office if the claim is thereafter established by
suit. Section 310. In view of these provisions, we are satisfied

Oe) 285

that the Legislature did not intend to create merely a rebuttable
presumption of rejection when the representative fails to act
within thirty days on a claim deposited with the clerk.

Hf Section 808 was enacted primarily for the benefit of creditors.
It provides a method of presenting claims when the representa-
tive cannot be located, and also fixes a definite time at which
the claimant becomes entitled to institute suit in the event his
claim is not allowed. The purpose of the statute would be defeated
if an action instituted by the creditor after expiration of the
thirty-day period could be abated upon a showing by the rep-
resentative that the claim had not been rejected in fact. Since
the claim is presumed to be rejected even though the clerk fails
to notify the representative, it seems clear that the Legislature
was attempting to do something more than establish a period
that would prima facie constitute a reasonable time for the rep-
resentative to act. In our opinion the presumption of rejection
ereated by Section 308 is conclusive in so far as the claimant’s
right to institute suit and the legal consequences of failure to do
so are concerned.

The statute formerly applicable to estates of decedents pro-
vided that “when a claim for money against an estate has been
rejected by the executor or administrator, either in whole or in
part, the owner of such claim may, within ninety days after such
rejection, and not thereafter, bring suit against the executor
or administrator for the establishment thereof in any court hav-
ing jurisdiction of the same.” Article 3522, Texas Rev. Civ. Stat.
1925. This was not regarded as a statute of limitation in the usual
sense. Failure to institute suit within the prescribed period could
be raised by general demurrer and was not excused by absence
of the representative from the State. Cotton v. Jones, 87 Texas
84; Poole v. Rutherford, Texas Civ. App., 199 S.W. 2d 665 (wr.
ref. n.r.e.) ; Jaye v. Wheat, Texas Civ. App., 180 S.W. 2d 1081
(no writ). The representative had no power to approve and
revive a claim barred by the statute. Burks v. Bennett, 62 Tex. 277.

In some of the cases cited above, Article 8522- was likened
to statutes providing for new trials, appeals and writs of error.
It was said that compliance with its terms was a qualification
upon the right to sue, and that the statute extinguished the right
and did not merely bar the remedy. At the same time this Court
stated that a suit not brought within ninety days after rejection
of the claim was barred “unless some cause supervened to prevent
the operation of that statute”. Cotton v. Jones, supra. In another
ease decided at the same term, certain claims were presented to

236

an executor, who promised to allow and pay them. They were
returned disallowed after being held by the representative until
he believed the same to be barred by limitation. At one place in
the opinion it was said that a suit brought within three months
thereafter was in time. At another point the Court observed that
while it was not passing on the conduct of T. W. House, facts
making the case a fraud against him would take the case out
of the statute of limitation. T. W. House was the plaintiff, and
the latter statement evidently was intended to mean that fraud
on the part of the executor would prevent the running of the
statute. Kyle v. House, 88 Texas 155.

In enacting the Probate Code, the Legislature chose the
wording of Article 4244, Texas Rev. Civ. Stat. 1925, applicable
to guardianships, rather than the prohibitory language of Article
8522. Section 313 provides that when a claim or a part thereof
has been rejected by the representative the claimant shall institute
suit thereon within ninety days after such rejection, or the
claim shall be barred. This statute is not materially different
from Article 3522 in either purpose or effect. It is one of the
regulations designed to bring about an early disposition of claims
against estates. The presentation of a claim to the representa-
tive is the first step in the procedure established for obtaining
a judgment which can be enforced in the probate proceedings,
and as a general rule the creditor must comply with all statutory
requirements.

Most jurisdictions hold that promises or conduct on the part
of a personal representative will not suspend or prevent the
bar of special nonclaim or administration statutes of limitation.
In some states a more liberal rule obtains, but this is generally
the result of statutory exceptions. See Annotations 11 A.L.R.
246, 66 A.L.R. 1415. We are not prepared to say at this time
that Section 318 extinguishes the right for all purposes, or that
there are no circumstances under which a creditor would be
entitled to institute suit more than ninety days after rejection.
It is unnecessary to decide either of those questions here, because
we think that under the facts of this case petitioners as a matter
of law were not entitled to rely upon a promise of the Adminis-
tratrix, express or implied, to approve and pay their claim.

I Petitioners knew that their claim had been filed with the
clerk, and were charged with knowledge that the same would be
deemed rejected by operation of law if no action was taken by
the Administratrix within thirty days. They also should have
known that the claim would be barred in the event suit was not

287

instituted within ninety days after such rejection. The statutes
contemplate that a creditor will keep himself informed as to the
status of his claim and take the steps required by law to reduce
the same to judgment. Since the representative must now act
within thirty days and is required to endorse a memorandum
of allowance or rejection on the claim when he does act, the
claimant will ordinarily have no difficulty in ascertaining that
his claim has been rejected in time to protect his rights by in-
stituting suit thereon. Petitioners could and should have done so
by examining their claim on file in the clerk’s office. They were
never told that the claim had been allowed, and the assurances
of the Administratrix or her attorney that it would be approved
and paid afford no basis, legal or equitable, for suspending the
operation of the ninety-day statute.

The judgment of the Court of Civil Appeals is affirmed.
Opinion delivered February 28, 1962.
[|
JAMES V. SHORT, JR., Petitioner
BARBARA sont, Respondent

No. A-8723. Decided March 7, 1962
354 S.W. 2d 933

288

Perkins, Floyd, Davis & Oden, Lawrence H. Warburton, Jr.,
with above firm, Alice, for petitioner.

Lloyd, Lloyd & Dean, Parker Ellzey with above firm, Alice,
for respondent.

ASSOCIATE JUSTICE HAMILTON delivered the opinion
of the Court.

James V. Short, Jr., brought habeas corpus proceedings in
Jim Wells County, Texas, on November 16, 1960, to obtain
possession of his two children, James E. and Sherrie Lynn Short,
aged three years and two years respectively. The children’s

289

mother, Barbara Short, answered this petition on November 18,
1960, and also filed a cross action for custody of the children.
The District Court of Jim Wells County, after a hearing, ordered
care and custody of the children to the mother with one month
of visitation each year to the father. The San Antonio Court of
Civil Appeals, Chief Justice Murray writing the majority opinion
and Justice Barrow dissenting, affirmed the trial court. (350
S.W. 2d 397.) It is the opinion of this court that the judgment
of the trial court and Court of Civil Appeals should be reversed
and custody of the children awarded to their father, James V.
Short, Jr.

James and Barbara Short were married in New Mexico in
1956. One year afterward their son was born. On September 6,
1958, their daughter was born. Two weeks later the couple
separated and have not lived together since that time. In June
of 1959 a divorce was granted the wife and she was awarded
custody of the children. Thereafter, James Short, the father,
instituted proceedings to have the custody of the children changed.
On June 22, 1960, hearing was had in Lea County, New Mexico,
and an “Order Modifying Judgment” was issued by the court
which stated that the father requested custody because of the
mother’s conduct and “that it would be to the best interest of
the children that the custody be taken from the mother, plaintiff,
and given to their father, defendant”. This order was not filed
until August 30, 1960, but this unexplained fact has no bearing
in this suit.

Immediately after the hearing and before the order was filed,
(but with knowledge of the court’s decision) the mother took
the children from the home of neighbors where they had been
staying, and with one W. E. “Cotton” Wood (a married man
with four children) left New Mexico, traveling over several
states, and finally settling in Alice, Texas, in the home of re-
spondent’s aunt.

Respondent lived in Alice about three months prior to this
trial, solely dependent upon her aunt and uncle.

Subsequent to the mother’s departure, petitioner moved from
New Mexico to Lincoln, Nebraska. This was a transfer for a
better position.

II Petitioner’s first point of error questions the Texas court’s
jurisdiction to award custody of the children in the face of the
valid New Mexico decree, or alternatively whether there was an

20

abuse of discretion by the trial court in taking jurisdiction. We
believe under the facts of this case jurisdiction to award cus-
tody was in the trial court.

However, in so holding, we also agree with the language
in Wicks v. Cox, 146 Texas 489, 208 S.W. 2d 876, which says:

“The foregoing (decision that a Texas court had juris-
diction) does not, of course, mean that our courts should take
jurisdiction to award custody in every case where the child
and the parties contending for its possession happen to be
here before the court. * * * We certainly do not imply that
our courts should be accessories after the fact to disorderly
practices of individual parents or others who thus seek to
avoid the normal processes of justice by ex parte determina-
tion or what they happen to consider a more propitious forum.”

In the case at bar, however, petitioner invoked the jurisdic-
tion of the Texas court by bringing the habeas corpus proceeding
in Jim Wells County. He cannot now be heard to complain of
the taking of such jurisdiction. Knollhoff v. Norris, 152 Texas
231, 256 S.W. 2d 79.

Petitioner’s second and third points of error complain of
the majority opinion of the Court of Civil Appeals which holds:
1) that there was such a material change of conditions that the
valid custody award of the New Mexico court should be changed;
2) the burden of proof was upon the petitioner to prove the
mother was positively unfit to care for the children. These points
will be discussed in reverse order.

Hi The New Mexico court found “that it would be to the best
interest of the children that custody be taken from the mother,
plaintiff, and given to their father, defendant.” This decree has
not been attacked by respondent. The reasoning of the dissent
in the court below (350 S.W. 2d 397, 402) is sound on this
question. While agreeing with the majority that ordinarily there
should be a positive showing that the mother is unfit to keep
her children, Judge Barrow goes on to say:

“But when a court of competent jurisdiction, in a proceed-
ing in which the mother was present and represented by counsel
in a full and fair hearing, has found and rendered judgment
that she has so conducted or misconducted herself as to posi-
tively disqualify herself to have such custody, the judgment
is res judicata and extinguishes her right and privilege. The

a 201

burden of proof is on her in a subsequent proceeding to show
material changes that require, in the interest of the children,
that their custody be changed.”

See 20 Texas Jur. 2d 691, Divorce and Separation, Sec. 370,
and cases cited, n. 17.

We are also of the opinion that the mother, Barbara Short,
failed to prove that conditions have so materially changed since
the New Mexico order that it would be for the best interests
of the children to require a change of custody back to her.

It is this court’s belief that the father’s move from New
Mexico to Nebraska for a better job is not a material change
warranting the overturning of a valid decree of a sister state.
Nor is the fact that the paternal grandmother will be required
to move temporarily to Nebraska to care for the children and
possibly hire a nursemaid for their care such a change.

I A showing of only slight change of conditions is not sufficient
grounds to change custody of children. Frequent custody hear-
ings are discouraged and not encouraged. It is our opinion that
the trial court abused its discretion in taking custody of the
children from their father and awarding it to their mother.
Leonard v. Leonard, 218 S.W. 2d 296 (Texas Civ. App., no
writ hist.) .

It is the order of this court that the judgments of the Court
of Civil Appeals and trial court be reversed and the custody of
the children awarded to their father, James E. Short, Jr. It is
also our opinion that the past acts of respondent in disregarding
valid court orders places this case in an exceptional category.
Under the authority of Rule 515, Texas Rules of Civil Procedure,
we deny respondent the right to file a motion for rehearing in
this cause. We further direct the district judge of Jim Wells
County, Texas, to issue a warrant, as authorized by Art. 129,
Texas Code of Criminal Procedure, to the sheriff of Jim Wells
County, Texas, to take and bring said children, James E. Short
and Sherrie Lynn Short, before said district judge without delay,
to be dealt with according to this opinion.

Opinion delivered March 7, 1962.

20S

Miniprep K. BRIDGES, A WIDOW, INDIVIDUALLY AND AS NEXT FRIEND
oF JOE WALLACE BRIDGES, III, AND SUZANNE BRIDGES, MINORS,
Petitioners
v.

CITY OF RICHARDSON AND RAy F. SMITH & Son, Respondents
No. A-8682. Decided January 81, 1962

Rehearing Denied March 14, 1962
854 S.-W. 2d 366

Woodgate, Richards & McElhaney, Dallas, for petitioners.

Strasburger, Price, Kelton, Miller & Martin, Dallas, for re-
spondents.

PER CURIAM.

The opinion of the Court of Civil Appeals is reported in
349 S.W. 2d 644.

We approve the judgment entered by the Court of Civil
Appeals, but we are not satisfied that the opinion of the court
“in all respects has correctly declared the law”. Normally that
conclusion would call for no other action on our part than the
stamping of the application for writ of error, “Refused. No Re-
versible Error”. See Rule 483, Texas Rules of Civil Procedure.
But some of the general holdings of the Court of Civil Appeals,
express and implied, which we regard as erroneous are so far-
reaching that we deem it wise to disapprove them specifically

eee) 298

lest they be regarded by lawyers, trial judges and judges of
the Courts of Civil Appeals as having our tacit approval.

The holdings to which we refer and our views with respect
thereto are:

1. That in order to complain successfully on appeal of the
erroneous admission of evidence, a party must have filed a proper
motion in limine to suppress the evidence or to instruct counsel
not to offer it.

ff The purpose in filing a motion in limine to suppress evidence
or to instruct opposing counsel not to offer it is to prevent the
asking of prejudicial questions and the making of prejudicial
statements in the presence of the jury with respect to matters
which have no proper bearing on the issues in the case or on the
rights of the parties to the suit. It is the prejudicial effect of
the questions asked or statements made in connection with the
offer of the evidence, not the prejudicial effect of the evidence
itself, which a motion in limine is intended to reach. A proper
objection made at the time evidence is offered is sufficient to
preserve right of review of error committed in admitting it, and
a motion in limine is not a necessary predicate for complaint on
appeal that the admission of the evidence was error and that
the error was prejudicial.

2. That in order to complain successfully on appeal of the
erroneous admission of evidence, a party must have requested
that the jury be retired until the judge had heard and ruled upon
the admissibility of the evidence.

Hf A request to retire the jury while evidence is being offered
cannot be a necessary predicate to the right to complain on
appeal of a trial court’s error in admitting evidence over proper
objection. The purpose in retiring a jury is to prevent prejudice
through development of questionable evidence in the presence
of the jury if the evidence is later excluded, or to permit the
perfecting of a bill of exceptions after the evidence has been
excluded.

8. That an objection that proffered evidence is “immaterial
and irrelevant” is not sufficient to preserve right of review of
error committed in admitting it.

HI The rule stated is a correct general rule but there is a limita-
tion on or an exception to the rule: When the evidence is not

204

relevant to any issue in the case and can have no material bearing
thereon, a general objection that it is immaterial and irrelevant
is sufficient to preserve right of review of error committed in
admitting it. 1 McCormick & Ray, Texas Law of Evidence, 2d ed.,
Sec. 25, p. 24; 1 Wigmore, Evidence, 3d.ed. Sec. 18, p. 336.

4. That a conclusion that the erroneous admission of evi-
dence was not reasonably calculated to cause and probably did
not cause an improper judgment leads to the further conclusion
that “no error resulted in [from] the admission of the evidence.”

IB If evidence is erroneously admitted, error exists; if its ad-
mission was not reasonably calculated to cause and probably
did not cause an improper judgment, it is still error but is not
reversible error. The question of whether a particular error is
reversible error depends upon whether it was reasonably cal-
culated to cause and probably did cause an improper judgment
and presupposes the existence of error. Aultman v. Dallas Ry.
& Term. Co., 152 Texas 509, 260 S.W. 2d 596,

In pointing out the foregoing errors in the opinion of the
Court of Civil Appeals we are not to be understood as approving
all other holdings: and statements in the opinion.

The application for Writ of Error is “Refused. No Reversible
Error”. Rule 483, Texas Rules of Civil Procedure.

Le
CiTy oF HOUSTON ET AL, Petitioners

v.
Foy D. Metron, Respondent

No. A-8588. Decided January 81, 1962
Rehearing Denied March i4, 1962
354 S.W. 2d 387

295

CHIEF JUSTICE CALVERT and ASSOCIATE JUSTICES
SMITH and WALKER dissented.

R. H. Burks, City Atty., Charles A. Easterling, Senior Asst.
City Atty., Houston, for petitioner.

Sam S. Minter, Houston, for respondent.

ASSOCIATE JUSTICE MEADE F. GRIFFIN delivered the
opinion of the Court.

Foy D. Melton, an inspector of police in the City of Houston,
Texas, on October 20, 1959, was indefinitely suspended by the
Chief of Police of said City. The Chief of Police in all things
complied with the provisions of Art. 1269m, Sec. 16, Vernon’s
Annotated Texas Civil Statutes, known as the Firemen’s and
Policemen’s Civil Service Act. Melton appealed to the Civil
Service Commission, and that body, after hearing all parties
and their witnesses, upheld the suspension. Melton then appealed
to a district court of Harris County, Texas, and that court, after
a hearing, held that the order of the Civil Service Commission
(hereinafter called Commission) was not supported by sub-
stantial evidence and set the order aside for its failure to contain
specific findings that Melton was guilty of each of the charges
contained in the letter of the Chief of Police suspending Melton.
The City and others appealed to the Court of Civil Appeals which
affirmed the judgment of the trial court and reinstated Melton

26 ee

and ordered the City to pay to Melton his accumulated salary.
The Court of Civil Appeals disagreed with the holding of the
trial court that the charges on which Melton was tried before
the Commission were not supported by substantial evidence, and
held that five out of the six charges were supported by substantial
evidence, but that charge No. 2—or specification as it was desig-
nated by the Commission—was not supported by substantial
evidence. The Court of Civil Appeals affirmed the judgment
of the trial court on the ground that the order of the Commis-
\sion did not comply with the latter part of Art. 1269m, Sec. 16,
providing that “no employee shall be suspended or dismissed
by the Commission except for violation of the civil service rules,
and except upon a finding by the Commission of the truth of
the specific charges against such employee.” (Emphasis by Court
of Civil Appeals), 347 S.W. 2d 643.

The opinion of the Court of Civil Appeals contains a full,
complete and clear statement of the facts and we shall set out
only such facts herein as are necessary to properly understand
our opinion.

HM The City complains of the action of the trial court and the
Court of Civil Appeals by seven points of error. In our opinion,
the point upon which this cause must be decided is whether or
not the order of the Commission upholding the indefinite sus-
pension of Melton is a finding of the truth of the six charges,
or specifications, contained in the letter of the Chief of Police
dismissing Melton. It was upon these charges that the Commis-
sion tried Melton, and on which the Commission heard evidence.
The Court of Civil Appeals said that “while we do not mean to
hold that the Commission must necessarily make separate find-
ings on each charge, at least it is required that it make some type
of finding that will inform us what charges it found to be true.
If here the Commission had made a general finding that all
charges were true, this would suffice, or if it had found all to
be true except certain specified charges, it would suffice.” We
agree with this statement of the law as applicable in this case,
and we hold the Commission did find all charges to be true.
Eddings v. Bichsel, Texas Civ. App., 1957, 320 S.W. 2d 197,
no writ history. We agree also with the Court of Civil Appeals
that there is in the record substantial evidence to support all
of the six remaining specifications except Specification, or Charge
No. 2. Any one of the five remaining specifications, if found to
be true, would support the action of the Chief of Police and
the Commission in indefinitely suspending Melton.

eS 297

Let us now examine the order of the Commission in its en-
*tirety to determine whether or not it contains findings of the
truth of the charges. The order begins by referring to the letter
of the Chief of Police suspending Melton; it states that a copy
of the letter is attached to the order and that the Commission
had numbered the specifications for convenience in referring
and identifying the specifications. After reciting certain pre-
liminary steps taken to fix the date of hearing, and that all
parties appeared in person and by attorney, the order sustains
Melton’s motion to dismiss Specification No. 9. The order further
recites that Specifications Nos. 7 and 8 were dismissed and not
considered further; that the hearing proceeded on the remaining
six specifications until both sides rested their respective cases.
The order recites further that after both sides had closed, the
Commission and its members considered and discussed among
and between themselves all of the testimony adduced upon said
hearing and conferred among themselves with respect thereto.
This particular paragraph of the order concludes with the. fol-
lowing language: “* * * and the evidence as a whole leaves no
doubt in our minds as to the substance (Commission’s emphasis)
of the issues. Based on such evidence, as well as upon the appear-
ance and demeanor of the witnesses while testifying, we have
no doubt that the said Foy D. Melton was guilty of improper
and wrongful conduct, well within said Specifications remaining
before us,” (emphasis ours)—those “specifications remaining”
meaning only the six remaining specifications considered by the
Commission.

I This is a finding by the Commission that all the remaining
six charges are true. The Commission’s underscoring and em-
phasis of the word “substance” precludes any question that it
found the specifications to be true. Webster’s Third New Un-
abridged International Dictionary, 1961, defines “substance” as
follows: “a fundamental part, quality or aspect: essential quality
or import; the characteristic and essential part.” The order then
continues with the following language, “based on such evidence
* * * we have no doubt that the said Foy D. Melton was guilty
of improper and wrongful conduct, well within said Specifica-
tions remaining before us.” (Emphasis ours.) The language
“well within” was here used in the sense of “as alleged”, or
“as contained”. This is a specific finding of guilt of wrongful
and improper conduct charged in each and all six specifications
on which Melton was tried. The fact that Specification No. 2 is
not supported by substantial evidence does not set aside the
Commission’s finding of guilt as to the other five.

28 ee

i Respondent Melton relies on Thompson y. Railroad Com-
mission, 150 Texas 307, 240 S.W. 2d 759 (1951) as authority
for his position that the order of the Civil Service Commission
in our case is not sufficient compliance with the requirements
of Art. 1269m, Sec. 16, Vernon’s Annotated Civil Statutes. The
statute in the Thompson case provided that the order of the
Railroad Commission should be void unless the Railroad Com-
mission “shall set forth in its order full and complete findings
of fact pointing out in detail the inadequacies of the services
and facilities of the existing carriers, and the public need for
the proposed service”. We find no language of like or similar
import in Art. 1269m, Sec. 16. There is no requirement that
failure to set out detailed findings shall make void the order of
the Commission. The requirement is that the Commission must
make a finding of the truth of the specific charges against such em-
ployee, and a careful analysis points up the fact that the order
is based upon such findings. The order permanently dismissed
Melton from the police force of the City of Houston as is re-
quired by the provisions of Art. 1269m, Sec. 16.

Melton also relies on the case of United States of America
v. Chicago, Milwaukee & St. Paul & Pacific Railroad Company,
294 US. 499, 79 L. Ed. 1028 (1935), to support his position.
We have examined that case and it is not in point. No requisite
findings were made in that case, whereas in the case at bar the
necessary findings were made.

The order of the Commission set out the facts and expressly
made findings showing the jurisdiction of that body to conduct
the hearing. There is no complaint in the instant case attacking
the jurisdiction of the Commission to act.

The judgment of the trial court setting aside the order of
the Civil Service Commission and reinstating Melton and order-
ing the City to pay him his accrued salary, and the judgment
of the Court of Civil Appeals, affirming the judgment of the
trial court, is hereby reversed and judgment is rendered that
Foy D. Melton take nothing.

Opinion delivered January 31, 1962.
MR. JUSTICE WALKER, dissenting.

I respectfully dissent. Section 16 of Article 1269m, Vernon’s
Ann. Texas Civ. Stat., provides, “that [nJo employee shall be
suspended or dismissed by the Commission * * * except upon a
finding by the Commission of the truth of the specific charges
against such employee.” Such a requirement is sound for a num-

209

ber of reasons.’ It was included in the present statute to insure,
among other things: (1) that no fireman or policeman would be
suspended or dismissed unless at least two members of the Com-
mission concluded that he was guilty of some specific charge
made against him, and (2) that no suspension or dismissal would
be upheld by the courts on a ground not found against the accused.
by the Commission.

A summary of the nine charges originally made against re-
spondent will be found in the opinion of the Court of Civil Ap-
peals, 347 S.W. 2d 643. Specifications 7 and 8 were dismissed
before conclusion of the hearing when the City Attorney admitted
there was no evidence to support the same, and Specification 9
was dismissed because the alleged misconduct occurred more than
six months before the date of respondent’s suspension. When
the Commission retired to reach a decision, therefore, respondent
stood charged with six separate and distinct acts of misconduct.
It was alleged that he had: (1) requested P. Y. Snow to talk
with his brother, Billy D. Snow, about the testimony the latter
fwould give in the case of Milner v. National Airlines, and stated
that the brother would be paid several hundred dollars if he
changed his testimony; (2) attempted to intimidate William
Hill, Jr., a police officer; (8) made a false statement under
oath on October 6, 1959, when he stated that he had not talked
with Billy D. Snow about the case; (4) gave false testimony at
the trial of the case when he declared that he had not attempted
to influence anyone’s testimony; (5) made a false statement
under oath on October 6, 1959, when he stated that he had not
offered anyone money to testify falsely in the case; and (6) at
various times attempted to influence and tamper with witnesses
subpoenaed in the case.

The Commission carefully avoided saying anything that might
disclose which or how many of these charges it found to be true.
The order states only that respondent was “guilty of improper
and wrongful conduct, well within the specifications remaining
before us”. This falls somewhat short of a finding that he had
committed each and all of the six alleged acts of misconduct.
“Within” means encompassed by or inside the limits of, and the
quoted excerpt from the order cannot fairly be construed as any-
thing more than a finding that respondent was guilty of one or
more of the charges. The majority seem to reason that the
Commission found there was substance to the charges, but there
is no recital in the order to that effect. It states that the evi-

1, See McGinnis and Temple, Administrative Agencies Should Tell Us Why.
24 Tex. Bar Jour. 211; Davis, Administrative Law, Vol. 2, page 444, Sec. 16.05.

300

dence left no doubt “as to the substance of the issues”. This is
simply another way of saying that the members of the Commis-
sion understood the real nature of the questions they were re-
quired to decide. “Issue” means point or question in controversy,
and a statement that the Commission was satisfied as to the
substance of the issues is not a finding that all six charges made
against respondent are true.

Recitals of this character should not be given a strained and
unnatural construction when the language could have been and
probably was used by the administrative body in an entirely
different sense. Under the majority holding, an administrative
agency will no longer be required to face squarely the issues
presented for determination, and a party who is prejudiced by
administrative action cannot be assured of fair and adequate
appellate review. If each member of the Commission concludes
that a different specification is true, they will be free to decide
that the accused was “guilty of improper and wrongful conduct
well within the specifications” and should be suspended even
though no two members can agree that even one of the charges
is true. In a case where one of two opposing parties is entitled
to administrative action under the law if Facts A, B, and C are
established, there may be allegations and substantial evidence
to support all three of such facts. If the agency finds only two
of the essential facts but decides to grant the relief sought, the
order can simply recite that the moving party has established
“facts well within the allegations’. On appeal the order would
necessarily be upheld on the theory that all three facts had been
found, although that is not true and under the law the order
should be set aside. In my opinion, the construction given by
the majority to the order in this case defeats the purpose of
the Legislature in requiring specific findings. I would affirm
the judgment of the Court of Civil Appeals.

CHIEF JUSTICE CALVERT and JUSTICE SMITH join in
the dissent.

Opinion delivered January 31, 1962.

30:

rad

Ex Parte RUFUS LINDLEY

No, A-8708. Decided January 24, 1962
Rehearing Denied March 14, 1962
354 S.W. 2d 364

CHIEF JUSTICE CALVERT and JUSTICE GRIFFIN
dissented.

Joe N. Chapman, Sulphur Springs, for relator.

Woodrow Edwards, Mt. Vernon, Howard Smith, Sulphur
Springs, for appellee.

ASSOCIATE JUSTICE JOE GREENHILL delivered the
opinion of the Court.

Rufus Lindley was the temporary administrator of an estate.
The probate court which had appointed him entered an order
removing him and appointing another in his place. The order
directed Lindley to turn over-the estate to his successor. He
declined to do so, appealed to the district court, and posted bond.
It was his contention that upon the appeal and the posting of
pond, the order of the probate court was vacated and superseded.
The probate court disagreed. Upon Lindley’s refusal to comply
with the order, he was held to be in contempt of court. Hence
this habeas corpus proceeding. The question here is whether Lind-
ley’s appeal did supersede or vacate the order removing him. If
it did, the probate court was without power to adjudge him in
contempt.

The pertinent facts, as we understand them from the briefs
and oral argument, are these: Sallie Lindley was the aged
mother of Rufus Lindley and the grandmother of J. G. Lindley
and Juanita Lindley Irons. Sallie Lindley died, and the grand-
children (who were adults) presented her will for probate. Rufus
Lindley was dissatisfied with his mother’s will. (He was left
$1.00.) So he and others contested the will. Meanwhile, the
probate court appointed Rufus temporary administrator (with
limited powers) of his mother’s estate.

Sallie Lindley’s will was admitted to probate. Rufus ap-
pealed. Upon the will contest in the district court, the jury
was unable to agree on the issues of testamentary capacity and
undue influence. The contest ended in a mistrial.

The grandchildren thereupon requested the probate court

308

to remove Rufus as temporary administrator. The probate court
did remove Rufus for three reasons: (1) he had failed to file
an inventory and appraisement within 60 days; (2) he had failed
to file an annual account; and (3) it would be to the best interest
of the estate if a disinterested person, one not engaged in the
will contest, were temporary administrator.

In the same order, the court appointed H. J. Mahaffey tem-
porary administrator, again with limited powers of collecting
certain moneys due the estate, paying its operating expenses,
renting properties, and doing other acts necessary to preserve
the estate. The order also directed Rufus to turn over the records
and assets of the estate and to file an accounting.

Rufus excepted to the order and gave notice of appeal to the
district court. The court fixed his bond at $1,000. Pursuant
to Rule 332 of the Texas Rules of Civil Procedure, the conditions
of the bond were that Rufus Lindley “shall prosecute said appeal
to effect, and perform the decision, orders, decree or judgment
which the District Court shall make thereon in case the cause
shall be decided against him”.

HT Notwithstanding the notice of appeal and the posting of the
bond, the probate court directed Rufus to comply with his order
to turn over the estate to Mahaffey. As stated, he refused. After
notice and hearing, Rufus was held in contempt and this habeas
corpus proceeding followed.

Section 28 of the Texas Probate Code begins: “Any person
who may consider himself aggrieved by any decision, order,
decree or judgment of the court shall have the right to appeal
therefrom to the district court of the county.”

HE Unquestionably, therefore, Rufus had the right to appeal
his removal. The question is whether he has the right to con-
tinue to act pending the appeal. Section 28 continues:

“Pending appeals from orders or judgments appointing
administrators or guardians or temporary administrators * * *
the appointees shall continue to act as such and shall continue
the prosecution of any suits then pending * * *. If on appeal
from the county court, a different administrator or guardian
is appointed, he shall be substituted in such suits.”

If this portion of Section 28 is viewed from the standpoint
of an original appointment of a temporary administrator, it is

506

clear that Section 28 means that the appointment shall not be
superseded on appeal. It states that “pending appeals * * * the
appointee[s] shall continue to act as such * * * .” There is good
reason why this order should not be superseded: if the court
has appointed a temporary administrator and exception is taken
to the appointment, the court would be left with no temporary
administrator if the appointment were appealed and superseded.

I The statute does not purport specifically to deal with the
removal of a temporary administrator and the appointment of
a successor. Did the Legislature intend that Section 28 have
two different applications: (1) that an order originally appoint-
ing a temporary administrator may not be superseded, but (2)
an order removing him and appointing another may be super-
seded and held for naught pending appeal? We think not.

Counsel for Rufus Lindley argues forcefully that where
Section 28 says “pending appeals * * * the appointee[s] shall
continue to act,” it must mean here that the original appointee
shall continue to act because since the successor trustee has not
yet acted, he could not “continue to act”. The argument has
logic. It and the fact that the bond is worded like a supersedeas
bond caused us to set this case down for oral argument. But we
have concluded that it was the legislative intent that the order
removing Rufus Lindley and appointing a successor was not sub-
ject to being vacated and superseded by appeal. This is consistent
with the directive in Section 28 that the order originally ap-
pointing a temporary administrator shall not be superseded
(“he shall continue to act upon appeal’), and it is in harmony
with other general policies fixed by the Legislature with regard
to the probate court and its relationship to temporary adminis-
trators.

As we view these statutes, we conclude that it is the general
legislative intent that the temporary administrator is but an
officer or agent of the court to assist the court in the temporary
administration of estates. Thus, in Section 181 of the Probate
Code, the court is authorized to appoint a temporary administrator
whenever it appears to the court that one is necessary. He gives
the appointee such limited powers as may be required. Subsection
(c) of that Section provides that the order making the appoint-
ment shall continue “for such period of time as the court shall
deem in the best interest of the estate’; or until the appointment
is made permanent. This evidences an intent that the court shall
have control over the appointment and the tenure of a tem-
porary administrator.

305

Section 138 also evidences a general intent that the probate
court should have the power to control the temporary admin-
istration of estates and the temporary administrator that he
appoints. That section says that the temporary administrators
shall “have and exercise only such rights and powers as are
specifically expressed in the order of the court appointing them
* * & Any acts performed by temporary administrators that are
not so expressly authorized shall be void.”

HI Thus the temporary administrator is a creature of the
statutes with only such limited powers as the court deems ueces-
sary. His powers are shaped by the probate court to fit the
needs of each particular case. He has no vested interest or right
in the position. His principal object is to preserve the estate until
it can pass into the hands of a person fully authorized to admin-
ister it for the benefit of creditors, heirs, devisees and legatees.
Dull v. Drake, 68 Texas 205, 4 S.W. 864 (1887); Fenimore v.
Youngs, 119 Texas 159, 26 S.W. 2d 195 (1980). As we read the
statutes, the policy of giving the probate court power to control
estates and the administrator during a temporary administration
outweighs the asserted right of a temporary administrator to
maintain himself in office during the appeal of an order removing
him for cause and appointing his successor. Our conclusion is
that “the appointee” who shall continue to act pending appeal
is the appointee, whether original or subsequent, who is the cur-
rent choice of the probate court.

There is language in Crouch v. Stanley, 348 S.W. 2d 543
(Texas Civ. App. 1961) which would indicate a contrary con-
clusion. That case did not reach this court, and we are not per-
suaded by that opinion. Any language in the Crouch opinion
contrary to this opinion is disapproved.

Rufus Lindley is remanded to the sheriff of Hopkins County.
Opinion delivered January 24, 1962.

CHIEF JUSTICE CALVERT and ASSOCIATE JUSTICE
GRIFFIN dissenting.

306

W. M. SHUMARD, Relator
v.
WILLIAM SCANLAN, DISTRICT JUDGE, ET AL, Respondents

No, 38-8868. Decided May 81, 1961
846 S.W. 2d 595

ASSOCIATE JUSTICE GRIFFIN dissented.
Peter J. La Valle, Texas City, for relator.

Will Wilson, Atty. Gen., Robert A. Rowland, Asst. Atty. Gen.,
for respondents.

STEAKLEY, JUSTICE.

Relator is W. M. Shumard, who is a defendant in a suit num-
bered 36571-A, styled The State of Texas v. Bell Loan Company,
et al, pending in the 107th District Court of Cameron County,
Texas. He was the subject of a subpoena duces tecum command-
ing him to appear on March 28, 1961, for purposes of taking his
deposition in the pending case. The commission for taking the
deposition was issued pursuant to Rules 188 and 199, Texas
Rules of Civil Procedure.

On this same date of March 28, the following motion was filed
in the pending suit:

“MOTION
“TO THE HONORABLE JUDGE OF THIS COURT:
NOW COMES PETE LA VALLE, Attorney, for the De-

(3

fendants, Bell Loan Company and W. M. Shumard, in the
above styled and numbered cause and makes this his applica~
tion for a continuance herein for the reason that he is a
member of the House of Representatives of the 57th Legis-
lature of the State of Texas, and is in actual attendance at
said Legislative Session. That his presence at the taking of
any deposition herein and his presence in this cause, is neces-
sary for a fair and proper trial of this cause.

WHEREFORE, Defendants pray the Court to continue
this cause until after the adjournment of the Legislature of
the State of Texas, as provided by law.

/s/_ Pete La Valle
Pete La Valle, Attorney for Defendants.

THE STATE OF TEXAS
COUNTY OF TRAVIS

BEFORE ME, the undersigned authority, on this day per-
sonally appeared Pete La Valle, who on oath stated that he
is attorney for Defendants in the above styled and numbered
cause, and that he is fully qualified and authorized to make
this affidavit, and that the foregoing plea and every state-
ment and allegation thereof are true.

/s/__Pete La Valle
Pete La Valle

SUBSCRIBED AND SWORN TO before me this the 28th
day of March, 1961.

/s/_O. R. KINSER

Notary Public in and for Travis
County, Texas.”

Honorable William Scanlan, Presiding Judge of the 107th
District Court of Cameron County, set the motion for hearing
on April 7, 1961. Mr. La Valle was not present on this date for
hearing of the motion, but was in attendance at the session of
the House of Representatives of the Texas Legislature. There-
after the Presiding Judge entered the following order:

“ORDER OF THE COURT
“On the 7th day of April, 1961, came on to be heard the

508

Motion of Peter J. La Valle, Attorney for Defendant W. M.
Shumard, for a continuance of the Deposition of Defendant
W. M. Shumard.

“The Court proceeded to hear said Motion and consider
the argument and authorities submitted by both Plaintiff and
Defendant and the pleadings filed herein, and it appearing
to the Court that the Clerk of this Court upon request of the
Plaintiff issued a Commission to take the oral deposition of
W. M. Shumard on the 28th day of March, 1961, at 10:00
o’clock A.M., in the office of McAtee, Boland & Fridge, Re-
porters, 986 Bankers Mortgage Building, Houston, Texas,
that Mrs. Jeanne M. Wagner, Notary Public, issued a Subpoena
Duces Tecum under authority of said Commission, which
was duly served on Defendant W. M. Shumard and that Mo-
tion of Intention to Take the Oral Deposition of W. M.
Shumard was sent to Mr. J. E. Winfree, Attorney of Record
for W. M. Shumard, by certified mail on the 15th day of March
1961, and received by Mr. Winfree on the 16th day of March,
1961, and it further appearing that on March 28, 1961, there
was filed, by Peter J. La Valle, a Member of the House of
Representatives of the 57th Legislature of the State of Texas,
a Motion for Legislative Continuance, accompanied by an
affidavit that he is the Attorney for Defendant, W. M. Shu-
mard. The Court thereupon found that the Motion for Con-
tinuance should be denied.

“Tt is, therefore, ORDERED that the Defendant, W. M.
Shumard, with the records listed in the Subpoena Duces Tecum
served him previously, appear at the offices of McAtee, Boland
& Fridge, 936 Bankers Mortgage Building, Houston, Texas,
at 9:00 o’clock A.M., on the 22nd day of April, 1961, for the
purpose of having his oral deposition taken pursuant to Com-
mission duly issued by the Clerk of this Court.

“To which Order Defendant duly excepted.
“Signed for entry this 21st day of April, 1961.

/8/ Wm. Scanlan
JUDGE PRESIDING.”

It is to be noted that the Presiding Judge considered the
motion filed by Mr. La Valle as an application for a continu-
ance of the deposition of the relator and not as a motion for a
continuance of the cause. We do not construe the order of the

Se

Presiding Judge as purporting to deny, or as passing on, the
matter of a continuance of the trial of the cause.

Following entry of the above order by the Presiding Judge,
the Petition for Writs of Mandamus and Prohibition was filed
in this Court on the same date, April 21. We ordered the Petition
filed and stayed the taking of the deposition of relator until this
cause could be determined.

The specific prayer of the Petition is that the respondents
(who are the Presiding Judge, the Assistant Attorney General
handling the case for the State, and the Court Reporter acting
under the deposition commission) “be prohibited from continu-
ing with their efforts to take the deposition of W. M. Shumard
by virtue of the commission now oittstanding, and that the Hon-
orable William Scanlan, Acting Judge of the 107th District Court,
be commanded to instruct the Clerk of the 107th District Court
to recall such commission, and that he be further commanded
to enter an order quashing such commission.” There is also an
alternative prayer that the Presiding Judge “be commanded
to enter an order continuing the cause until thirty days past
the adjournment of the Legislature of the State of Texas”; we
do not, however, consider this question to be before us since, as
pointed out above, the Presiding Judge did not pass on this
matter.

Our question, then, is whether it was the intention of the
Legislature to include the taking of a deposition in a pending
suit in the mandatory continuance provisions of Article 2168a,
Vernon’s Texas Civil Statutes, which reads as follows:

“In all suits, either civil or criminal, or in matters of
probate, pending in any court of this State at any time within
thirty (30) days of a date when the Legislature is to be in
Session, or at any time the Legislature is in Session, it shall
be mandatory that the court continue such cause if it shall
appear to the court, by affidavit, that any party applying for
such continuance, or any attorney for any party to such cause,
is a member of either branch of the Legislature, and will be
or is in actual attendance on a Session of the same. Where
a party to any cause is a Member of the Legislature, his affi-
davit need not be corroborated. On the filing of such affidavit,
the court shall continue the cause until thirty (30) days after
the adjournment of the Legislature and such affidavit shall
be proof of the necessity for such continuance, and such con-
tinuance shall be deemed one of right and shall not be charged

50

against the party receiving such continuance upon any subse-
quent application for continuance. It is hereby declared to
be the intention of the Legislature that the provisions of this
Section shall be deemed mandatory and not discretionary.”
Acts 1929, 41st Leg., p. 17, ch. 7, Sec. 1, as amended Acts
1941, 47th Leg., p. 69, ch. 56, Sec. 1; Acts 1949, Bist Leg.,
p. 1111, ch. 569, Sec. 1.

We regard the decision and rationale of this Court in Ramsey
v. Gardner, 154 Texas 457, 279 S.W. 2d 584, as decisive of the
question before us. This Court there held that a proceeding to
perpetuate testimony under Rule 187, Texas Rules of Civil Pro-
cedure, is not subject to the mandatory continuance provisions
of Article 2168a. It was pointed out in the opinion that Rule
187 contains “no requirement of a hearing or order by the trial
court prior to the issuance of the commission”; that “The con-
tinuance of a cause usually means the postponement of the trial
of a case”; that “It is clear to us that the effect of the statute
is to require that the trial of an action or matter in probate
be continued when the other requirements are satisfied’; and,
finally, that “The statute is mandatory and the intention of
the Legislature and the effect of the Act are clearly revealed
by its provisions. We would not, therefore, be justified in extend-
ing the Act to situations which do not come within its terms.”

Three of the members of this Court dissented in Ramsey and
in their dissenting opinion pointed out that “The majority applies
Article 2168a and our corresponding Rule 254 only to bring
about a postponement of the trial of a cause and not to postpone
any preliminary or ancillary proceeding.”

The only difference between the issue drawn in Ramsey and
here is that Rule 187 authorizes the deposition procedure prior
to the institution of the suit, whereas the deposition here is in
connection with a pending suit to which Rules 188 and 199
apply. The critical question, however, is the same, namely, whether
the language in Article 2168a “In all suits, either civil or criminal,
* * * it shall be mandatory that the court continue such cause * * *
that any party applying for such continuance, or any attorney
for any party to such cause * * *, On the filing of such affidavit,
the court shall continue the cause, * * *? (emphasis added)
manifests the legislative intent that the mandatory provisions
of the Act apply only to a continuance of the trial of a cause.
It was held in Ramsey that it does so, and it is so held here; we
cannot enlarge upon the terms of the Act to include the taking
of a deposition in a pending cause just as this Court in Ramsey

ST

could not do so with reference to the taking of a deposition to
perpetuate testimony in anticipation of a pending cause.

We are fully aware of the public purpose represented by the
enactment of Article 2168a; namely, that members of the Legis-
lature will not be interrupted in the performance of their official
duties while in session. It seems clear to us, however, that the
Act nowhere manifests an intention by the Legislature to include
the taking of a deposition in a pending suit within its mandatory
continuance provisions.

In view of our holding that the taking of a deposition is not
within the purview of Article 2168a, it becomes unnecessary for
us to consider the further contentions of respondents that Mr.
La Valle was not attorney for the relator as contemplated by
the Act; and that Article 2168a is unconstitutional as invading
the powers of the judiciary as has been held by the courts of
some states in passing upon the validity of similar statutes.

The Petition for Writs of Mandamus and Prohibition is
denied, and the temporary writ of prohibition heretofore issued
is dissolved. The costs are taxed against relator.

Opinion delivered May 31, 1961.
GRIFFIN, Associate Justice, dissenting.
I respectfully dissent.

The majority opinion offers no protection to a member of
the Legislature from interference with his duties as a lawmaker.
The majority holding is an extension of Ramsey v. Gardner, 154
Texas 457, 279 S.W. 2d 584, so as to further restrict the mean-
ing of “cause”, as used in Article 2168a, Vernon’s Annotated
Texas Civil Statutes, to “trial”. The taking of depositions is a
very necessary and usual part of a trial.

I adopt herein my dissent in the Ramsey case, supra.

312 |

Emit Knutson, Petitioner
v.
SHELDON RIPSON ET AL, Respondents

No, A-8485. Decided January 17, 1962
Rehearing Denied March 21, 1962
854 S.W. 2d 575

Allen, Allen & Reavis, Perryton, for petitioner.

Lemon, Close & Atkinson, Perryton, William Norton, Lowden,
Iowa, for respondents.

ASSOCIATE JUSTICE CULVER delivered the opinion of
the Court.

Petitioner, Knutson, brought this suit seeking damages for
the breach of a contract whereby Knutson agreed to sell, and
the respondents, Ripson, Norton and House, agreed to buy ap-
proximately 1200 head of cattle. To the following Special Issue
“Do you find from a preponderance of the evidence that the
liability, if any, of the defendants under the contract in question,
was not settled and discharged by Emil Knutson by his accept-
ance of the checks delivered to him by defendants on November
11, 1959?” the jury answered: “It was settled and discharged.”

a8

The trial court thereupon entered a judgment for defendant
that plaintiff take nothing. On appeal, 346 S.W. 2d 424, this
judgment was reversed and the cause remanded for a new trial.
Both Knutson and Ripson et al. bring applications for writs of
error praying that the judgment of the Court of Civil Appeals
be reversed and rendered in their favor.

Knutson contends that there is no evidence to support the
finding of the jury in answer to the foregoing special issue.

The written contract between the parties provided for the
purchase and sale of some 1200 cattle at a stipulated price per
pound. The cattle were to be delivered at the option of the pur-
chasers between August 1 and November 15, 1959. The contract
further provided that Ripson and his associates would deposit
with Knutson the sum of $18,000.00 “as escrow” or “forfeit
money”, which figured $15.00 per head. Three separate lots were
delivered on different occasions and settlement made on each
delivery. On those occasions Knutson allowed to the purchasers
credit for $15.00 per head and deducted those sums from the
forfeit money.

Purchasers had requested that half of the steers totalling
700 be delivered on September 23, but Knutson delivered only
282 steers giving as his reason that he thought Ripson was un-
reasonable in making that request and “they were not fat enough
for me.” At the time of the last delivery on November 11, Rip-
son refused to take more of the steers than had been delivered
to him on the last occasion. Whereupon Knutson offered to sell
the remainder to him at a reduced price, which offer was rejected.

Thereafter the parties proceeded to the bank where checks
were given to Knutson for the 232 head so delivered. In this
transaction Knutson gave Ripson credit for some $800.00 that
had been paid to him in error on a former delivery and also
eredited Ripson with the entire balance of the forfeit money.
Admittedly the check given by Ripson did not contain any nota-
tion to the effect that it was in full settlement, nor was anything
said to that effect by any of the parties. However, under all the
facts and circumstances we cannot say that the Court of Civil
Appeals was in error in holding that there was some evidence
to warrant a finding of fact that the parties had intended to
make a settlement of the matter in their last transaction, or that
Knutson Jed Ripson to believe that by the acceptance of the
checks the matters in controversy would be settled.

5.

Hl The Court of Civil Appeals further held in its remand of
the case that the issue as submitted called for the jury to make
a finding upon a question of law rather than on a question of
fact and on that point we are also of the opinion that the Court
of Civil Appeals did not err. See Burgess et al. v. Sylvester,
143 Texas 25, 182 S.W. 2d 858; Kemper v. Police & Firemen’s
Ins. Ass’n., 48 S.W. 2d 254, Com. App.; Hough v. Grapotte, 127
Texas 144, 90 S.W. 2d 1090.

Ripson, in support of his contention that the issue properly
submits a fact question and not one of law, cites Root & Fehl
v. Murray Tool Co., 26 S.W. 2d 189, Com. App., where the issue
was submitted as follows:

“On October 14, 1926, when the defendants delivered a
check of $254.71, was it agreed between the parties that this
would be in full satisfaction of all claims and controversies,
if any, theretofore existing between the parties?”

That issue asked for ‘a finding as to whether or not the parties
made an agreement, which is an issue of fact; while the one in
the case before us inquires as to the effect of the acceptance of the
checks upon the contract liability of the defendants, which is a
question of law. Therein lies the distinction.

The judgment of the Court of Civil Appeals is affirmed.
Opinion delivered January 17, 1962.
Le

THE STATE OF CALIFORNIA DEPARTMENT OF MENTAL HYGIENE,
Petitioner
v.
BANK OF THE SOUTHWEST NATIONAL ASSOCIATION ET AL,
Respondents
No. A-8640. Decided February 21, 1962

Rehearing Denied March 21, 1962
854 S.W. 2d 576

315

Stanley Mosk, Atty. Gen., Sacramento, Cal., Hlizabeth Palmer,
Deputy Attorney General, Dillingham, Schleider & Lewis (John
S. Brunson, Houston, with firm), Sam L. Sterrett, Jr., Houston,
for petitioner.

Baker, Botts, Andrews & Shepherd, Houston, (Wm. R. Choate,
Houston, with firm), for respondents.

SC

ASSOCIATE JUSTICE NORVELL delivered opinion of the
Court.

This is a suit to recover moneys expended in caring for the
beneficiary of a support trust. The case turns upon the construc-
tion of the trust instrument. The State of California Department
of Mental Hygiene sued the Bank of the Southwest, as trustee,
and the heirs of Henrietta Cargill Adkins, a beneficiary of the
trust, claiming some $5,000 was due the department under the
terms of a testamentary trust established by Ennis Cargill. The
trial court rendered a summary judgment that plaintiff take
nothing and the Court of Civil Appeals has affirmed. 348 S.W.
2d 731.

Ennis Cargill died testate on November 26, 1988. His will
created a testamentary trust for the benefit of his two daughters,
Ruby Tennie Cargill and Henrietta Cargill Adkins. Pertinent
portions of the trust instrument are set forth in the opinion of
the Court of Civil Appeals. The provisions having a particular
bearing upon our holdings are as follows:

“(b) My daughter Ruby Tennie Cargill (born 4 Dec.
1898) is at the time of the execution of this will confined in a
state hospital of the State of California; * * * having been
committed to said institution on December 22, 1932. I have
been called upon to make payments in amounts not exceeding
$25. per month for the purpose of maintaining her in said
institution and defraying additional incidental expenses. So
long as my said daughter is confined in said institution, or
in any other institution, I direct the Trustee to pay to the
proper authorities of such institution for the use and benefit
of my said daughter and to defray the expense of her mainte-
nance therein a like sum of money each month, unless a greater
or lesser amount is required, in which event the Trustee shall
pay the amount so required, provided, however, that in no event
shall the amounts so paid exceed the maximum amount re-
quired by such institution from time to time for persons con-
fined under such circumstances and for reasons similar to
those which brought about the commitment of my said daugh-
ter. In any event the amounts so to be paid and expended by
the Trustee shall be determined in its unlimited judgment and
discretion taking into consideration all facts and circumstances
attendant upon my said daughter’s condition and requirements.
In lieu of payments to said institution the Trustee may make
payments in like amounts to the mother of my said daughter
in reimbursement of sums paid out by her for such purposes.

Ce ee

“In the event that my said daughter has been released from
said institution prior to my death, or should she be released
by due, proper and legal proceedings after my death, by reason
of the cessation of the cause of her commitment thereto, then
and in either of such events, I direct that the Trustee shall
pay to her out of the net income $150. per month for and dur-
ing the term of her natural life, or until such time as she
may again be committed to the same or a similar institution,
in which event the provisions set forth in the next preceding
paragraph of this sub-paragraph (2) shall become applic-
able. * * *

“(d) When my daughter Henrietta Cargill reaches the
age of 40 years, or upon her death prior thereto, if my daugh-
ter Ruby Tennie Cargill, be then living, the Trustee shall,
subject to the further provisions hereof, set apart and hold
under the further provisons hereof such portion of the Trust
Estate as shall at time thereof yield at the then reasonable
rate of return on investments the sum of $1800. per annum
net over and above the then reasonable expenses of admin-
istering said fund hereunder, including the compensation of
the Trustee. Such fund so set apart shall be held during the
natural life of my daughter, Ruby Tennie Cargill, and the net
income therefrom shall be utilized, expended and paid to or
for her as provided in sub-paragraph (b) above. The balance
of the Trust Estate then remaining, or if my daughter Ruby
Tennie Cargill be then dead, the entire Trust Estate shall
be paid and delivered, free of the Trust, to my daughter Hen-
rietta Cargill, and the Trust shall terminate with respect
thereto. Upon the death of my daughter Ruby Tennie Cargill,
the portion of the Trust Estate set apart and held for her as
above provided shall be paid and delivered, free of the Trust,
to my daughter, Henrietta Cargill, and the Trust shall termi-
nate with respect thereto. * * *

“(g) * * * During the time that my daughter Ruby Tennie
Cargill is confined in an institution, or thereafter, the Trustee
may make from time to time disbursements from the excess
net income and/or principal of the Trust Estate, or from the
portion set apart for her, as above provided, to meet any
emergency or necessity arising, in like manner and for like
purposes as specified in the next preceding paragraph, the
amount, time, and desirability of and the necessity for such
disbursements to be determined wholly in the discretion of
the Trustee.” (Italics added.)

ee

Henrietta Cargill Adkins became forty years of age in 1952,
whereupon the trustee partitioned the estate in accordance with
the provisions of the trust instrument. A portion calculated to
yield a net sum of $1800 per year was retained for the benefit
of Ruby Tennie Cargill, and the balance distributed to Henrietta
Cargill Adkins free of trust. The latter died in 1956, and her
surviving husband and children are respondents here.

Ruby Tennie Cargill is incurably insane and has been a patient
in the state hospitals of California at all times material to this
suit. Upon the testator’s death in 1988, the trustee made pay-
ments of $25.00 monthly to Mrs. Ruby Cargill, mother of Ruby
Tennie Cargill, as reimbursement for payments made by her
to the California agency. When Mrs. Cargill died in 1952, the
trustee sent the $25.00 payments directly to petitioner. These
monthly payments continued through 1956.

In February, 1957, petitioner wrote the trustee that the cur-
rent charge for care and treatment of Ruby Tennie Cargill was
$134.00 per month. Petitioner also demanded $5100.00 as re-
imbursement for past support, claiming that this sum, together
with the $25.00 per month which had been paid represented
the reasonable and actual expense of maintaining Ruby Tennie
Cargill from 1952 to 1957. This letter was the first advice which
the trustee received that a charge in excess of $25.00 per month
was due and payable for the support of Ruby Tennie Cargill.

Shortly after receipt of this letter, the trustee commenced
making payments of $134.00 per month. It refused however to
pay the additional $5100.00 demanded for back support and that
sum is the subject matter of this litigation.t

HT In affirming the trial court’s summary judgment against
petitioner, the Court of Civil Appeals held that under the trust
instrument, it was necessary for petitioner to demand in advance
an increase in support payments before the trustee would be
liable therefor. Section (b) of the trust instrument, above quoted,
directs the trustee to pay $25.00 per month to petitioner “unless
a greater or lesser amount is required, in which event the trustee
shall pay the amount so required * * *.”

HI Petitioner urges that the word “required”, as used by this

1. Since 1957, the expense of maintaining Ruby Tennie Cargill has increased
from $134.00 monthly to $178.00 and later to $188.00 per month. The trustee has
made payments accordingly. There is no dispute as to expenses after February
of 1957, as the trustee has paid all sums requested by petitioner.

Ss

testator, should be construed as synonymous with “needed”,
rather than with “demanded”, as-held by the courts below. It is
said that the trust instrument requires the trustee to pay all
reasonable and necessary support charges regardless of whether
or not there was an advance demand therefor. In support of this
contention, petitioner cites a number of cases in which the courts
have defined “required” to mean “needed” under various factual
situations. Boyce v. Stringfellow, Texas Civ. App., 114 S8.W.
652, no wr. hist., and cases cited therein; Hull v. Holloway, Sup.
Ct. of Errors, Conn., 20 Atl. 445; In Re Martin’s Will, 269
N.Y. 305, 199 N.E. 491.

There are also cases which announce the definition sought
by respondents. See Bain v. Coats, Tex. Com. App., 244 S.W.
130. Webster’s Third New International Dictionary gives defini-
tions of the word “require” which support both positions. The
only conclusion to be drawn from these authorities is the oft-
repeated truism that words are simply implements of communica-
tion, and imperfect ones at that. Oftentimes they cannot be as-
signed a rigid meaning, inherent in themselves. Rather, their
meaning turns upon use, adaptation and context as they are
employed to fit various and varying situations?

Petitioner contends that to equate “required” with “demanded”
would violate the manifest intentions of the testator in that it
would eliminate all discretionary authority of the trustee and
reduce the trustee to a mere bookkeeper or disbursing agent.
It is said that such a construction would relieve the trustee of
its duty to look after the welfare and needs of the beneficiary,
Ruby Tennie Cargill. This argument is based upon the proposi-
tion that the two possible definitions of “required” are mutually
exclusive. Thus, petitioner says that if the trustee need not pay
additional support money unless such is demanded, he is divested
of all discretion in seeing that the beneficiary’s needs are met.

In the event of a demand for increased support payments, it
would seem that under the provisions of the will the trustee
would have the right to determine whether such increases were
necessary to the well-being of the beneficiary before complying
with the request. Indeed, the testator gave one guide to the
trustee in making such a determination by stating in the trust

2, The well-known dictum of Mr, Justice Holmes seems particularly appro-
priate here:

“Words do not always mean the same thing. A ‘word’ is not a crystal, trans-
parent and unchanged: it is the skin of a living thought and may vary greatly
in color and content according to the circumstances in which it is used- Towne
v. Hisner, 245 U.S. 418, 38 S.Ct. 158, 62 L. ed. 872.”

50

instrument that “in no event shall the amounts so paid exceed
the maximum amount required by such institution from time to
time for persons confined under such circumstances and for
reasons similar to those which brought about the commitment
of my said daughter.” We might add that the testator’s use of
the word “required” in the phrase, “maximum amount required
by such institution”, is clearly used as being synonymous with
“demanded” and is referable to a uniform charge set by the
institution. To equate “required” with “needed” in this particular
phrase would mean an instruction to the trustee to see that
the beneficiary, Ruby Tennie Cargill, needs no more than does
any other patient similarly committed. We cannot ascribe such
a highly unlikely intention to this testator.

Hi Moreover, the trust instrument itself recites that the testator
had been “called upon to make payments in amounts not ea-
ceeding $25.00 per month”, and then directs the trustee to pay
“a like sum of money each month, unless a greater or lesser sum
is required”. The testator obviously believed, and rightfully so,
that his daughter was in the hands of a competent, efficient
state hospital. In a normal, business-like manner he had been
“called upon” to pay a stipulated monthly sum to this hospital
and directed his trustee to do likewise unless more money was
“required”. We do not believe that the testator intended for
the trustee to make periodic inquiries into the administration of
this public hospital to see if the latter should be charging higher
fees for its services. It seems the testator, and thereafter the
trustee, could reasonably assume that petitioner was taking care
of the beneficiary to the best of its capabilities at all times and
that if it needed additional funds it would make a request there-
for as it eventually did. Clearly the payment of this retroactive
demand would not have any effect on the care already received
by the beneficiary prior to 1957.

When we examine the circumstances surrounding the execu-
tion of the trust instrument as evidenced by the recitations ap-
pearing in Mr. Cargill’s will, there are a number of matters that
become reasonably clear. Mr. Cargill was not under the impres-
sion that the meager sum of $25.00 per month was sufficient
to pay all of the actual expenses incident to his daughter’s resi-
dence in the California institution. As he was called upon to
pay only $25.00 per month and directed that after his death
such amount be paid unless more be required, he clearly con-
templated that within prescribed limits the institution should set
the amount to be charged. He plainly provided that the trust

3

which he created should not pay more for his daughter’s care
than was required of others similarly situated.

From these circumstances, it seems clear that the settlor
contemplated that the amount to be paid by the trust should be
determined by the uniform rate set by the institution and de-
manded of those under some legal obligation to support an un-
fortunate residing in the state institution.

A number of factors enter into the rates or charges made
by state and tax-supported institutions of an eleemosynary nature.
In some, all expenses essential to the keep of the inmates is
borne by the state or other governmental organization. In others,
such expenses, theoretically at least, are to be borne by those
legally liable for the support of an inmate, such as the parent or
husband of an unfortunate, provided of course the person so
liable is financially able to bear such burden. In still others, the
expense may be borne in part by the state or some public institu-
tion and part by the family. Cargill may have considered that
$25.00 per month was the family’s share of the expense for keep-
ing his daughter. In all events, even for depression times it would
be incongruous to say, in view of the provisions of the will, that
he considered that the $25.00 monthly payments covered all his
daughter’s needs and that the trustee should, from time to time,
make inquiry and determine if a greater sum was needed. It
appears that prior to his death, he had been making the pay-
ments required of him by the California state department. He
intended that the trust should continue to make these payments
as he had done. The word “required” necessarily referred to some
action in the form of a demand on the part of the California
agency.

It is perhaps in order to point out some distinctions. This is
not a case in which support payments pass directly from a trustee
to a needy beneficiary, nor do we have a situation where the
beneficiary is in the care of a friend or relative who recoups
expenses periodically from the trustee. Admittedly in such cases
the trustee would have a more direct responsibility in caring
for the beneficiary, and it is probable that the support payments
would be more variable in amount and perhaps more irregular
in interval. In the present case, however, the only authority that
could logically determine the amount of funds required for the
beneficiary’s maintenance would be the officers of the mental
hospital. Only they themselves could determine whether or not
the petitioner was demanding enough money for the care of Miss
Cargill in accordance with the policy of the State and the opera-

22

tional methods of the institution. The case of State v. Rubion,
158 Texas 43, 308 S.W. 2d 4, involved a suit by a state hospital
for reimbursement for support of the beneficiary of a trust,
but the rule of that case does not militate against the result we
have reached here. The stated purpose of the trust instrument
in Rubion was “to provide a means of support for my grand-
daughter and adopted daughter, Ella Hansley, insofar as such
estate will permit, and to provide for her both in sickness and
health, using therefor either the income or corpus of such estate,
or both as the exigencies of the situation may require’. This
Court held that the trustee abused his discretion in refusing to
make any provision for the payment of the State’s claim, either
in whole or in part. The ultimate issue in that case, however,
as it is here, was the intent of the testator as reflected in the |
language of the trust instrument. In Rubion, the Court narrowed
the question to whether the testator intended for the trust res
to be used for present support and maintenance of the beneficiary
or whether it was intended that none of it be used until the
beneficiary was discharged from the state hospital. We do not
regard this case as being in point upon the issue of the testator’s
intent insofar as the present trust instrument is concerned.

I Here, as in the Court of Civil Appeals, the petitioner con-
tends that there is a fact issue of fraud in the case. It is con-
tended that the opening sentence of a 1952 letter of information
from the trustee to petitioner misled petitioner’s officers into
believing that the trust instrument provided for a maximum
support payment of $25.00 per month. An allegation raising this
contention is not contained in petitioner’s pleadings and was not
raised in the trial court. The issue cannot be raised for the first
time on appeal.

Our construction of the trust instrument herein set forth
makes it unnecessary to discuss other matters and contentions
contained in the briefs.

The judgment of the Court of Civil Appeals is affirmed.

Opinion delivered February 21, 1962.

82.

ic)

PAN AMERICAN PETROLEUM CORPORATION ET AL, Petitioners

v.
H. L. CAIn, Respondent

No. A-8154, Decided January 17, 1962
Rehearing Denied March 28, 1962
355 S.W. 2d 506

0

SMITH, GRIFFIN, NORVELL and HAMILTON, JUS-
TICES, dissented.

Turner, Rodgers, Winn, Scurlock & Terry, Dallas, L. A.
Thompson, Tulsa, Okla., J. K. Smith, Fort Worth, for Pan Amer-
ican Petroleum Corp.

Morehead, Sharp & Boyd, Plainview, for Mary Jarman et al.
William B. Neely, Midland, for William B. Neely, Trustee, et al.
Fulton, Hancock & McClain, Gilmer, for Leland Fikes.
Klett, Evans, Trout & Jones, Lubbock, for respondent.
JUSTICE WALKER delivered the opinion of the Court.

The controlling question presented by this appeal is whether
the power to lease as reserved in a certain deed conveying an
undivided mineral interest may be exercised by the heirs of the
grantor after the latter’s death. By deed dated May 17, 1987,
James Kiser conveyed to Mrs. Mae Johnston an undivided one-
fourth interest in the minerals in the Northeast Quarter of Sec-
tion 640, Block D, John H. Gibson Surveys in Yoakum County.
Although a printed form was used, the instrument contains the
following typewritten paragraph:

“It is also agreed and understood that the Grantor herein
reserves the right to lease said land without the joinder of
the grantee, he at all times using his best efforts to obtain the
highest lease possible and shall never execute a lease wherein
Jess than the regular one-eighth (1/8) royalty is reserved.”

At the time this deed was executed Skelly Oil Company held
an oil and gas lease on the land which expired by its own terms
on December 24, 1937. While such lease was in force, Mrs. Mae
Johnston conveyed an undivided one-eighth interest in the min-
erals to H. L. Cain, respondent. James Kiser died intestate on
February 19, 1948, and was survived by four daughters who
are his sole heirs. An additional undivided 90-acre interest in
the minerals of the 160 acres, which was owned by James Kiser
when he conveyed to Mrs. Mae Johnston, vested in such heirs
upon his death and was owned by them when they executed four
oil and gas leases on the Jand to Leland Fikes on May 24, 1955.

Hl Petitioners are: (1) Pan American Petroleum Corporation

| 925

and Leland Fikes, the present owners of the four leases; (2)
certain individuals who claim overruling royalties in part of the
land; and (8) the four daughters of James Kiser. They contend
that the four leases cover the undivided one-eighth mineral in-
terest owned by respondent, while the latter insists that his in-
terest in the minerals is not under lease. All parties moved for
summary judgment in the trial court, and the motion of respon-
dent was granted. The Court of Civil Appeals affirmed on the
basis of its conclusion that the power to lease reserved by James
Kiser terminated at his death. 340 S.W. 2d 98. We approve that
holding and affirm the judgment of the Court of Civil Appeals.

The parties as well as the Court of Civil Appeals say that
the power to lease, referred to by some writers as the executive
right, reserved in the deed from James Kiser to Mrs. Mae John-
ston is a power coupled with an interest. It has been so denom-
inated by at least one other Texas court, Superior Oil Co. v.
Stanolind Oil & Gas Co., Texas Civ. App., 230 S.W. 2d 346,
(aff. 150 Texas 317, 240 S.W. 2d 281); Odstrcil v. McGlaun,
Texas Civ. App., 230 S.W. 2d 353, (no writ) ; Allison v. Smith,
Texas Civ. App., 278 S.W. 2d 940, wr. ref. nr.e.; and there can
be no doubt that an interest in land and a power with respect
to another interest in the same land were vested in James Kiser.
It is equally clear, however, that the interest owned by him was
not so related to the power that the latter would, in other types
of transactions, ordinarily be preserved after the death of the
donor or principal. “[T]he interest which can protect a power
after the death of a person who creates it, must be an interest
in the thing itself. In other words, the power must be engrafted
on an estate in the thing.” Hunt v. Rousmanier’s Adm’rs., 8
Wheat. 174, 5 L. Ed. 589. See also Daugherty v. Moon, 59 Texas
897. As pointed out by a number of eminent legal writers, the
executive right reserved to the grantor in a conveyance of an
undivided mineral fee interest is not 2 power coupled with an
interest in that sense, because the grantor has no interest or
estate in the subject or thing on which the power is to be exer-
cised, i.e., the undivided mineral interest conveyed to the grantee.
Walker, Developments in the Law of Oil and Gas in Texas Dur-
ing the War Years—A Resume, 25 Texas Law Rev. 1, 19; Jones,
Problems Presented by the Separation of the Exclusive Leasing
Power from the Ownership of Land, Minerals, or Royalty, Sec-
ond Annual Institute on Oil and Gas Law and Taxation, 271.
See also Meyers, The Effect of the Rule Against Perpetuities
on Perpetual Non-Participating Royalty and Kindred Interests,
32 Texas Law Rev. 369, 395.

526

Mechem suggests that a new nomenclature is needed, because
the one now used by the courts in this field is sadly ambiguous.
He states that the interest of an agent in the execution of a
power may be one of three kinds:

(1) “An interest, not in the thing concerning which the
power is to be exercised, or in the results to flow from its exer-
cise, but merely an interest in being permitted to exercise it in
order to earn his commissions.” This is a mere naked power,
and is revocable at the will of the principal even though such
revocation involves the breach of an agreement not to revoke it.

(2) “An interest, not amounting to a property or estate in
the thing itself, but still an interest in the existence of the power
or authority to act with reference to it, not for the purpose of
earning a commission by the exercise of the power, but because
the agent has parted with value, or incurred liability, or assumed
obligations, at the principal’s request or with his consent, looking
to the exercise of the power as the means of reimbursement,
indemnity or protection.” Although this has been referred to
by the courts as a power coupled with an interest and is not
revocable by act of the principal, it is ordinarily deemed to be
revoked by his death. For purposes of his classification, Mechem
designates the same as a power given as security.

(8) “An interest or estate in the thing itself, concerning
which the power is to be exercised, arising from an assignment,
pledge or lien created by the principal, coupled with which is the
power to deal with the thing itself in order to make the assign-
ment, pledge or lien effectual.” This is the orthodox power cou-
pled with an interest which is generally held to be irrevocable
by the act of the principal or by his death or disability. See
Mechem, Law of Agency, 2nd ed. 1914, Vol. 1, Sec. 570, et seq.,
Sec. 588.

Hi It is clear that James Kiser had more than a mere naked
power. Although he owned no estate in the subject matter on
which the executive right was to operate, the power was reserved
to facilitate the leasing of his interest in the minerals. It was
for the protection or security of such interest that he stipulated
for the power. On the basis of Mechem’s classification, such power
might be regarded as one given by way of security but it is not
coupled with an interest.

We do not mean to suggest that the death of one to whom
an undivided mineral interest is conveyed will necessarily re-

ee 827

voke the executive right reserved to the grantor in the convey-
ance. That question is not presented here, and it perhaps should
not be held that a power given by way of security will always
terminate at the principal’s death. See Mechem, Law of Agency,
2nd ed. 1914, Vol. I, Sec. 658 et seg. The instrument involved
in Drake v. O’Brien, 99 W. Va. 582, 180 S.H. 276, was said to
create a power coupled with an interest which was, in effect, a
grant or lease for mining purposes, and it was held that the
power did not terminate at the death of Mary Gale, one of the
grantors. See also Bonzo v. Nowlin, (Ky. 1955), 285 S.W. 2d
153. Moreover, as pointed out by Professor Meyers in his article
cited above, it is well to recognize the strains produced by at-
tempting to force modern commercial transactions into moulds
that are hundreds of years old.

HH Our question is whether the reserved leasing power may be
‘exercised by the heirs of the grantor after his death. Petitioners
cite the decisions holding that a power coupled with an interest
does not necessarily terminate with the death of the agent. Col-
lins v. Hopkins, 7 Iowa 463; Scott v. Cain, 77 Ga. App. 826,
50 S.E. 2d 99; Todd v. Griffin, 55 Ind. App. 605, 104 N.E. 519;
Lightner’s Appeal, 82 Pa. St. 301; Boatmen’s Bank v. Vandiver,
Mo. App. 281 S.W. 144. In each of these cases the beneficiary
or holder of the power owned an interest in the thing on which
the power was to be exercised, and the courts were concerned
only with whether the power should remain in existence for a
relatively short period after the death of the holder in order
that his estate or the beneficiary might have, recover or enforce
such interest.

II In our opinion the executive right terminates with the death
of the original holder unless there is something to indicate that
the parties intended that the power should survive and be exer-
cised by others. This conclusion finds support in the reasoning
and holdings of courts of other jurisdictions where the precise
question has been considered. In Howard v. Dillard, 198 Okla.
116, 176 P. 2d 500, the instrument provided that the grantor
“shall retain management and control of the minerals and priv-
ileges hereinbefore mentioned, and that he shall have the sole
and exclusive right to lease said lands to any person to whom
lhe may choose and upon such terms and conditions suitable to
him * * *.” It was held that the reserved leasing power was
personal to the grantor and terminated at his death. A number
of years later the same court considered a conveyance in which
the reservation was in favor of the grantor, his heirs, executors,
administrators and assigns. In support of its holding that the

82 ee

power to lease might be exercised by the assignees of the grantor’s
heirs, the court pointed out that “the right was expressly re-
served to the grantor, his heirs, executors, administrators and
assigns as an exclusive right and a proper subject of ownership.
An examination of the mineral deeds * * * show that he clearly
expressed his intention to remain vested with the right to lease,
and that he intended for this right to constitute a proper subject
of ownership with a power of assignment.” Stone v. Texoma
Production Co., Okla., 386 P. 2d 1099. The expressed intention
of the parties was made the basis of a similar holding in Bonzo
v. Nowlin, supra.

So far as we have been able to determine, no court has
adopted a different approach on the problem. In Drake v. O’Brien,
supra, the question of whether the power there granted might be
exercised by the personal representatives or assigns of the orig-
inal parties does not appear to have been raised. We note, how-
ever, that the Restatement abolishes the distinction between
powers coupled with an interest and powers given as security,
and lays down the rule that a power given for security as there
defined is not terminated by the death of the holder unless other-
wise agreed by the parties. Restatement of the Law of Agency,
Secs. 138, 139.

Hi The question did not arise in the Superior Oil Company,
Odstrcil and Allison cases, because the executive right was there
expressly granted or reserved to the heirs and assigns of the
original holder. Petitioners insist that the absence of the words
“heirs and assigns” cannot be material because the reservation
is governed by Article 1291, Vernon’s Ann. Texas Civ. Stat.
It is there provided that “[ejvery estate in lands which shall
thereafter [hereafter] be granted, conveyed or devised to one
although other words heretofore necessary at common law to
transfer an estate in fee simple be not added, shall be deemed
a fee simple, if a less estate be not limited by express words or
do not appear to have been granted, conveyed or devised by con-
struction or operation of law.” We need not determine at this
time whether the statute applies to reservations as well as grants,
conveyances and devises, because it clearly deals only with estates
in land. An estate in land is the degree, quantity, nature and
extent of interest which a person has in real property. See Gibbs
vy. Lester, Comm. App., 41 S.W. 2d 28; 19 Am. Jur. Estates Sec.
12; 81 C. J. S. Estates Sec. 1. The statute can have no application,
therefore, to a grant or reservation of something other than an
interest in land.

eS 329

We have already noted that the executive right reserved by
James Kiser is not a power coupled with an interest, and it is
equally clear that the power to lease is not in itself an interest
in land. It does not entitle the holder, either presently or at any
time in the future, to possession or use of, or any benefit arising
from, the land or any part thereof. As pointed out by the Supreme
Court of Pennsylvania, “a power is an authority given to dis-
pose of real or personal property of which the donor has the
right of disposition. It is not an estate in the property, and its
scope and extent is governed by the instrument creating it.”
Hupp v. Union Coal and Coke Co., 284 Pa. 529, 181 Atl. 364.
See also Pope v. Safe Deposit & Trust Co., 163 Md. 239, 161
Atl. 404, where the court observed that a power retained is not
an estate in the subject matter of the power.

We agree with the Court of Civil Appeals that Article 1291
does not apply to the reservation in this case. Petitioners’ further
argument that Mrs. Mae Johnston and her assigns could never
enjoy the executive right because the same was reserved by
James Kiser assumes that the parties intended for the grantor,
his heirs and assigns, to remain vested with the power to lease
in perpetuity, and that is the question now presented for de-
cision. It also seems clear to us that a grant or reservation of
the executive right is not a covenant, running with the land or
otherwise.

While the children of James Kiser may find it somewhat
more difficult to lease their interest in the minerals if they do
not also have power to lease respondent’s interest, the enjoy-
ment of their interest will not otherwise be affected by loss of
the executive right. Subject only to the relative disadvantage of
their position in the matter of leasing, they may take possession
of, sell or lease such interest, drill for the production of minerals,
and enjoy all of the benefits of ownership as fully and effec-
tively as their father might have during his lifetime. This being
so, we do not think that termination of the power works such a
grave hardship or injustice as to require that the law perpetuate
the same beyond the term agreed upon by the parties.

In the article cited above, Professor Meyers urges the adoption
of some theory that will enable the courts to uphold the executive
right. He points out that full utilization of mineral wealth oc-
curs with exploration and development of the subsurface, and
that full development is rendered more probable when the execu-
tive right remains in the hands of a single person. This argument
has considerable force where the Rule against Perpetuities is

330

concerned, but it does not justify judicial revision of the terms
of a conveyance. The rights of the. party whose mineral interest
is subject to a leasing power held by another must also be con-
sidered, and it is well to remember that the executive right,
even if held to be perpetually separated from ownership of the
interest over which it is to be exercised, will not necessarily re-
main in the hands of a single person.

The conveyance in the present case contains nothing to sug-
gest that the parties intended for the executive right to be exer-
cised by anyone other than James Kiser. No words of inheritance
appear in the reservation, and it was provided that he would
at all times use his best efforts to obtain the highest lease possi-
ble. This latter requirement could not be satisfied by the best
efforts of another, whether heir at law, devisee, assignee or
stranger. We agree with the Court of Civil Appeals that the
power to lease terminated at the death of James Kiser, and it is
unnecessary for us to consider the perpetuities question or the
other points of error brought forward by petitioners.

The judgment of the Court of Civil Appeals is affirmed.
Opinion delivered January 17, 1962.
SMITH, JUSTICE, dissenting.

I respectfully dissent. The Court agrees that Kiser reserved
something more than a mere naked power. Then it narrows the
question to whether this reserved leasing power may be exer-
cised by the heirs of the grantor after his death. I contend that
the reservation of power to lease contained in the deed from
Kiser to Mrs. Johnston amounts in law to a property right which
never at any time passed by the grant, and that when Kiser
died, intestate, this interest in land passed by descent and distri-
bution to his daughters. As I will more specifically discuss later,
the Court seems to base its holding that the power reserved was
personal to Kiser on the proposition that the reservation does
not include the words “heirs and assigns”.

Petitioner, Pan American, claims title under four separate
but identical oil and gas leases, executed by the four daughters
after the death of Kiser, covering the whole of Section 640.
The four daughters received their interest in Section 640 under
the laws of descent and distribution.

The Respondent, Cain, who holds title to 1/8 of the mineral

331

interest purchased by Mrs. Johnston, contends that the leases,
having been executed by parties other than the original holder
of the executive right, have no binding effect on his undivided
1/8 mineral interest. In other words, Cain claims that his min-
eral interest is not leased. The Court of Civil Appeals has held
that the right to lease, unlimited as to time, reserved by Kiser,
terminated upon his death and did not pass by descent and
distribution to his heirs. The Court here, in holding that the
power ‘did not pass to the daughters, lays down the rule that the
reserved executive right terminates with the death of the orig-
inal holder unless there is something to indicate that the parties
intended that the power should survive and be exercised by others.

Cain’s contention is that there was a complete lack of power
in the Kiser daughters to ever execute the leases: (a) because
of the death of Kiser, and (b) because the reservation to Kiser
violated the Rule against Perpetutities, and, also that the power
was improperly exercised.

Pan American, et al., including the Kiser daughters, contend
that the leases they executed were and are valid, and that their
motions for summary judgment instead of Cain’s motion for
summary judgment should have been granted. I agree with Pan

_ American. However, since the Court confines its opinion to the
question of whether or not the power to lease terminated at the
death of Kiser, I shall confine this dissent to that question, and
shall not discuss all the reasons why I think the summary judg-
ment should have been entered in favor of Pan American.

The executive right reserved by Kiser, in his deed to Mrs.
Mae Johnston, to lease the fractional interest therein conveyed
was a property right, an interest in land, appurtenant to the
mineral interest therein conveyed, and for the use and benefit
of the mineral interest retained and owned by Kiser, and as such
passed on his death by descent to his heirs. This property right
was expressly excepted from the grant. The executive right ex-
pressly reserved by Kiser never, at any time, vested in Mrs.
Johnston for the simple reason that property excepted, or the
estate reserved, is never included in the grant. Cockrell v. Texas
Gulf Sulphur Co., 157 Texas 10, 299 S.W. 2d 672.

This Court, as well as the Court of Civil Appeals, apparently
misinterpret the true contention of Pan American when it says
that the executive right reserved by Kiser is a power “coupled
with an interest”. In my opinion, we have here a power “coupled
with an interest” not in the sense discussed by these courts, but

8 ee

in the sense that the power reserved was “engrafted on and was
annexed” to the 1/4 undivided interest conveyed to Mrs. John-
ston. The power was also “annexed” to the remaining 90-acre
interest in the minerals which Kiser retained. In the case of
Hunt v. Rousmanier, 8 Wheat. 174, 5 L. Ed. 589, the Court
speaks in terms of the power being “engrafted on the estate”.
The power “connected with” or “engrafted on” Mrs. Johnston’s
interest in the mineral estate, which was expressly excepted in
the deed to Mrs. Johnston, remained annexed to Kiser’s property
interest upon his death, as well as the Johnston-Cain interest.
Thus, the power and the interest were united in Kiser. The
phrase “coupled with an interest” does not mean an interest
in the exercise of the power. It means, in the sense used here,
that Kiser retained an interest in the property on which the
power was to operate. In the case of Drake v. O’Brien, 99 W. Va.
582, 130 S.E. 276, Sup. Ct. W. Va., 1925, it was held that “the
power is to be construed liberally in favor of the object to be
accomplished”. Although in that case the complete executive rights
were conveyed to the grantees, who had purchased only a one-
half interest in the 1,000 acres of land involved, the principle
is the same where, as here, all of the executive rights have been
reserved by the grantor. In the Drake case the Court said:
« % * The language employed in the Gale deeds aptly fits this
definition.2 By the deed of June 26, 1875, there was conveyed
to the grantees a one-half interest in 1,000 acres of land. Not
only that, but the deed gave the power to take, operate, and
control the entire tract as their own for the production of timber,
coal, and salt, with power to lease the same in their own names
as owners of the entirety. Thus, the grantee had an interest
in every stick of timber, bushel of coal, and barrel of oil under
the 1,000 acres.” The Court, in holding that the power did not
terminate with the death of the grantor, quoted from Perry on
Trusts, Sec. 602h:

“Tt is a universal rule that a power coupled with an interest
is irrevocable. * * * Not even the death or the insanity of the
grantor or donor will annul or suspend its exercise. * * * In
other words, the power is annewed to the property, and is an
irrevocable part of the security, and goes with it.” (Emphasis
added.)

The Court also states:
“Where the power is coupled with an interest so that it
2, “By the phrase ‘coupled with an interest’ is not meant an interest in the

exercise of the power, but an interest i the property on which the power is to
operate.’ (Emphasis added.)

ee 3388

may be exercised in the name and as the act of the donee of
the power, the death of the person who conferred the power
has no effect upon it.” (Emphasis added.)

Although it is unnecessary to the decision, it could be plausibly
(argued that since the power was reserved by Kiser, he conferred
the power upon himself. In other words, Kiser was actually
both the donor and donee. In such a situation, the general rule
announced in the Drake case, and many other cases, that the
power does not terminate at the death of the donor-grantor,
would certainly be applicable.

The majority opinion says: “Our question is whether the
reserved leasing power may be exercised by the heirs of the
grantor after his death.” The Court’s opinion indicates that its
holding that Kiser’s right to lease terminated upon his death,
and, therefore, did not pass by descent and distribution to his
heirs, is based largely on the fact that words of inheritance
were not used in the language of the reservation. The Court
holds that the executive right terminates with the death of the
original holder unless there is something to indicate that the
parties intended that the power should survive and be exercised
by others. The Court then discusses the case of Stone v. Texoma
Production Co., Okla. 886 P. 2d 1099. In that case the only
“something to indicate that the parties intended that the power
should survive and be exercised by others” is the fact that “the
right was expressly reserved to the grantor, his heirs, executors,
administrators and assigns as an exclusive right and a proper
subject of ownership.” (Emphasis added.) The reservation in
the deed in the present case does not contain the underscored
words “his heirs, executors, administrators and assigns”. This
is the only possible difference between the reservation in the
Stone case and the present case. There is nothing about the Stone
case which would lead to the conclusion that the Court based
its holding on the fact that the reservation contained words of
inheritance. It is clear, from the opinion, that the Court in the
Stone case held that the right to lease was reserved to the grantor,
and, therefore, the title to such right did not pass to the grantee.
The Court further held that the reserved executive right was a
proper subject of ownership, and that upon the death of the
grantor the right to lease descended to his heirs and they be-
came vested with a right to assign. It is clear to me that the
words of inheritance contained in the Stone instrument did not
control the Court’s judgment, but rather the controlling factor
was the rule that the executive right or interest reserved or
excepted was a reserved property right which could never pass

88

to the grantee by reason of the deed containing the reservation
or exception. It is well established that an interest or estate
in land excepted from a grant is excluded from the grant and
does not pass to the grantee. Pich v. Lankford, 157 Texas 335,
802 S.W. 2d 645; King v. First National Bank of Wichita
Falls, 144 Texas 583, 192 S.W. 2d 260, 262, 163 A.L.R. 1128; Rey-
nolds v. McMan Oil & Gas Co., Texas Comm. App., 11 S.W. 2d
778, motion for rehearing overruled, 14 S.W. 2d 819; 14 Texas
Jur. 958, Deeds, Sec. 175.

The right to lease, having been reserved by the grantor
Kiser in his deed, could not under any circumstances, by reason
of such deed, ever become the property of the grantee, Mrs.
Johnston, or her subsequent assignee, Cain.

The argument that the reservation did not expressly provide
that the power was to extend to Kiser’s “heirs and assigns” is of
no force, especially in the light of Article 1291, Vernon’s Anno-
tated Civil Statutes of Texas.*

This statute has been construed to apply in the same way
in cases involving reservations from grants. Word v. Kuykendall,
Texas Civ. App., 246 S.W. 757, no wr. hist. The effect of this
type of statute has been adequately stated in 26 C. J. S. 1001,
Section 138, in this way:

«« * * Under a statute providing that a conveyance of
realty shall be construed to be a conveyance in fee without
the use of the word ‘heirs’, unless it appears from the language
of the instrument that the grantor meant to convey an estate
of less dignity, it is not necessary in order to constitute a
reservation in fee that the reservation be limited to the heirs
of the grantor.”

The purpose of the statute would be thwarted if we were to
hold at this late date that technical words of inheritance were
necessary to secure to the heirs of the grantor the rights ex-
pressly reserved to the grantor.

The Court of Civil Appeals has held that Article 1291, supra,
only has reference to the conveying of the fee simple estate.
This Court has held that Article 1291, supra, applies to a mineral

8. “Bvery estate in lands which shall thereafter (hereafter) be granted,
conveyed or devised to one although other words heretofore necessarily at com-
mon law to transfer an estate in fee simple be not added, shall be deemed a fee
simple, if a less estate be not limited by express words or do not appear to have
been granted, conveyed or devised by construction or operation of law.”

a 885

estate. In the case of Mitchell v. Castellaw, 151 Texas 56, 246
S.W. 2d 163, this Court said:

«* & % Tt would seem to be the better rule that neither
words of inheritance nor other words of art are essential to
the valid reservation of an appurtenant easement of even un-
limited duration. Restatement, supra, Sec. 468, comment b
and Sec. 478, comment a; 28 C.J.S. supra. See also Word v.
Kuykendall, supra. We are cited no Texas authority to the
contrary. Clearly such is the case with reference to an exception
clause operating to sever the minerals from the surface. Asso-
ciated Oil Co. v. Hart, Texas Com. App., 277 S.W. 1043.”
(Emphasis added.)

It is significant that while no technical words of inheritance
are included in the reservation involved here, there is likewise
no mention in the reservation of any provision directing that the
power to lease is to pass to Mrs. Johnston, her heirs and assigns,
at the death of Kiser. The clear import of the statute is to
require words of reversion in order that the right or interest
may return to the party who would otherwise enjoy the same
but for the grant or reservation rather than the common law’s
requirement that words of inheritance be included in the grant
or reservation. Rogers v. Nixon, Texas Civ. App., 275 S.W. 2d
197, wr. ref. Even the states that recognize and follow the common
law rule, requiring words of inheritance in order for a reserva-
tion to vest in the heirs of the grantor, recognize that the same
is not necessary after the passage of a statute such as Article
1291, supra.

The judgments of both the trial court and the Court of Civil
Appeals should be reversed, and the motion of Pan American,
et al. for summary judgment should be granted.

ASSOCIATE JUSTICES GRIFFIN, NORVELL and HAM-
ILTON join in this dissent.

Opinion delivered January 17, 1962.

SKELLY OIL CoMPANY, Petitioner
v.
GERTRUDE L. ARCHER ET AL, Respondents
No. A-7884. Decided November 29, 1961

On Rehearing February 21, 1962
356 S.W. 2d 774

337

HAMILTON and SMITH, ASSOCIATE JUSTICES, dis-
senting.

C. L. Swim, Tulsa, Okla., Underwood, Wilson, Sutton, Heare
& Berry, Amarillo, for petitioner.

Sanders, Scott, Saunders, Brian & Humphrey, Amarillo, for
respondent.

JUSTICE GRIFFIN delivered the opinion of the Court.

This action was brought by Mrs. Gertrude Archer et al
against Skelly Oil Company in trespass to try title and, in the
alternative, for termination of an oil and gas lease on four and
three-fourths sections of land upon which the primary term
had ended. The lease was entered into between Mrs. Archer as
lessor and Skelly Oil Company as lessee, on August 5, 1948, for
a primary term of ten years, and the property described in the
lease was in Hansford County, Texas, and covered all of Sec-
tions 4, 282, 285 and 292, and the S/2 and NW/4 of Section
284, except 1/2 of the minerals in the SE/4 of Section 284
never owned by the lessor, totaling 3,040 acres more or less. The
parties named as plaintiffs below, other than Mrs. Gertrude
Archer, acquired their interest by conveyance from Mrs. Archer
after the original oil and gas lease was executed.

This is the second appeal of the case. On the first trial motion
for summary judgment by Skelly Oil Company was sustained,
the effect of which was a holding by the trial court that the
lease was valid and in force as to the entire 3,040 acres covered
thereby. On appeal from that judgment the case was reversed
and remanded for trial on the merits as to the effect of the
provisions of the rider attached to the lease contract and with
regard to whether the two gas wells situated on the leased acreage
were producing in paying quantities. The Court of Civil Appeals’

88 ee

opinion on the former appeal is reported in 314 8.W. 2d, at page
655. Application for writ of error to this court was refused,
no reversible error, with per curiam opinion reported in 317
S.W. 2d 47.

The oil and gas lease in issue was entered into on a form
commonly used in Texas and contained a habendum clause as
follows:

“It is agreed that this lease shall remain in force for a
term of ten years from date, and as long thereafter as oil or
gas, or either of them, is produced from said land by the lessee.”

Subsequent to the habendum clause is the usual clause pro-
viding for payment of 1/8 of production, and following’ the
royalty provision is the annual rental provision providing for
the payment of $3,040.00 annual delay rental. Attached to the
lease contract, directly over the above-mentioned annual rental
payment clause, is a typewritten rider as follows:

“In the event of gas production being obtained on the above
8,040 acre lease, not more than 640 acres shall be held by each
well, and annual rentals shall be paid on the balance of the
acreage. In the event that a gas well is drilled, the revenue
from same shall be equal to, or exceed the amount of the an-
nual rental payments, based on one well to each Section. In
no event shall the payments received by the lessor amount to
Jess than $3,040.00 during any 12 months period. This rider
and provision shall be controlling over any conflicting pro-
visions contained in the printed form attached hereto and made
a part hereof.”

Trial of the action now before this court was to a jury in
the District Court of Hansford County, Texas. At the close of
the evidence the court held:

«ce %&* * as a matter of law and also by uncontroverted facts
as shown by the evidence and the testimony and the Court
now finds and holds that the oil and gas lease in question
dated August 5, 1948, has terminated as to Section 4, Block
‘Pp’ H&GN RR Co. Survey; all of Section 282, Block 2, GH&H
RR Co. Survey; and the South half (8/2) and the Northwest
Quarter (NW/4) of Section 284, Block 2, GH&H RR Co.
Survey, all in Hansford County, Texas, same having terminated
at the expiration of the primary term of said lease, to-wit:
August 5, 1958, and further, that said oil and gas lease which

Se 3:

is recorded in Volume 9, page 286, Lease and Contract Records
of Hansford County, Texas, is a valid and subsisting lease
covering Section 285, Block 2, GH&H RR Co. Survey, Hans-
ford County, Texas, same being continued after the primary
term of said lease down to the date of trial by virtue of pro-
duction of gas in paying quantities from said Section 285.”
(Emphasis added.)

The above holding left only Section 292 for consideration
in the trial. One special issue was submitted to the jury, and
this issue inquired if the gas well on Section 292 had failed to
produce gas in paying quantities for the three-year period sub-
sequent to the primary term, August 5, 1953, to August 5, 1956,
the evidence having been limited by the court to this period.
The jury answered that the well had failed to produce in paying
quantities. On the basis of the holding by the trial court and
the jury verdict, judgment was entered that respondents have
title and possession of Section 4, 282, 292 and the South half
(S/2) and the Northwest quarter (NW/4) of Section 284, and
that the lease was to continue in full force and effect as to Sec-
tion 285. Upon appeal by Skelly the trial court’s judgment was
affirmed. 334 S.W. 2d 855.

There has been no oil discovered or produced on any of the
land covered by Skelly’s lease. Prior to the expiration of the
primary term of the lease a gas well was brought in on Section
285 and another well on Section 292, and both wells were pro-
ducing gas at the time of the trial.

No complaint is made in this court of the judgment of the
trial court and Court of Civil Appeals’ holding that Skelly’s
lease is in full force and effect as to Section 285, Block 2, Hans-
ford County, Texas. Therefore, that judgment is here affirmed.

Petitioner Skelly Oil Company seeks to have the lease declared
valid and subsisting in its entirety as to all of the four and
three-fourths sections described therein.

On the first appeal of this case, and being an appeal by the
Archers from the trial court’s action in favor of Skelly, the Court
of Civil Appeals said that to uphold the summary judgment it
must be held as a matter of law that the oil and gas lease, with
the rider attached, extended the lease beyond the primary term
on all the land described in the lease by virtue of production of
gas on Sections 285 and 292 during the primary term. Skelly
makes the same contention on this appeal. As to this point, the

0

Court of Civil Appeals on the first appeal reversed and remanded
the summary judgment thus overruling the above contention.
314 S.W. 2d 655, 317 S.W. 2d 47, wr. ref. nre.

The only significance of our refusal of writ of error, “no
reversible error”, on the former appeal, in so far as the con-
struction of the lease is concerned, was to approve the judgment
of the Court of Civil Appeals and necessarily, therefore, to reject
Skelly’s contention that, as a matter of law, production in paying
quantities from a single well would extend the life of the entire
Jease beyond the primary term. Our action did not have the effect
of approving the construction placed on the lease by the Court
of Civil Appeals.

On retrial of the case—from which this is an appeal—Mrs.
Archer pleaded, alternatively, that if the lease with rider at-
tached was ambiguous, all parties intended by attachment of
the rider to modify the provisions of the lease so that after the
expiration of the primary term each well producing in paying
quantities would hold only 640 acres; that is, that as to all sec-
tions on which there was not a well producing in paying quan-
tities the lease would terminate. Testimony was offered by the
Archers in support of this pleading. At the conclusion of the
testimony the Archers filed a motion for an instructed verdict,
in the first two paragraphs of which it moved the court to find,
as a matter of law, that their construction of the lease was a
correct one. The court granted Paragraphs 1 and 2 of such mo-
tion, and it was pursuant to that action that the court included
in its judgment the finding, hereinabove quoted, “as a matter
of law and also by uncontroverted facts as shown by the evidence
and the testimony”. (Emphasis added.)

Hl We have concluded that the attachment of the rider makes
the lease ambiguous. Not only is its meaning uncertain and
doubtful, thus meeting the test of ambiguity announced in Neece
vy. A.A.A. Realty Company, 159 Texas 403, 8322 S.W. 2d 597,
our latest decision on the subject, but it is also subject to more
than one reasonable meaning, unresolvable by rules of interpre-
tation, thus meeting the stricter test of ambiguity laid down in
Universal C.I.T. Credit Corp. v. Daniel, 150 Texas 5138, 243
S.W. 2d 154. The primary object of courts in construing written
contracts is to arrive at the intention of the parties. The pro-
visions of the rider may be interpreted as modifying the rights
and obligation of the parties only during the primary term of
the lease. This is the interpretation for which Skelly contends.
They may be interpreted as modifiying the rights and obligations

ee

of the parties throughout the life of the lease. This is the inter-
pretation for which the Archers contend. But if they are inter-
preted as modifying the rights and obligations of the parties
throughout the life of the lease, they may be further interpreted
as meaning that after the primary term the entire lease could
be kept alive by production from a single well plus the payment
of a sufficient sum to equal $3,040.00 annually. This is the con-
struction originally given by Skelly as is shown by Skelly’s an-
nually tendering checks to the amount of $3,040.00. Any one of
these interpretations would be equally reasonable, or unreason-
able, as the case may be, and the proper construction therefore
becomes a fact question.

I The burden was on the Archers, as plaintiffs, to prove their
case. They could prove it in either of two ways: by securing a
holding that the lease was unambiguous and could be given only
the construction for which they contend, or, if the lease were
ambiguous, by introducing evidence that the parties intended
it to have the construction which they gave it. Neece v. A.A.A.
Realty Co., 159 Texas 408, 322 S.W. 2d 597, 599, 603. While
contending that the lease was unambiguous, the Archers never-
theless introduced evidence bearing on the intention of the
parties. If the evidence on this issue was conflicting, the Archers
also should have secured submission of an issue to the jury.
This they did not do. Instead, in response to their motion, the
trial court found, “as a matter of law and also by uncontroverted
facts as shown by the evidence and the testimony”, that the
parties intended the lease to have the meaning attributed to it
by the Archers. Skelly’s theory of the case has been—and is—
that the lease with the rider attached is unambiguous. In none
of its pleadings filed in the trial court, nor in any of its briefs
in the Court of Civil Appeals or this Court, has Skelly asserted
that there is any ambiguity in the lease contract with the rider
attached. Neither has it challenged on appeal the correctness
of the action of the trial court in deciding questions growing
out of an ambiguous situation in favor of the Archers as a matter
of law rather than submitting the same to the jury. Skelly by
Points 4 and 7 in its briefs in the Court of Civil Appeals con-
tended that the uncontroverted evidence and the terms and
provisions of the lease showed that the lease had not terminated
as to any of the land. This contention is consistent with Skelly’s
theory of the case that the lease is unambiguous. We do. not
agree with this contention. Skelly does not in this Court seek
to change the theory on which it tried this case. It must stand
upon its contention that, as a matter of law, the rider did not
modify the habendum clause of the lease and that, therefore,

P|

production in paying quantities from a single well would, as a
matter of law, keep the entire lease alive after the expiration
of the primary term. We rejected this construction of the lease
on the first appeal by denying Skelly’s application for writ of
error, and we reject it now.

To sustain its position that the lease had not terminated on
any of the land described therein, Skelly placed principal re-
liance upon the cases of Waggoner Estate v. Sigler Oil Co., 1929,
118 Texas 509, 19 S.W. 2d 27; Henshaw v. Texas Natural Re-
sources Foundation, 1949, 147 Texas 436, 216 S.W. 2d 566;
Lido Oil Co. v. W. T. Waggoner Estate, 1930, Texas Civ. App.,-
81 S.W. 2d 154, wr. ref.; Johnson v. Montgomery, 1930, Texas
Civ. App., 31 S.W. 2d 160, wr. ref.; and Glasscock v. Sinclair
Prairie Oil Company, 185 F. 2d 910, U.S.C.A. (5th Cir., 1950),
and a Texas case.

None of these cases are in point nor controlling in the case
at bar. The two Waggoner cases are the same case but different
appeals. The wording of the lease there involved was different
from our lease and rider. There was no rider attached to the
Jease in either of the Waggoner cases. In those cases cancellation
of the lease was sought on the basis that the lessee Oil Company
had failed to properly develop the leased premises and, there-
fore, the leases had expired.

The Henshaw case, 147 Texas 436, 216 S.W. 2d 566, bears
not the slightest resemblance to our case, either as to facts or
the legal principles involved. It was a suit between joint venturers
in which one sought to forfeit and cancel the interest of the
other in the common property.

In Johnson v. Montgomery, 1930, Texas Civ. App., 81 S.W.
2d 160, wr. ref., the parties to an oil and gas lease provided
for a primary term of five years and the lease to last as long
thereafter as oil or gas, or either of them, was produced from
said land. Only two gas wells were completed on the land during
the primary term. Under the terms of a contract contemporane-
ously executed by the lessors and lessee in the oil and gas lease
(and which contract by reference made the lease a part of the
contract) when lessee commenced a test well on any section he
had the right to select three (8) other sections to be freed from
paying delay rentals. The lessee had selected three additional
sections for each well. At the end of the primary term, Jessors
brought suit to cancel and forfeit the lease as to all the 22,485
aeres covered by the original lease, except the eight sections

A —_:::

in the two blocks with the two gas wells. Among other conten-
tions lessors claimed that by virtue of freeing the eight sections
under the lease from delay rentals under the contract, the haben-
dum clause of the lease had been changed so that it held only
such eight sections and terminated as to the balance. As to this
contention the court held the contract covered only the delay
rentals due under the primary term and did not affect the dura-
tion of the estate beyond the primary term. Such holding was
correct under the contract there involved. There can be no ques-
tion that the contract involved in that case made no attempt
to change or modify the habendum clause of the lease, but ap-
plied only to the delay rentals which were payable only during
the primary term. No language is used—as is found in our case
—that one gas well should hold not more than 640 acres out of
the total acreage covered by the lease.

In the case of Glasscock v. Sinclair Prairie Oil Co., 185 F.
2d 910 (5th Cir., 1950), the lease contained a provision that
drilling or reworking operations, or production from any well
on the land should continue the lease in force only in so far as
the lease covers the tract in which the well was located, and not
to exceed 640 acres to be selected by lessee. It then proceeds,
“The aforementioned rental payable by Lessee” to cover defer-
ment of drilling operations for twelve months each “* * * during
the primary term shall be reduced by One Dollar ($1.00) per
acre for each acre of land included within any tract or tracts
which Lessee is holding or entitled to hold on the due date of
the rental payment in question * * *.” The court held that the
provisions of the paragraph from which we have quoted applied
only to the delay rentals payable during the primary term. The
court further said these provisions were to insure the lessor a
continuation of the rental payments instead of a cessation of
such payments in the event of drilling or production under the
lease. It was pointed out that without this provision the drilling,
reworking operations or production from one well would have
caused a cessation in payment of the entire delay rentals during
the primary term. To avoid this the provisions insured the lessor
a continuation of delay rental payments with only a credit of
$1.00 per acre per unit of 640 acres on which there was located
a well. Under the language of the instrument under considera-
tion in the Glasscock case, it is very plain that only the primary
term was involved.

This holding makes it unnecessary to discuss any of Skelly’s
points of error in the application, except those complaining of
the court’s charge and instructions in connection with the one

Se

‘issue submitted inquiring if the gas well on Section 292, Block 2,
had failed to produce in paying quantities from the end of the
primary term, August 5, 1953 to August 5, 1956.

ff Skelly assigns error to paragraphs four and five of the
general instructions contained in the court’s charge to the jury.
Paragraph 4 is as follows:

“The words, ‘paying quantities’, as used in this charge
and as applied to a gas lease, mean that the gas discovered must
be sufficient to pay the lessee a profit, though small, over
operating and marketing expenses, although it may never
repay the cost of drilling the well.”

Paragraph 4 is a correct statement of the law as applied
to the case before us where it is sought to keep the lease alive
beyond the primary term by production from the well or wells
on the leased land. In our case that land is Sec. 292, containing
640 acres. Summers: Oil and Gas, Permanent Ed. Vol. 2, Sec.
3806, p. 830. 13 Oil and Gas Reporter 516; Garcia v. King, 1942,
189 Texas 578, 164 S.W. 2d 509; Clifton v. Koontz, 1959, 160
Texas 82, 825 S.W. 2d 684, Sec. 7. We hold there was no error
in the court’s defining “paying quantities” as it did.

Paragraph 5 is as follows:

“In determining ‘operating and marketing expenses’, as
that term is used in this charge, if any there be, you may consid-
er such expenses as taxes, overhead charges, labor, repairs, de-
preciation on salvable equipment, if any, and other such items
of expense, if any. In this connection, you are instructed not
to consider any costs or expenses in connection with the original
drilling of the well.”

Skelly’s objections to this paragraph are that it permitted
the jury to take into consideration “depreciation on salvable
equipment”. Skelly also objects that overhead charges are not
proper items to be taken into consideration in determining
whether or not a well is producing in paying quantities.

In Clifton v. Koontz, 1959, 160 Texas 82, 325 S.W. 2d 684,
we were not called upon to pass on the question whether or not
depreciation on producing equipment, which is salvable, should
be charged.

An address entitled “Production in Paying Quantities: Tech-

Ss

nical Problems Involved”, delivered by Mr. Edwin M. Cage to
the Tenth Annual Institute on Oil and Gas Law and Taxation,
p. 61, 90 et seq., discusses these two items. He says with regard
to depreciation:

“All this points up the one inescapable conclusion that the
bookkeeping entry of depreciation is in no sense an ‘out-of-
pocket’ lifting expense and it should never be included as an
item to be deducted from revenue to determine whether a lease
is still producing in paying quantities. There is a possibility,
however, that the lessor in a carefully prepared case could
establish ‘actual depreciation’ (as distinguished from the book-
keeping entry) as a legitimate charge to lifting expense.
For example, in pumping a well the lessee may be using some
equipment which has been ‘written off’ completely and on
which lessee is no longer taking any depreciation. Still that
piece of equipment may have a current salvage value. To
some extent continued operations are wearing out that equip-
ment and reducing its salvage value. The proof may be dif-
ficult and the reduction in value may be slight, but the fact
remains that there is ‘physical depreciation’ which is properly
chargeable to lifting expense.

“But you say, ‘This is not out-of-pocket money.’ Perhaps
not, in the literal sense, but it is certainly an out-of-pocket asset
in the same sense as if a lessee supplied his fuel and grease
from a warehouse stockpile rather than from current cash
purchases. In either situation the consumption of the asset
can only be attributed to the lifting expense of the well.”

While our well has no pumping equipment, it does contain
certain items of salvable equipment necessary to produce the
gas from the well—and not a part of the drilling and comple-
tion expense—the life of which is being used up in producing
the gas sold from the well. This equipment should be depreciated
if the evidence shows it is subject to depreciation as a part of
the expense in producing and marketing the gas.

As to the overhead charges, Mr. Cage in his address con-
cludes that they are more difficult for the lessee to explain than
depreciation. He concludes that those items of overhead charges
which can be traceable to the actual expense of production of
the well’s product for marketing should be considered in de-
termining whether or not the well is producing in paying quan-
tities. Whitaker v. Texaco, Inc., 283 F. ed, 169, Secs. 9-10, (10th
Cir., 1960).

46

In the case at bar Skelly’s witnesses testified that in arriv-
ing at the figure of net profit from the well on Section 292,
there were no charges of minor repairs, depreciation of salvable
equipment, well inspections, and other items of expenses for this
particular well. The witnesses said these items would ordinarily
be performed by the local people in charge of the operations and
would not show up on the vouchers submitted to their offices
for recording. One witness testified that although it took labor
for conditioning the well, repairs and supplies, etc., there was
no evidence of any allocation of these items in figuring the net
profit as shown on the exhibits relied upon to show a profit in
operation.

I Skelly complains that the court’s charge permits the jury
to consider taxes, labor and repairs, “and other such items of
expense, if any”, in determining whether or not the well was
producing in paying quantities. The labor, repairs, and taxes
(in this case only gross production taxes and ad valorem taxes
were inquired about or testified to) which were allocated to
this well and which were used on this well in order to properly
produce the well or keep it producing, are proper items of ex-
pense to be considered. We find no error in the “other such
items of expense”, and do not believe that this phrase led the
jury into error.

According to the testimony of Skelly’s accounting witness,
7/8ths of the production from this well made the following net
profits:

August 1953-August 1954 §$ 48.04
August 1954-August 1955 88.15
August 1955-August 1956 183.24

The only expenses charged against Skelly’s 7/8ths production
were ad valorem taxes, gross production taxes, and district ex-
penses. This last item was an allocation on a per well basis of
the district administrative and supervisory expenses for super-
vising all of the wells in this district. As said above, Skelly’s
witness admitted that other expenses would be incurred for
this particular well, and that such expenses had not been con-
sidered in determining whether or not this well had made a net
profit for the company.

“These conflicting theories and methods of calculation were
before the jury. The question of whether or not an oil well is
producing in paying quantities is a question of fact for the

es

jury. Woodson Oil Company v. Pruett, Texas Civ. App., 281
S.W. 2d 159; Bain vy. Strance, Texas Civ. App., 256 S.W. 2d
208; Clark v. Holchak, 152 Texas 26, 254 S.W. 2d 101;
Garcia v. King, 189 Texas 578, 146 S.W. 2d 509.” Sullivan
and Garnett v. James, 1957, 308 S.W. 2d 891, at 898, n.r.e.

In view of the evidence in this case and the reasonable infer-
ences a jury is permitted to draw, we cannot say there was no
evidence to support the jury’s finding that the well on Section
292 failed to produce gas in paying quantities during the period
inquired about.

The judgments of the trial court and the Court of Civil Ap-
peals are affirmed.

Opinion delivered November 29, 1961.

ON MOTION FOR REHEARING
PER CURIAM.

On further consideration we have concluded that there is
in the record no evidence of probative force to support the find-
ing of the jury that the well on Section 292 is not producing in
paying quantities.

Hl The jury was instructed that in answering the issue it should
determine whether Skelly was making a profit, though small,
after deducting certain expenses, including cost of repairs and
depreciation on salvable equipment. Gross income from the well
over the three year period has been small indeed. There is evi-
dence in the record of some repairs on well equipment. No doubt
there is some salvable equipment which is depreciating. But there
is in the record no evidence of the cost of the repairs; nor is
there evidence of what equipment is salvable, the cost thereof,
or a proper rate of depreciation. In short, there was no evidence
introduced upon which the jury’s answer to the issue can rest;
it is founded upon speculation and surmise. At best the evidence
is nothing more than a mere scintilla, and that is not enough
to support the jury’s answer to the issue or the judgment term-
inating the lease on Section 292. Joske v. Irvine, 91 Texas 574,
44 S.W. 1059.

The error affects only the part of the judgment terminating
the lease on Section 292. There is no reason why that part of the
judgment may not be severed and reversed and the remainder
of the judgments of the courts below be affirmed. Rule 503,
Texas Rules of Civil Procedure.

SS

Having concluded to reverse the judgments in so far as they
terminate the lease on Section 292, we come next to the question
of whether judgment should be here rendered for Skelly because
of the failure of the Archers to discharge their burden of prov-
ing that the well was not producing in paying quantities or
whether in the interest of justice this phase of the case should
be remanded to the trial court for retrial. Rule 505, Texas Rules
of Civil Procedure. Considering the record before us as a whole,
we have concluded that justice will be best served by a remand
for retrial. Aetna Ins. Co. v. Klein, 160 Texas 61, 325 S.W. 2d
876; London Terrace v. McAlister, 142 Texas 608, 180 S.W.
2d 619.

This case was tried before our decision in Clifton v. Koontz,
160 Texas 608, 325 S.W. 2d 684. On retrial the burden will be
on the Archers to prove that Skelly was not making a profit
from operation of the well. If they fail to produce evidence which
establishes that fact as a matter of law or fail to obtain a fact
finding, supported by evidence, to that effect, the lease should
not be terminated. If, on the other hand, the evidence establishes
as a matter of law that Skelly was not making a profit from
the well or if there is a fact finding, supported by evidence, to
that effect, the lease should yet not be terminated unless the
evidence establishes as a matter of law or the Archers obtain a
fact finding, supported by evidence, that a reasonably prudent
operator would not have continued to operate the well under
the circumstances. In a jury trial this latter issue can be sub-
mitted conditionally.

The motion for rehearing is granted. The judgments of the
trial court and Court of Civil Appeals cancelling the lease on
Section 292 are reversed, that issue is severed and as to it the
cause is remanded to the trial court for retrial. The judgment
of the Court of Civil Appeals is otherwise affirmed.

Opinion delivered February 21, 1962.
JUSTICE HAMILTON, dissenting.

The dissenting opinion delivered on November 29, 1961, is
withdrawn, and the following is substituted therefor:

I respectfully dissent from the Court’s opinion.

It appears to the writer that the contract is unambiguous
and should be construed by this Court. The rider, which deals
with the subject of payment of rentals in case of discovery of
gas, is in conflict with the rental-paying provision of the main

De 349

body of the lease, and no ambiguity arises when the rider is
construed in connection with such provision. The question of
ambiguity arises only when an attempt is made to lift a part
of the first sentence in the rider, that is, “one well will hold
only 640 acres” out of context and apply it to the habendum
clause, the subject matter of which is wholly foreign to the
subject matter of the rider.

It appears that where two possible constructions could be
placed upon a contract, one of which would cause a conflict be-
tween two provisions and another would harmonize the two
provisions, that the latter would be the reasonable construction
and the other would not be reasonable. This rule of construction
is supported by a decision of this Court in Universal C.1.T. Credit
Corporation v. Daniel, 150 Texas 518, 243 S.W. 2d 154, cited
by the majority opinion in support of its holding that the con-
tract is ambiguous. The Court in that case, after stating that the
primary concern of courts is to ascertain and give effect to the
true intention of the parties, said:

“To achieve this object the courts will examine and con-
sider the entire writing, seeking as best they can to harmonize
and give effect to all provisions of the contract so that none
will be rendered meaningless.”

It is clear from a reading of the rider that its subject matter
is the payment of rentals, in case of gas production. No other
subject is dealt with. The first three sentences therein deal with
the matter of payment of rentals. The first two sentences simply
modify the rental provision in the lease, so as to provide that
in case of gas production, rentals are payable on all the acreage
except the 640 acres per well, and even the 640 acres on which
a gas well is drilled is not entirely exempt. If the royalty does
not amount to as much as the annual rental on 640 acres, the
difference is to be made up so that the revenue therefrom is
not to be less than the rentals would have been for that acreage.

The third sentence simply says what is meant by the rider.
That is, that payments under the lease, regardless of gas pro-
duction, shall never be less than the rentals provided for in the
Jease ($8,040.00) during any twelve months’ period. The lessor,
for whose benefit this rider was placed on the lease, put her
own interpretation on the rider by adding the third sentence to
the first two sentences. It adds nothing to the contract except
to make certain that the lease is not divisible. The Court of Civil

Appeals says it was added for emphasis. I think we should give
effect to that emphasis.

The fourth sentence makes the rider provision controlling
over conflicting provisions contained in the main body of the
Jease. Full effect is given to this sentence when the rider is con-
strued as modifying the rental payment provision in the lease.
No one contends that the rider is ambiguous as applied to the
rental payment provision, and everyone admits that the rider
and rental payment provisions are in conflict.

It should be held that since the rider refers only to the
payment of rentals, it necessarily follows that it applies only
to the primary term. Its purpose was to assure to the lessor dur-
ing the primary term a continuance of the rental payments
without any reduction in the total revenue received after pro-
duction of gas was obtained. This construction is in accord with
that given similar provisions by the courts of Texas and by the
Fifth Circuit Court. Waggoner Estate v. Sigler Oil Co., 118
Texas 509, 19 S.W. 2d 27; Lido Oil Company v. W. T. Waggoner
Estate, 31 S.W. 2d 154, error refused; Johnson v. Montgomery,
81 S.W. 2d 160, writ refused; Glasscock v. Sinclair Oil Com-
pany, 185 Fed. 2d 910, 5th Cr. Ct.

The Waggoner Estate v. Sigler Oil Company case involved
a lease which provided that one well would hold 2000 acres in
a@ square around the well, and rentals were to be paid on the
palance of the acreage. Suit was to cancel the lease on all acre-
age outside that held by each well. Only 3000 acres were in-
volved, the rest of the 87,000 acres having been assigned to the
Waggoner Estate. The suit was primarily for cancellation on
account of nondevelopment. However, the primary term had
expired. The court held that the lease was valid as to the acreage
outside of the 2000 acres agreed to be held by one well. It did
not discuss the matter which we have before us, but in the Lido
v. Waggoner Estate case, which was the second appeal of the
same case, the court, at page 159, 31 S.W. 2d, specifically con-
strued the former opinion by the Supreme Court as holding that
the proviso that one well would hold 2000 acres applied to the
rental payment period only.

The Glasscock v. Sinclair Oil Company case, instead of say-
ing that one well would hold only 640 acres, says that “produc-
tion from any well thereon shall continue this lease in force
only in so far as this lease covers a tract for each such well * * *
containing not more than 640 acres”, rentals to be paid on bal-

SP

ance of the acreage. (Emphasis ours.) Each of these cases had
a similar habendum clause and a similar rental payment pro-
vision to that contained in the Archer lease, and in each of the
cases it was held there was no ambiguity and that the provision
applied only to the rental payment provision and did not apply
after the primary term.

Under the above authorities and the accepted rules of con-
struction, I would hold the lease to be valid and binding as to
the entire acreage covered thereby, since it is undisputed that
there is paying production on Section 285.

ASSOCIATE JUSTICE SMITH joins in this dissent.

Opinion delivered April 4, 1962.

JUSTICE HAMILTON concurring on Motion for Rehearing.

While adhering to my dissent filed herein, I concur in the
per curiam opinion of this court delivered February 21, 1962,
holding that there was no evidence of probative force in the
record to support the finding of the jury that the well on Sec-
tion 292 is not producing in paying quantities. However, I would
render judgment holding the lease valid as to Section 292 rather
than remand the case for new trial as to this section only.

Since this case is being remanded as to Section 292 in the
interest of justice, this court, in order to be consistent, should
also remand the case as to Sections 4, 282, and the south half
of the northwest quarter of Section 284 in the interest of justice.
On the trial of the case the Archers went into the matter of the
cost of repairs and depreciation, but failed to make proof of -
any such expenses of operation. They had as much opportunity
to make such proof as they will ever have on another trial.

This court in its original opinion upheld the judgment of the
trial court canceling the lease as to Section 4, 282, and the
south half of the northwest quarter of Section 284 on the theory
that the lease was ambiguous and that the trial court made
an implied finding that the parties intended that a producing
gas well would hold only one section after the end of the primary
term. This court held that no attack was made on such finding
of the trial court, and on this ground rendered judgment can-
celing the lease as to said sections.

It is evident why Skelly made no attack on such finding of

iy

5

the trial court. The parties did not try this case on the theory
on which this court decided the case. The Court of Civil Appeals
did not decide the case on this theory. Neither of the parties
briefed the case on this theory in the Court of Civil Appeals
or in this court. It appears that this is one of the situations in
which it was intended that Rule 505, Texas Rules of Civil Pro-
cedure, should be applicable. I would not sever the issue as to
Section 292, but would remand the entire cause as to the four
sections here involved to the trial court for retrial.

Opinion delivered April 4, 1962.
as

GEORGE G. MACDONALD, Petitioner
v.
Mary S. TRAMMELL, Respondent

No. A-8749. Decided April 4, 1962
856 S.W. 2d 148

353

Small, Small & Craig, Austin, for petitioner.

Carter, Stiernberg, Skaggs & Koppel, Harlingen, L. Hamilton
Lowe, Austin, for respondent.

ASSOCIATE JUSTICE CULVER delivered the opinion of
the Court.

Petitioner, MacDonald, a real estate broker, brought this
suit against Mrs. Mary S. Trammell, a resident of Cameron
County, respondent herein, and Ras Redwine, a resident of
Travis County, for damages. The suit is based upon these
allegations: that William L. Trammell, now deceased, orally
contracted with MacDonald to pay him a commission for the
sale of certain real property; that Mrs. Trammell, his widow,
entered into a conspiracy with Redwine, the purchaser, to induce
her husband to breach that contract; that as a result of that
conspiracy Trammell was fraudulently induced to breach the
contract.

WM oMrs. Trammell’s plea of privilege to be sued in the county
of her residence was sustained by the trial court and that order
has been affirmed by the Court of Civil Appeals, (351 8.W. 2d
89), on the ground that no cause of action lies against one who
induces the breach of an agreement which may not be enforced
under the provisions of Sec. 28, Art. 6573a, Vernon’s Annotated
Civil Statutes.

We granted the application on the basis of a conflict between
this decision and that rendered by the Dallas Court of Civil Ap-

ee

peals in Yarber v. Iglehart, 264 S.W. 2d 474 (1958), no writ
history, and in Davis v. Freeman, 347 S.W. 2d 650, no writ
history (1961).

HM We are of the opinion that no cause of action can be
successfully asserted against Mrs. Trammell for inducing her
husband not to pay the commission nor for conspiring with
another to bring about that result. Assuming, but not deciding,
that the resident defendant, Redwine, could be held liable in
damages for tortiously interfering with the performance of an
unenforceable contract, it does not follow that there exists a
joint cause of action against Redwine and Mrs. Trammell nor
one for fraud on her part so as to fix venue as to Mrs. Trammell
in Travis County by reason of Exceptions 4 or 7 of the general
venue rule, Art. 1995, Vernon’s Annotated Civil Statutes.

In the first place Mrs. Trammell had as much of a financial
interest at stake in this matter as did her husband. The property
involved was a part of their community estate and the alleged
debt was a community obligation. Although the husband is vested
with the management and control of the community estate, it
would be rather anomalous to hold that she would subject herself
in damages for advising and consulting with her husband in
respect to their common interests. Secondly, we are of the opinion
that to so hold would be against sound public policy. The case
of Lee v. Silver, 262 App. Div. 149, 28 N.Y.S. 2d 833, affirmed
88 N.E. 2d 288, cited by respondent is rather illuminating on
this problem. In that case the mother was sued in damages for
having wrongfully and maliciously induced her daughter to re-
pudiate and breach a contract of employment. In holding that
it would be against public policy to make a parent liable for
advising a child the court said:

“A cause of action exists against a person who maliciously
procures another to breach a contract for personal services.
The wrongful act is malicious when done without legal or social
justification. I do not believe that the rule should include ad-
vice given by a parent to an infant child to disaffirm a con-
tract. Public policy dictates that parents should have an
absolute right to advise their infant children with regard to
all matters; that such a right should be exercised freely and
should not subject the parent to any inquiry as to motive. Such
an unrestricted right is one most calculated to promote the
best interests of the family relationship.”

“in Nelson v. Melvin, 236 Iowa 604, 19 N.W. 2d 685, the

ee

court held that parents have the right to advise their child to
breach a marital contract and that such advice or the result
thereof is not actionable, aptly pointing out:

“Tf any other rule were to be pronounced, it would be
inviting litigation of a character which would do much to
break family discipline and control.”

To the same effect is Conway v. O’Brien, 269 Mass. 425,
169 N.E. 491.

We think that this principle applies with equal if not greater
force in respect to the relationship of husband and wife. As
argued by Mrs. Trammell, if she could be held liable for attempt-
ing to persuade her husband not to carry out this unenforceable
contract, she would be equally liable for inducing him to plead
the statute of limitations where the debt was barred by that
statute, or to seek refuge in the statute of frauds and for a like
reason the husband would be liable in case he advised the wife
to plead coverture. It follows that if she is not liable for induce-
ment she cannot be held for conspiracy to induce.

Among the mutual marital rights and obligations is the right
of one spouse to the society, comfort, affection and assistance
of the other. Article 1985, Vernon’s Ann. Civ. Stat., provides
that the husband shall be joined as a party in suits for separate
debts and demands against the wife. Our courts have said that
the theory of this rule is to the end that the husband may aid,
protect, counsel and assist the wife in defending the suit. Holmes
v. Jackson, Texas Civ. App., 200 S.W. 2d 276, no writ history;
Rhoades v. Fredwell, Texas Civ. App., 192 S.W. 2d 295, wr. of
er. ref. n.r.e. Surely then the law would not deny to the wife
the corresponding obligation and privilege of offering aid and
assistance to the husband in matters affecting their common
interests.

I Both the trial court and the Court of Civil Appeals have
reached the correct result and that result may properly rest on
a ground other than on a decision of the point of law asserted
to be in conflict. A decision of that point will not necessarily
control the disposition of this case and we therefore do not have
jurisdiction. Williams v. Williams, 160 Texas 99, 325 S.W.
2d 682.

Accordingly the order granting the application for writ of

Bi

5
error is set aside and the application is dismissed for want of
jurisdiction.
Opinion delivered April 4, 1962.

Ea

JOHN F. MAHER EY AL, Petitioners
v.
GARLAND M. LASATER ET AL, Respondents
No. A-8681. Decided February 21, 1962

Rehearing Denied April 4, 1962
354 S.W. 2d 923

Lloyd, Lloyd & Dean, Alice, for petitioners.

Ss

Butler, Binion, Rice & Cook, Houston, Markel Heath, Fal-
furrias, R. H. Singleton, Houston, Harold E. Vittitoe, Falfurrias,
for respondents.

CHIEF JUSTICE CALVERT delivered the opinion of the
Court.

Suit was by John F. Maher and others to set aside an order
of the Commissioners Court of Brooks County declaring a private
road across their land to be a public highway. The trial court
granted the relief sought. The Court of Civil Appeals reversed
the judgment of the trial court and rendered judgment that the
plaintiffs take nothing. 348 S.W. 2d 671.

In declaring the road to be a public highway, the Commis-
sioners Court acted under apparent authority conferred by
Article 6711, Vernon’s Annotated Texas Civil Statutes. The
pertinent provisions of the statute are set out at length in the
opinion of the Court of Civil Appeals, 348 S.W. 2d 675, and
need not be repeated here. As the statute now reads, and as it
read at the time the order under attack was entered, a commis-
sioners court is authorized to declare and open a public highway,
at public expense, across lands of nonconsenting owners, upon
application and showing that one or more landowners wish,
but do not have, a means of access to their land or premises
connecting with the county public road system. Petitioners assert
that the statute is unconstitutional in so far as it authorizes a
taking of their property in the factual situation before us.

The Commissioners Court’s order was entered pursuant to
application made by Garland M. Lasater. Lasater and petitioners
had been tenants in common of lands acquired under the will
of Mary M. Lasater. A plat of the lands is reproduced in the
opinion of the Court of Civil Appeals in Lasater v. Maher, 330
S.W. 2d 481, 482. The lands were partitioned by judgment of
the District Court of Brooks County in 1956. Section 331 was
awarded to Lasater. The section is isolated from public roads
by a salt lake on the North, privately owned land on the East
and South, and land awarded to petitioners on the West. In the
partition proceeding Lasater protested the report of the com-
missioners in partition because it did not award him an easement
for an outlet by necessity across petitioners’ land to a public
highway bordering such land on the West. The matter was con-
tested and Lasater’s claim to the easement as a way of necessity
was denied by the trial court’s judgment. He did not appeal.
Thereafter, he filed suit to establish a right to an easement across

8

petitioners’ land as a road by necessity. He lost in the suit, upon
a holding by the Court of Civil Appeals that the issue was res
judicata. Lasater v. Maher, Texas Civ. App., 830 S.W. 2d 481,
no writ history.

The roadway which the Commissioners Court’s order estab-
lishes as a public highway is two and one-half miles in length.
Its western terminus is at its intersection with the public high-
way bordering petitioners’ land on the West and its eastern
terminus is at the West line of Section 331. It dead-ends at that
point. It does not serve as a means of access to any other land.
There are no other residents along its course.

Lasater does not live on Section 331, and neither does anyone
else. The land is grazing or pasture land and only about 60 of
the 640 acres could be cultivated. The only improvements on the
section are a windmill and some pens.

Section 17 of Article 1 of the Constitution of Texas provides
that “No person’s property shall be taken, damaged or destroyed
for or applied to public use without adequate compensation being
made, unless by consent of such person; * * *.” That provision
not only requires the payment of adequate compensation for
property taken for public use, it prohibits the taking of property
for private use. Marrs v. Railroad Commission, 142 Texas 293,
177 S.W. 2d 941, 949; Coastal States Gas Producing Co. v. Pate,
158 Texas 171, 309 S.W. 2d 828, 888. The provision operates as
a limitation on the power of the Legislature as well as a limitation
on the power of goverrimental agencies and public and private
corporations. McInnis v. Brown County Water Imp. Dist., Texas
Civ. App., 41 S.W. 2d 741, 744, writ refused. The Legislature
may not authorize that which the Constitution prohibits.

Prior to amendment by the Legislature in 1958, Article 6711
authorized Commissioners Courts to declare a roadway to be a
public highway only if they deemed “the road of sufficient public
importance”. As so written the statute conditioned the taking
of property upon a finding that it would be dedicated to a public
use. By Acts 58rd Leg., p. 1054, ch. 488, the requirement for
a finding that the road was of public importance was eliminated,
and Commissioners Courts are now authorized to declare a private
roadway to be a public highway if applicants therefor wish it
to be done and “have no means of access to their lands and
premises”. In so far as the amendment seeks to authorize the
taking or private property for private use, it is unconstitutional
and void.

3

i Lasater argues that by the amendment the Legislature has
declared that a public purpose is served when land is taken to
provide a roadway for a landowner who has no means of access
to his land. It may have done so by implication. It certainly has
not done so expressly. In any event, a mere declaration by the
Legislature cannot change a private use or private purpose into
a public use or public purpose. Dallas Cotton Mills v. Industrial
Co., Texas Com. App., 296 S.W. 508, 505; Texas Turnpike Co.
v. Dallas County, 153 Texas 474, 271 S.W. 2d 400, 402. While a
legislative declaration in this and kindred fields will be given
great weight by the courts, the ultimate question of whether a
particular use is a public use is a judicial question to be decided
by the courts. Housing Authority of City of Dallas v. Higgin-
botham, 185 Texas 158, 143 S.W. 2d 79; Davis v. City of Lub-
bock, 160 Texas 38, 326 S.W. 2d 699.

Both parties to this litigation cite and to some extent rely
on Phillips v. Naumann, 154 Texas 158, 275 S.W. 2d 464, as
authority for their respective positions. That case grew out of
an order of a Commissioners Court entered under authority of
Article 6711 before it was amended. The order directed the open-
ing of a roadway across land owned by Phillips to lake-front
Jand owned by Naumann. A jury found that in entering the order
the Commissioners Court was acting primarily for the benefit
of Naumann and that the court did not deem the road of sub-
stantial public importance. The trial court, nevertheless, sus-
tained the order of the Commissioners Court, and its judgment
was affirmed by the Court of Civil Appeals. 270 S.W. 2d 266.
We reversed the judgments of the district court and Court of
Civil Appeals and rendered judgment invalidating the order of
the Commissioners Court on one primary holding which was
dispositive of the case. We held that the evidence established that
Naumann had access to his land over another road and that there
was no necessity for the established road. In deciding that ques-
tion we assumed, but did not hold, that it is of public importance
that every person residing on land be provided access to and from
his land so that he may enjoy the privileges and discharge the
duties of a citizen.

After deciding the controlling question in Phillips v. Nau-
mann, we gave consideration to other matters which were urged
upon our attention. What we said as to those matters may be
dicta, but we regard the views we expressed as sound and as
decisive of the issue before us here. We discussed the jury find-
ings that the order opening the road was primarily for the benefit
of Naumann and that the Commissioners Court did not deem

60

the opening of the road of any substantial public importance,
and said (275 S.W. 2d 467) :

“The undisputed evidence discloses that the only persons
who could be benefited by the opening of this road are the
Naumanns and persons who might desire to visit them. The
principle that private property cannot be taken for a private
use is too elementary to call for a citation of authorities in
support thereof. What this record discloses is the taking of
private property of petitioners for the use of Naumann, and
for no other use, and that, too, when there is no necessity for
doing so.”

The only possible public purpose conceivable which the road
in this case can serve is that of putting the products of the soil
and the range of Section 831 into the economy of the community.
That question is also dealt with in Phillips v. Naumann. It
was there suggested that by opening up the road Naumann would
be enabled to establish a fishing camp or some other commercial
development on his lands. We expressed our views with respect
to the suggestion in this language (275 S.W. 2d 468):

“Tt does not lie within the power of the Commissioners’
Court to condemn a highway across petitioners’ ranch in order
to enable Naumann to establish a fishing camp or other com-
mercial enterprise on his land. To do so would be taking private
property for a private purpose.”

HE No good purpose would be served by analyzing the many
cases cited by the parties. The simple fact is that the Commis-
sioners Court of Brooks County has entered an order which, if
given effect, will, on the facts in this case, take petitioners’ land
for the private benefit of respondent Lasater. The order violates
Section 17 of Article 1 of the Constitution and is void. No doubt
the Commissioners Court acted in a good faith belief that its
order was authorized by Article 6711. To the extent that the
Article purports to authorize the taking of private property for
private use, it also violates Section 17 of Article 1 of the Consti-
tution and is void.

The judgment of the Court of Civil Appeals is reversed and
the judgment of the trial court is affirmed.

Opinion delivered February 21, 1962.

36:

a

Mrs. L. L. DAVIS, Petitioner
Vv.
East Texas SAVINGS & LOAN ASSOCIATION OF TYLER, TEXAS
ET AL, Respondents
No. A-8455. Decided February 28, 1962

Rehearing Denied April 4, 1962
354 S.W. 2d 927

Smith & Smith, Tyler, for petitioner.

Reeves & Reeves, Tyler, for respondent East Texas Savings
& Loan Ass’n.

Power, McDonald & Mell, and L. L. James, Tyler for re-
spondents Ritta Lee Venable and husband.

CHIEF JUSTICE CALVERT delivered the opinion of the
Court.

East Texas Savings & Loan Association filed an interpleader
suit in the district court against Mrs. L. L. Davis, individually
and as independent executrix of the estate of L. L. Davis, de-
ceased, and Mrs. Ritta Lee Venable to determine the ownership
of.a fund in the amount of $6000 which East Texas deposited in

es 368

the registry of the court. East Texas sought recovery of its at-
torney’s fee of $450 and court costs. Mrs. Davis is the surviving
widow of L. L. Davis and Mrs. Venable is his daughter by a
previous marriage.

Mrs. Davis, by way of answer, denied East Texas’ right to
recover the attorney’s fee, and by cross-action sought recovery
of the entire $6000. Mrs. Venable by cross-action sought to re-
cover one-half of the $6000 and sought a recovery from Mrs.
Davis of one-half of a sum of $2000 collected by her from First
Federal Savings & Loan Association.

The trial court’s judgment denied all relief sought by East
Texas and Mrs. Venable, and awarded the entire $6000 to Mrs.
Davis, individually. The Court of Civil Appeals reversed the
trial court’s judgment and rendered judgment as follows: Hast
Texas was awarded a recovery of its attorney’s fee in the sum
of $450 and of costs; the remainder of the $6000 in the registry
of the court, after payment of court costs and East Texas’
attorney’s fee, was divided equally between Mrs. Davis and Mrs.
Venable; Mrs. Venable was awarded a recovery from Mrs. Davis
of one-half of the sum of $2000 collected by her from First
Federal, a one-half interest in all money in the bank at the time
of the death of L. L. Davis, and a one-half interest in a burial
certificate owned by L. L. Davis at the time of his death. The
recovery allowed Mrs. Venable was made subject to payment
of one-half of East Texas’ attorney fee, one-half of costs in the
trial court, one-half of the burial expense of L. L. Davis, one-
half of the cost of his tombstone, one-half of an attorney’s fee
to be allowed for probating the will of L. L: Davis, and one-half
of the court costs in the probate proceedings. The court severed
the issue relating to the fee of the attorney who probated the
will and remanded that issue to the trial court to hear evidence
and determine the amount thereof. The judgment was ordered
certified to the district court for observance. All costs of appeal
were adjudged against Mrs. Davis, individually. 346 S.W. 2d 178.

The factual background of the suit is as follows: On January
6, 1958, L. L. Davis, then a single man, deposited the sum of
$6000 with East Texas and received stock certificate No. 2755,
issued in his name. On February 13, 1953, L. L. Davis married
petitioner. At the request of L. L. Davis, stock certificate No.
2755 was changed to read “L. L. Davis or Mrs. L. L. Davis” on
January 3, 1956, and at the same time a signature card was signed
by Mr. and Mrs. Davis which stated that the certificate was held
by them as joint tenants with right of survivorship.

ee

Two stock certificates in the amount of $1000 each were pur-
chased by Mr. and Mrs. Davis during their marriage from First
Federal. One certificate was purchased on January 8, 1955, and
the other on January 8, 1956. Both were issued in the name of
Mr. or Mrs. L. L. Davis as joint tenants with right of survivorship.

On July 10, 1959, L. L. Davis died leaving a will, executed
on May 7, 1956, naming Mrs. Davis as independent executrix.
The will was admitted to probate on October 14, 1959.

At a date uncertain but after October 14, 1959, and before
October 20, 1959, Mrs. Davis presented certificate No. 2755 to
East Texas and requested payment. Both before and after this
informal demand, East Texas was notified by Mrs. Venable
through her attorney that she was claiming a one-half interest
in the funds represented by the certificate under the terms of
the will of L. L. Davis. As a result of such information, the records
of East Texas were “flagged” to indicate the dispute. After Hast
Texas refused to pay the money, Mrs. Davis presented a formal
written demand on October 20, 1959.

The will of L. L. Davis contains the following pertinent pro-
visions:

“ry

“I give to my wife, Cora E. Davis, our homestead located
at 905 North Bois d@’Arc Avenue in the City of Tyler, State of
Texas, and described as all that lot or parcel of land situated
within the County of Smith, State of Texas, in the corporate
limits of the City of Tyler, to wit: (description) as well as all
of our household furniture, our automobile, all personal effects
and belongings and other property of a similar nature used
personally or in or about the home.

“TIT

“All the rest and residue of my estate consisting of cash,
bond, stocks, and personal property of a similar nature I give
equally, share and share alike, to my wife, Cora E. Davis,
and my daughter, Rittia Lee Vendable, to be divided one-half
(1/2) each at the earliest possible time after the payment of
expenses as above provided.”

The theory of the trial court’s judgment is reflected in the
judge’s findings of fact and conclusions of Jaw. He found that

Ss

the $6000 deposited by East Texas was the only property in-
volved in the case; that East Texas was not justified in filing
the interpleader suit; that under the terms of the agreement made
with East Texas on January 3, 1956, Mrs. Davis became a joint
tenant of the East Texas deposit with right of survivorship,
which interest ripened into absolute ownership upon the death
of L. L. Davis; that L. L. Davis did not intend by the third
paragraph of his will to dispose of property other than his own;
that although paragraph two of the will gave separate property
of the testator to Mrs. Davis and thereby gave her property which
she would not otherwise have been entitled to, she was not put
to an election by the will, and that by taking the property de-
scribed in paragraph two she had not elected to give up her
interest in the $6000 deposit.

The judgment of the Court of Civil Appeals rests on holdings
that East Texas was justified in filing the interpleader suit;
that title to the $6000 deposit and the $2000 collected by Mrs.
Davis from First Federal is controlled by our decision in Hilley
v. Hilley, 342 S.W. 2d 565; that the testator did intend by para-
graph three of the will to dispose of the $6000 on deposit with
East Texas and other property owned by Mrs. Davis; that the
will did put Mrs. Davis to an election, and that by taking the
property devised and bequeathed to her in paragraph two of the
will Mrs. Davis became bound by the disposition in paragraph
three.

We hold: 1. East Texas was not justified in filing the inter-
pleader suit and, therefore, is not entitled to recover its attor-
ney’s fee and costs. 2. Title to the $6000. deposit is not governed
by Hilley v. Hilley. 3. Upon the death of L. L. Davis, Mrs. Davis
became the owner of the $6000 on deposit with Hast Texas. 4.
Title to the $2000 collected from First Federal was, and is, in
issue in the case. 5. Title to the $2000 is governed by Hilley v.
Hilley and was community property of Mrs. Davis and L. L.
Davis at his death. 6. L. L. Davis did not intend by paragraph
three of his will to dispose of property not owned by him. 7.
The will did not put Mrs. Davis to an election, and by taking
the property given her in paragraph two of the will she did not
elect to give up her separate or community interest in other
property. 8. That the Court of Civil Appeals erred in closing
the independent administration and in undertaking to partition
and distribute the estate of L. L. Davis.

1. East Texas was not justified in filing the interpleader suit.
An interpleader suit is authorized by Rule 48, Texas Rules of

6 ee

Civil Procedure, only when persons having claims against the
plaintiff are such that he “is or may be exposed to double or
multiple liability’. The claims “must be such as to place the
stakeholder in some real doubt or hazard to entitle him to the
remedy of interpleader”, Nixon v. Malone, 100 Texas 250, 98
S.W. 380, 385, and the doubt must at least be a reasonable one.
Employers’ Casualty Co. v. Rockwall County, 120 Texas 441,
85 S.W. 2d 690, 693; Greenwald v. Ligon, Texas Com. App., 14
S.W. 2d 829, 832.

Certificate No. 2755 provides that it is issued by East Texas
and accepted by the purchasers “subject to all the laws of the
State of Texas”. Article 881a-23, Vernon’s Annotated Texas
Statutes, provides that when shares or share accounts are issued
by a building and loan association “in the name of two or more
persons, or to two or more persons or the survivor of either
(sic),” the share or share accounts “may be withdrawn on the
signature of either party to whom such share or share accounts
were issued, * * * and such association shall have no further
liability for the amounts so paid.” The Article further provides:

“Such a joint account shall create a single membership in
such association, and the repurchase or withdrawal value of
share or share accounts issued in joint names and dividends
thereon, or other rights relating thereto, may be paid or de-
livered in whole or in part, to any of such persons who shall
make request therefor, whether the other person or persons be
living or dead. The payment or delivery to any such person,
on a receipt or acquittance signed by any such person, to whom
any such payment or such delivery of rights is made, shall
be a valid and sufficient release and discharge of any such
association for the payment or delivery so made.”

Under the express terms of the certificate and the statute,
East Texas could have paid the $6000 on deposit with it to Mrs.
Davis without the slightest risk of double liability. The statute
shielded it from risk with absolute immunity. There was, and
is, no room for reasonable doubt of that fact.

East Texas urges that the decisions in Pruett v. First Na-
tional Bank in Temple, Texas Civ. App., 175 S.W. 2d 658, no
writ history, and Adams v. Jones, Texas Civ. App., 258 S.W.
2d 401, no writ history, and the fact that Art. 881a-23 had not
been construed by the courts made it doubtful of its rights and
thus justified it in refusing to pay Mrs. Davis and in filing this
suit. The Pruett case dealt with Art. 541d, V.A.T.C.S., before

|

that Article was changed and incorporated in the Texas Banking
Code as Art. 842-710, governing the liability of banks for paying
out money deposited in a joint account. That statute immunized
banks against liability for payments made from joint accounts,
in accordance with the terms of joint account agreements, prior
to receipt “of notice in writing not to pay such deposit”. The
decision is patently not authority for the refusal of East Texas
to pay under the controlling provisions of Art. 881a-23. Adams
v. Jones dealt with the question of ownership of a joint account
in a bank and not with the rights of the bank. The statutory pro-
tection guaranteed East Texas by Art. 881a-23 is too plain to
require construction.

2. Ownership of the $6000 certificate or deposit is not gov-
erned by Hilley v. Hilley. The certificate in Hilley v. Hilley was
purchased with community funds. The East Texas certificate
was purchased with separate funds of L. L. Davis. The legal
consequences of the two transactions are entirely different.

8. Upon the death of L. L. Davis, Mrs. Davis became the
owner of the $6000 on deposit with East Texas as her separate
property. The contract made by Davis with East Texas was a
valid and enforceable contract for the benefit of a third party.
Edds y. Mitchell, 143 Texas 307, 184 S.W. 2d 828, 828. In that
case we held that United States Savings Bonds purchased by
Mrs. Rhode and made payable to herself and on her death to
Mrs. Edds, were, on the death of Mrs. Rhode, the property of
Mrs. Edds. Our conclusion was predicated on a holding that the
contract made by Mrs. Rhode with the United States Govern-
ment was for the benefit of Mrs. Edds and that when the bonds
were purchased Mrs. Edds acquired a present vested though
defeasible interest in the bonds which ripened into full and
absolute title upon Mrs. Rhode’s death. That case and this case
are not to be distinguished because the former involved bonds
and this involves a savings and loan certificate.

In this case the rights of Mrs. Davis are the same as those of
Mrs. Edds. When the contract was made by L. L. Davis with
East Texas, Mrs. Davis was thereby vested with a present, though
defeasible, interest in the deposit. Her interest would have been
defeated if the certificate had been changed by Davis or the
deposit had been withdrawn before his death, or if Mrs. Davis
had predeceased her husband. But when Davis died without the
interest of Mrs. Davis having been defeated, she became the
owner of the full title to the deposit. We know of no constitu-
tional or statutory impediment to the making by a husband of

5 ee

such a contract affecting title to his separate funds. We speci-
fically recognized that right in Hilley v. Hilley, 342 S.W. 2d 565,
571, when we said, “there seems to be no legal impediment to
recognition of a contract for the benefit of a third party when
the bonds are acquired with the purchaser’s separate funds.”
See also Chamberlain v. Robinson, Texas Civ. App., 305 S.W.
2d 817, writ refused and McFarland v. Phillips, Texas Civ. App.,
258 S.W. 2d 958, writ refused nr.e.

4. Title to the $2000 collected by Mrs. Davis on the First
Federal certificates was, and is, an issue in the case. Ownership
of this fund was put in issue by the answer and cross-action
of Mrs. Venable on which the case was tried. She predicated her
claim to ownership of an interest therein on construction of para-
graph three of her father’s will. Neither East Texas nor Mrs.
Davis raised any question of the court’s right or duty to try the
issue. On the contrary, Mrs. Davis claimed to be the owner of
all of the proceeds of these certificates as her separate property.
Evidence was introduced concerning the purchase of the certi-
ficates and the collection of the proceeds by Mrs. Davis.

Rule 48, Texas Rules of Civil Procedure, governing inter-
pleader suits, expressly states that its provisions “supplement
and do not in any way limit the joinder of parties permitted in
any other rules”. Neither should, nor will, the Rule be construed
to limit the joinder of claims permitted by other rules. Joinder
of the claim by Mrs. Venable to an interest in the $2000 is author-
ized by Rules 51 and 97, Texas Rules of Civil Procedure. The
issue thus squarely joined on ownership of proceeds of the First
Federal certificates should have been determined by the judg-
ment of the trial court.

ff 5. The two First Federal certificates were purchased during
marriage, presumptively with community funds. Title to those
certificates and the deposit they represented is governed by
Hilley v. Hilley, 342 S.W. 2d 565. They were the community
property of Mr. and Mrs. Davis, and title to the one-half com-
munity interest of Mr. Davis vests according to the provisions
of his will.

Mf 6. L. L. Davis did not intend by paragraph three of his will
to dispose of property not owned by him. Mrs. Venable’s claim
to a one-half interest in the $6000 deposited in court and a one-
half interest in the $2000 collected by Mrs. Davis from First
Federal must rest upon a conclusion that by paragraph three of
his will Mr. Davis intended to dispose of the East Texas certifi-

|

cate which upon his death became the separate property of Mrs.
Davis and of Mrs. Davis’ one-half community interest in the First
Federal certificates.

The law presumes that a testator intends to dispose of only
his own property, and a testamentary instrument will not be
construed to dispose of property not owned by the testator unless
that result is indicated by clear and unequivocal language which
leaves the will “open to no other construction”. Wright v. Wright,
154 Texas 138, 274 S.W. 2d 670, 674-675; Avery v. Johnson,
108 Texas 294, 192 S.W. 542, 544. For, as we have held, if the
language of the will is open to a different construction, that is,
a construction that the testator intended to dispose of only his
own property, the instrument will be construed as a matter of
law as not disposing of any other property. Wright v. Wright,
supra.

Here, the testator stated in paragraph three of his will that
he gave equally to Mrs. Davis and Mrs. Venable “All the rest
and residue of my estate consisting of cash, bonds, stocks, and
personal property of a similar nature”. The use of the words,
“my estate” and “my property” in themselves indicate an inten-
tion to dispose only of the testator’s own property. Wright v.
Wright, supra; Avery v. Johnson, supra; Rippy v. Rippy, Texas
Civ. App., 49 S.W. 2d 494, writ refused; Ward v. Gohlke, Texas
Civ. App., 279 S.W. 2d 422, writ refused. It follows that an in-
tention to dispose of Mrs. Davis’ separate property and her one-
half interest in community property is not disclosed by clear and
unequivocal language in the will.

7. Since paragraph three of the will does not dispose of Mrs.
Davis’ separate and community interest in the savings and loan
certificates and other personal property, she was not put to an
election of whether to give up that interest and take the property
devised to her in paragraph two of the will or retain that interest
and give up the property devised to her in paragraph two. Para-
graph three of the will, properly construed, disposes only of Davis’
separate property, if any, and of his one-half of the community.
Mrs. Davis and Mrs. Venable take the property in equal shares.

I 8. At the time this suit was filed the estate of L. L. Davis
was being administered by Mrs. Davis as independent executrix.
Evidence in the record clearly indicates that the estate had not
been fully administered and the trial judge so found. Section
152 of the Probate Code authorizes a distributee to file an appli-
cation to close an independent administration, but the application

50

must be made to the probate court and may be granted only
“after an estate has been fully administered and there is no
further need for an independent administration of such estate’.
The judgment of the Court of Civil Appeals in effect ordered the
administration on the estate of L. L. Davis closed and the estate
partitioned and distributed as there directed. The district court
did not err in refusing to close the administration or in refusing
to partition and distribute the estate and the Court of Civil Ap-
peals erred in reversing and rendering a contrary judgment.

The judgment of the Court of Civil Appeals is reversed. That
part of the judgment of the district court denying East Texas
any relief and awarding Mrs. Davis individually the $6000 on
deposit in the registry of the court is affirmed. That part of the
judgment of the district court decreeing that Mrs. Venable take
nothing is reversed, and it is ordered that Mrs. Venable’s title to
a one-fourth interest in the $2000 collected by Mrs. Davis from
First Federal Savings & Loan Association be established, subject
to a due and orderly administration by Mrs. Davis of the estate
of L. L. Davis. The trial court’s judgment assessing all costs in
that court against East Texas is affirmed. One third of the costs
in the Court of Civil Appeals and in this court is assessed against
each of the parties.

Opinion delivered February 28, 1962.
es
RAILROAD COMMISSION OF TEXAS ET AL, Petitioner
v.
C. MUREL WILLIAMS, Respondent.
No. A-7961. Decided October 18, 1961

Concurring Opinion Delivered April 11, 1962
856 S.W. 2d 181

oe
a
ry

GRIFFIN, JUDGE, not sitting.

SMITH, JUDGE, concurred in the results but for different
reasons.

Will Wilson, Atty. Gen., Houghton Brownlee, Jr., Charles D.
Cabiniss, Ben Harrison, Linward Shivers, Asst. Attys. Gen., for
Railroad Commission of Texas, petitioner.

2

Verne Maawell, Dallas, Powell, Rauhut, McGinnis, Reavley
& Lochridge and Frank Douglass, Austin, with above firm, for
American Petrofina Co. of Texas, petitioner.

Henry Betts, Black & Stayton, Thomas Black of the firm,
Austin, for Southern Natural Gas Co., petitioner.

McKay & Avery, Wallace H. Scott, Jr. Austin, Wilson &
Spivey, Tyler, for Reynolds Oil Co., petitioner.

Clark, Mathews, Thomas, Harris & Denius and James H.
Keahey, Austin, with above firm, for C. Murel Williams, re-
spondent.

MR. JUSTICE GREENHILL delivered the opinion of the
Court.

Murel Williams here seeks a permit to drill a gas well on
a 1.65-acre tract. The spacing pattern fixed by the Texas Railroad
Commission for the drilling of gas wells in this field in Shelby
County, Texas, is one well to each 640 acres. Williams seeks the
permit to drill on the 1.65-acre tract in order to prevent con-
fiseation of property under an exception to Rule 37 (the spacing
rule) of the Railroad Commission. He did not allege or prove
that the well was necessary to prevent waste. The application
was denied by the Commission. Upon appeal to the district court,
the action of the Commission was reversed and an order entered
that the permit be granted to prevent confiscation. In that action,
the Southern Natural Gas Co., Reynolds Oil Company, and the
American Petrofina Co. of Texas intervened and aligned them-
selves with the Commission in opposition to the granting of the
permit. The action of the trial court in granting the permit was
affirmed by the Austin Court of Civil Appeals. 336 S.W. 2d 800.
‘We here reverse the judgments of the courts below and uphold
the order of the Railroad Commission on the ground that there
is substantial evidence that the permit was not necessary to pre-
vent confiscation.

The basic facts are without dispute and are repeated here
substantially as they appear in the opinion of the Court of Civil
Appeals’ opinion below:

The 1.65-acre tract in question is the east 1.65 acres of a
8.8-acre tract acquired by H. P. and Ruby Williams, Murel’s
parents, on November 23, 1917. In the same deed to Williams
and his wife was a conveyance of the adjoining 87.5 acres. On

378

January 12, 1920, H. P. and his wife acquired the adjoining
5-acre tract. These three tracts combine to form a parallelogram.

On July 10, 1920, H. P. and his wife conveyed one-half the
minerals beneath the 3.8-acre tract to Smith Price. That owner-
ship has remained with Price and his widow.

On December 14, 1935, H. P. and his wife executed a 10-year
mineral lease on the 5- and 37.5-acre tracts to J. T. Perryman
who assigned it to Pure Oil Company.

On January 7, 1986, H. P. and his wife and Smith Price
executed a 10-year mineral lease on the 3.3-acre tract to Ed C.
Smith. That lease was ultimately assigned to Pure Oil Company.

This Joaquin gas field was opened in 1936. Pure assigned its
leases mentioned above to Southern Production, Inc., on Sep-
tember 18, 1940.

On May 15, 1942, Smith Price executed a pooling agreement
with Southern Production Company covering his one-half mineral
interest in the 3.3-acre tract.

On May 21, 1942, Southern Production put of record in Shelby
County an instrument styled “unit designation” by which it com-
bined and unitized as an operating unit for gas the leases cover-
ing the 3.3-, 5-, and 37.5-acre tracts. As stated above, Smith Price
had executed a pooling agreement covering his interest, but H. P.
and his wife did not authorize the inclusion of their interests
in the three Williams tracts in the unit.

On July 1, 1942, Southern Production completed a well known
as the Addie T. Stephens No. 1 on acreage which was included
in the unit purportedly containing the three Williams tracts. This
well produced until 1957. Smith Price participated in the pro-
duction from the Addie T. Stephens No. 1 during its producing
life, but the royalties accruing to H. P. and his wife were held
in a suspense account and have never been claimed by them.
The three Williams tracts were held under lease by the payment
of delay rentals which H. P. and his wife continued to receive
until the leases expired.

In December, 1945, and January, 1946, respectively, the
leases covering the Williams tracts referred to above expired.

On March 18, 1946, Southern Production executed a release

5

of the leases as to the 5- and 87.5-acre tracts, and on November
20, 1957, Sinclair Oil and Gas Company, assignee of Southern
Production, released the lease on the 8.3-acre tract.

On September 18, 1952, H. P. and his wife gave Murel a
general power of attorney to manage their affairs. Under this
authority, Murel testified that he “pretty much” ” managed their
affairs thereafter.

On May 1, 1953, Murel, on behalf of H. P. and his wife and
through his general power of attorney, executed an oil and gas
lease as to the 5- and 37.5-acre tracts to Natural Gas Distributing
Company. This lease expressly excluded the 3.8-acre tract. On
the same day, H. P. and his wife executed a pooling agreement
with Natural Gas covering the 5- and 87.5-acre tracts. This lease
was pooled into the H. P. Williams Unit. The H. P. Williams
No. 1 well was drilled on the 37.5-acre tract in 1958, and it still
produces. The Williams Unit is a noncontiguous unit authorized
under the field rules then applicable; i.e., to get together enough
acreage to qualify for a 640-acre drilling unit, the parties were
allowed to put into the unit scattered leases in various locations
in the field+

Murel Williams was instrumental in procuring for Natural
Gas various tracts which went to make up the H. P. Williams
Unit, and for such work he was given a 1/8th overriding royalty
on the production from all the unit. American Petrofina of Texas
is the successor to Natural Gas on the leases in this suit.

On January 16, 1958, H. P. and his wife conveyed by war-
ranty deed their rights in all the surface and in an undivided
one-half of the minerals of the 3.3-acre tract to Murel, their son.
On December 1, 1958, a consent decree was entered in the Dis-
trict Court of Shelby County partitioning the tract between
Murel and the widow of Smith Price. Each received equal tracts
containing 1.65 acres. Mrs. Price received the west 1.65-acre tract
and Murel the east 1.65-acre tract. Neither of the tracts was
of sufficient size to be developed for oil or gas in accordance
with the rules of the Railroad Commission.

On March 1, 1958, Mrs. Price leased her 1.65-acre tract to
S. R. Bright, who assigned to Reynolds Oil Company on October

1. The well on the Williams tract is virtually surrounded on all sides by
another producing unit, the Reynolds unit, Petitioners, therefore, argue that the
well on the Williams tract (comprising in all some 45.8 acres) is actually draining
a large area outside the Williams tract—and that therefore Williams et al.
are receiving more than their fair share of the gas.

a 315

10, 1958. On May 29, 1958, Reynolds applied to the Commission
for a permit to drill on its J. L. Grayson Unit, stating that such
unit included 3.78 acres under lease from [Mrs.] Smith Price.
Reynolds’ application was granted, and production was obtained
on lands other than the 1.65-acre tract leased by Mrs. Smith
Price.

On December 26, 1958, Murel filed with the Commission his
application for a well, thus instituting this case.

No attempt has been made by those with an interest in the
west 1.65 acres to secure a permit, and their rights, if any, are
not involved here.

According to the opinion of the Court of Civil Appeals below
and the briefs filed on behalf of Murel, the following is his
position: Murel concedes that the partition of the 3.3-acre tract
into two 1.65-acre tracts was a voluntary subdivision in violation
of the spacing rules of the Commission, and, of itself, does not
entitle him to a well on his east 1.65 acres. His position is, how-
ever, that the 3.3 acres was constituted a separate tract for oil
and gas development purposes on July 10, 1920, when H. P. and
his wife, Murel’s father and mother, conveyed an undivided one-
half of the minerals under the tract to Smith Price. He contends
that at that time the common ownership and control of the 5-,
87.5-, and 3.8-acre tracts previously existing in H. P. and his
wife was disrupted and was never reunited. He argues that, be-
cause the 3.3-acre tract was thereby made a seperate tract for
oil and gas development purposes, the tract had a right to at
least one well as a matter of law from July 10, 1920, to December
i, 1958, when the tract was partitioned. He then employs the
so-called Century Doctrine, Railroad Commission v. Magnolia
Petroleum Co., 180 Texas 484, 109 S.W. 2d 967 (1987), to re-
constitute the 3.3-acre tract from the two 1.65-acre tracts and
claims the alleged right of the 3.3-acre tract to one well for his
1.65-acre tract.

We assume, without deciding, that the 3.8-acre tract owned
by H. P. and his wife did become a separate tract for oil and gas
development purposes on July 10, 1920, when they conveyed an
undivided one-half mineral interest to Smith Price, and that it
remained a separate tract until December 1, 1958. What, then,
were the oil and gas development rights existing in the tract
and the owners of the tract prior to the conveyance of the un-
divided one-half mineral interest to Murel and the subsequent
partition in 1958, and what rights does Murel now have?

0

If H. P. and his wife had desired to develop separately the
3.3-acre tract prior to conveyance to their son, Murel, they would
have had to apply to the Railroad Commission for an exception
to Rule 87 on the ground of waste or confiscation. The Court of
Civil Appeals and Murel assume that they would have been en-
titled to a first well on it as a matter of law. We conclude that
they would not have been entitled to a well as a matter of law
because there is substantial evidence to support a finding by
the Commission that at least after production on the adjoining
37.5-acre H. P. Williams tract (beginning in 1953 and continuing
to date), H. P. Williams could not have proved that the gas under
the 3.3-acre tract was being confiscated; i.e., he could not have
proved that without a well on his 3.3-acre tract, he could not
recover his fair share of the gas from the 8.3 acres. Since
production units are of approximately 640 acres, one well is pre-
sumed to drain that amount of acreage. As will be pointed out
below, it is undisputed that the H. P. Williams well on his 37.5-
acre tract is capable of producing (draining) gas from under
the adjoining 3.8-acre tract and that it actually did so. We further
conclude, therefore, that the courts below were in error in hold-
ing that, as a matter of law, Murel was entitled to a well. Our
reasons follow:

The analysis of Murel and the Court of Civil Appeals de-
pends in part on treating the right to a well as a vested right
in the land itself. Some cases have language to this effect;? but
the holdings in them did not turn on the precise point now be-
fore us.

BE The right to a well on a tract of land, however, is not a vested
right in the land itself, but is a right of the owners of the land.
Railroad Commission v. Magnolia Petroleum Co., 180 Texas 484,
109 S.W. 2d 967 (1987).* If it were a vested right in the land,
then the right of a small tract could not be destroyed by merger
with a larger tract. The right of a small tract can, of course,
be so destroyed. Railroad Commission v. Wood, 95 S.W. 2d 1328
(error refused, 1936).

2. E.g., Railroad Commission v. Humble Oil and Refining Co. 151 Texas
Bl, 245 S.W. 24 488 (1952); Dailey v. Railroad Commission, 183 8.W. 24 219
(error refused, 1939); Stanolind Oil and Gas Co. v. Railroad Commission, 96
S.W. 24 664 (no writ history, 1936).

8. See Charlie J. Meyers, “‘Common Ownership and Control’ in Spacing
Cases”, 31 Texas Law Rev. 18, at 22:

“The error springs from the assumption that every tract has a vested right
to one well, and that transfers in ownership of the tract cannot destroy that
vested right. The mistake in this reasoning is, of course, that it is not the tract,
as a parcel of land, that is entitled to a well; it is the owner who has the right.”

re 377

I The cases may have spoken of rights in land because it is
easier to express the right to a well as one belonging to the tract
rather than mentioning the owners of the tract each time. But
whether the right belongs to the tract or to the owner is im-
portant when considering rights to well permits as exceptions
to Rule 37, because the particular facts and circumstances of
each landowner’s case may or may not justify granting him a
permit. It is our conclusion that a landowner must prove that
he needs a well to prevent confiscation or waste.

The argument of Murel and the Court of Civil Appeals is
further grounded on the proposition that the 3.3-acre tract was
entitled to a first well as a matter of law. Again, there is language
in some cases that the owner of a tract of land, which is too small
to meet the spacing rules but which is not a voluntary subdivision
in violation of those rules, is entitled to a first well on the tract
as a matter of law.t But, as stated above, the holdings in these
cases did not turn on the question decided herein. The reason-
ing of those cases as to why every landowner of an involuntary
subdivision is entitled to at least a first well as a matter of law
is given in Stanolind Oil and Gas Co. v. Railroad Commission,
96 S.W. 2d 664 (no writ history, 1936) which is perhaps the
first case stating this rule:

“Total deprivation of the landowner’s vested right to a
fair share of the recoverable oil in place under his land is
not a proper remedy under our present conservation laws and
rules promulgated thereunder.” Stanolind Oil and Gas Co. v.
Railroad Commission, 96 S.W. 2d 664, at page 665.

It thus appears that the courts were perhaps compelled to
the conclusion in these cases that the only way to protect the
small tract owner was to give him at least one well as a matter
of law. We have concluded, however, that such a small tract
owner is not necessarily entitled to a first well as a matter of
law.® He is entitled to the exception, under Rule 37, if it is neces-

4. Railroad Commission v. Humble Oil and Refining Co. 151 Texas
51, 245 S.W. 2d 488 (1952); Dailey v. Railroad Commission, 188 S-W. 2d 219
(error refused, 1939); Stanolind Oil and Gas. Co. v. Railroad Commission, 96
S.W. 2d 664 (no writ history, 1936).

5. See the discussion by Robert E. Hardwicke, “Oil-Well Spacing Regula-
tions and Protection of Property Rights in Texas”, $1 Texas Law Rev. 99. Hard-
wicke reasons that if the rule (each tract is entitled to a first well as a matter
of law) means that the commission may not ignore its own rules, and that tracts
subdivided before Rule 37 or the discovery of oil or gas shail be entitled to a
well to prevent waste or confiscation, then the rule is sound. If it means that
each tract is entitled to a well regardless of the development in the area by the
applicant and others, then the rule is not sound.

8

sary to prevent waste or to prevent confiscation of property.
As this Court said in Gulf Land v. Atlantic Refining Co., 184
Texas 59, 181 S.W. 2d 73 (1989), on p. 80:

“In order to accomplish orderly drilling, the Commission
has simply promulgated a rule fixing minimum spacing dis-
tances at which wells may be drilled without application, notice,
or hearing. Any one desiring to drill a well at a lesser distance
must secure a special permit, after notice and hearing. Such
applicant assumes the burden of proof that such well is neces-
sary to prevent waste, or to prevent the confiscation of prop-
erty.”

Il The basic right of every landowner, including small tract
owners, is to a fair chance to recover the oil and gas in and
under his land, or their equivalents in kind. Gulf Land v. Atlantic
Refining Co., cited just above. This means that the owners and
lessees of some small tracts are entitled to a well on their tracts
as a matter of law because there is no other way to give them a
fair chance to recover the oil and gas under their land. Stanolind
Oil & Gas Co. v. Railroad Commission, cited just above. But
they must first prove confiscation or waste.

Hi The rule of fair chance or fair share is the reason for the
“confiscation” exception to Rule 837 whereby an owner or lessee
can get a well permit for a small tract. Brown v. Humble Oil and
Refining Co., 126 Texas 296, 83 S.W. 2d 935 (1935) ; Railroad
Commission v. Gulf Production Co., 184 Texas 122, 132 S.W.
2d 254 (1939). In fact, it has been held that the proper test
of confiscation under Rule 87 is whether an owner, with the
wells which already exist, has been accorded a fair and equal
opportunity with other producers of surrounding tracts within
the drainage area to recover his fair share of the oil in place
beneath his tract. If he has, no confiscation results. Gulf Oil Cor-
poration v. Smith, 145 S.W. 2d 280 (error refused, 1940).

Murel expressly denied a theory of waste in seeking a permit
for his 1.65 acres, and has based his claim on confiscation. We
think that there is substantial evidence in the record to support
a Railroad Commission finding of no confiscation. The Railroad
Commission has developed a gas well spacing pattern of one well
for each 640 acres in the Joaquin field, and has determined that
“development on such 640-acre pattern will provide for adequate
drainage of the gas reserves.” The 8.3-acre tract is within the
Williams’ 45.8-acre area which is drained by the H. P. Williams
No. 1 well. That well is located on the Williams 37.5 acres im-

89

mediately adjoining the 3.3 acres. Murel’s own expert witness,
Ashford, testified:

“Q. And, of course, the H. P. Williams No. 1, which is
only about 1000 or 1200 feet from that area, has been drain-
ing it, hasn’t it?

“A. Yes, sir.

“Q. Probably draining it more than any other well you
know of; isn’t that right, Mr. Ashford?

“A. Well, it is as close as any other.
“Q. It is as close or closer; is that right?
“A. Yes, sir.”

Petitioners’ expert witness, Tucker, testified that “there
would be absolutely no question that a well as close as the Wil-
liams well is to the subject 3.3-acre area would drain that area.”
Through the H. P. Williams No. 1 well close by on their adjoin-
ing land, H. P. and his wife have been draining their own 8.3-acre
tract. There seems little doubt, therefore, that the H. P. Williams
No. 1 well provided H. P. and his wife with a reasonable op-
portunity to produce their fair share of the oil and gas under
the 3.3-acre tract.

As stated above, Murel employs the so-called Century Doec-
trine, Railroad Commission v. Magnolia Petroleum Co., 130 Texas
484, 109 S.W. 2d 967 (1937), to reconstitute the two 1.65-acre
tracts into the 8.3-acre tract and claims the alleged right of the
owners of the 3.3-acre tract to a well for his 1.65-acre tract. But

. the basic condition of this doctrine is that a well is needed “to
protect the vested rights of the owners of such larger tract [the
reconstructed tract] to recover their fair share of the oil there-
under in place”. Humble Oil & Ref. Co. v. Lasseter, 120 S.W. 2d
541 (error dismissed, 1938). In this case none was needed to
protect the owners, H. P. and his wife, because they were already
draining the tract with their well on the adjoining tract.

HM If they, as contenants with Smith Price of the 3.3-acre
tract, had applied for a well permit for the tract prior to the
conveyance to Murel and after the H. P. Williams No. 1 well
had begun to drain the 8.8-acre tract, there would have been
substantial evidence to support the denial by the Commission of

500 ee

the application. Murel, their grantee of the undivided one-half
mineral interest, could have no better rights to a well permit.
To hold otherwise would mean that a grantor of a mineral in-
terest could create valuable oil development rights in his grantee
which he himself did not have. This rule is a necessary corollary
* to the voluntary subdivision rule. That rule prohibits the creation
of a right to a well permit on each small tract subdivided from
a large one when the owner of the larger tract did not have
such right. Humble Oil and Refining Co. v. Railroad Commission,
68 S.W. 2d 622 (Texas Civ. App. 1984), affirmed sub nom
Brown v. Humble Oil and Refining Co., 126 Texas 296, 88 S.W.
2d 935 (1935).

The opinion of the Court of Civil Appeals below dealt large-
ly with the opinion in Ryan Consolidated Petroleum Corp. v.
Pickens, 155 Texas 221, 285 S.W. 2d 201 (1955). We do not
here reach the problem raised in the Ryan case, and that opinion
has no application to the decision which we have reached.

The judgments of the courts below are reversed, and judg-
ment is here rendered for the Railroad Commission and the other
petitioners.

Opinion delivered October 18, 1961.
SMITH, JUSTICE, concurring.

I concur in the result but do not agree with many of the
reasons assigned by the Court as to why the action of the Com-
missioners in denying Murel Williams a permit was being upheld.
In my opinion, the action of the Commissioners in denying the
permit was supported by substantial evidence. The evidence is
simply this: Williams and Smith Price were the owners of the
8.3 acres involved here. Smith Price executed a pooling agree-
ment covering his undivided 1/2 interest. This 3.8 acres went
into the unit. A permit was granted to this unit. Williams de-
liberately left his 1/2 interest out of both units which had been
created. It is my opinion that the 8.8 acres was only entitled to
one well and that when the permit was granted, locating the well
on one of the tracts with which Price had unitized, the location
was just as though the well was actually located on the 3.3-acre
tract owned by Williams and Price. Under such circumstances,
Williams was not entitled to another well on the 3.3 acres or his
one half of that tract. The reasons assigned by Mr. Justice Green-
hill for holding against Williams are, in the main, contrary to
the well-settled rules of property announced by this Court in

38:

|
eB

numerous decisions. In view of other cases pending in this Court,
I deem it proper to write my views at this time rather than to,
merely note a concurrence.

Opinion delivered April 11, 1962.
a

‘VALMONT PLANTATIONS ET AL, Petitioners
v.
THE STATE OF TEXAS ET AL, Respondents
No. A-8465. Decided February 14, 1962

Rehearing Denied April 11, 1962
355 S.W. 2d 502

2 T
ASSOCIATE JUSTICE GRIFFIN, dissenting.

A. J. Vale, Pope & Pope, F. Randall Nye, Rio Grande City,
L. Hamilton Lowe, Austin, for Valmont Plantations et al.

Ransome & Ray, Brownsville, Cunningham, Yznaga & Dun-
can, Brownsville, for R. F. Breeden et al.

Strickland, Wilkins, Hall & Mills, Mission, for W. L. Pickens,
Trustee, et al.

Strickland, Wilkins, Hall & Mills, Mission, for Everett Bell
et al.

Will Wilson, Atty. Gen., Austin, Houghton Brownlee, Jr.,
Assistant, Wayland Rivers, Spec. Asst., Kent, Brown & George,
Harlingen, A. G. Haigh, Edinburg, Gibbon, Klein & Ferrero,
Harlingen, Truett Hubbard, Donna, J. D. Vollmer, Mercedes,
Smith, Mcltheran & Jenkins, Weslaco, Kelley, Looney, McLean
& Littleton, Edinburg, Vinson, Elkins, Weems & Searls, Houston,
Sawnie B. Smith, Edinburg, Robertson, Jackson, Payne, Lan-
caster & Walker, Dallas, Hill & Kin, Mission, for State of
Texas et al.

E. H. Moore, LaFeria, for other respondents.

ASSOCIATE JUSTICE ROBERT W. HAMILTON delivered
opinion of the Court.

This is a suit between appropriators and riparians. It is a
class action to determine whether, in the absence of specific grants
of irrigation waters, Spanish and Mexican grants along the Rio
Grande River have appurtenant riparian irrigation rights.

The State and numerous water districts assert rights of the
appropriators, and the owners of lands out of the original grants
assert rights similar to those commonly called riparian rights.

The trial court held that although it was of the opinion that
the grants did not carry with them riparian rights of irrigation,
it was bound by the case of Motl v. Boyd, 116 Texas 82, 286
S.W. 458, and held that the grants along the lower Rio Grande
did carry with them the implied rights of irrigation.

I The Court of Civil Appeals reversed the judgment of the
trial court and rendered judgment for the appropriators, hold-

eS 383

ing that the original Spanish and Mexican grants in question
did not carry with them implied rights of irrigation. 346 S.W.
2d 853. In so holding that court determined that statements made
by way of dicta in Motl v. Boyd to the contrary were not stare
decisis of the question. We affirm.

HI The opinion of Mr. Justice Pope of the Court of Civil Appeals
is exhaustive and well documented. We believe it would serve
no good purpose to write further on the subject other than to
point out that the question of the binding effect of certain state-
ments contained in Motl v. Boyd presents a different problem
when applied to a Court of Civil Appeals than it does when
applied to this Court. The dissent of Chief Justice Murray is
largely based upon the proposition that the Court of Civil
Appeals is bound to follow the dicta contained in Motl v. Boyd,
which he regards as being judicial in nature. We find text state-
ments which are similar in purport to the thesis asserted by the
Chief Justice. It is pointed out in Corpus Juris Secundum that:

“It is commonly held that a decision is authoritative only
on questions which it was necessary to decide, and were in-
volved, or in issue, in the case. However, inferior courts have
been held bound by a decision on a question actually determined
by an appellate court even though the decision thereof was not
necessary to the determination of the case.” 21 C.J.S., Courts,
Sec. 190, p. 382.

See also, 21 C.J.S., Courts, Sec. 209, p. 316, as to statements
made by way of dicta for the guidance of lower courts.

With the granting of the writ of error in this case the
question of whether the Court of Civil Appeals should have fol-
lowed the dicta of Motl v. Boyd became academic. The question
now relates to the action which should be taken by this court with
reference to such dicta. When we apply the reasoning of Mr.
Justice Pope relating to the doctrine of stare decisis (346 S.W.
2d 878) to the Supreme Court, the answer is inescapable. Such
dicta should not control our disposition of this case. In Vidal
v. Girard’s Executors, 2 How. 127, 11 L. Ed. 205, the Supreme
Court of the United States (opinion by Mr. Justice Story) re-
examined a point of chancery jurisdiction as “strong additional
light had been thrown upon the subject” through historical re-
search,

As further discussion is unnecessary it will be pretermitted.
The judgment of the Court of Civil Appeals is affirmed and the

3

opinion of that court is adopted as the opinion of the Supreme
Court.

Opinion delivered February 14, 1962.
GRIFFIN, JUSTICE, dissenting.

After diligent search of the authorities I am by no means
convinced that the Spanish and Mexican law is as declared by
the majority opinion. In fact, I find that the commonly accepted
practices of those colonizing the lower Rio Grande Valley demon-
strate that since the 1700’s riparian owners have had the right
to use the waters of the Rio Grande to irrigate their lands.
Irrigation was a necessity if the colonists were to exist and
prosper. Since this right has so long been recognized, I would
follow that branch of the Spanish and Mexican law which gives
the right of irrigation to the riparian owner.

The decision in Motl v. Boyd, 116 Texas 82, 286 S.W. 458
(1926) established a well recognized rule of property under
which many millions of dollars have been invested in riparian
lands in the lower Rio Grande Valley. That case reiterated and
affirmed what had been the previous announcement of this court
regarding the rights of riparian owners. With but one exception,
all acts of the Legislature pertaining to riparian rights, beginning
with 1889 and continuing to date, have specifically recognized
and protected the rights of riparian owners.

It is a grave mistake to hold that the pronouncements in
Motl v. Boyd are only obiter dicta rather than judicial dicta. This
court in that case (p. 463) said that it was strongly urged on
the court to deny the applicability of the doctrine of riparian
rights to natural or statutory navigable streams. The Court said:
«= * * This course is insisted on with so much force and so
earnestly that we have concluded to investigate the whole sub-
ject for the purpose, if we can, of ascertaining the rule applicable
im this state, and of harmonizing our statutes and decision and
setting at rest, in so far as we can, the question involved.” (All
emphases throughout this opinion are mine unless the contrary
is shown.) Then after a thorough discussion of the writing and
the authorities this court said, (p. 465) : “* * * In view of what
we have cited from Hall’s Mexican Law, we believe we are clearly
warranted in saying that, in so far as the Mexican law in Texas
is concerned, it was one which distinctly recognized the rights
of riparian owners of land,” which includes the right to irrigate
their crops.

es 385

In discussing the Act of January 20, 1940, adopting the com-
mon law as the rule of decision, the court said, (p. 466): “In
so far as colonization grants were concerned, this act of the
Republic was a distinct recognition of the laws under which the
grants were made, and a declaration by the Republic of Texas
that these grants and the rights thereunder would be recognized
and carried forward under the laws under which they were made,
included in which were, we have seen, the rights of riparian
owners.”

Summarizing its holding in that cause the court says:

« * * On the whole, we think it proper to say that from
the Mexican decree of 1823 down to the passage of our appro-
priation act in 1889, the fixed policy of this state, under all
of its several governments, that of Mexico, Coahuila and
Texas, Tamaulipas, and the Republic and state of Texas, was
to recognize the right of the riparian owner to use water, not
only for his domestic and household use, but for irrigation
as well.

“What we have thus far said has been predicated upon
the history of the subject, and an interpretation of the laws,
decrees, and the acts involved. The construction, however, is
in harmony with the decisions of this court, which appear
to us to have settled the question that riparian rights to the
use of the waters of the streams of the state for irrigation
purposes were a part of the grants of land when the grants
were made. Watkins Land Co. v. Clements, 98 Texas 578, 86
S.W. 733, 70 L.R.A. 964, 107 Am. St. Rep. 653; Board of
Water Engineers v. McKnight, 111 Texas 82, 229 S.W. 301;
Martin v. Burr, 111 Texas 57, 228 S.W. 543.”

This is a clear and direct holding by this Court that riparian
owners had the right to use the waters of a stream for irriga-
tion purposes prior to the appropriation act of 1889.

The holding in Motl v. Boyd which declared that riparian
owners had a vested right to use the water from the stream for
irrigating their crops was recognized and affirmed in the cases
of Chicago, R. I. & G. Ry. Co. v. Tarrant County Water Control
& Improvement Dist. No. 1, 128 Texas 432, 73 S.W. 2d 55(9),
(1984) and Heard v. State, 146 Texas 189, 204 S.W. 2d 344
(1947). Thus we see that the principle of the rights of riparian

- owners to use the stream waters to irrigate as set out in Motl

6

v. Boyd in 1926 has been unquestioned by this Court. It has
become and is a rule of property, and I would not overrule it.

The majority decision creates confusion and uncertainty and
results in a lack of uniformity of rights as between landowners
on the same stream as well as on different streams. The majority
recognizes in principle the rights of riparian owners holding under
common law grants to use stream waters for irrigation. Many
of our longer streams in Texas have on their banks both common
Jaw and civil law grants. The rights should be the same, and by
following what has been the law up to this decision these grants
would continue to have and possess the same rights thus main-
taining uniformity. The majority decision creates an impractical
patchwork of law applicable along most of our major streams
rivaling Grandma’s quilt for variety.

The most serious objection to the majority opinion is that it
creates an uncertainty as to what the laws are at the present time,
although prior cases have unequivocably set forth rules and prin-
ciples of law. How can an attorney advise his clients with any
certainty as to the client’s rights? Here the majority overthrows
a solemn declaration of law set forth in clear and unambiguous
language in Motl v. Boyd in 1926. What attorney can afford to
advise his clients in the face of clear declarations establishing
a rule of property that such declarations are not the law, but
obiter dicta and not binding? The responsibility of this Court is -
to maintain a consistent interpretation of the law, as well as
to render justice in its decisions. The confidence of the people
of Texas is not to be treated lightly, nor the legal profession
put in doubt as to the lasting effect of a particular holding.

This Court said in Southland Royalty Co. v. Humble Oil &
Refining Co., 151 Texas 324, 249 S.W. 2d 914, 916 (1952):

“It may be noted here that respondents suggest a re-exam-
ination of the Parker and George cases on the theory that
the courts should not attribute to lessors jointly executing a
general form lease, without more, an intent to pool or unitize
their properties; that the language of the general form lease
was never intended to effect or to operate as a pooling agree-
ment. This argument is not entirely unappealing. The Texas
rule in this respect is not of universal application. See 116
A.L.R. 1267, et seq. On the other hand, the law of the Parker
and George cases have now become a rule of property in this
state and should not be changed in the absence of other con-
trolling circumstances, even though good reasons might be

Pe 887

given for a different holding’ Tanton et ux v. State National
Bank of El Paso et al., 125 Texas 16, 79 S.W. 2d 833.”

In Thomas v. Meyer, Texas Civ. App., 1932, 168 S.W. 2d
681, 685, no writ history, it is said:

“It seems more probable to assume that the holdings upon
the point here involved were deliberately made for the guidance
of the bench and bar upon a point of statutory construction
not theretofore considered by the Supreme Court. It, therefore,
seems that these holdings must at least be considered as
judicial dicta rather than mere obiter. * * *”

The lower Rio Grande Valley has attained its present state
of development under the rights of riparians to use the flow
of that stream to irrigate their fertile fields and orchards. It
should be allowed to continue to develop under such rights, sub-
ject to the recognized rights of the court to prorate the water
in times of extreme drought.

I would not overthrow the accepted practices and understand-
ing of the rights of riparian owners which have been generally
accepted for nearly 200 years.

For an academic discussion on this matter see “The Texas
Law of Flowing Waters with Special Reference to Irrigation from
the Lower Rio Grande”, Davenport & Canales, Baylor Law Re-
view, Vol. VIII, No. 8, p. 283; The Development of the Texas
Law of Water, Vol. 21, Vernon’s Annotated Texas Civil Statutes.

I would reverse the judgment of the Court of Civil Appeals and
affirm the trial court’s judgment.

Opinion delivered February 14, 1962.
as

EX Parte RICHARD H. GODEKE
No. A-8808. Delivered March 21, 1962

Rehearing Denied April 18, 1962
855 S.W. 2d 701

388

Camp & Camp, Cameron, Fischer, Wood, Burney & Nesbitt,
Corpus Christi (James R. Harris, Corpus Christi, with above
firm), for relator.

Jack W. Prescott, Cameron, for respondent.

ASSOCIATE JUSTICE NORVELL delivered the opinion of
the Court.

The District Court of Milam County found Richard H. Godeke

ee] 389

guilty of contempt of court because he failed to return his minor
son, Robert Frederick Godeke, to the child’s mother, Marjorie
B. Hoppe (Richard H. Godeke’s divorced wife) as directed by
an order of said court.

It appears without dispute that the relator took his son from
the custody of the mother under a provision of the Milam County
District Court’s order which permitted the child to visit his
father for seven days during the Christmas season. While the
child was with his father in Nueces County, the relator filed
suit on December 29, 1961, in the Domestic Relations Court of
Nueces County in which he sought a decree granting him “the
full and absolute custody and control of said minor child”. The
petition was presented to the Judge of the Domestic Relations
Court on the day it was filed, and the Judge thereof, without
giving notice to the mother of the child and without the hearing
of evidence decreed “that the temporary care and custody of
said minor, Robert Frederick Godeke, be vested in said Peti-
tioner (the relator here) until and pending the hearing of this
cause or until further Order of this Court.” This order recited
that it appeared from the allegations of the petition that absent
such action, the minor “may be removed from the continental
limits of the United States”.

In his petition for writ of habeas corpus the relator set up
the decree of the Nueces County Domestic Relations Court as
a defense to the contempt charge and upon preliminary considera-
tion of the case we granted habeas corpus and admitted relator
to bail.

Carl C. Black, the Sheriff of Milam County, who occupies
the position of respondent here, contends that the decree of
Nueces County Domestic Relations Court upon which relator relies
is void for two reasons: First, the Milam County District Court
case in which the decree disobeyed or ignored by relator was
issued, was a pending case at the time the domestic relations
court undertook to assume jurisdiction, and, Second, that the
action of the domestic relations court in entering the order with-
iout notice, without hearing evidence and without setting a
specific time for a hearing of evidence, constituted an abuse
of discretion and was so arbitrary as to be wholly void! under
the due process clauses of the state and federal constitutions.

1. It was orally argued that in cases of this character when, because of
emergency conditions, a temporary custody is required some such procedure as
that provided by Rule 680, Texas Rules of Civil Procedure, relating to tem-
porary restraining orders, should be followed; that is, a hearing should be set

0 es

In our opinion the decree of the Domestic Relations Court of
Nueces County was void because it was in conflict with’ a prior
decree of the Milam County District Court in a case which was
then pending in said district court at the time of the entry of
the Nueces County decree. This requires that relator be remanded
to the custody of the Sheriff of Milam County and we do not
reach the constitutional question.

There is dispute between the parties as to the date of the
rendition of the Milam County decree. Relator contends that
such date is October 30, 1961, while the respondent asserts that
the date of signing in the order, that is, December 21, 1961,
is to be taken as the true date of the rendition of judgment. Were
this a factual dispute, this Court would be without power to
decide it as we have jurisdiction of questions of law only. Article
5, Sec. 8, Texas Constitution. However, the issue presented is
one of law involving the construction of the decree according
to the language contained therein and in accordance with the
pertinent provisions of the Texas Rules of Civil Procedure.

The Milam County order is quite lengthy for a decree of this
nature and contains numerous detailed provisions as to the
custodial rights of Marjorie B. Hoppe and the visitorial rights
of the relator, Richard H. Godeke. The decree occupies five pages
of an exhibit in the form of a transcript filed in this cause. The
decree came about in this wise: Richard H. Godeke invoked
the jurisdiction of the District Court of Milam County on
October 26, 1961, in order to procure a temporary restraining
order preventing the mother, Marjorie B. Hoppe, from taking
the child, Robert Frederick Godeke, out of the State of Texas.
It appears from this application that the Milam County District
Court had entered a custodial order relating to the child on
July 7, 1961. The injunction application, if granted, would have
effected a modification of this order which was one of a long
series of such decrees resulting from legal controversies between
Richard H. Godeke and his former wife, the present Mrs. Hoppe,
extending from January 25, 1954, when the parties were di-
vorced by a decree of the District Court of Bexar County, Texas,

as soon as practicable for a day certain and both sides be given an opportunity
to be heard. It is urged that the entry of an ex parte order without hearing
evidence until final disposition of the cause is a wholly arbitrary action and
void. It has been held that a parent's right to the custody of a child is afforded
protection by the due process clauses of Article 1, Sec. 19 and the Texas
Constitution and the fifth amendment to the federal constitution, unless such
right has been forfeited by abandonment or other misconduct. DeWitt v. Brooks,
143 Texas 122, 182 S.W. 2d 687, reversing Brooks v. DeWitt, Texas Civ. App.,
178 S.W. 2d 718.

eS 31
up to the present time. Legal proceedings have been filed in at’

least four counties of Texas, Bexar, Travis, Milam and now
Nueces.

The Milam County decree contains two dates, October 30
and December 21 in that it was therein recited that, “{O]n this
the 80 day of October A.D. 1961, came on to be heard the above
styled and numbered cause * * *” and that such decree was
“Signed and entered this 21st day of December, 1961.” This
latter recitation appears at the bottom of the decree and imme-
diately above the judge’s signature thereon.

The District Judge evidently followed the recommendations
of Rule 306a in reciting the date of the rendition of judgment
and we think this recited date of signing is controlling.

It is conceded by relator that if “the Milam County District
Court proceeding was still a pending case at the time the Nueces
County Domestic Relations Court undertook jurisdiction * * *
the Milam County Judgment imprisoning Relator in the Milam
County Jail is valid.” This necessarily must be true. The Milam
County decree allowed the relator to have the child during the
Christmas holidays, but ordered him to return the child to the
mother at the end of the holiday period. The Nueces County
order purports to vest custody of the child in the father until
further orders of the court, thus permitting him to ignore the
Milam County decree. The Nueces County order, if issued at a
time when there was a pending case in Milam County involving
the same subject matter, would be void and would afford no
protection to relator for his refusal to abide by the Milam County
order. Ex parte Lillard, 159 Texas 18, 314 S.W. 2d 800. Cleve-
jJand v. Ward, 116 Texas 1, 285 S.W. 1063.

Hl The controlling and all important question in this case is
whether or not on December 29, 1961, the date of the Nueces
decree, the Milam County cause was a “pending case”. Under
the provisions of our Rules of Civil Procedure this question must
be answered in the affirmative. Rules 306-a and 329-b must be
considered together. Rule 306-a provides that “the date of sign-
ing” (December 21 in this case), as recited in the judgment or
order, shall be deemed the date of rendition thereof in determin-
ing the time within which to file a motion for new trial, notice
of appeal, etc. Rule 329-b, Sec. 5 provides that, “after the ex-
piration of thirty (30) days from the date judgment is rendered
or motion for new trial overruled, the judgment cannot be set

9 es

aside except by bill of review for sufficient cause filed within
the time allowed by law.”

I If October 30 were taken as the date of rendition of judgment,
the same would become impervious to direct attack except by
bill of review on November 29, thirty days after such date of
rendition. However, under Rule 306-a, taken in connection with
Rule 329-b, the Court would be clearly authorized to set aside
the judgment upon motion for new trial or upon its own motion
any time within 80 days after judgment was rendered. Rule
829-b, Sec. 5. Our Rules of Civil Procedure must be construed
so as to produce harmony rather than discord. It would be self
contradictory to say that the judgment could only be attacked
by bill of review from and after November 29, but that within
thirty days after December 21, the judgment could be set aside
on the court’s own motion—or by action upon a motion for a
new trial. The question here is one of pendency. A cause still
pends in a trial court so long as a judgment rendered therein
remains subject to attack by motion for new trial or subject to
judicial vacation or modification by such court under the terms
and provisions of Rule 329-b.

The relator is remanded to the custody of the Sheriff of
Milam County.

Opinion delivered March 21, 1962.
[|

GERALD S. GORDON ET AL, Relators
v.
HONORABLE P. FRANK LAKE, SECRETARY OF STATE, Respondent
No. A-8583. Delivered April 4, 1962

Rehearing Denied April 25, 1962
856 S.W. 2d 188

393

ASSOCIATE JUSTICE GRIFFIN, dissenting.
ASSOCIATE JUSTICE STEAKLEY, not sitting.

Gerald S. Gordon, Myron M. Sheinfeld, Houston, for relators.

Will Wilson, Atty. Gen., Austin, Fred Werkenthin, Bob Shan-
non, Asst. Attys. Gen. for respondent.

WALKER, JUSTICE.

This is an original proceeding in which Gerald 8. Gordon et
al, relators, seek a writ of mandamus requiring Honorable P.
Frank Lake, Secretary of State, respondent, to file a corporate
charter setting forth the purposes formerly authorized by Article
1803b, Vernon’s Ann. Texas Civ. Stat. The statute was ex-
pressly repealed by the Legislature effective ninety days after
May 29, 1961. Acts 1961, 57th Leg., p. 458, ch. 229. Relators

30.

presented their original charter to respondent on August 3, 1961.
An amended charter was submitted five days later, and re-
spondent refused to file the same on the ground that Article
1808b had previously been repealed by the Texas Business Cor-
poration Act, which was adopted in 1955. Motion for leave to
institute the present proceeding was filed on August 9, 1961.

For some time after the adoption of the Business Corpora-
tion Act, the Secretary of State accepted and filed charters con-
taining purpose clauses stated in the terms of Article 1303b.
In Opinion No. WW-77 dated April 1, 1957, the Attorney Gen-
eral took the position that the earlier statute was repealed by
such Act. As indicated above, it was solely for this reason that
respondent declined to file the charter presented to him by rela-
tors. He concedes that if they were entitled to organize a cor-
poration for the purposes authorized by Article 1808b, the instru-
ment tendered to him complied in all respects with the laws
then in effect.

I A statute may be repealed expressly or by implication. Where
a later enactment is intended to embrace all the law upon the
subject with which it deals, it repeals all former laws relating
to the same subject. See Motor Inv. Co. v. City of Hamlin, 142
Texas 486, 179 S.W. 2d 278. Repeals by implication are not
favored, however, and laws relating to the same subject should
be considered as though incorporated in the same act. If they
ean be harmonized and effect given to each when so considered,
there is no repeal by implication. See Conley v. Daughters of The
Republic, 106 Texas 80, 156 S.W. 197.

Several types of corporations are expressly excepted from
the provisions of the Business Corporation Act. Article 2.011
provides that “[nJo corporation may adopt this Act or be organ-
ized under this Act or obtain authority to transact business in
this State under this Act: * * * (4) If any one or more of its
purposes is to operate any of the following: * * * (b) trust com-
panies * * *.” Section A of Article 9.14 declares as a general
rule that the Act does not apply to corporations organized for
any of such purposes. It is provided, however, that:

«x * * if any of said excepted domestic corporations were
heretofore or are hereafter organized under special statutes
which contain no provisions in regard to some of the matters
provided for in this Act, or any such excepted foreign corpora-

1, Except as otherwise indicated all statutes are referred to by the article
number under which they appear in V.A.T.S. Bus. Corp. Act.

es 395

tions were heretofore or are hereafter granted authority to
transact business within this State under any special statute
which contains no provisions in regard to some of the matters
provided for in this Act in respect of foreign corporations,
or if such special statutes specifically provide that the gen-
eral laws for incorporation or for the granting of a certificate
of authority to transact business in this State, as the case may
be, shall supplement the provisions of such statutes, then the
provisions of this Act shall apply to the extent that they are
not inconsistent with the provisions of such special statutes.”

Subject to the exceptions and limitations of said Section
A, the Act is made applicable to all domestic corporations organ-
ized after its effective date. Article 9.14, Section D. It is further
provided that subject to the provisions of Articles 9.14, 9.15,
Section C of Article 2.02 and Section B of Article 9.16, “and
excluding any existing general Act not inconsistent with ‘any
provisions of this Act, no law of this State pertaining to private
corporations, domestic or foreign, shall hereafter apply to cor-
porations organized under this Act * * *.” Article 9.16.

As pointed out in Carney v. Sam Houston Underwriters, Texas
Civ. App., 272 S.W. 2d 942 (wr. ref., n.r.e.), the ordinary con-
ception of a trust company is one that is authorized to take
and administer trusts. Prior to its repeal, Article 1803b per-
mitted the organization of a corporation with the power, among
others, to act as trustee under any lawful express trust com-
mitted to it by contract or will, or under appointment of any
court having jurisdiction of the subject matter. This is one of
the stated purposes of the charter now in question, and we agree
with the Attorney General that relators are attempting to or-
ganize a “trust company” within the meaning of the Business
Corporation Act.

Hit is evident that the Legislature did not intend for the
Act to embrace all of the law on the subject of corporations and
their creation. The excepted corporations may not be organized
under or adopt its terms, but their organization under other
applicable laws is clearly contemplated thereby. None of the pro-
visions of Chapter 2, Title 82, Texas Revised Civil Statutes 1925,
as amended, was expressly repealed, and we find nothing in
the Act to support the conclusion that they were repealed by
implication. To the extent that they relate to the organization
of excepted corporations, such provisions are in no way incon-
sistent with the Business Corporation Act. It is our opinion that
Article 1308b was in full force and effect when relators pre-

396

sented their charter for filing and that respondent should have
accepted and filed the same.

I The Attorney General also argues that mandamus should not
issue because relators had an adequate remedy by appeal under
the provisions of Article 9.04. Any person whose charter is not
approved by the Secretary of State is there granted the right
of appeal to any district court of Travis County. We have al-
ready pointed out that relators were not entitled to organize
their corporation under the Act, but it is contended that the
appeal provisions of Article 9.04 were extended to them by the
proviso of Article 9.14 quoted above. Such proviso makes the
Act applicable, in so far as excepted corporations are concerned,
only where: (1) a domestic corporation has been organized under
a special statute which contains no provision with reference to
some of the matters covered by the Act; (2) a foreign corpora-
tion has been granted authority to do business in this State under
a special statute which does not deal with all of the matters
provided for in the Act; or (8) such special statutes specifically
provide that their provisions shall be supplemented by the gen-
eral laws for incorporation or for the granting of a permit to
do business in Texas. Since the Legislature has declared in plain
and explicit terms the circumstances under which the Act shall
apply to excepted corporations and to the incorporation of the
same, it cannot fairly be said that the lawmakers intended to
make such provisions applicable to every effort to organize an
excepted corporation. The reference to statutes which specifically
provide that their terms shall be supplemented by the general
Jaws for incorporation indicates rather clearly that the Act
is not to be extended by construction to all persons who seek
to organize any type of corporation. We are not here dealing
with an existing domestic or foreign corporation, and relators
are not attempting to incorporate under a special law which
specifically provides that its provisions shall be supplemented
by the general laws for incorporation. Article 9.04 does not apply
to relators, and their only remedy is an original mandamus pro-
ceeding in this Court. See Article 1785, Vernon’s Ann. Texas
Civ. Stat.

ff Finally, respondent says that the controversy is now moot
because the express repeal of Article 1808b became effective
August 26, 1961. He points out that under the provisions of
former Article 1813, Vernon’s Ann. Texas Civ. Stat., the exist-
ence of a corporation dated from the filing of the charter in
the office of the Secretary of State. It is his contention that the
charter cannot now be filed because any right relators may have

eS 397

had expired by operation of law on August 26, 1961. We do
not agree.

When the Legislature repealed Article 1803b and the other
general statutes under which relators were acting, it provided
that any right accrued or established under the prior law would
not be impaired or affected by such repeal. Acts 1961, 57th Leg.,
p. 458, ch. 229, Sec. 2. General incorporation statutes have been
said to be standing offers to the public which are accepted when
a charter in compliance therewith is received by the Secretary
of State. The existence of the corporation was made to date
from the filing of the charter because the acceptance of the offer
by the incorporators is ordinarily signified in that manner. See
Hildebrand, Texas Corporations, Vol. 1, p. 61, Sec. 23. Where
as here a charter which satisfies all legal requirements is pre-
sented for filing, the Secretary of State is under a duty to ap-
prove it and the incorporators are entitled to have the same filed.

It has long been settled that a party who wins a favorable
jury verdict will not be deprived of his legal right to a judg-
ment thereon by the failure or neglect of the trial court to render
judgment during the term. The trial judge has authority to
render judgment nunc pro tunc at a subsequent term, and a writ
of mandamus will issue in a proper case requiring him to do so.
Williams v. Wyrick, 151 Texas 40, 245 S.W. 2d 961; Gulf, C.
& S. F. Ry. Co. v. Canty, 115 Texas 537, 285 S.W. 296. Al-
though respondent acted in good faith and on the advice of the
Attorney General, his refusal to file the charter was wrongful
in legal contemplation. We think relators should not be deprived
of their rights by the failure of a public official to perform a
ministerial duty involving no exercise of judgment or discre-
tion where the delay in enforcing such rights has resulted solely
from the processes of the law. Relators were diligent in seeking
relief before the repeal of Article 1308b became effective, and
it is our opinion that the charter should be filed by respondent
as of August 8, 1961. In the event he does not do so, a writ
of mandamus will issue.

ASSOCIATE JUSTICE STEAKLEY not sitting.
Opinion delivered April 4, 1962.
GRIFFIN, JUSTICE, dissenting.

I respectfully dissent. The Court does not have jurisdiction
to issue this writ of mandamus.

308

Respondent filed a motion to dismiss the application of Rela-
tors for a mandamus on the ground that when he refused to
file the articles of incorporation Relators should have pursued
their remedy at law by appealing to a district court of Travis
County, Texas, as provided by Art. 9.04 of the Act. We carried
the motion to dismiss along with the cause for argument at the
time of submission.

I would hold that Relators were bound to appeal from Re-
spondent’s adverse ruling as is provided by Art. 9.04 of the Act
and, therefore, deny Relator’s application for writ of mandamus.

Relators say that since they seek to incorporate a trust com-
pany under Art. 1803b, they are specifically excluded from any
of the provisions of the Act. They rely on Art. 2.01B that “no
corporation may adopt this Act or be organized under this Act
or obtain authority to transact business in this State under this
Act * * * (4) if any one or more of its purposes is to operate

any of the following: * * * (b) trust companies * * *.”

Art. 9.14A of the Act provides in part: “This Act does not
apply to domestic corporations organized for the purpose of
operating banks, trust companies * * * [here are enumerated the
excepted types of corporations] provided, however, that if any of
said excepted domestic corporations were heretofore or are here-
after organized under special statutes which contain no pro-
visions in regard to some of the matters provided for in this Act,
* * * then the provisions of this Act shall apply to the extent
that they are not inconsistent with the provisions of such special
statutes.” (Emphasis added.)

Art. 9.04A of the Act provides that “if the Secretary of
State shall fail to approve any articles of incorporation, * * *
he shall, within ten days after the delivery thereof to him, give
written notice of his disapproval to the person * * * delivering
the same, specifying in such notice the reasons therefor. From
such disapproval such person * * * may appeal to any district
court of Travis County by filing with the clerk of such court a
petition setting forth a copy of the articles or other document
sought to be filed and a copy of the written disapproval thereof
by the Secretary of State, * * *.”

Relators contend that the above provisions prohibit the crea-
tion of a trust company; that Relators seek to incorporate under
the only statute available to them which is Art. 1308b, a part
of the general corporation law and that the Act recognizes the

es 399
right to so incorporate. Relators further say that the Act pro-
vides that it shall apply to corporations incorporated under the
general corporation laws only to the extent that such Act is
not inconsistent with the special statutes under which Relators
seek to incorporate; that the incorporation of a trust company
is inconsistent with the Act, and therefore Relators cannot avail
themselves of the right of appeal given by Art. 9.04A of the Act.
I do not so construe the Act.

While Art. 2.01B prohibits trust companies from being or-
ganized under the Act, or from adopting the provisions of the
Act, and while Art. 9.14A recognizes that the Act does not
apply to trust companies, it also contains a proviso which makes
the provisions of the Act applicable to such excepted corporations
which are organized under special statutes which contain no
provision in regard to some of the matters provided for in the
Act, to the extent that the provisions of the Act are not incon-
sistent with such svecial statutes. The words used in the proviso
clause “provided however” qualify or modify the exception of
trust companies. The phrase “provided however” means the same
as “but nevertheless”, or “but notwithstanding what is above
expressed”, or “but anything herein before contained to the con-
trary notwithstanding”. McDandless v. Carter, 18 Hawaii 221
(1907).

The phrase “provided however” introducing a paragraph in-
dicates that the paragraph qualifies or modifies the entire article
in which the paragraph is contained; the word “provided” ex-
pressing a limitation or exception, and the word “however” add-
ing confirmation to such intention. Hartung v. Witte, 59 Wis.
285, 18 N.W. 175; Millard v. McFadden, 57 N.Y.S. 2d 594, 596,
185 Misc. 771.

The language used by the Legislature in Art. 9.14A of the
Act expressly purports to bring all corporations under the pro-
visions of the Act, except where such corporations are organized
under special statutes with contrary or inconsistent provisions.
It is the duty of the court construing a statute to give effect to
every part and all the language of the statute wherever this can
reasonably be done. 39 Texas Jur. 208, Sec. 112 and authorities
cited therein. “Another fundamental rule requires that a statute
be construed as a whole and that all of its parts be harmonized,
if possible, so as to give effect to the entire act according to the
evident intention of the Legislature, * * *” citing 89 Texas Jur.
209-210, Sec. 113.

00

An examination of Art. 1808b, Title 82, V.A.C.S., of the
general incorporation act shows there are no provisions therein
governing the action of the proposed incorporators in the event
the Secretary of State shall refuse to file the articles of incorpora-
tion. Therefore it would be entirely consistent with Art. 1308b
to hold that in the event the Secretary of State shall refuse to
file the articles of incorporation, an appeal must be taken under
the provisions of Art. 9.04A of the Act. Relators contend that
the comments of the Bar Association Committee, as found fol-
lowing Art. 9.04 in the Act as set out in Vernon’s Annotated
Texas Statutes, “succinctly, unequivocally and positively” state
that Art. 1735, V.A.C.S., still governs their remedy against the
Respondent; that Art. 1785, V.A.C.S., is still applicable to all
corporations not subject (Relators’ emphasis) to the Act under
the provisions of Art. 9.144. (Emphasis added.) Upon careful
analysis of the provisions of Art. 9.14A I am of the view that
trust companies are governed by the provisions of the Act relat-
ing to appeal from the adverse decisions of Respondent.

Relators having failed to exercise their right of appeal, I
would deny this mandamus.

Opinion delivered April 4, 1962.
| et

AMERICAN AIR LINES, INC., Petitioner
v.
JNO. L. MILLER AND FAY MILLER, DOING BUSINESS AS
CENTEX TURKEY HATCHERY, Respondents

No. A-8508. Decided May 9, 1962
856 S.W. 2d 771

ASSOCIATE JUSTICES GRIFFIN and SMITH dissenting.

Buck & Buck, by Robert P. Clines, Fort Worth, for American
Airlines, Ine.

Lawrence L. Bruhl, Llano, and L. Hamilton Lowe, Austin, for
John L. Miller.

Arthur P. Bagley and John C. Foschee, Austin, for Railway
Express Agency.

ASSOCIATE JUSTICE HAMILTON delivered the opinion
of the Court.

Respondents John L. Miller and Fay Miller, doing business
as Centex Turkey Hatchery, sued petitioner, American Airlines,
Inc., and respondent Railway Express Agency to recover damages
sustained to a shipment of 3,000 turkey poults. In a suit before
the trial court judgment was rendered for respondents John L.
Miller and Fay Miller against American Airlines, Inc., and Rail-
way Express Agency jointly and severally in the amount of
$1010.90. The Court of Civil Appeals affirmed as to the judgment
against American Airlines, Inc., and reversed and rendered as
to Railway Express Agency. 346 S.W. 2d 905. American Airlines,
Inc. and the Millers filed applications for writ of error.

The Millers delivered the poults to American in Fort Worth
at 8:40 p.m., April 22, 1957, for shipment to the Idaho Poultry
Company at Boise, Idaho. At the time American received the

402 es
poults it issued to the Millers an air-freight uniform air Dill
reciting:
“Destination Airport City Consignee’s No.
AT PORTLAND, OREGON

Routing: Airline Routing Applies Unless Shipper Inserts
Specific Routing Here

sexe oe oe

“It is mutually agreed that the goods herein described are
accepted in apparent good order (except as noted) for trans-
portation as specified herein, subject to governing classifications
and tariffs in effect as of the date hereof which are filed in
accordance with law. Said classifications and tariffs, copies
of which are available for inspection by the parties hereto,

- are hereby incorporated into and made part of this contract.

tek ee
No. of Description of Pieces
Pieces ‘And Contents Weight
Boxes Broadwhite
30 Turkey Poults 4504

(Live Baby Poults
100 Per Box)

Instructions to Carrier

Leave Amon Carter Field via American Air Frt. Arrive
at Portland, Oregon airfield—ADVISE Railway Ex-
press to pick up, truck direct to Boise, Idaho.”

American carried the poults to Los Angeles, California, where
they were delivered to The Flying Tiger Line, Inc., another air
carrier, not a party to this suit, at 7:58 am. on April 23, 1957.
The Flying Tiger Line, Inc. carried the poults to Portland
Oregon, where they were delivered to Railway Express at about
6:30 or 7:30 am., April 25. Railway Express took the poults
by train to Huntington, Oregon, 387 miles distant, and from
there Railway Express took them by truck to Boise, one hundred
miles distant.

Within approximately forty-five minutes after the poults
were delivered to Railway Express one of its employees said his
attention was called to the shipment by the odor from them, and
that upon opening the boxes he found lots of the turkey poults

es 408

already dead and many were in a dying condition. About 1838
poults died before delivery and 600 afterwards.

Plaintiffs’ expert witness testified that in his opinion the
cause of the death of the poults was that “they could have either
been too hot or too cold, either one—too hot or too cold * * * or
they could have been on the road too long.” He further testified
that if the poults had died and were dying in large quantities
at the time the Railway Express received them it would indicate
that the cause of their death occurred before that time. The trial
court found from the evidence that turkey poults are endowed
by nature to live without food or water for seventy-two hours
after hatching.

In holding American Airlines liable the Court of Civil Appeals
said that American contracted for transportation of the turkeys
beyond Los Angeles and elected to treat connecting carriers as
its agents. With this we cannot agree.

HI The Court of Civil Appeals correctly held that petitioner
is subject to the Civil Aeronautics Act of 1988 as amended, and
was required to file its tariff with the Civil Aeronautics Board.
49 U.S.C.A., Sec. 483. As is recited in the air-freight uniform
air bill, this tariff became a part of the contract between shipper
and carrier. The tariff of American Airlines was introduced in
evidence, and contains the following:

“The carrier shall not be liable for loss, damage, deteriora-
tion, destruction, theft, delay, default, mis-delivery, non-de-
livery or any other result not caused by the actual negligence
of itself, its agents, or employees, acting within the scope of
their authority, or not occurring on its own line or in its own
service or for any act, default, negligence, failure or omission
of any other carrier or any other transportation organization.”

This tariff shows The Flying Tiger Line, Inc., is another
carrier adopting the same tariff.

The Court of Civil Appeals, while recognizing the tariff as
part of the contract, says that this does not help American Air-
lines for the reason that when American carried the poults to
Los Angeles and there delivered them to The Flying Tiger Line,
Inc., for delivery to Railway Express at Portland it adopted The
Flying Tiger Line, Inc., as its agent to transport the poults to
Portland. It cites Gulf, C. & S. F. Ry. Co. v. Hines, (Texas
Comm. App.) 250 S.W. 1018, Atchison, T. & S. F. Ry. Co. v.

0

Word, 159 S.W. 875, error refused, and Atlanta C. & L. Ry. Co.
v. Riverside Mills, 219 U.S. 186, 31 S. Ct. 164, 55 L. Ed. 167,
81 L.R.A. (N.S.) 7. These cases involve railroads as carriers.
They are subject to the Carmack Amendment, which provides
in effect that a receiving carrier, in spite of any stipulations to
the contrary, shall be deemed, when it receives property in one
state to be transported to a point in another state, involving
the use of a connecting carrier for some part of the way, to have
adopted such other carrier as its agent and to have incurred
earrier liability throughout the entire route, with the right
to reimbursement for a loss not due to his own negligence. Con-
gress has not seen fit to make the Carmack Amendment applicable
to airline carriers, so therefore those cases are not in point.

This court, in the case of A. J. Tebbe & Sons Company v.
Brown Express, 161 Texas 457, 341 S.W. 2d 642, deals in detail
with contracts for transport of goods beyond the facilities of a
carrier in cases where the Carmack Amendment is not in force,
such as this one. We there recognized (page 645) the majority
rule in America to be that the mere acceptance of goods con-
signed to a point beyond the line of the initial carrier is not
enough, but the initial carrier’s liability ends when the shipment
is delivered to the connecting carrier unless the evidence af-
firmatively discloses an agreement to carry over the whole route.
See: Atlantic Coast Line R. Co. v. Riverside Mills, 219 U.S.
186, 31 S. Ct. 164, 55 L. Ed. 167; Michigan Central R. Co. v.
Mineral Springs Mfg. Co., 16 Wall. 318, 21 L. Ed. 297; Ogdens-
burg & L. C. R. Co. v. Pratt, 22 Wall. 128, 22 L. Ed. 827; Hunter
v. Southern Pac. Ry. Co., 76 Texas 195, 18 S.W. 190; Gulf, C.
& 8. F. Ry. Co. v. Jackson & Edwards, 99 Texas 348, 89 S.W.
968; Michigan Central R. Co. v. Myrick, 107 U.S. 102, 1 8. Ct.
425, 429, 27 L. Hd. 325.

I In the instant case we not only do not have any specific
agreement that American will carry over the whole route, but the
tariff filed by American with the Civil Aeronautics Board says
specifically it will not be liable for any act, default, negligence, .
failure or omission of any other carrier or any other transporta-
tion organization. The record in this case discloses that Amer-
ican delivered the poults to The Flying Tiger Line, Inc., in Los
Angeles within less than twelve hours after receiving them, and
received from The Flying Tiger Line, Inc., a transfer manifest
showing that the poults were accepted in an undamaged condition.
John L. Miller, one of the plaintiffs below, testified that the poults
were delivered in Los Angeles within a reasonable time and that
he knew of no negligence on the part of American in its handling

es 405

of the shipment. We therefore hold that American Airlines is
not liable for the damage to the poults.

i Im regard to the liability of Railway Express for the damage
to the shipment of poults, the evidence is conclusive that whatever
happened to the poults to cause the damage must have happened
prior to the time they were received by Railway Express. From
that time on the evidence shows that Railway Express did every-
thing it could have done to prevent further damage. It is shown
that at all times a man who was experienced in the handling of
live shipments of poultry was caring for the shipment, and the
record shows in detail what he did to try to prevent any further
damage. We agree with the Court of Civil Appeals that such
evidence exonerates Railway Express from any negligence which
may have caused the damage.

We reverse the judgment of the Court of Civil Appeals hold-
ing American Airlines liable and render judgment in its favor.
We affirm the judgment of the Court of Civil Appeals holding
that the respondents take nothing as against Railway Express
Agency.

ASSOCIATE JUSTICES GRIFFIN and SMITH dissenting.
Opinion delivered May 9, 1962.

Es
ROBERT S. CALVERT, COMPTROLLER, ET AL, Petitioners
v.
Fort Worth NATIONAL BANK, INDEPENDENT EXECUTOR,
Respondent

No. A-8572. Decided May 9, 1962
856 S.W. 2d 918

©

a

Will Wilson, Atty. Gen., Austin, W. V. Geppert and W. E.
Allen, Asst. Attys. Gen., for petitioners.

Stone, Parker, Snakard, Friedman & Brown, James A. Mc-
Mullen, III, Fort Worth, with above firm, for respondent.

ASSOCIATE JUSTICE WALKER delivered the opinion of
the Court.

The question presented by this appeal is whether property
received by the beneficiary of a will as a result of the election
of the owner of such property to accept under the will is to be
regarded as having passed by the will for the purpose of com-
puting the inheritance tax imposed by Article 7117, Texas Rev.
Civ. Stat. 1925, as amended. Acts 1945, 49th Leg., p. 148, ch.
98. This statute was repealed in 1959, but its provisions in sub-
stantially the same language were reenacted as Article 14.01,
V.A.T.S. Tax.-Gen., the relevant portions of which are quoted in
the margin.! For convenience the several inheritance tax statutes
will be referred to by the article number under which they now
appear in V.A.T.S. Taxation-General.

The present case was tried before the court on an agreed
statement of facts. Frank Taylor, a resident of Fort Worth,
died on April 19, 1957, leaving a written will which was admitted

1. “All property within the jurisdiction of this State, real or personal,
corporate or incorporate, and any interest therein, including property passing
under a general power of appointment exercised by the decedent by will, in-
cluding the proceeds of life insurance to the extent of the amount receivable
by the executor or administrator as insurance under policies taken out by the
decedent upon his own life, and to the extent of the excess over Forty Thousand
($40,000) Dollars of the amount receivable by all other beneficiaries as insur-
ance under policies taken out by the decedent upon his own life, whether be-
longing to inhabitants of this State or to persons who are not inhabitants,
regardless of whether such property is located within or without this State,
which shall pass absolutely or in trust by will or by the laws of descent or
distribution of this or any other state, or by deed, grant, sale, or gift made
or intended to take effect in possession or enjoyment after the death of the
grantor or donor, shall, upon passing to or for the use of any person, corpora~
tion, or association, be subject to a tax for the benefit of the State’s General
Revenue Fund, in accordance with the following classification; * * *, Any
transfer made by a grantor, vendor, or donor, whether by deed, grant, sale,
or gift, shall, unless shown to the contrary, be deemed to have been made in
contemplation of death and subject to the same tax as herein provided, if such
transfer is made within two (2) years prior to the death of the grantor, vendor,
or donor, of a material part of his estate, or if the transfer made within such
period is in the nature of a final distribution of property and without adequate
valuable consideration.”

0

to probate by the County Court of Tarrant County on May 27,
1957. He was survived by his widow, Mrs. Pearl 8. Taylor. At
the time of his death, the testator owned separate property ap-
praised for inheritance tax purposes at $1,750.23. He and Mrs.
Taylor also owned community property of the aggregate net
value of $185,190.64.

The will by its terms undertakes to dispose of the testator’s
separate property and the entire community estate. After giving
the home, household and kitchen furniture, and personal effects
to Mrs. Taylor, all of the remainder of the separate and com-
munity property was devised and bequeathed to The Fort Worth
National Bank as trustee. The trustee is directed to pay the net
revenue of the trust estate or $500.00 per month, whichever is
greater, to Mrs. Taylor during the remainder of her life. Upon
her death the trust will terminate and all of the trust property
then remaining on hand will vest one-half in the heirs of the
testator and one-half in certain named relatives of Mrs. Taylor.
The will also provides for the disposition of the testator’s separate
property and community interest in the event Mrs. Taylor should
elect not to accept under the will. The Fort Worth National Bank
is named in the will and has been duly appointed and qualified
as independent executor without bond.

Subsequent to the probate of the will, Mrs. Taylor elected
to and did accept thereunder by written instrument filed in the
probate proceedings. The inheritance tax report filed with the
Comptroller of Public Accounts lists the separate property of
the testator and his one-half interest in the community estate.
After Mrs. Taylor made her election, the Comptroller took the
position that the entire community estate as well as the separate
property had passed by the will. The inheritance tax was com-
puted on this basis, and a total tax of $5,187.82 was assessed
against the beneficiaries of the will other than Mrs. Taylor. No
tax was assessed against Mrs. Taylor for the reason, as stated
in the order, that she did not receive more than her community
interest plus the $25,000.00 statutory exemption.

When the inheritance tax is computed on the basis of the
value of the testator’s separate property and his interest in the
community estate, the aggregate amount owing is $1,444.02.
The $5,187.82 assessment was paid by respondent, but such
payment to the extent of $3,693.80 was made under protest.
This action was then instituted to recover the latter amount.
Judgment was rendered by the trial court in favor of respondent,
and the Court of Civil Appeals affirmed. 348 S.W. 2d 19. We

PE — {{

agree with the courts below that the community interest of Mrs.
Taylor did not pass by the will of her husband within the mean-
ing of Article 14.01, and the judgment of the Court of Civil
Appeals is accordingly affirmed.

It should be observed at the outset that departmental con-
struction is of no assitance in determining the intention of the
Legislature. The proper method of computing inheritance taxes
where a widow elects to accept under a will which disposes of
her interest in the community estate has been the subject of
at least six different opinions by the Attorney General of Texas.
From time to time earlier opinions have been modified or over-
ruled, and overruled opinions have been reinstated. The current
departmental construction is reflected by the position of the
Comptroller in the present case, but for a period of some ten
years ending in 1958 the official view of the Attorney General
was that Article 14.01 had the meaning attributed to it by re-
spondent.

HI We begin with the premise that the statute imposes a special
tax and must be strictly construed against the government. Where
the meaning of such a law is doubtful, the doubt should be re-
solved in favor of the taxpayer. See Lewis v. O’Hair, Texas Civ.
App., 180 S.W. 2d 879 (no writ) ; 85 C.J.S. Taxation, Sec. 1185,
p. 879; 28 Am. Jur. Inheritance, Estate, Succession and Gift
Taxes, Sec. 47, p. 50. It is also well settled that statutes in pari
materia are to be read and construed together in arriving at
the intention of the Legislature. 82 C.J.S. Statutes, Sec. 366, p.
801; 50 Am. Jur. Statutes, Sec. 348, p. 8343. Moreover, as pointed
out in Magnolia Petroleum Company v. Walker, 125 Texas 480,
83 S.W. 2d 929, it is proper to consider the history of the sub-
ject matter in arriving at the purpose and intent of the law.

Hf Historically, death duties “in all countries rest in the essence
upon the principle that death is the generating source from which
the particular taxing power takes its being, and * * * it is the
power to transmit, or the transmission from the dead to the
living, on which such taxes are more immediately rested.” See
Knowlton v. Moore, 178 U.S. 41, 20 S. Ct. 747, 44 L. Ed. 969.
From a reading of our inheritance tax statutes, we think the
basic plan and purpose of the Legislature was to levy the tax
upon the privilege of succeeding to property belonging to a
decedent at the time of his death. Article 14.01 speaks of property
passing by will or by the laws of descent or distribution, whether
belonging to inhabitants of this State or to persons who are not
inhabitants. The only property that is ordinarily regarded as

0 ee

passing by either will or descent is that which was owned by
the testator or intestate at the time of his death. See V.A.T.S.
Probate Code, Sec. 58. Article 14.15 provides that the county
judge shall appoint appraisers “to fix the value of the property
of such decedent subject to taxation hereunder”.

HI When the Legislature intended to tax the succession to prop-
erty other than that owned by the decedent at the time of his
death, such intention is plainly and unequivocally stated. In ad-
dition to the provisions mentioned above, Article 14.01 expressly
includes: (1) property passing under a general power of ap-
pointment exercised by the decedent by will; (2) certain life
insurance proceeds; (3) transfers made or intended to take
effect in possession or enjoyment after death of the grantor or
donor; and (4) transfers in contemplation of death. Property
passing under a general power of appointment exercised by the
decedent by will could be said to “pass absolutely or in trust by
will’, but it is evident that the Legislature used the quoted
language in the ordinary and more restricted sense mentioned
above. If the lawmakers had intended to tax other property not
belonging to the decedent, such as the surviving wife’s community
interest, we think specific language to that effect would have
been included in the statute.

In Jones v. State, Com. App., 5 S.W. 2d 974, the husband
devised certain property to his wife with the stipulation that
the same was in lieu of her community interest in all other
property. The widow accepted the provisions of the will, and
it was contended that she should pay inheritance tax on the
property devised to her. The court recognized that by virtue of
the will and her election the widow had acquired full title to
specific property whereas in the absence of a will she would
have owned an undivided interest in the entire community estate.
Since the value of the property which she received was not greater
than her community interest plus the statutory exemption, it
was held that the will simply effected a partition between the
widow and the other beneficiaries and that no property passed
to her within the contemplation of Article 14.01. The tax liability
of other beneficiaries of the will who receive part of the widow’s
community interest as a result of her election was not considered
or decided.

In Bethea v. Sheppard, Texas Civ. App., 143 S.W. 2d 997
(wr. ref.), Henry Henke and his wife, Catherine Henke, executed
a joint will and trust agreement which provided that the entire
community estate should pass to a named trustee in the event

i

the husband died first. Mrs. Henke and a daughter were to re-
ceived specified annual payments from the trust during the life-
time of the former, and the payments to the daughter were to
be increased and continued for eight years after Mrs. Henke’s
death. At the end of such period the corpus of the trust was to
be distributed to the daughter if living; but if the daughter was
not living at that time, the property was to be held in trust for
an additional five years and then delivered to the daughter’s chil-
dren. The husband died first, and inheritance tax was paid only
on his half of the community estate. Upon the subsequent death
of Mrs. Henke it was held that the right of the daughter to suc-
ceed to her mother’s community interest was taxable as a transfer
by Mrs. Henke made or intended to take effect in possession or
enjoyment after death.

A necessary corollary of that holding is the proposition that
Mrs. Henke’s community interest did not pass by Mr. Henke’s
will within the meaning of the inheritance tax statutes. There
the wife consented in advance for her half of the community
property to be placed in trust as directed by the husband’s will.
Here the same result is accomplished by the widow’s election to
accept under the will subsequent to the death of her husband.
We cannot believe that the Legislature intended to tax the one
transaction as an inter vivos transfer by the consenting wife and
the other as a passage of title by the husband’s will.

The Attorney General directs our attention to Graser v.
Graser, 147 Texas 404, 215 S.W. 2d 867; Dakan v. Dakan, 125
Texas 305, 83 S.W. 2d 620; and Kelly v. Kelly, Com. App., 294
S.W. 518, where it was said that upon the widow’s election to
accept the disposition made by her husband’s will, she and the
other devisees take under the will and the legal result is that
her community interest passes under the will as if it had always
belonged to the testator. That is a convenient way of stating the
consequences of the election in title controversies between the
widow or her heirs and the other beneficiaries of the will. It
does not mean that the widow’s interest passes by will for in-
heritance tax purposes, and that question was not involved in
any of the three cases last cited.

HMM As pointed out by the writer in 5 Washington Law Re-
view 55, it is manifest that no tax liability with respect to Mrs.
Taylor’s community interest accrued at the death of her husband
or upon the probate of his will, because her interest did not and
could not pass solely by virtue of such will. Before it could be
said that Mrs. Taylor’s interest had passed by any means, a

2 es

further voluntary and affirmative action on her part was re-
quired. It was not until she elected to take under and in accord-
ance with the provisions of the will that the trustee became en-
titled to her interest in the community property. Although the
election when made might be held for some purposes to relate
back to Mr. Taylor’s death, the effective legal act was the vol-
untary election of the living wife and not the testamentary dis-
position of the deceased husband. It seems clear to us then that
Mrs. Taylor’s community interest did not pass to the trustee by
her husband’s will within the meaning of Article 14.01. Whether
the right of succession to such interest is taxable as a transfer
made by her in contemplation of death or to take effect in pos-
session or enjoyment after death is a question which must be
determined later. Since the value of the interest received by
Mrs. Taylor through and under the will is less than the value of
her share of the community property plus the $25,000.00 statu-
tory exemption, the Comptroller correctly concluded that no tax
is attributable to the interest so received by her. Jones v. State,
supra.

The judgment of the Court of Civil Appeals is affirmed.
Opinion delivered May 9, 1962.
||
INDEMNITY INSURANCE COMPANY OF NoRTH AMERICA, Petitioner

v.
Cc. R. McGze, Respondent

No. A-8747. Decided April 4, 1962
Rehearing Denied May 16, 1962
356 S.W. 2d 666

A183

Barnes & Barnes, Beaumont, for petitioner.
Stephenson, Stephenson & Thompson, Orange, for respondent.
JUSTICE HAMILTON delivered the opinion of the Court.

This is a suit brought by plaintiff (respondent here) under
the Texas Workmen’s Compensation Act to set aside an award
of the Industrial Accident Board. The trial court set aside the
award and entered judgment for the plaintiff finding him totally
and permanently disabled and awarding compensation of $13,-
651.55. The insurance carrier appealed to the Tenth Court of
Civil Appeals, and the judgment of the trial court was affirmed.
351 S.W. 2d 359.

The plaintiff’s injury resulted from his slipping or jumping
off a crane while he was working on a construction job. The
evidence is disputed as to whether this slip or fall caused only
a hernia or a combination hernia and back injury. These facts,
however, are immaterial, as this opinion turns on defendant’s
(petitioner’s) first point of error, which is:

“The Court of Civil Appeals erred in affirming the Trial
Court’s action in ruling that the Judge was not disqualified
to preside over the trial of this case, wherein the trial judge
was required to fix the attorney’s fees, and he was a first
cousin of Respondent’s counsel.”

The facts pertinent to this point of error were brought out

Ce

in a hearing on motion for new trial. The record shows that the
plaintiff hired Woodson E. Dryden to represent him in this case.
Mr. Dryden appeared in behalf of the plaintiff before the In-
dustrial Accident Board and he also filed plaintiff’s original
petition in the 128th Judicial Distrct Court, Orange County,
Texas. At this point in the proceedings Mr. Dryden employed Mr.
Ward Stephenson to handle the case.

It is an undisputed fact that Ward Stephenson and the trial
judge are related within the third degree of consanguinity, as
they are first cousins.

Mr. Stephenson filed the first, second and third amended
original petitions for the plaintiff. Mr. Stephenson and his law
partner, Mr. Marlin Thompson, conducted the plaintiff's case
before the trial judge. However, the final judgment awarded
one-fourth of plaintiff’s recovery to Mr. Woodson Dryden only.

In the hearing on motion for new trial, Mr. Stephenson
testified that there was no specific agreement between Mr. Dryden
and himself as to fees. However, he indicated he would submit
a statement of his fee to Mr. Dryden when the case was com-
pleted. He stated, “* * * [W]hatever charges I made is the way
we customarily do, to take into consideration the success, like-
wise, of the litigation and if we are successful in any case, we
feel that we would be in a position to take that into considera-
tion in assessing our charges.”

ff The issue to be decided in this case is whether plaintiff’s at-
torney, Ward Stephenson, is a “party” to that suit within the
meaning of Article V, Sec. 11, Constitution of Texas, and Article
15, Vernon’s Texas Civil Statutes. Article 15 states:

“No judge or justice of the peace shall sit in any case
wherein he may be interested or where either of the parties
may be connected with him by affinity or consanguinity within
the third degree, or where he shall have been counsel in the
case. Const. Art. 5, Sec. 11.”

HE This Court held in the case of Postal Mutual Indemnity Co.
v. Ellis, 140 Texas 570, 169 S.W. 2d 482, that the plaintiff’s
attorney in a workmen’s compensation case is a party to the suit.
This decision was reached primarily because of the provision in
Article 8306, Sec. 7d, Vernon’s Texas Civil Statutes, which re-
quires the judge to award the attorney’s fees out of the plaintiff's
recovery. That opinion said:

re 415

ses & % * ® The record discloses that the plaintiff and his
attorney by their pleadings invoked the jurisdiction of the
court for the decision of that issue (attorney’s fees). The
attorney was directly interested in the decision of the question.
He was one of the contending parties as against the employee
as to the value of the services rendered by him and the amount
of the fee to be allowed therefor, and it was within the power
of the judge to favor him in the decision of that question.
It can hardly be said that he was not a party to and directly
interested in the controversial issues thus presented. * * * * *”

See also Texas Employers’ Insurance Ass’n v. Scroggins, 826
S.W. 2d 606 (no writ hist.).

The Court of Civil Appeals does not quarrel with this rea-
soning, but in essence holds that Ward Stephenson was not a
party to this suit because he was not the plaintiff’s attorney.
Rather, the Court of Civil Appeals looked upon Mr. Stephenson
as an employee of Mr. Woodson E. Dryden, plaintiff’s original
attorney. It overruled the point of error now before us because
it felt the evidence in the record reflected that Dryden employed
Stephenson for a fee based on work performed, and that the final
judgment awarded one-fourth of the recovery to Dryden and not
Stephenson. Thus, the court reasoned that Stephenson was not
a party to the suit.

Paragraph 9 of Plaintiff’s Third Amended Original Petition
on which this suit was tried states:

“The plaintiff says that he has employed the attorneys
whose names are signed to this petition to represent him in
this behalf and has contracted to pay said attorneys such fee
as the court may allow, not to exceed one-third of the recovery
herein.

eo ee ok &
“STEPHENSON AND STEPHENSON
“WOODSON E. DRYDEN

“By /S/ Ward Stephenson

“Attorneys for Plaintiff
“Stephenson Building
“Orange, Texas”

These pleadings and the actual trying of the lawsuit by Ward
Stephenson made it conclusive that he was the attorney for the
plaintiff, and a party to the suit. It is not material that the trial

6

court’s judgment did not award attorney’s fees to Ward Stephen-
son. What is material is that under the pleadings it was within
the power of the trial judge, but for his disqualification, to have
entered judgment awarding attorney’s fees to Ward Stephenson.

By this holding we do not intend to cast a shadow upon the
trial judge. We have no doubt that the trial judge’s integrity is
of the highest. However, as Chief Justice Willie stated in the
ease of Hodde v. Susan, 58 Texas 389, 394, “It was the object
of the Constitution to place judicial officers beyond the tempta-
tion which such circumstances would throw in their way.”

The judiciary must not only attempt to give all parties a
fair trial, but it must also try to maintain the trust and confidence
of the public at a high level. Article 15 is one aid in accomplish-
ing these aims. This is aptly expressed in the case of Newcome
v. Light, 58 Texas 141, 145, where this court quotes from the
New York Court of Appeals case of Oakley v. Aspinwall, 3
Comst. 547, which says: .

“os * % the first idea in the administration of justice is,
that a judge must necessarily be free from all bias and par-
tiality. * * * Mankind are so agreed in this principle, that
any departure from it shocks their common sense and senti-
ment of justice. * * * Partiality and bias are presumed from
the relationship or consanguinity of a judge to the party. This
presumption is conclusive and disqualifies the judge. * * *
Where no jurisdiction exists by law it cannot be conferred by
consent, especially against the prohibitions of a law which
was not designed merely for the protection of the party to
a suit, but for the general interest of justice. It is the design
of the law to maintain the purity and impartiality of the courts,
and to insure for their decisions the respect and confidence
of the community. Their judgments become precedents which
control the determination of subsequent cases; and it is im-
portant in that respect that their decisions should be free
from all bias. After securing wisdom and impartiality in their
judgments, it is of great importance that the courts should
be free from reproach or the suspicion of unfairness. The
party may be interested only that his particular suit should
be justly determined; but the state, the community, is con-
cerned not only for that, but that the judiciary shall enjoy
an elevated rank in the estimation of mankind.’ ”

Hf It is our opinion that Ward Stephenson is plaintiffs attorney
in this workmen’s compensation case and is a party to this suit

ee) ait

as contemplated in Article 15, Vernon’s Texas Civil Statutes.
Therefore, the judge of the trial court was disqualified to hear
this cause.

The judgment of the Court of Civil Appeals is reversed, and
the cause is remanded for new trial.

Opinion delivered April 4, 1962.
JUSTICE SMITH, concurring.

The trial judge was disqualified. The judgment he entered
in this case was void. Postal Mutual Indemnity Co. v. Ellis,
140 Texas 570, 169 S.W. 2d 482. This being true, all proceedings
were a nullity. Any judgment rendered, regardless of whether
for the plaintiff or defendant, should have been set aside and
held for naught. The judgment cannot be void as to one party
and only voidable as to the other.

as
MICHEL T. HALBOUTY ET AL, Appellants

RAILROAD COMMISSION oF ‘TEXAS ET AL, Appellees

No. A-8200. Decided February 14, 1962
Rehearing Denied May 28, 1962
357 S.W. 2d 864

»

18

ASSOCIATE JUSTICE GRIFFIN dissenting, and ASSO-
CIATE JUSTICE SMITH dissenting on Motion for Rehearing.

Andrews, Kurth, Campbell & Jones, Houston, (L. E. Frazier,
Jr., and Harry R. Jones, Houston) for Michel T. Halbouty and
Meredith & Company.

Butler, Binion, Rice & Cook, Houston (A. EH. Amerman, Jr.,
Cecil Cook, and James D. Smullen, Houston) for Peter Henderson
Oil Company.

Turner, Rodgers, Winn, Scurlock & Terry, Dallas (Frank J.
Scurlock, Dallas), for Pan American Petroleum Corporation.

re 419

Will Wilson, Atty. Gen., Austin (Houghton Brownlee, Jr.,
and Linward Shivers, Asst. Attys. Gen., Austin) for Railroad
Commission of Texas.

Blalock, Lohman & Blalock, Houston, Hart & Hart, Austin,
for Intervenors H. L. Dillon et al.

Wallace H. Scott, Jr., Austin, for Intervenor J. C. Barnes.

McKay & Avery, Austin, for Intervenor Tyrell-Combest
Realty Co.

Spruiell, Lowry, Potter, Lasater & Grinn, Tyler, for Inter-
venor P. G. Lake, Inc.

ASSOCIATE JUSTICE CULVER delivered the opinion of
the Court.

Michel T. Halbouty and others bring this direct appeal from
a decree of the trial court upholding certain orders of the Rail-
road Commission of Texas and denying to the appellants a
permanent injunction and all other relief prayed for.

In the trial court the appellants sought to restrain the Rail-
road Commission from continuing in effect the allocation formula
adopted August 18, 1958, for the Port Acres Field in its order
No. 3-838,395 which reads as follows:

“RULE 8. The daily allowable production of gas from
individual wells completed in a non-associated gas reservoir
of the subject field shall be determined by allocating the allow-
able production, after deductions have been made for wells
which are incapable of producing their gas allowables, among
the individual wells in the following manner:

“a) Two-thirds (2/3) of the allowed gas production from
a non-associated gas reservoir shall be allocated to the individual
wells completed therein in that proportion that the acreage
assigned to each such well bears to the sum of the acreage in
the reservoir.

“(b) One-third (1/3) of the allowed gas production from
a non-associated gas reservoir shall be allocated equally among
the individual wells completed therein.

0

“(c) The total daily non-associated gas allowable for each
well shall be the sum of its acreage and per well allowables.”

They also prayed that the Commission be further enjoined
from allowing the marketing of gas from the Port Acres Field
until the Commission required the operators in the field to
maintain the pressure at such point as would permit the maximum
recovery of hydrocarbons contained in the reservoir and to pre-
vent unnecessary waste of those natural resources.

The trial court sustained exceptions to the pleadings in so
far as they were directed to the refusal of the Railroad Commis-
sion to enter the compulsory cycling and pressure maintenance
order and found and concluded that the order of the Commission
otherwise complained of was reasonably sustained by substantial
evidence and is lawful and valid.

At the outset the Railroad Commission and the other ap-
pellees vigorously challenge our jurisdiction of this direct appeal
on the ground that such appeal will lie only where the purpose
of the suit is to restrain action or threatened action on the part
of the Commission and not when the object of the suit is to
compel action. In other words they say that the real purpose and
object of this suit is to compel the Railroad Commission to enter
a new proration order and to order cycling and pressure mainte-
nance in the Port Acres Field.

To support their position in this respect they rely on our
decision in Boston v. Garrison, 152 Texas 253, 256 S.W. 2d 67.
That suit as first filed sought to restrain the officials of the De-
partment of Public Safety from suspending a chauffeur’s license.
Prior to the trial the license had expired and plaintiff, by an
amendment to his petition, sought to compel the department to
renew the old or issue a new license. We held that direct appeal
would not lie in that respect and that his only redress was in the
nature of a mandamus. We did not hold that we would not have
jurisdiction of the appeal from the refusal of the trial court to
restrain the department from suspending the license but that
matter had become moot.

I In the case here the appellants assert that the proration
formula of one-third and two-thirds is unjustified, unreasonable
and invalid and of that issue we do have jurisdiction. Incident-
ally, a striking down of this proration order would, in the natural
course of things, enjoin upon the Railroad Commission the duty
to write a new order, but it is not within the scope of our juris-

421

diction here to direct the Commission in that regard. What we
have before us is the validity vel non of the order as written.
Railroad Commission v. Sterling Oil & Refining Co., 147 Texas
547, 218 S.W. 2d 415; Board of Water Engineers v. Colorado
River Municipal Water District, 152 Texas 77, 254 S.W. 2d 369;
Texas & N. O. Ry. Co. v. Railroad Commission, 155 Texas 323,
286 S.W. 2d 112; Railroad Commission v. Shell Oil Co., 146
Texas 286, 206 S.W. 2d 235.

Article 1738a, Vernon’s Ann. Civ. Stat., reads in part as
follows:

«os % * anneals may be taken direct to the Supreme Court
of this State from any order of any trial court granting or
denying an interlocutory or permanent injunction * * * on the
ground of the validity or invalidity of any administrative order
issued by any State Board or Commission under any statute
of this State. * * *.”

The article further provides that the Supreme Court shall
prescribe the necessary procedural rules to be followed in per-
fecting such appeal. Pursuant to that directive, Rule 499-a was
adopted.

In Atlantic Refining Co. v. Railroad Commission of Texas,
346 S.W. 2d 801, our jurisdiction of the direct appeal was
attacked and while we did not there discuss the question of
jurisdiction that decision by implication holds contrary to ap-
pellees’ contention.

Hf Inco far as appellants complain of the refusal of the Railroad
Commission to require compulsory cycling and pressure main-
tenance in this field is concerned, we do not have jurisdiction
of the appeal. The jurisdiction of the Supreme Court on direct
appeal is dependent upon and limited to the wording of the Con-
stitutional Amendment, Art. 5, Section 8b, and Art. 1738a, Ver-
non’s Ann. Civ. Stat. While in the trial court appellants prayed
for an injunction to restrain the Commission “from approving
or allowing the withdrawals of gas to market from the Port Acres
Field in such quantity and under such conditions as will result
in the preventable waste of the hydrocarbon content of such gas
until such time as the Commission has duly entered an order or
orders requiring the operators in such field to maintain the pres-
sure in the field at a point which will permit the maximum re-
covery of the hydrocarbons contained in the reservoir to the end
that preventable waste of such natural resources shall be pre-

vented,” nevertheless the actual relief sought was to require the
Conimission to enter a compulsory cycling and pressure mainten-
ance order. It was so considered and treated by the Commission.

These proceedings were instituted before the Commission in
the following manner: On November 19th, three months after the
adoption of Special Order No. 8-38,395, Peter Henderson Oil
Company requested that the Commission hold a hearing to re-
consider and amend Rule 8 thereof. Notice was given that the
hearing was set for January 27, 1959. On January 22nd Halbouty
and Meredith joined in the Henderson Company request and asked
that the issues be broadened to include the question of whether
recycling or other secondary recovery operations should be insti-
tuted and conducted. On January 23rd Pan American joined in
the Halbouty-Meredith request. On July 6, 1959, after hearing
and consideration, the Commission notified all parties of its
action as follows:

“This is to advise that the Commission, at a formal con-
ference held July 6, 1959, denied your application for a man-
datory cycling order for the Port Acres (Lower Hackberry)
Field, Jefferson County, Texas.

“The Commission further denied your application for an
allocation formula based on net acre feet for the subject field
and ruled that the allocation formula based on 2/8 acreage
and 1/3 per well shall continue to remain in effect.”

In Boston v. Garrison et al., supra, under the direct appeal
provision it was pointed out that the Supreme Court does not
have jurisdiction where the purpose of the suit is to require or
to compel action although the relator prayed “that mandatory in-
junction shall issue requiring the defendants to issue plaintiff
renewal license or provisional license”. That in effect was an ap-
plication for mandamus to compel the department to issue the
license.

In Lane v. Ross, 151 Texas 268, 249 S.W. 2d 591, the relators
prayed that the respondent be ordered and commanded not to
transmit to the chairman of a state political committee certain
minutes and returns of election and that the respondent be ordered
to transmit certain other minutes and returns. We held that in this
original action this court did have jurisdiction to issue a writ of
mandamus but no jurisdiction to grant injunctive relief and since
there appeared to be no need for issuance of the mandamus the
petition was dismissed.

eS 428
In Boston v. Garrison we said:

«* = * Tn that case [Lane v. Ross] there was jurisdiction
to issue the writ of mandamus but no jurisdiction to issue
a writ of injunction, and because of the want of jurisdiction
the injunctive relief was denied. Here, assuming that consti-
tutionality or validity is properly involved, the court has juris-
diction on direct appeal from an order or judgment granting
or denying an injunction, but no jurisdiction on direct appeal
from an order or judgment granting or denying mandamus.”

I So here an application to restrain the Commission from allow-
ing gas to be marketed until the Commission has entered an order
requiring recycling of gas is the equivalent of an application to
have the court compel the Commission to enter the recycling order.
The appeal to the district court lay from two separate and dis-
tinct and severable orders of the Commission. A combination of
the two complaints in one cause would not serve to give us juris-
diction where otherwise it would not attach.

It appears that the Port Acres Field produces only gas and
condensate. It embraces an area of approximately 3,000 acres.
The discovery well was completed in 1957. The production is from
sands at a depth of something over 10,000 feet. The Commission,
in its special order for this field, adopted the following spacing
rule:

“Rule 1. No gas well shall hereafter be drilled nearer
than thirteen hundred and twenty (1820) feet to any well
completed in or drilling to the same reservoir on the same
lease, unitized tract or farm, and no well shall be drilled
nearer than three hundred and thirty (330) feet to any prop-
erty line, lease line or subdivision line; provided, however,
that the Commission will, in order to prevent waste or to
prevent the confiscation of property grant exceptions to per-
mit drilling within shorter distances than herein prescribed
whenever the Commission shall have determined that such
exceptions are necessary either to prevent waste or to prevent
the confiscation of property. When exception to this rule is
desired, application therefor shall be filed and will be acted
upon in accordance with the provisions of Commission State-
wide Rules 87 and 38, which applicable provisions of said
rules are incorporated herein by reference.

“The aforementioned distances in the above rule are
minimum distances to allow an operator flexibility in locating

0

a well, and the above spacing rule and the other rules to fol-
Jow are for the purpose of permitting only one well to each one
hundred and sixty (160) acre proration unit.”

Thus the Commission determined that one well to 160 acres
would effectively recover all of the hydrocarbons contained in the
field reservoir.

At the time of the trial there were said to be 25 producing
wells on large units or tracts and 22 producing wells drilled under
permits issued as exceptions to Rule 37.

This suit was brought by Pan American Petroleum Corpora-
tion, Michel Halbouty and Meredith and Company. Peter Hen-
derson Oil Company intervened and these four are appellants. A
number of the small tract owners intervened and aligned them-
selves with the Commission. They are H. L. Dillon, Jr., H. C.
Barnes, Tyrell-Combest Realty Company and P. G. Lake, Inc.
Most of the small tract owners in this field have entered into
unitization agreements. For instance, the Peter Henderson Oil
Company units, three in number, consist of several hundred small
tracts. The 22 Rule 87 wells are situated on tracts ranging from
2/10ths of an acre up to 5 acres; 16 embraced less than one
acre and 10 less than one-half acre.

I The principal contention urged by the appellants is to the
effect that the proration formula in this field allocating pro-
duction on a basis of one-third per well and two-thirds on the
amount of acreage in the tract is not reasonably sustained by
substantial evidence, but on the other hand is arbitrary, unreason-
able and confiscatory of appellants’ property. Under the record
before us we are of the opinion that this case is controlled by our
recent decision in Atlantic Refining Co. v. Railroad Commission,
162 Texas 274, 346 S.W. 2d 801 (hereinafter referred to as
Normanna) and the point is therefore sustained.

The Attorney General in his brief for the Railroad Commis-
sion squarely points up the real issue before us that goes to the
heart of this case. He says “that townsite operators do have a
property right in the reserves underlying the large tract owners,
and that that right extends to the right to drain enough oil or
gas from other tracts in the field to yield a reasonable opportunity
for a profit to the operator.” The other appellees also assert that
right.

In other words, since the owner of a tract, no matter how

425

small, is entitled to one well to prevent the confiscation of the
gas underlying his tract, he, therefore, becomes entitled to con-
fiseate gas from adjacent properties sufficient to pay the cost of
his drilling operations and return a reasonable profit. In support
of that proposition he cites only Railroad Commission v. Humble
Oil & Refining Co., Tex. Civ. App., 193 S.W. 2d 824, wr. ref.
n.r.e., [the Hawkins case] where the following statement is to bi

found: :

“As a corollary to these rules, it is held that the owner
of an ‘involuntary’ segregated tract cannot be denied the
right to drill at least one well on his tract however small it
may be. From which it would seem that his allowable can not
be cut down to the point where his well would no longer pro-
duce, (See Railroad Commission v. Mackhank, Tex. Sup.,
190 S.W. 2d 802) nor below the point where it could not be
drilled and operated at a reasonable profit.” (No authority is
cited in support of the latter conclusion).

In the Mackhank case the only proposition decided by this
court was that there was substantial evidence reasonably sup-
porting the conclusion that in order to prevent waste it was neces-
sary to keep the two wells on production and the order was there-
fore not invalid. The Mackhank decision can in no way be con-
strued as authority for a rule that would require allowable pro-
duction sufficient to return the cost of the well and its operation
plus a reasonable profit. The conservation statutes nowhere sug-
gest such a factor. We find nothing in the law to justify that
proposition. ©

In the Hawkins case the testimony was that Humble’s prop-
erties contained 76.5 per cent of the recoverable reserves of the
entire field and under the effective proration order it was allowed
to produce only 71.4 per cent and this, if continued for the es-
timated life of the field, some 27 years, would result in drainage
from the Humble’s properties to the Townsite section of some
thirty million barrels of Humble’s oil. Some witnesses, on the
other hand, testified that the productive life of the Townsite
73.74 acres would be shortened below that of the remainder of
the field by some ten years on account of its position on the struc-
ture and the heavy withdrawals. Another witness testified that
in his opinion if production were unrestricted the town lot wells
would produce more oil than under the proration order then in
effect. The court pointed out other considerations and factors
which served to support the reasonableness of the Commission’s
order.

The Hawkins case goes further to state the accepted rule
which is contradictory of any theory that the allowable must be
fixed on a cost plus profit basis, namely, “In the exercise of this
rule of curtailment it is generally recognized that the rules and
regulations adopted must, as far as practical, and within reason-
able limitations afford the several property owners a fair op-
portunity to produce the recoverable oil underlying their lands
or its equivalent.” This rule had theretofore been firmly estab-
lished in our jurisdiction.

In Gulf Land Co. v. Atlantic Refining Co., 184 Tex. 59, 131
S.W. 2d 73 (1939), we held:

«= * + Tt is the law that every owner or lessee of land is
entitled to a fair chance to recover the oil and gas in or under
his land, or their equivalents in kind. Any denial of such fair
chance would be ‘confiscation’ within the meaning of Rule 37
and the Rule of May 29th. Empire Gas & Fuel Co. v. Rail-
road Commission, Tex. Civ. App., 94 S.W. 2d 1240, writ re-

fused. * * *”

Again in Trapp v. Atlantic Refining Co., Tex. Civ. App., 169
S.W. 2d 797, wr. ref., it is said:

«x %* * The uniform holding has been that the criterion
implicit in this exception is whether the well is necessary to
protect the owner in his right to obtain his fair share (or
the equivalent thereof) of the recoverable oil underlying his
land. Both of these exceptions were discussed and upheld in
Gulf Land Co. v. Atlantic Refining Co., 184 Texas 59, 181
S.W. 2d 78. Since the issue raised in this contention has been
so conclusively adjudicated, its discussion as an original propo-
sition is both unnecessary and undesirable.”

The Legislature announced a declaration of policy in the
production and use of natural gas in Section 1, Art. 6008 as
follows:

“In recognition of past, present, and imminent evils oc-
curring in the production and use of natural gas, as a result
of waste in the production and use thereof in the absence of
correlative opportunities of owners of gas in a common re-
servoir to produce and use the'same, this law is enacted for
the protection of public and private interests against such evils
by prohibiting waste and compelling ratable production.”

421

In Corzelius v. Harrell, 143 Tex. 509, 186 S.W. 2d 961, we
quoted with approval the language used by the United States
Supreme Court in Thompson y. Consolidated Gas Corporation, 300
US. 55, 57 Sup. Ct. 364, 81 L. Ed. 510:

—H “* * * Tt may be assumed that House Bill 266 [Art. 6008]
should be construed as authorizing regulations to prevent
waste, and to create and protect correlative rights of owners
in a common reservoir of gas to their justly proportionate
shares thereof, free of drainage to neighboring lands. * * * ”

In Marrs v. Railroad Commission, 142 Tex. 298, 177 S.W.
2d 941, we held that “Under the settled law of this State oil and
gas form a part and parcel of the land wherein they tarry and
belong to the owner of such land or his assigns; and such owner
has the right to mine such minerals subject to the conservation
laws of this State. Every owner or lessee is entitled to a fair
chance to recover the oil or gas in or under his land, or their
equivalent in kind, and any denial of such fair chance amounts
to confiscation.”

As pointed out in Normanna we also held in the Marrs case
that the allowables fixed for the two separate areas were entirely
out of proportion to the potentials and would result in the taking
of one man’s property and giving it to another. Although the
Marrs case rejected the substantial evidence rule, nevertheless
that is not to say that the rules of law otherwise announced by
that decision are wrong or have been overruled by later decisions
of this court.

In the case presently before us the basic facts are not sub-
stantially in dispute. The contentions arise over conclusions to be
drawn from those facts. From the testimony of Dillon’s witness,
the only witness offered by any of the appellees, it appears that

“a L-acre tract under the 1/3-2/3 formula would have a total
gross income from April 1, 1960, to the end of its productive
period of $407,501.00. The total cost of such a well, including
drilling, operating, and royalty expenses, would be $361,674.00,
leaving a net profit of $45,827.00. The same testimony shows that
under a formula based on acre feet of producing sand, each 1-acre
tract. even without prior production would have only a total
gross income of $50,867.00. This witness further testified that the
total hydrocarbon recovery from each 1-acre tract under the
1/3-2/3 formula would be 1,542,987 MCF of gas and 69,358
barrels of condensate. That of this total recovery, 1,482,987 MCF
of gas and 62,858 barrels of condensate would be contributed by

|]

drainage. In other words, each 1-acre lot depends upon drainage
for 92.87% of its gas recovery and 90.63% of its condensate
recovery.

The witness further testified that the estimated field capa-
bility is 165,932,900 MCF of gas and 7,458,782 barrels of con-
densate; that the 22 small tract wells combined would recover
38,945,714 MCF of gas and 1,525,876 barrels of condensate. This
witness estimates a total of 116,063 acre feet of producing sand
in the Port Acres Field and he assigns 2,050 acre feet of this total
or 1.77% to the 22 Rule 37 tracts. According to his figures, these
small tracts with 1.77% of the producing sand would under the
1/8-2/3 formula recover 20.46% of the field’s total gas and con-
densate potential.

Petitioner’s exhibit from the Railroad Commission allowable
schedule for September, 1960, shows 20 Rules 37 wells with a
total allowable of 193,599 MCF of gas. Twenty-five wells on
normal 160-acre proration units (some being less than 160 acres)
are allowed to produce 1,116,416 MCF of gas. The tracts on
which the 20 Rule 37 wells are situated comprise only 19.89 acres,
while the 25 regular wells are located on 3,036 acres. Thus, on a
productive acre basis, the 20 wells having .65% of the total acreage
receive 14.6% of the allowable.

By way of comparison between the well on one of the largest
producing units and the well on one of the smallest units, the
following table is constructed from the testimony of the appellees’
witness: :

SURFACE ACREAGE MONTHLY ALLOWABLE (MCF) AVERAGE

Pan American-Ward 1—176.00 48,587 276.06 MCF per acre

‘Thompson-Sassine 25 48,587 38,060.00 MCF per acre
ACRE FEET OF SAND

Pan American-Ward 1—9,851.9 9,515 4,932 MCF per aere ft.

Thompson-Sassine 17.8 9,515 534.551 MCF per acre ft.

Thus, on the basis of the present proration order the well on
the one-fourth acre tract is allowed to produce 137 times as much
gas per acre as the well on 176 acres and 107 times more per acre
foot of producing sand.

Article 6008, Section 12, Vernon’s Ann. Civ. Stat., provides
that the Commission shall proceed to regulate and prorate gas pro-
duction in the reservoir “on a reasonable basis”. The Article

ee 429

further provides that “the monthly reservoir allowable shall be
allocated among all wells entitled to produce gas therefrom so as
to give each well its fair share of the gas to be produced from the
reservoir, provided that each well shall be restricted to the amount
of gas that can be produced from it without waste.” Section 12
of that statute provides that the Commission shall take into ac-
count in fixing the daily allowable production for each gas well
the size of the tract, the relation between the daily producing
capacity and the aggregate daily capacity of all gas wells and all
other factors which are pertinent.

The appellees offered some testimony that there is potentially
a water drive from the east to the west that would result in
longer and greater production in the western portion of the field
where the Rule 37 wells are located, the theory being that this
water drive would limit and flood out the eastern wells forcing
the gas westward into the higher structure where the Henderson
Rule 87 wells are located, thus compensating Henderson at least
in part for the drainage loss. On the other hand the appellants’
witnesses emphatically assert that there is presently no water
drive and deny that there is any indication of such occurrence
in the future. We understand from the testimony that no water
drive has yet occurred that has resulted in any loss to or flooding
of the wells to the east where the drive would first be felt. Ad-
mittedly these Rule 87 wells are located in the area where the
producing sand stratum is thicker and the structure is higher.
In our opinion neither of these factors offer any comfort to the
Rule 37 appellees because their tracts are almost completely sur-
rounded by and lie within the confines of the Peter Henderson oil
units and will necessarily drain from those units. There is testi-
mony in the record that Halbouty and Meredith under the 1/3-2/3
formula will eventually produce substantially all of the gas es-
timated to underlie their land, but this fact does not tend to make
the formula a reasonable one as between the Rule 37 wells and
Henderson.

In making a comparison between the Peter Henderson units
and the 20 Rule 37 wells! we use the testimony of appellees’ wit-
ness. The Henderson units comprise 520.3 acres or 19.84% of
the total field acreage and have 16.13% of the total field allow-
able while the 20 Rule 37 wells have a total of 19.88 acres or .76%
of the total acreage and receive 14.78% of the total allowable.

From the testimony of the same witness it appears that Peter

1. Only wells on October, 1960, Proration Schedule are used.

00

Henderson has 33,807 acre feet or 29.87% of the total acre feet
in the field, while the 20 Rule 87 wells have only 1,957 or 1.70%
of the total.

The appellees urge that this case is distinguishable from
Normanna on the facts and therefore the latter should not con-
trol. (1) They say the Normanna Field had not been substantially
developed, whereas the Port Acres Field is well developed. While
this is true, that fact would appear to militate in favor of the
appellants rather than of the appellees because the greater the
development and the more accurate the obtainable geological in-
formation, the less justification can be found for applying the
standard 1/3-2/3 proration formula. (2) They maintain that the
allocation formula here is beneficial to some of the large tract
producers and does not deprive them of any property rights.
Although there is evidence that some of these producers, due to
early production, or for other reasons, may recover 100% or more
of their reserves in place, it is clear, however, that at least one of
them, Henderson Oil Company, whose large units are composed
of unitized small tracts, will suffer loss from drainage to the
Rule 37 wells. (3) They say as contrasted with Normanna this
is not solely a case of large tracts against small ones because
Henderson makes the contention that the formula is inequitable
as among the large tracts. We fail to see how this would make a
material distinction, although the case here is principally one
of small tracts that have been unitized against small tracts whose
owners have preferred not to unitize. In Normanna we were con-
cerned with only one small tract. Here 40 permits have been
granted to drill small tracts of which there are 500 in the field,
presenting a much more serious problem so far as orderly eco-
nomical development is concerned.

Another point of distinction urged is that in Normanna the
attack was made against the 1/8-2/3 formula while in this case
the appellants asked the Commission to enter their “recommended
order” in lieu of the 1/3-2/8 proration order. In other words they
say that by the terms of appellants’ application the Commission
was limited to an acceptance or rejection of the recommended
order in that the appellants asked for no other relief than on a
“take it or leave it” basis. They argue that there is a great dif-
ference procedurally between an application to enter a specific
order and one claiming that the rule in effect is unduly harmful
and requesting the Commission to rescind that rule and enter one
that is fair and in its stead.

We do not so construe the proceedings in this case nor evi-

431

dently did the Commission. Henderson’s application reads: “On
behalf of Peter Henderson Oil Company we wish to request a
hearing to reconsider and amend Rule 8 of the special order adopt-
ing rules and regulations for the Port Acres [Lower Hackberry]
Field of Jefferson County, Texas.” At the time of filing of Hen-
derson’s application, November 19, 1958, only one permit to drill
in this field as an exception to Rule 87 had been requested and it
was not granted until December 22, 1958. The notice of the hear-
ing issued by the Commission recited that the hearing would be
held for the purpose of considering the application of Peter Hen-
derson Oil Company and concluded as follows: “Pursuant to
said Hearing the Commission will enter such rules, regulations,
and orders as in its judgment the evidence presented may justify.”

In Henderson’s motion to the Commission for rehearing it is
argued that the present formula is unjust and unfair and does
not allow to all parties a fair opportunity to have and produce
their fair share of the gas and condensate from the reservoir. In
that connection the motion urges the Commission to take into
consideration the variation of the sand thickness, the size of the
tracts, the drainage from the thick sand portion of the field into
the thin sand and all other pertinent factors shown by the evi-
dence to exist. It is also argued that if the per well factor is re-
tained it should be substantially less than one-third.

The proceedings before the Railroad Commission are informal
and their validity will not be tested by the technical rules of
pleadings and practice that obtain in court trials. Railroad Com-
mission v. Magnolia Petroleum Co., 180 Tex. 484, 109 S.W. 2d
967; Cook Drilling Co. v. Gulf Oil Corporation, 189 Tex. 80,
161 S.W. 2d 1035.

The fact that appellants suggested and urged upon the Com-
mission that the proration formula should limit recovery sub-
stantially to the reserves in place beneath each tract does not
foreclose their right to complain of the formula which they con-
sidered inequitable and confiscatory of their property nor does it
limit the Commission solely to the option of either accepting or
rejecting the proposed formula in toto. All parties, of course,
concede that the court is not empowered to direct the Commis-
sion as to the nature or terms of its order or what weight should
be given to the several allowed factors. We are limited to passing
upon the validity of the order as promulgated.

The appellees, in seeking to uphold the proration formula
adopted by the Commission, discuss at considerable length the so-

3.

called “rule of capture” and claim some benefit or protection
under that rule. They cite among other cases Brown v. Humble
Oil & Refining Co., 126 Tex. 296, 83 S.W. 2d 935, 87 S.W. 2d
1069; Corzelius v. Harrell, 148 Tex. 509, 186 S.W. 2d 961; Ryan
Consolidated Petroleum Corporation v. Pickens, 155 Tex. 221,
285 S.W. 2d 201. The doctrine of these cases is stated in Cor-
zelius as follows:

| | “The rule in this State recognizes the ownership of oil and
gas in place, and gives to the lessee a determinable fee therein.
It is also held that such rule should be considered in connec-
tion with the law of capture, which is recognized as a prop-
erty right and both rules are subject to regulation under the
police power of this State.”

Somewhat more positively we said in Eliff v. Texon Drilling
Company (1948), 146 Tex. 575, 210 S.W. 2d 558, 4 A.L.R. 2d
191, that:

“Tn our state the landowner is regarded as having absolute
title in severalty to the oil and gas in place beneath his land.
The only qualification of that rule of ownership is that it must
be considered in connection with the law of capture and is
subject to police regulations.”

In Ryan v. Pickens it is stated that “The courts of Texas have
consistently held that the rule of capture is still in force in this
State. It has become a vested property right.” That is not to say,
however, that the rule of capture is unlimited or not modified by
the accompanying rule recognized by all the cases and stated in
the Ryan case as follows: ,

«ce %* * Were [in Texas] oil and gas in place are by the es-
tablished rules of property a part of the realty or corpus of
the land, and subject to ownership, severance, conveyance,
Jease and taxation as such. * * *.”

The very fact that the Commission has the right to limit pro-
duction on the basis of acreage is a recognition of that principle.
If the Commission has the legal right, which they formerly ex-
ercised, to fix a proration formula based one-half per well and

2. See also cases cited:

Lemar v. Garner, 121 Texas 502, 50 S.W. 2d 769; Humphreys-~Mexia Co. v.
Gammon, 118 Texas 247, 254 S.W. 296, 29 A.L.R, 607; Waggoner Estate v. Sigler
Oil Co., 118 Texas 509, 19 S.W. 2d 27; Texas Co. v. Daugherty, 107 Texas 226,
176 S.W. 717, L-R.A. 1917F, 989.

es 438

one-half on the amount of acreage, and as now generally prac-
ticed of basing the allowable 1/3 on the well and 2/3 on the acre-
age, then there is nothing in the rule of capture that would make
it illegal for the Commission in the exercise of its sound judgment
and discretion now to give greater or less weight to the well or
acreage factors or for that matter to the amount of reserves in
place or any other field factors as provided by the statute.

Tt is an obvious result that if in a common reservoir one tract
owner is allowed to produce many times more gas than underlies
his tract he is denying to some other landowner in the reservoir
a fair chance to produce the gas underlying his land.

As to the right of capture, appellees refer to the following
statement in Brown v. Humble Oil & Refining Co., 126 Tex. 297,
83 S.W. 2d 935, 87 S.W. 1096:

“Owing to the peculiar characteristics of oil and gas, the
foregoing rule of ownership of oil and gas in place should be
considered in connection with the law of capture. This rule
gives the right to produce all of the oil and gas that will flow
out of the well on one’s land; and this is a property right. And
it is limited only by the physical possiblity of the adjoining
landowner diminishing the oil and gas under one’s land by
the exercise of the same right of capture. The following de-
cisions discuss the law of capture as applied in this State:
Stephens County v. Mid-Kansas Oil & Gas Co., 113 Tex. 160,
254 S.W. 290, 29 A.L.R. 566; H. & T. C. Ry. Co. v. East, 98
Tex. 146, 81 S.W. 279, 66 L.R.A. 738, 107 Am. St. Rep. 620,
4 Ann. Cas. 827; Prairie Oil & Gas Co. v. State (Tex. Com.
App.) 231 S.W. 1088, 1089. Both rules are subject to regula-
tion under the police power of a state.”

The court seems here to be merely stating what the rule of
capture is if unlimited by correlative rights, for in the preceding
paragraph the court expressly reaffirms that in Texas the law
recognizes the ownership of oil and gas in place and gives to the
lessee a determinable fee therein.

To infer that the rule of capture gives to the landowner the
legally protected right to capture the oil and gas underlying his
neighbor’s tract is entirely inconsistent with the ownership theory.
To harmonize both rules, the rule of capture can mean little more
than that due to their fugitive nature, the hydrocarbons when
captured belong to the owner of the well to which they flowed,
irrespective of where they may have been in place originally,

po

0

without liability to his neighbor for drainage. That is to say that
since the gas in a continuous reservoir will flow to a point of low
pressure the landowner is not restricted to the particular gas that
may underlie his property originally but is the owner of all that
which he may legally recover. This seems to be substantially the
view expressed in Brown v. Humble, supra.

In Stephens v. Mid-Kansas Oil & Gas Co., 118 Tex. 160, 254
S.W. 290, 29 A.L.R. 566, it was determined that the rule of cap-
ture does not conflict with the view of absolute ownership of the
minerals in place and we quote: “If the owners of adjacent lands
have the right to appropriate, without liability, the gas and oil
underlying their neighbor’s land, then their neighbor has the cor-
relative rights to appropriate, through like methods of drainage,
the gas and oil underlying the tracts adjacent to his own.” In the
Port Acres Field under the application of the existing proration
formula Henderson does not enjoy any correlative rights so far
as the small tract wells are concerned since there can be no com-
pensatory drainage to Henderson from the small tracts.

In Normanna the evidence shows that the 1/3-2/3 formula
would result in the drainage of a tremendous quantity of gas and
condensate from other leases in the field to the .8-acre lease in
question, though the precise amount of drainage was incapable of
ascertainment, and of course such drainage could not be com-
pensated by drainage from the .3-acre tract to other leases in
the field. The evidence further showed that the order would allow
the well on the .3-acre tract to produce at a rate of over 200
times as much gas per acre as a well on the 320-acre unit estab-
lished by the spacing pattern. We think the evidence here is com-
parable to that in Normanna. Under the order adopted in the Port
Acres Field more than 90% of the hydrocarbons recovered by
the Rule 37 wells would be drained from other leases in the field.
As said in Normanna the proration formula adopted here of
1/3-2/3 does not come close to compelling ratable production nor
afford to each producer in the field an opportunity to produce his
fair share of gas from the reservoir.

We fully appreciate the thorny problem that the Commission
has in this matter of proration among the hundreds of fields under
their supervision with different characteristics and the diverse
conflicting interests, views and opinions, but we are confident that
with the trained personnel at their disposal a much nearer ap-
proximation can be made, giving to all parties an opportunity to
produce a fair share of the minerals underlying the field with
ratable allowables that will be more nearly equitable than appears

Se 435

in the case before us. As long ago as 1935 we said in the Brown
v. Humble Oil & Refining Company case:

«+ * Tt ig now, however, recognized that when an oil field
has been fairly tested and developed, experts can determine
approximately the amount of oil and gas in place in a common
pool, and can also equitably determine the amount of oil and
gas recoverable by the owner of each tract of land under cer-
tain operating conditions.”

So far as the appellees’ complaint that a striking down of the
1/8-2/3 formula would probably entail heavy financial loss to
them, it may be said that they drilled their wells at their own
risk. There is some indication in the record by bill of exception
that they were offered unitization that would prevent confisca-
tion and afford to them a fair share of the mineral proceeds from
the common source. While the statute does not compel unitization,
nevertheless it does expressly authorize that procedure subject to
the approval of the Railroad Commission, Art. 6008b, V.A.C.S.
It is to be reemphasized that their permits were granted for the
purpose of avoiding confiscation of the minerals underlying their
properties and not for the purpose of enabling them to drain the
minerals underlying adjoining lands to pay the cost of their op-
erations plus profits. This does not mean and we are not to be
understood as foreclosing the power of the Commission, by proper
order or exception, to allow the holder of a Rule 37 permit to
recover a sufficient amount of oil or gas to repay drilling and
production costs and provide a reasonable profit when no other
means of recovering the minerals which underlie his land are
available. No such problem is before us.

From the foregoing it follows that the 1/8-2/3 proration
formula as applied by the Commission in the Port Acres Field
is invalid in that it does not afford an opportunity to all of the
parties to produce and save their fair share of the minerals or
their equivalent. We hold that it is not reasonably supported by
substantial evidence. .

The judgment of the trial court is reversed and judgment
rendered for appellants.

Opinion delivered February 14, 1962.
SMITH, JUSTICE, dissenting on Motion for Rehearing.

I respectfully dissent. Upon further consideration, I find that

80

to agree with the majority would place me in a completely incon-
sistent position with that of former decisions of this Court, es-
pecially those wherein I was the author of the majority opinions.
This is especially true when considered in the light of the de-
cisions in Ryan Consolidated Petroleum Corporation v. Pickens,
155 Tex. 221, 285 S.W. 2d 201, and other cases discussed herein.
Not only that, the majority opinion bears out my fear that the
Normanna decision was the opening wedge to compulsory pooling
by judicial decree. See my dissent in Atlantic Refining Company
y. Railroad Commission, 162 Tex. 274, 846 S.W. 2d 801. How-
ever, expressions in the majority opinion in that case lead me to
think that possibly the holding announced by the majority only ap-
plied to that particular case. I am inclined to believe that many
of the oil and gas attorneys were of a similar view. When I wrote
the dissent in Normanna, it was my deliberate purpose to guard
against compulsory pooling by judicial decree. I find the Court
now following the advocates of compulsory pooling in the pres-
ent case, although the Normanna case did not actually deny the
right of separate development to owners of small tracts. I am now
convinced that the Halbouty decision effectually denies such right
and apparently authorizes compulsory pooling without any legis-
lative authorization.

The right of separate development of small tracts has long
been recognized by the Texas courts. In fact, it has become a
settled rule of property. The fact that the rule was announced
in so-called Rule 87 cases does not mean that such rule is confined
in application to such cases.

The Railroad Commission of Texas has in the past rigidly fol-
lowed the law as announced by this Court in Ryan and other cases
and has adopted rules consistent with the principles of law an-
nounced in cases prior to Normanna. The Railroad Commission
steadfastly adhered to the law and has awaited action of the
Legislature, the only department of government that has the
legal power to compel compulsory pooling.

After the Normanna decision, the Railroad Commission was
confronted with the difficult task of adopting rules and regula-
tions for the Normanna Fields. The Railroad Commission ob-
viously reached the conclusion that the Normanna decision could
mean nothing other than compulsory pooling. On September 27,
1961, the Railroad Commission adopted new rules for the Nor-
manna Fields. The Commission in its order took cognizance of two
short paragraphs in the Normanna opinion wherein the Court

437

said that the 2/3-1/8 rule did not come close! to compelling ratable
production and that the responsibility? was upon the Commission
to devise some rule of proration which would conserve the gas
in the field in question and at the same time be fair and just to
all parties.

It should be noted that the Normanna opinion carefully avoid-
ed specifically directing the Railroad Commission to adopt a
rule encompassing compulsory pooling. In fact, it gave no specific
direction in this respect. However, the Commission was of the
opinion’ that compusory pooling was demanded by the Normanna
decision. Rule 8b,‘ and other provisions in the special order is-

1. “It does not come close to compelling ratable production; neither does
it offer each producer in the field an opportunity to produce his fair share of
the gas from the reservoir.”

2. “The responsibility rests with the Commission to devise some rule of
proration which will conserve the gas in the field in question and at the same
time be fair and just to all parties without depriving any of them of his
property;”

3. “WHEREAS, From a study of the full record adduced at said hearing,
which included technical reservoir data and legal briefs submitted by the several
interested parties, the Commission is of the opinion and finds that an acreage
allocation formula would reasonably provide each party an opportunity to pro-
duce its fair share of the gas in a reservoir, but beeanse of the additional re-
sponsibility placed upon the Commission, that is, to arrive at a means of pre-
venting confiscation of a small tract’s reserves while allowing each operator to
produce its fair share of the gas in a reservoir, as knotty a problem as has
ever been placed before the Commission, must be solved, that such solution in
all probability is best resolved through the use of @ special allowable that would
encourage a small tract owner to negotiate with his neighbors for fair and just
treatment, but would also provide a sufficient allowable to such small tract to
encourage a reasonable attitude in such neighbors so that they would endeavor
to work out this common problem; * * *.”

4. “Rule 8b. Any operator having the right to drill a gas well upon a
tract containing less than 100 acres, after application, notice and hearing prior
to the drilling of the well, may, if in the judgment of the Commission the facts
so justify, be given a definite and fixed special allowable, provided the well is
completed as a producing well, higher than the allowable that would be fixed
for any well completed upon such tract by reference to said allocation formula
upon proof to the Commission (1) that the drilling and completion of a well
upon said tract is not economically feasible; and (2) that each and every owner
of the right to drill upon acreage immediately adjacent to said tract of less than
100 acres has refused to allow the pooling of said tract with enough of said
immediately adjacent acreage to create a drilling unit of at least 100 acres
upon fair and reasonable terms, that is, upon such terms as would allow the
owners to drill, complete and operate the well to be drilled thereon and as would
provide that all income received from 7/8ths of the production from said well
and all expense of drilling, completing and operating said well should be shared
among the owners of the working interest in said drill-site unit upon an acreage
basis. Such special allowable shall control the production of gas from said well
during its producing life, except that said allowable shall be related properly
to total field production as the same may fluctuate and said special allowable,
if granted, shall in no event exceed the allowable of a gas well completed on ‘a
tract containing 100 productive acres; provided further, however, that any
well drilled before the adoption of this rule will be treated, for purposes of
this xule, as though it had not yet been drilled.”

|)

sued on September 27, 1961, strongly indicate that the Commis-
sion felt that this Court had by the Normanna decision released
the Commission from the duty of following the well-settled rules
of property which had been firmly announced by this Court in
the decisions hereinafter cited.

The Halbouty decision confirms the action of the Commis-
sion of September, 1961. In other words, Halbouty said, in ef-
fect, to the Commission that it correctly concluded, in adopting
the September, 1961 rules, that it had the authority under the
Normanna decision to fix an allowable for wells on small tracts
in the absence of statutes providing for compulsory pooling.

The Halbouty decision falls in line with the advocates of com-
pulsory pooling and for the first time informs the litigants as to
what the majority really had in mind when it wrote the Normanna
decision. However, I wish to point out that even after Normanna,
the advocates of compulsory pooling recognized that the Texas
courts had definitely established the right of separate develop-
ment. May I digress to say that we do not have before us here
the question of whether or not the property rule prevailing in
Texas has caused gross inequities. The question is: Are we going
to depart from the Court’s consistent adherence to the rule that
a tract, no matter how small, is entitled to one well as a matter
of right unless the tract is a part of a voluntary subdivision, and
that the Legislature is the only body that can bring about com-
pulsory pooling? It is well recognized that the Texas rule of
property stands for the proposition that in Texas the owner of
a small tract is entitled to one well as a matter of right and that
to limit the allowable for that well to a figure commensurate with
the recoverable oil and gas in place beneath the tract would make
the well an unprofitable one and his right to drill a well on his
tract would be a futile thing. This rule of property has been com-
pletely destroyed by the Halbouty decision, particularly when this
Court said:

“So far as the appellees’ complaint that a striking down
of the 1/3-2/3 formula would probably entail heavy financial
loss to them, it may be said that they drilled their wells at
their own risk. There is some indication in the record by bill
of exception that they were offered unitization that would
prevent confiscation and afford to them a fair share of the

mineral proceeds from the common source. * * * ”

Clearly, without statutory standards, the Railroad Commis-
sion cannot adequately exercise the power of compulsory pooling

ee 439

now given to it by Halbouty. On the other hand, the owners of
small tracts are left at the mercy of the standards fixed by the
owners occupying the position of Halbouty and Henderson — this,
without regard to whether the small tract owners are wealthy,
middle class, or poor.

In this case, the offers to pool made by Halbouty and Hender-
son are most indefinite, this because there exists no legislative
guide fixing the standards for determining how expenses and
revenue is to be shared. Each operator who is fortunate enough to
have gotten together several small tracts is left to make his own
ground rules. This cannot be sound. For example, in this case,
Halbouty offered to pool and unitize his leases with others, but
all that his offer said on the subject of expenses was that Halbouty
will “pay and bear his ratable share of the cost of drilling and
operating costs”. I think Dillon’s argument on this particular
phase of the case is sound and I quote:

“Does ‘ratable’ mean on the basis of surface acreage? If
so, it would obviously be an unfair basis of pooling or unitiza-
tion, if the thin leases of Halbouty on the east were unitized
with tracts in the center of the field having very thick and
productive sands. Or, on the other hand, does ‘ratable’ mean
that the costs and revenue would be divided on the basis of
estimated acre feet of net productive sand? If so, whose esti-
mate is to be taken as the criterion? Must the Railroad Com-
mission set up a schedule of acre feet, resolving the tremen-
dous conflicts between experts as to how many acre feet are
beneath the various tracts?

“To illustrate the difficulties, it may be pointed out that
with reference to the Henderson-Doornbos No. 2 Unit, Hal-
bouty’s expert estimated that it had 420 acre feet, whereas
Henderson’s expert estimated that it had 1,760 acre feet, or
an increase of 319% over the estimate of Halbouty’s witness.
Similarly, as to the Henderson-Doornbos No. 1 Unit, Hen-
derson’s expert gave his client’s lease an estimated 2,165 acre
feet, as compared to Halbouty’s witness’s estimate of 768 acre
feet, or an increase of about 180%. Similarly, as to the Hender-
son-Montrose Unit, Halbouty’s expert estimated that it had
only 7,764 acre feet, whereas Henderson’s expert estimated
that it had 14,300 acre feet. In other words, Mr. Henderson’s
expert increased the estimate of Halbouty’s expert by 84%.

“We assume, from what the Court has said, that the Rail-
road Commission must decide whether acreage, or acre feet,

0

or estimates of reserves in place, or some other standard will be
the basis for allocating expenses and revenues among the
owners of tracts which are forced to unitize and the Commis-
sion must resolve any conflicts between experts in estimating
productive acreage or acre feet or reserves in place. Even
though the owners of small tracts feel that their acre feet or
reserves are being grossly underestimated, in relation to simi-
lar estimates for adjoining tracts, still they would have to ac-
cept whatever the Railroad Commission decides if they are to
share in the pool or unit. Presumably, also, the large unit
operators must accept the Commission’s decision under the
threat that, if they do not, the small tract owners will be
allowed to produce enough gas to pay back costs plus some
profit. In that event, we respectfully ask, if the large unit
operators either refuse to pool or unitize or will not accept
the decision of the Railroad Commission regarding their share
of any proposed unit, by what legal authority is the Railroad
Commission then empowered to authorize the owners of small
tracts to go ahead and separately develop their tracts and
receive an allowable which will permit them to drain more
gas than they originally had in place? Is the legal test of
‘confiscation’ in such cases to be something other than the
denial to the owners of large tracts of the right to recover the
gas in place beneath their tracts?”

The right of separate development of small tracts, where the
owners did not voluntarily pool with other tracts, has never been
questioned in former decisions. Even though the Legislature in
Article 6014, Vernon’s Annotated Civil Statutes, gave the Rail-
road Commission broad authority to enact orders to prevent
waste, the Legislature was very careful in paragraph (g) of this
statute to expressly declare that it was not the intention of the
Legislature to require repressuring of an oil pool or that the
separately owned properties in any pool be unitized under one
management, control or ownership. The Normanna decision is now
being used as express authority from the Supreme Court of Texas
to the Railroad Commission to ignore such cases as Ryan Con-
solidated Petroleum Corporation v. Pickens, supra; Pickens v.
Ryan Consolidated Petroleum Corporation, Tex. Civ. App., 219
S.W. 2d 150, wr. ref. n.r.e.; Halbouty v. Darsey, Tex. Civ. App.,
826 S.W. 2d 528, 582, wr. ref. n.r.e.; Nale v. Carroll, Tex. Civ.
App., 266 S.W. 2d 519, 526, affirmed 155 Tex. 555, 289 S.W. 2d
743; Coates v. De Gracia, Tex. Civ. App., 286 S.W. 2d 691, 694;
Section 1 of Article 6008b, Vernon’s Annotated Civil Statutes;
Dailey v. Railroad Commission, Tex. Civ. App., 183 S.W. 2d 219,
wr. ref.; Stanolind Oil & Gas Company v. Railroad Commission,

at

Tex. Civ. App., 96 S.W. 2d 664, no wr. hist.; Nash v. Shell Petrol-
eum Corporation, Tex. Civ. App., 120 S.W. 2d 522, wr. dism.; Rail-
road Commission v. Delhi-Taylor Oil Corporation, Tex. Civ. App.,
802 S.W. 2d 278, wr. ref. n.r.e.; Halbouty v. Darsey, Tex. Civ.
App., 331 S.W. 2d 885, no wr. hist.; Atlantic Refining Company v.
Railroad Commission, Tex. Civ. App., 880 S.W. 2d 494, wr. ref.
nx.e.; Railroad Commission v. Humble Oil & Refining Company,
151 Tex. 51, 245 S.W. 2d 488.

My contention is simply this: The statutes now in effect do
not compel unitization. Therefore, the Railroad Commission has
no legal authority to enter orders which would have the effect of
requiring or compelling unitization. This very argument was per-
suasive and no doubt caused this Court in the Ryan case to adopt
the view as expressed in the final majority opinion that without
legislation requiring compulsory pooling, the Court had no power
to enact such legislation. Thus, the Court adhered to the separate
tract development theory under the well-settled rule of property.
In the Ryan case, we discussed the fact that the State of Mis-
sissippi and other states had adopted unitization and pooling
statutes, but expressly held that the rule of capture “has become
a vested property right” and the “Legislature of Texas has not
seen fit to enact legislation which would authorize the Railroad
Commission to adopt and promulgate rules which would have the
effect of rendering ineffective the rule of capture recognized in
all the decisions in this State.” The opinion of the majority in
the present case, nullifying the proration order in the Port Acres
Field, does exactly what the Ryan case said the Legislature of
Texas has not seen fit to do. It not only authorizes, but it even
requires the Railroad Commission to adopt and promulgate rules
which would have the effect of rendering ineffective the rule of
capture as recognized in all previous decisions in Texas. It cannot
be said that the Ryan case was decided without due regard to all
the problems we have presented in the present case. It was argued
in the Ryan case that the majority opinion in that case permitted
the confiscation by Pickens & Coffield of minerals belonging to
Ryan. The dissenting opinion stressed the contention that the
majority opinion was based primarily on the rule of capture and
strongly urged that Ryan was entitled to equitable relief to the
extent that it should share in the ownership of all oil produced
from Pickens and Coffield’s land and that to allow the rule of
capture to prevail would amount to an unconstitutional confis-
cation of Ryan’s property, the theory being that “under our law
no one has a right simply to capture the property of someone
else”. This Court rejected that theory. We said:

rs

“Petitioner’s [Ryan] contention that this cause is one for
equitable relief should not be sustained for the further reason
that its position is inconsistent with the law of capture, which
is a well-settled rule of property in this jurisdiction. The rule
of capture is simply this — that the owner of a tract of land
acquires title to the oil and gas which he produces from wells
drilled thereon, though part of such oil or gas may have mi-
grated from adjoining land. The Railroad Commission is with-
out power from the Legislature * * * to do anything * * * .”

We rejected the State of Mississippi authorities primarily on
the ground that our Legislature had not adopted statutes to “safe-
guard, protect and enforce the co-equal and correlative rights of
owners in a common source or pool of oil and gas to the end that
each such owner in a common pool or source of supply of oil and
gas may obtain his just and equitable share of production there-
from * * *”

I still say, as we said in Ryan, that the Legislature of Texas
has not seen fit to enact legislation which would authorize the
Railroad Commission to adopt and promulgate rules which would
have the effect of rendering ineffective the rule of capture recog-
nized in all the decisions in this State. The majority, on the other
hand, now refuses to consider the physical facts with regard to
“the peculiar characteristics of oil and gas”, which has been
established. See Brown v. Humble Oil & Refining Company, 126
Tex. 296, 83 S.W. 2d 935, 87 S.W. 2d 1096. Justice Wilson, the
writer of the dissent in Ryan, said that the principles of geology
and reservoir dynamics then known upheld his view and would
eventually meet “with the same acceptance in judicial thought
that they are accorded in business and financial thinking”. We
rejected such thinking then and should do so now. I agree with
Dillon et al when they say, in their motion for rehearing, that
the present decision in this case creates immediately many com-
plex problems and, in the absence of legislation on the subject,
leaves the Railroad Commission without a proper standard to
be used in discharging its duties so far as oil and gas is con-
cerned. The motion points out some of these problems, such as:

“For example, exactly what does the Court mean when it
says in its opinion (page 16) that ‘the landowner is not re-
stricted to the particular gas that may underlie his property
originally but is the owner of all which he may legally recover’?
What is the test of what an owner can ‘legally recover’? Is it
the equivalent of the gas which was originally in place beneath
his tract? If so, must he stop producing his well when he has

eS aug

recovered such amount of gas, even though the reservoir be-
neath his tract has by that time been again refilled by gas which
has been drained from other properties?

“For example, every witness who testified in this case said
that the appellant, Halbouty, would recover under the present
proration formula substantially more than 100% of the recover-
able gas originally in place beneath his lease, and it was admitted
in Halbouty’s main brief in this Court that he will recover
over 26% of the field reserves, whereas it is estimated that his
leases have only 22% of the field reserves under them. Must
Halbouty stop producing when he has recovered 100% of the
original reserves in place beneath his units? If he produces
more than this, is he liable to Henderson for excessive drain-
age, since Henderson will suffer by excessive drainage to Hal-
bouty’s tracts (meaning by ‘excessive’ an amount exceeding the
gas originally beneath the Halbouty leases)?’ [Emphasis
added.]

I agree with Dillon et al when they say:

“Increased knowledge of engineering and geological facts
about oil and gas reservoirs has not changed the fundamental
nature of oil and gas as fluid substances which move in the
reservoir, without regard to property lines, in response to
pressure differentials, which are established by either natural or
artificial forces. Where and how and to what extent such move-
ments will take place cannot be predicted with certainty even
now, particularly where wells are spaced widely apart and only
estimates or intelligent guesses can be made as to the condition
of the reservoir in the large undrilled areas between the wells.
To apply, as the Court apparently has done in the opinion in
this case, the same rules of property to oil and gas which are
applied to solid minerals, is not only an abandonment of es-
tablished rules of property but also an attempt to ignore funda-
mental physical facts.”

There is no sound reason for the abandonment of the rules
of property which have been long established in Texas. No pre-
vious decision has held that the Railroad Commission must deny
a living allowable to a first well on a separate tract. The Dillons
et al., and other small tract producers in the Port Acres Field,
have spent millions of dollars in drilling costs alone. If this de-
cision is permitted to stand these people cannot possibly recover
their costs because the allowables for such wells will be limited so
far below their producing capacity that they can recover only the

es

equivalent of the gas in place beneath each tract. No previous
decision, including the Normanna decision, has intimated, much
less held, that the Railroad Commission would be required to cut
the allowables of the many Port Acres wells to the point where
they could recover only a very small fraction of their cash invest-
ment. In the Normanna case, the Court indicated only that the
predicted net profit to the Bright & Schiff well was unreasonably
high. I think everyone will agree that the Normanna case was
revolutionary, but, at the same time, there was nothing even in
that case indicating that the Railroad Commission would be re-
quired to destroy the investments of the owners of wells lawfully
drilled upon separate tracts. In this connection, I concurred in
the result reached in the case of Railroad Commission of Texas
et al v. Murel Williams, 163 Tex. 370, for the reasons stated in a
concurring opinion delivered on April 11, 1962. I concurred in
the result only for the reason that, in my opinion, the Court in
the Williams case was lending encouragement to the advocates of
compulsory pooling in their effort to effectively destroy the rules
of property heretofore announced and followed by The Supreme
Court of Texas.

In my opinion the allocation formula attacked in this case
is reasonably supported by substantial evidence. The District
Court correctly excluded the testimony of Commissioner Murray.

I agree with Dillon et al. when they say:

“The proration orders attacked in this case are legislative
orders, in that they apply generally to all producers in the
Port Acres Field and are prospective in operation. Therefore
tests which would apply to judicial or quasi-judicial decisions
cannot properly be applied to the proration orders involved, in
this case. Certainly no one would contend that a statute could
be attacked on the ground that the legislators voting for the
statute had previously committed themselves, by agreements
among themselves or otherwise, to a policy embodied in the
statute, before it was passed. The only question would be
whether the statute, based on evidence heard by the Court, is
or is not in conformity with constitutional requirements. So,
it is submitted, in this case, where a legislative order of the
Railroad Commission is concerned, the Court should not in-
quire into the policies, motives, or methods of the Commission
which caused it to adopt this formula rather than some other.”

A helpful discussion of the scope of judicial review of oil and
gas orders of the Railroad Commission is contained in the opinion

A 445

in Railroad Commission v. Magnolia Petroleum Company, 130
Tex. 484, 109 S.W. 2d 967. That case refers to and quotes from
the opinion in Railroad Commission v. Galveston Chamber of
Commerce, 105 Tex. 101, 145 S.W. 578.

The same rule announced in the above cases was more recently
stated by this Court in Railroad Commission v. Houston Natural
Gas Corporation, 155 Tex. 502, 289 S.W. 2d 559, 573:

“farlier in this opinion we pointed out that where the at-
tack upon a legislative act of the Railroad Commission is that
it violates the Constitution because it is confiscatory, we would
not ‘investigate the methods adopted by the Commission in
fixing its rates, nor the motives or purposes which prompted
such action’. Railroad Commission v. Galveston Chamber of
Commerce. 105 Tex. 101, 145 S.W. 578, 580. The Commission
may have used altogether erroneous methods and an erroneous
conception of the law but if it arrived at a correct rate — and
the court will test this rate against its own finding of fact —
then the rate should be sustained.”

The courts should simply test the validity of the order in-
volved here on the basis of whether it is supported by substantial
evidence. There is no logical reason why the Railroad Commission
should be restrained from continuing in effect the allocation for-
mula adopted August 18, 1958, for the Port Acres Field. I would
affirm the judgment of the trial court.

Opinion delivered May 28, 1962.
be
MILES STRICKLAND ET AL, Relators

v.
Hon. P. FRANK LAKE, SECRETARY OF STATE OF TEXAS, Respondent

No. A-8670. Decided May 28, 1962
857 S.W. 2d 383

Miles Strickland, Myron M. Sheinfeld, Houston, for relators.

Will Wilson, Atty. Gen., Bob EH. Shannon, Asst. Atty. Gen.,
Austin, for respondent.

ORIGINAL MANDAMUS

". ASSOCIATE JUSTICE FRANK P. CULVER delivered the
opinion of the Court.

This is an original proceeding in which Miles Strickland and
others seek a writ of mandamus to require the Secretary of State
to accept and file corporate charters which set forth the purposes
formerly authorized by Art. 1808b, Vernon’s Annotated Texas
Civil Statutes. The statute was expressly repealed by the Legis-
lature effective August 25, 1961. Acts 1961, 57th Legislature,
p. 458, ch. 229. The relators presented their charters to the Sec-
retary of State on August 15, 1961, and the Secretary of State
refused to file the same on the ground that Art. 1808b had been
previously repealed by the Texas Business Corporation Act adopted
in 1955.

In Gordon v. Lake, 163 Tex. 392, 356 S.W. 2d 188, we held
that Art. 1303b was not repealed by the Texas Business Corpora-
tion Act, but that the same was in full force and effect when the
relators presented their charter to the Secretary of State and
that he was legally obligated to accept and file the charter. We
further held that the only remedy available to the relators was by
way of an original mandamus in this court and that they should
not be deprived of their rights when the delay in enforcement
resulted solely from the processes of the law. Therefore the rela-

eS 4a

tors here concededly are entitled to the writ of mandamus unless
it be said that they failed to exercise due diligence in seeking
relief. Their right to have the charters accepted and filed accrued
prior to the repeal.

The facts in that respect are that on August 23rd, two days
before the effective repeal date of Art. 1303b, these relators filed
a motion praying that they be allowed to intervene in Gordon
v. Lake and to seek the issuance of a writ of mandamus in their
behalf. On October 3rd following we dismissed the motion to
intervene and relators did not thereafter file a motion for re-
hearing. On October 24th they then sought leave to file their
petition in mandamus.

The Secretary of State maintains that the delay of two months
after the effective date of the repeal statute in seeking redress
from this court is a lack of due diligence; and that since the
relators had no legal right to intervene in Gordon v. Lake the
effort to do so was a mere nullity and consequently they occupied
no better position than if a motion to intervene had never been
filed. In other words he insists that the attempt of one to avail
himself of some remedy, which does not exist, cannot be con-
sidered in determining whether due diligence has been exercised.

The Secretary cites the case of City of Ranger v. Gholson,
141 S.W. 2d 396, Civ. App., 1940. That case held that the filing
and pendency of a motion to intervene which was thereafter prop-
erly dismissed, did not toll the statutes of limitation. That hold-
ing is no doubt correct but it has little application. When the
bar of limitation is invoked the matter of diligence is not an issue.
The question is whether suit has been timely filed and the dis-
missal of a suit properly filed would have the same effect so far
as limitation is concerned as the dismissal of the intervention in
Ranger v. Gholson. We do say that in all probability relators’
petition would have been filed earlier in this court had we not
delayed action in their motion for a period of some 40 days. So to
some extent at least the delay may be said to have resulted from
Jegal processes. We think the attempt to intervene is a cirecum-
stance to be considered on the question of due diligence.

In this connection we call attention to the proviso in the re-
peal act, supra, as follows:

“The repeal of a prior Act by this Act shall not impair or
otherwise affect:

1 es

“(1) The organization or the continued existence of a
domestic corporation existing at the time of such repeal or any
foreign corporation qualified to do business in this State at
the time of such repeal to continue so to do without again
qualifying to do business in this State; provided, however, that
any corporation heretofore operating by virtue of Section 49
of Article 1802 or 1808b, Vernon’s Civil Statutes of Texas, or
both, must meet the qualifications of the Texas Business Cor-
poration Act.

“(2) Any right accrued or established, or any liability
or penalty incurred, under the provisions of such Act prior to
the repeal thereof.”

The term “diligence” is relative and incapable of exact defini-
tion. Its meaning must be determined by the circumstances of
each case. Reasonable diligence has been defined as such dili-
gence that an ordinarily prudent and diligent person would ex-
ercise under similar circumstances. Missouri, K. & T. Ry. Co. v.
Gist, Tex. Civ. App., 73 S.W. 857. It is usually a question of fact.
However, we are of the opinion that under the circumstances in
this case the relators did not fail to exercise due diligence in
filing their application for writ of mandamus in this court within
a period of two months after the effective date of the repeal of
Art. 1803b.

We therefore hold that the Secretary of State should file these
charters as of the date they were presented to him, namely, August
15, 1961. In the event he does not so do the writ of mandamus
will issue.

Associate Justice Steakley not sitting.

Opinion delivered May 23, 1962.

GRIFFIN, JUSTICE, concurring.

In view of the holding by the Court in Gordon v. Lake, I bow
to the will of the Court, and concur herein.

re 449

STATE OF TEXAS, Relator
v.
G. C. OLSEN ET AL, Respondents

No. A-8902. Denied May 23, 1962
360 S.W. 2d 402

De
D. D. Sullivan, District Attorney, Andrews, John H. Banks,
County Atty., Winkler County, Kermit, for relator.

Warren Burnett, Odessa, Luther E. Jones, Jr., Corpus Christi,
for respondents.

PER CURIAM.

Permission to file this original mandamus proceeding in
this court was granted on March 14, 1962. Oral argument was
heard and the case submitted for decision on April 25, 1962.
The purpose of the proceeding is to require Honorable G. C.
Olsen, Judge of the District Court in and for the 109th Judicial
District to set aside and vacate a judgment rendered and en-
tered by him in a preliminary proceeding in cause No. 1071, The
State of Texas v. John Mack Herring, then pending on the
Criminal Docket of said court for Winkler County, and to pro-
ceed to trial in said cause.

It has come to the attention of this court that Honorable
G. C. Olsen has died since the case was submitted. No doubt a
successor will be appointed and will qualify in due time. The
proceeding against Judge Olsen is moot. A writ of mandamus
will not lie against a successor judge in the absence of a refusal
by him to grant the relief Relator seeks. If the successor judge
refuses to grant the relief sought, Relator may then amend its
application for writ of mandamus and the matter will be de-
cided on the merits. There will be no need for reargument.

Relators will be granted fifteen days from the qualification
of a successor to Judge Olsen in which to file an amended appli-
cation for writ of mandamus. If the successor judge should refuse
to grant relief and an amendment is not filed within the time
stipulated, this cause will be dismissed. In the meantime, decision
in the case will be held in abeyance. Saenz v. Sanders, 151 Texas
10, 245 S.W. 2d 483.

Opinion delivered May 23, 1962.

0

MApISON RAYBURN, JUDGE, ET AL, Petitioners

v.
THE STATE OF TEXAS, Respondent

No, A-8847. Decided April 25, 1962
Rehearing Denied May 23, 1962

a .
Dow & Dow, M. Leon Kalvort, Houston, for petitioner.

Will Wilson, Atty. General, Austin, L. P. Lollar, Morgan Nes-
bitt and Edward A. Cazares, Assistant Attys. Gen., for respondent.

PER CURIAM.

Contrary to the decision of the Amarillo Court of Civil Ap-
peals in City of Amarillo v. Adams, Texas Civ. App., 842 S.W.
2d 371 (wr. dis.), the Texarkana Court of Civil Appeals has
held that the period for filing objections to the award of the
commissioners in a condemnation proceeding as provided in
Article 8266, Vernon’s Ann. Tex. Civ. Stat., is not enlarged by
the provisions of Rule 4, Texas Rules of Civil Procedure. State
v. Rayburn, Texas Civ. App., 852 S.W. 2d 357. We are in agree-
ment with the holding of the Court of Civil Appeals in the present
case, because the Rules of Civil Procedure do not operate to
extend the time provided by statute within which an appeal may
be taken to the courts in a proceeding originally administrative
in nature. The application for writ of error is Refused, No Re-
versible Error.

Opinion delivered April 25, 1962.
as
TEXAS & NEW ORLEANS RY. Co., Petitioner
MeELBA Hart er Mt, Respondents
No. A-8704. Decided April 11, 1962

Rehearing Denied May 80, 1962
357 S.W. 2d 901

A451

Keith, Mehaffy, McNicholas & Weber, Beaumont, for peti-
tioner.

Barber & Seale, Jasper, for respondents.

8

ASSOCIATE JUSTICE GREENHILL delivered the opinion
of the Court.

Melba Hart and Mary Evelyn McCormick were injured when
their car was struck by one of the defendant railway company’s
engines near La Porte, Texas. Suit was brought on their behalf.
The jury found the railway was negligent in failing to have in
operation blinker-light warning devices and in failing to pro-
vide adequate warning at the crossing. It found the driver of
the car, Mary McCormick, was also negligent in failing to keep
a proper lookout and in other respects. The jury answered issues
of discovered peril against the railroad: that its fireman dis-
covered and realized the perilous position of the girls in time,
and negligently failed to exercise the means at hand to avoid
the collision. Judgment was entered against the railway: $15,000
for Melba Hart and $5,000 for Mary McCormick. That judg-
ment was affirmed by the Beaumont Court of Civil Appeals
solely on the basis of the discovered peril issues, 350 S.W. 2d
227. It required a remittitur which reduced the amount of the
recovery to $5,000 for Melba Hart and $2,000 for Mary Me-
Cormick.

Because the question is whether there is “some evidence” or
“no evidence” to support the jury’s answers to the discovered
peril issues, the facts must be set out.

The driver of the car, Mary McCormick, age 19, decided to
drive to Alvin to see a boy friend. She invited Melba Hart, age
17, who lived at Kountze, Texas, to ride with her. Melba did
not share the expense and had no control of the car. The girls
left Kountze around 9:15 a.m. on Sunday of the Labor Day
weekend, 1958. They drove to Baytown, through the tunnel under
the Houston Ship Channel, and stopped at a stop sign before
entering Spencer Highway which runs east and west from La
Porte, Texas, to the vicinity of Houston. They turned right onto
Spencer Highway, in a westerly direction, heading toward Hous-
ton and Alvin and away from La Porte. The railroad crossing
was about a half mile toward Houston from the stop sign. The
car was driven at approximately 35 to 40 miles per hour when
it got to the tracks and was struck. The time of the accident was
around noon on a clear August day.

The terrain at and all around the crossing is flat. The rail-
way track crosses the highway at right angles, in a north-south
direction. There is a depot on the northeast side of the highway-
railway intersection. At some time before the collision, it formed

es:

an obstruction to the vision of the driver of the car and the fire-
man of the train. It was located 99.6 feet north of the highway
(from which direction the train came) and 21 feet east of the
main railroad track. There was a spur or house track on the
east side of the depot. The main track was on the west side of
the depot.

The train in question consisted of a diesel engine and about
AO freight cars, 86 loaded with gravel and 4 empties. There is
a dispute as to how many freight cars were on the spur track
(which would also obstruct the vision of the driver of the car
from the train, and the vision of the fireman of the car). The
engineer testified that he had spotted one car of automobiles on
the spur track just opposite the platform of the depot. Having
spotted the car, he backed to a switch, and was just getting un-
derway again shortly before the collision.

An agent of the railway testified that at this intersection,
there were on both sides of the track large railroad warning
standards. At the top of the standard was a crossbuck; below
the crossbuck were automatic flashing lights which were activated
by a train on the track in the vicinity of the crossing. The
standard on the east side of the track (the side from which the
girls approached) was also equipped with an automatic bell.
The standard on the other (western) side, he testified, had the
flashing lights but no bell. The County had railway crossing
signs on both sides of the crossing.

Melba Hart said that as she and Mary McCormick approached
the crossing they were talking; that she first saw the train when
it came out from behind the depot (which is 99.6 feet from the
highway). On cross examination, she testified that she didn’t
see the train until the automobile was crossing the track. She
said she was looking straight ahead “and then I just happened
to glance over my right shoulder and I saw the train just before
it hit us.” The engine struck the car on the car’s right side, the
side on which Melba was sitting.

She said there were no blinking lights, no bells ringing, no
whistle blowing. She did not see any railroad crossing sign. On
cross examination she admitted that “when the train hit me,
I forgot everything I did know.” As to the warning signs, she
said, “I don’t remember none of this stuff.” She could not re-
member how fast the train was moving; she had no earthly idea.

0

Mary McCormick, the driver, also testified that there were
no blinking lights at the crossing. She heard no bells or whistle.
She was “normally looking down the highway”, but she did not
see the train until about a second before her car was hit. She
remembered the county railroad warning sign. She did not
remember whether there were any railroad standards equipped
with warning lights. She did not know whether the sign and
the device was there or not. She did not see any blinking lights;
there were none working to her knowledge.

She did remember the depot, and she did remember some
box cars which were not moving (apparently on the spur track).
She had no idea as to the speed of the train. She had no idea
how far her car was from the tracks when she first saw the
depot. She just saw the train when the front of her car was on
the track.

Mrs. Earlene Hart, Melba’s mother, happened also to have
driven across this highway and crossing that weekend. She testi-
fied that when she crossed there on Friday, there were no signal
lights at the crossing. When she drove back across it on Mon-
day, there was some sort of bell-like structure hanging over the
highway. She could not remember whether it was anchored by
a post on the left or right of the highway, or how it got put up
over the Labor Day weekend. There was no evidence that there
was a train in the vicinity to have activated the warning signals,
assuming they were there. When she drove back on Monday, she
had not been informed, and did not know, that her daughter
had been involved in an accident at the crossing.

Roland Lee Gadman was driving on the Spencer Highway
on the day of the collision. He was headed in the opposite direc-
tion from the girls. He was an eye witness. As he approached
the crossing from the west, headed toward La Porte, he stopped
because he saw the flashing warning lights on the railroad sign.
The lights were in operation below the usual crossbuck sign.
He was positive that there were similar devices on the opposite
side of the track, which were still there; and he would say that
they, too, were in operation. But he did not know, positively,
that they were in operation since they were on the opposite side
of the crossing. The traffic was heavy this weekend.

He first noticed the train when it was 75 to 100 feet from
the highway—when it was just about even with the depot. The
depot would be an obstruction to drivers approaching from the
east, as plaintiffs were. He also observed one or two box cars

ee eee

on the spur track. He said the train was just starting, and
estimated its speed at from 5 to 8 miles per hour. The engineer
was blowing his whistle continuously, for a long time. Gadman
heard it above his car radio. Bells were ringing.

He observed the plaintiffs’ car when it was some 20 to 25
feet from the tracks. At this point the engine was entering the
left hand side of the highway. The girls’ car did not swerve:
“she continued just like she didn’t see it” (the engine). After
the collision, he got out of his car and walked down to the girls’
ear, some 50 feet down the track.

G. H. Montemat, the fireman, testified that he sat on the
left side of the engine, the side toward the approach of the girls’
car. He and the engineer had spotted a car on the spur track
and backed to a switch to continue their journey from Houston
to Texas City. He saw the plaintiffs’ car “just as we came out
from behind the depot”; “just as we passed the depot”. On cross
examination he testified that he first saw the plaintiffs’ car
when it was first within his sight range, when the automobile
was approximately 100 feet from the crossing. We think, taken
in context, he meant that he first saw the automobile when it
was within his sight range after he passed the depot.

When the engine backed to the switch to the north of the depot,
it came to a complete stop. His estimate of the distance from the
switch to the highway was from 300 to 1000 feet. With its 40
loaded and empty cars, it had attained a speed, he estimated,
of from 10 to 12 miles per hour. On cross examination, he ad-
mitted that the train could have been going as slowly as 5 to
8 m.p.h. He was just estimating. The engine itself is about 45
feet long, and his position was about 40 feet back from the
front of the engine. He estimated that he was approximately 90
to 100 feet from the crossing when he first saw the approaching
ear which would place the front of the train some 50 to 60 feet
from the highway. He was examined at length on what he did
upon seeing the car then some 100 feet from the crossing. He
said “for a second or so, I looked; and then I holloed to the
engineer to shoot it” (apply the emergency brake). On direct
and cross examination, this “second or so” was also expressed as

“a second or an instant”, “immediately”, “right away”, “a second
or two”. He hollered “loud”, and the engineer applied the emerg-
ency without delay, “real quick”. The fireman realized the danger
of the collision at the same time; he realized that the automobile
was in peril, and he shouted to the engineer to “shoot it”. After

46

he had shouted to the engineer to “shoot it”, he waived his arms
out the window trying to attract the attention of the plaintiffs.

It was his duty to ring the bell. The bell is operated by a
valve, like turning on a water faucet. He turned on the bell when
the train started from its standing position at the switch. It rang
continuously across the intersection. The engineer was blowing
the whistle continuously from the switch through the crossing.
The warning signal lights were working on his side (the plaintiffs’
side). After the collision, the engine stopped about 80 feet past
the highway, “about two car lengths”.

Montemat had been a fireman for the T.&N.O. about 18
years. He had made this particular run occasionally. He had
been with Frank Rogers, the engineer, two or three times before.
The fireman had not been on this particular engine in a good
while, and he had not been on it since the accident. There was
an emergency brake valve on the engineer’s side, but he could
not remember whether there was one on his side or not. He
would not say there was not one. The emergency on the fireman’s
side was “some new equipment”; “they’re coming out with
them”. If there was a brake valve on his side, he didn’t use it.
He yelled to the engineer who put on the emergency without

lelay.

Frank Rogers, the engineer, testified that he had spotted a
ear of automobiles on the spur track and then backed to the
switch for the main track. The switch was 1,000 to 1,100 feet
from the highway. The train with its 40 cars, mostly loaded,
weighed 2,650 tons. From its stopped position at the switch,
the train was accelerating. It had 8 notches of speed on the
throttle, and he had advanced the throttle to the 2nd position
as it approached the highway. He had not planned to accelerate
further because he had other work to do across the highway.

He put on the emergency immediately when the fireman
shouted to him. That was when the cab of the engine was just
past the depot, about 90 feet from the crossing. The cab is 41
feet back from the front of the train. The brakes, therefore,
were applied when the front of the train was some 50 feet from
the highway. He traveled some 50, 60, or 70 feet before he felt
the impact of the car. The engine was not equipped with a
speedometer. He estimated his speed at 10 m.p.h. when the
fireman shouted to him, and that the engine’s speed had been
reduced by “at least a third” at the time of the impact. On cross

ee) 49

examination, he conceded that he could have been going as slow
as 5 and not faster than 10 m.p.h. before applying his brakes.

He further testified that the train has air brakes. For them
to work, the air runs throughout the (40-car) train, and the
brakes on each car set at one time. The train was 1,600 feet
long. When the emergency is applied, the power is automatically
killed ; it is unnecessary to touch the throttle; and sand is dropped
under the engine’s wheels. There is no evidence as to how long
this operation takes. Nor is there evidence as to how long it
takes to stop a train of this size and weight at the speed at
which it was going. The engineer testified that the train traveled
175 feet from the time the fireman hollered “shoot it” until it
came to a stop; that he stopped it within 200 feet; that the auto-
mobile came to rest on his side of the engine, about 85 feet from
the highway. He climbed down from the cab immediately and
went to the driver. He asked, “Child, didn’t you see the train?”
She answered “Not till we were practically on it * * *. We were
talking about an accident we nearly had down the highway.”

He did not know whether there were two emergency brake
valves or one on the engine. He knew that there was one on his
side. On cross examination he conceded that he had said on
deposition, “I’m not sure, but I am positive there must be one.”
He concluded on the stand by saying, “I’m not positive.”

The engineer was responsible for the whistle. He blew two
long blasts as he left the switch, approximately 1,000 feet from
the crossing. Then he blew a series of two long, a short and long
blasts. Approaching the crossing, he blew a series of short or
warning blasts to warn some boys on scooters, on his side,
headed toward La Porte. He kept a long blast on the whistle
crossing the intersection. When the engine came to rest, its bell
was still ringing. He said the automatic signal lights were on
both sides of the track at the crossing, but he did not notice
whether they were in operation at that time. He did remember
that the-bell on the crossbuck standard was ringing.

HT In a discovered peril case, it is necessary for plaintiffs to
prove that the defendant actually discovered and realized their
perilous position in time to have avoided the collision by the
exercise of ordinary care in the use of all the means at their
command, Parks v. Airline Motor Coaches, 145 Texas 44, 193
S.W. 2d 967 (1946).1 It is not sufficient that the defendant
should have discovered, or should have realized, the perilous

1 There is no question here of the safety of the train or its operators.

Ss

position of the plaintiffs. Safeway Stores, Inc. v. White, 162
Texas 473 (1961), 348 S.W. 2d 162; Texas & N. O.-R. Co. v.
Grace, 145 Texas 48, 188 S.W. 2d 878 (1945). There must be a
last chance to avoid the injury, and the last chance must be a
clear one. R. T. Herrin Petroleum Transport Co. v. Proctor,
161 Texas 222, 338 S.W. 2d 422 (1960).

HM On the other hand, the fact of timely realization of the
danger may be established by circumstantial evidence. Creech
». Thompson, 156 Texas 561, 297 S.W. 2d 817 (1957). To raise
the issue of discovered peril here, it was only necessary for
the plaintiffs to show that the defendant realized, in time to
have avoided the collision, that plaintiffs were in a position of
peril, and were pursuing, and probably would continue to pursue,
a course that was likely to result in their being injured. Ford v.
Panhandle & Santa Fe Ry. Co., 151 Texas 588, 252 S.W. 2d
561 (1952); Safeway Stores, Inc. v. White, cited just above;
Galveston, H. & S. A. Ry. Co. v. Wagner, (Texas Comm. App.,
1927) 298 S.W. 552. The quantum of proof required of the
plaintiffs on these elements of discovered peril, in order to en-
title them to have the jury pass upon them, was such facts and
circumstances as, taken together with all reasonable inferences
therefrom, constituted some evidence of probative force of their
existence. Ford v. Panhandle & Santa Fe Ry. Co., cited just above.

Viewing the evidence in the light of these principles, it is our
opinion that the issue of discovered peril was not raised. There
is an absence of proof that the fireman discovered the perilous
position of the girls in time to have avoided the collision, or
that he failed, after such discovery, to exercise ordinary care in
the use of the means at his command to have avoided the injury
to them. .

The evidence has been set out at length and need not be re-
peated. The fireman first saw the girls as the cab passed the
depot, approximately 100 feet from the crossing. At that point
the front of the engine was about 60 feet from the crossing.
There is no evidence as to how quickly and within what distance
a train, a quarter of a mile in length, consisting of 40 cars,
weighing 2,650 tons, might have been stopped or decelerated.
The fireman testified that upon seeing the girls and watching
them a second or so, a second or two, a moment, an instant, he
shouted to the engineer to apply the emergency brakes and that
this was done immediately. He also testified that he “imme-
diately” shouted to the engineer. But viewing the testimony most

| 459

favorably to the plaintiffs, we must assume that a second or two,
or a second or so, intervened between the time the fireman saw
the girls, realized their peril, and shouted to the engineer.

A discovered peril case which has some facts similar to this
case is Martin v. Texas & N. O. Ry. Co., 236 S.W. 2d 567 (writ
refused, 1951). The plaintiff there approached the railroad in
his car. The railway was switching cars. The engine had stopped
some 20 feet from the street, then started slowly toward it at
8 to 5 miles per hour. The fireman saw the plaintiff at 100 to
125 feet as his car approached and realized, when the train was
10 feet from the pavement, that the plaintiff was not going to
stop. He shouted to the engineer to “big hole it.” The engineer
applied the emergency. The Court stated, “An interval of time
had to elapse after realization until the fireman could give the
signal. A greater interval of time had to elapse to enable the
engineer to understand the signal, respond, and apply the brakes.”
An elapsed time of “two and a fraction seconds” was held to be
too short to raise the issue of discovered peril.

In the Creech case, the fireman waited some five seconds
after discovering the deceased on the railroad trestle before
shouting to the engineer to apply the brakes. There was some
evidence that the brakes were not in fact applied before the train
struck the deceased. By a divided court, it was held that the
issue of discovered peril was raised. Creech v. Thompson, 156
Texas 561, 297 S.W. 2d 817 (1957).

Biggers v. Continental Bus System, 157 Texas 351, 303 S.W.
2d 359 (1957), involved a question of time, though it was not
a discovered peril case. It was conceded, as held in this Court’s
original Biggers opinion, that if less than 2 seconds elapsed be-
tween the time the Ford driven by Biggers came in front of the
defendant’s bus, there would be no liability. On rehearing, the
Court found that 344 seconds (or more) elapsed, and that this
was sufficient time for the bus driver to have reacted and taken
some evasive action.

In the present case, the engineer corroborated the fireman’s
testimony. He said the fireman shouted to him when the cab of
the engine was just passing the depot, some 90 feet from the
crossing. The front of the engine was then 49 feet from the high-
way. He put on the emergency immediately, and the train’s
speed was reduced, he said, by one-third by the time of the
collision.

0 ee

While a jury would be free to disbelieve the testimony of
the fireman and the engineer, their testimony is not evidence
that the opposite of what they said was true. Safeway Stores,
Ine. v. White, 162 Tex. 478, 348 S.W. 2d 162. We find no
other direct evidence, and the facts and circumstances do not
point to an earlier discovery or realization on their part, or that
they did not exercise ordinary care in the use of the means at
hand to avoid the collision. The girls said they didn’t see the
engine until it was upon them. Neither girl had any idea of the
train’s speed or its actions. The eye witness, Lee Gadman, gave
no testimony which aided the girls. His testimony was that the
warning signal was working, bells ringing, whistle blowing, and
that the girls’ car came to a stop but 50 feet down the track.

Counsel for the girls argues that there is proof that the en-
gine’s operators did not exercise ordinary care with all of the
means at their command to avoid the injury because the fireman
did not apply the emergency brake which was on his side. The
burden was upon plaintiffs to prove that there was an emergency
brake on the fireman’s side. There is no direct proof that there
was. The fireman, who had been on this particular engine only
a few times and never since the accident, testified that such valves
were new equipment and were coming out, but that he did not
know whether there was one on this engine or not. The engineer
said he did not know either whether this particular engine had
one emergency valve or two; he knew there was one on his side.
He conceded that he had said on deposition that he was sure
there was one. But on the trial, he repeated that “I’m not so posi-
tive.” Assuming that this raises an issue as to whether there
‘was such a valve, our conclusion is that, even so, the operators of
the engine did all they could in the time which they had, by the
exercise of ordinary care, to avoid the collision after the dis-
covery of the girls,

HE There was but a very brief period of time involved here.
This Court has held that the basis for recovery on discovered peril
rests on humanitarian doctrines: a person seeing another in a
position of peril, and recognizing the danger in time to avoid
it, nonetheless negligently fails to use the means at hand to
avoid it. The dereliction of duty alleged, it is said, is an act of
inhumanity which should never be imputed in the absence of
competent evidence warranting an inference of guilt. Texas &
N. O. Ry. Co. v. Grace, 145 Texas 48, 188 S.W. 2d 878. (1945).
Parks v. Airline Motor Coaches, 145 Texas 44, 193 S.W. 2d 967
(1946) ; Sugarland Industries v. Daily, 185 Texas 582, 143 S.W.
2d 981 (1940) ; Schuhmacher v. Posey, 147 Texas 392, 215 S.W.

a

2d 880 (1949). It is our opinion that a pause of a second or so,
or a second or two, on the part of the fireman as he watched
the girls approach at 35 to 40 m.p.h., and realized their position,
was not under the circumstances sufficient to raise the issue of
discovered peril.

Counsel for the girls argues that there is evidence from which
the jury could infer that the fireman discovered the girls’ car
before the cab of the engine passed the station. This is based on
the isolated statement by the fireman that he saw the girls when
their car was first within his sight range. There was nothing
to obstruct his view from his position at the switch, 1000 feet
from the highway, except the depot and whatever freight cars
were on the spur track. Assuming that this is the import of his
testimony (and we do not think it is), the girls’ car was visible
well back from the crossing. The testimony gives no point at
which the vision was obstructed back to the point where the girls
turned onto the Spencer Highway, a half mile from the crossing.
At points remote from the crossing, the girls, traveling at 35 to
40 m.p.h (or less as they started from the stop sign) were not
in a position of peril. The language of the Ford case is apposite
here:

“When the fireman first discovered the approach of the
automobile he had a right to assume that the driver would
stop it (the car) before reaching the crossing. Both ordinary
care for his own safety and Article 6701d, Sec. 86(d), Ver-
non’s Ann. Civ. St., required that he stop it.” Ford v. Panhandle
& Santa Fe Ry. Co., 151 Texas 538, 252 S.W. 2d 561, 567.

As the engine approached the highway, it went behind at
least one box car on the spur track and the depot. These were
obstructions to vision. When the cab came from behind the depot,
the fireman testified plainly that he discovered and realized the
peril of the girls. At this point the girls were still approximately
100 feet from the crossing. This opinion has assumed that they
were in a position of (discovered) peril from that time, but
not before.

I Our holding that the issue of discovered peril was not raised
disposes of the claim of the driver, Mary McCormick, who was
found by the jury to have been contributorily negligent. But
her negligence is not imputed to Melba Hart, her guest. As to
Melba Hart, the jury found that the railroad was negligent (1)
in failing to have a watchman stationed at the crossing; (2) in
failing to have its warning signal light in operation on her side;

Ce

and (3) in failing to provide adequate warning for the extra-
hazardous crossing.

We think the evidence, set out above, does not amount to
credible testimony that there were no railroad warning blinker
lights at the crossing. At most it amounts to testimony that they
were not in operation on the girls’ side at the time of the accident.
The issue submitted to the jury was not whether there were such
signals but whether they were in operation. Since the railroad
had automatic blinker lights at the crossing, they were not re-
quired, at least under the circumstances here present, also to
have a flagman. Galveston, H. & S. A. Ry. Co. v. Wells, 121
Texas 310, 50 S.W. 2d 247, 251 (1932).

But the jury found that these warning lights were not in
operation. We think the evidence set out above raises an issue
as to whether they were or were not in operation. The fireman,
an interested witness, testified they were working. The engineer
did not notice. Gadman said they were working on his side and
he thought they were working on the other, but he couldn’t be
sure. While the girls, as found by the jury, were not keeping a
proper lookout and did not even see the train, they testified that
they were looking straight ahead and saw no warning lights.
The issue is close, but we cannot say that there is no evidence
that the lights were not working. The Court of Civil Appeals
did not pass upon whether there was sufficient evidence to sup-
port the jury’s answer thereto. The case will therefore be re-
turned to that Court for that purpose.

There is a general finding of the jury that the railroad failed
to provide adequate warning at the crossing. The only suggested
ways of warning were: flashing light signals, a flagman, the
blowing of whistles, and the ringing of bells. We have dealt
with the flagman and the flashing light signals. The jury made
specific findings that the railroad did not fail to ring its bell
or blow the whistle. Gadman, the eye witness, heard both and
stopped because of them. The answer to the general issue on
inadequate warning therefore adds nothing and is not controlling.
Sproles v. Rosen, 126 Texas 51, 84 S.W. 2d 1001, at 1003 (19385).

One question remains: the jury found that the warning signal
lights were not in operation and that this failure constituted
negligence and a proximate cause. The railroad says that no
issue was raised for the jury, and that as a matter of law, it is
not liable because, even assuming the signal was not working,
there is no proof of negligence on its part; that there is no evi-

PE

dence as to how long the signal had been inoperative, no proof
that it knew it was inoperative, and no proof that it should
have known.

We do not have here the question as to whether the failure
of the warning devices to operate at an extrahazardous crossing
constitutes negligence as a matter of law. The question was
submitted to the jury which found that it did constitute negli-
gence. Our view is that it is the duty of the railroad to warn
at such a crossing. It may give warning in a number of ways.
Where it elects to warn by the use of an electric flashing light
device, the burden is upon it to see that the device operates.
Otherwise, at least as to the mechanical part of the device, it
gives no warning.

There may be reasons why a device is inoperative. For ex-
ample, there could have been a power failure through no fault
of the railroad. The device may have been struck by lightning,
knocked down or broken by a third party. No reason is given
or suggested here. Assuming that the signal lights were not
working, we think their unexplained failure to work raised an
issue of negligence for the jury. See Annotation, 58 A.L.R. 973.

As to Mary McCormick, this cause is reversed and judgment
is here rendered for the petitioner, the defendant in the trial
court. As to Melba Hart, the cause is reversed and remanded
to the Court of Civil Appeals for further proceedings in accord-
ance with this opinion.

Opinion delivered April 11, 1962.
Es
THE STATE OF TEXAS, Petitioner
v.
RALPH OAKLEY ET AL, Respondents
No.. A-8520, Delivered March 28, 1962

Rehearing Denied May 80, 1962
356 S.W. 2d 909

&

64

GRIFFIN, SMITH, WALKER and HAMILTON, JJ., dis-
sented.

Will Wilson, Atty. Gen., H. Grady Chandler, Joseph G. Rollins
and Jay Howell, Asst. Attys. Gen., Austin, for petitioner.

David Tisinger, Austin, for respondent.
STEAKLEY, JUSTICE.

In this condemnation proceeding the jury found the market
value of the 66.1 acres of land taken was $62,500.00 and the
judgment awarded respondents a recovery in this amount. Re-
spondents appealed and the Court of Civil Appeals reversed and
remanded the cause (846 S.W. 2d 948) upon the holding that
the trial court erred in permitting an expert witness for the
State to testify to the sale prices of several tracts of land, of
which he did not have firsthand knowledge, for the purpose of

See) 465;

showing part of the basis for his opinion of the market value of
the land condemned. The Court of Civil Appeals regarded the
testimony as hearsay and therefore inadmissible.

The precise problem arises from the testimony offered by
petitioner of the witness, Jim Frederick, a real estate broker
and professional appraiser. The witness was offered as an expert
and was permitted, over objection of respondents as hearsay,
to testify on direct examination concerning several sales of prop-
erties which he considered comparable, and as aiding him in
reaching his opinion of the value of the tract taken, but the
sales prices of which he learned from other sources. The testi-
mony as to the other sales was not offered as proof of the facts
of such sales, or of the sales prices, but for the limited purpose
of showing a part of the basis for the value opinion of the
witness.

We have reviewed the testimony of the witness and note
that no objection was made by respondents to his qualifications
as an expert “in the real estate appraisal business”. It further
appears that the witness was “employed by the State to make
appraisals of the Ralph Oakley property” and that he testified
in considerable detail concerning the manner and method of his
appraisal study, together with the factors considered by him.
He testified that his opinion of the value of the 66.1 acres con-
demned was “$49,401.00, which is an average of $747.36 an
acre.” He then explained at considerable length the various
factors considered by him in the value conclusion to which he
had testified, and stated that “the most comparable sales are
those located in the immediate vicinity and that are subject to
the same influences, the same traffic, the same population, the
same characteristics, nearer to the location of the property you
are appraising, are more comparable.” Thereupon the witness
was interrogated concerning the various sales which he con-
sidered, after which counsel for the State commenced a series
of questions as to what the various pieces of property sold for,
asking at the outset the sale price of the first piece of property
to which the witness had previously testified. At this point
counsel for respondents took the witness on voir dire and estab-
lished that he did not “participate personally in the sale”. Where-
upon objection was interposed “to any further testimony as
hearsay and going into mental processes”. Counsel for the State
then took the witness on direct examination and asked, “Did
you confirm this sale with the buyer or the seller?” to which
the witness replied, “I confirmed it with one of the principals
involved.” Counsel for the State then stated to the court: “Your

40 ee

Honor, we tender this evidence, not to prove the actual sale
itself, but as one of the bases from which the witness arrived at
his opinion of value.” The court overruled the objection of counsel
for respondents, whereupon counsel for respondents asked, “May
it clearly be understood that I have a running bill of exceptions
on all of these sales that he goes into * * * on the ground that
they are hearsay”, in support of which counsel for respondents
again took the witness on voir dire to establish that he, the wit-
ness, did not “participate in any of these sales” himself. The
court then gave counsel for respondents “a full bill on all these
sales”. Thereafter the witness proceeded to recite the sales price
of the properties which he had investigated and which he con-
sidered as comparable to the property involved in the condemna-
tion suit, after which counsel for respondents interrogated him
at considerable length on cross-examination.

With respect to the testimony of the witness in the par-
ticulars under review, the trial court instructed the jury as
follows:

“You are instructed that testimony by witnesses not hav-
ing first hand knowledge of the matter stated that certain
properties had sold for certain prices shall not be considered
as evidence that such properties have sold or that such prop-
erties have sold for the prices stated, or as evidence of the
market value of the property involved, but may only be con-
sidered as being information which the witnesses testified
they gathered for the purpose of forming an opinion of the
market value of the property involved.”

The question before us is narrowed to that of the admissi-
bility of the testimony of the expert witness concerning sales
of which he did not have personal knowledge, and which was
offered for the limited purpose we have noted, since neither
the qualifications of the expert witness nor the comparability
of the sales to which he testified are challenged. See in the latter
connection Hays v. State, 342 $.W. 2d 167, State v. Morse, 342
S.W. 2d 165, and State v. Sides, 348 S.W. 2d 446 (all, writ re-
fused, n.r.e.) which considered the admissibility of expert testi-
mony as to comparable sales when questioned on the basis that
the sales were not sufficiently similar to be comparable but in
which the source of information to which the witness testified
was not raised.

On the question thus presented there is a division of au-

es 467

thority between the courts of other states and between the Courts
of Appeals in Federal jurisdictions.

Kentucky, Oregon and New Jersey have adopted the view
that the testimony is admissible and that the hearsay exclusion
is inapplicable. See Stewart v. Commonwealth, 337 S.W. 2d 880;
State v. Parker, 357 P. 2d 548; Delaware L. & W. R. Co. v. City
of Hoboken, 85 A. 2d 200.

We quote the analysis by the courts in Stewart v. Common-
wealth and in Delaware L. & W. R. Co. v. City of Hoboken, supra:

Stewart v. Commonwealth:

“It is quite often true that the most thorough, compre-
hensive and accurate professional appraisals are based almost
entirely on ‘hearsay’ in the legal sense of the word. Persons
who appraise or deal in real estate professionally make it their
business to keep abreast of current transactions. The value of
an appraisal depends very largely on the manner in which
it is developed. It is of importance to the court and jury to
know how it was made and on what information it was based.
If some or all of that information was acquired by hearsay,
but through the customary channels of the trade, or by methods
recognized as standard in the making of appraisals, we see
no useful purpose in a rule of absolute exclusion. Therefore,
confining the effect of this opinion to witnesses whose quali-
fications include experience in appraising or dealing in real
estate as a business, we hold that testimony as to the prices
paid in comparable sales is not inadmissible merely because
it is secondary or hearsay evidence. Since Mr. Hennessy was
professionally qualified as an appraiser and real estate broker,
the fact that he had verified the prices by personal contact
with the purchasers was a sufficient basis to admit his testi-
mony on the comparable sales.”

Hoboken:

“The modern trend in the law of evidence favors both a
liberal rule of admissibility and the giving of a broad dis-
cretionary control to the trial judge. The present rule in many,
perhaps in a majority, of American jurisdictions permits an
expert witness as to value to base his opinion on those sources
of information to which business men usually resort, and
allow the witness to divulge to the court the data on which
his opinion is based, even though hearsay testimony is thus

ee

presented. 32 C.J.S., Evidence, Sec. 545, p. 289. Our standard
of true value is the price a willing purchaser and a willing
seller would agree upon. Murphy v. Town of West New York,
182 NJ.L. 111, 89 A. 2d 88 (Sup. Ct. 1944). The expert
witness should consider the same elements as would willing
and intelligent buyers and sellers; he may rely upon the same
sources of information that they would use. As Chief Judge
Parker pointed out in U. S. v. 25,406 Acres of Land, I72
F. 2d 990 (4th C.C.A., 1949), since the court adopts the
standards of the market place in making valuations, there is
no reason why it should close its eyes to how the market place
arrives at and applies the standards. And see the opinion of
Chief Justice Maltbie in Vigliotti v. Campano, 104 Conn.
464, 183 A. 579 (Conn. 1926). Also City of Baltimore v.
Hurlock, 118 Md. 674, 78 A. 558 (Md. 1910), and Davenport
vy. Haskell, 298 Mass. 454, 200 N.E. 409 (Mass. 1936).”

Massachusetts, Colorado and Missouri hold the view that
such testimony is improper as hearsay and is misleading. See
National Bank of Commerce v. City of New Bedford, 56 N.E.
288; Hunt v. City of Boston, 25 N.E. 82; City and County of
Denver v. Quick, 118 P. 2d 999; State of Missouri v. Dockery,
300 S.W. 2d 444.

The United States Court of Appeals for the First Circuit in
United States v. Katz, 213 F. 2d 799, denied the contention of
the government that expert witnesses “should have been allowed
to testify as to those prices (paid for comparable lands) on
direct examination to show the jury the basis upon which their
opinion of value rested”, and quoted with approval from the
Massachusetts case of National Bank of Commerce v. City of
New Bedford, supra, that “An expert may testify to value, al-
though his knowledge of details is chiefly derived from inadmis-
sible sources, because he gives the sanction of his general ex-
perience. But the fact that an expert may use hearsay as a ground
of opinion does not make the hearsay admissible.”

Our research does not disclose any subsequent case in Fed-
eral jurisdiction following the view stated by the First Circuit.

The less strict view was expressed by the Court of Appeals
for the Fourth Circuit in United States v. 5139.5 Acres of Land,
200 F. 2d 659, 662, as follows:

“Tf the expert has made careful inquiry into the facts, he
should be allowed to give them as the basis of the opinion

ee 469

he has expressed. If he has not made careful inquiry, this
will be developed on cross examination and will weaken or
destroy the value of the opinion. Ordinarily evidence as to
facts of this sort given by an expert as the basis of his opinion
as to value comes with a sufficient guaranty of trustworthi-
ness to justify the relaxation of the hearsay and best evidence
rules.”

The above holding has been followed by the Fourth Circuit
in United States v. Lowrey, 246 F. 2d 472, by the Ninth Circuit
in United States v. Johnson, 285 F. 2d 35, by the District of
Columbia Circuit in District of Columbia Redevelopment Land
Agency v. 61 Parcels of Land, 285 F. 2d 865, and by the Fifth
Circuit in International Paper Co. v. United States, 227 F.
2d 201, 209.

The question at hand was considered by the Houston Court
of Civil Appeals in cases of City of Houston v. Collins, 310 S.W.
24a 697, and City of Houston v. Huber, 311 S.W. 2d 488, each
with no writ history, in which the admissibility of the testimony
was upheld when “offered for the limited purpose only of show-
ing the basis for the witness’s conclusions as to the value of
appellee’s property,” the Court citing United States v. 5139.5
Acres of Land, supra, and Cole v. City of Dallas, 229 S.W. 2d
192 (writ ref. n.r.e.). While not directly considering the question,
the opinion in Cole is subject to the construction that the testi-
mony of an expert witness concerning facts upon which his
opinion is founded will not be excluded “merely because it is
based upon what is usually regarded as hearsay”. Wichita Falls
R. & F. W. R. Co. v. Cooper, 285 S.W. 927 (no writ hist.) is
inapplicable because the testimony there held improper was an
offer as original evidence of “the statement”, said the court,
“of what Mr. Davenport told him or what he had heard was
the asking price of the lots, or of the price Mr. Williams was
willing to give for three acres of the Cooper land in an exchange
of properties”. (Our emphasis.)

The Court of Civil Appeals in the case at bar appears to
have misconceived the nature of the problem as indicated by
the following statement in the opinion: “The hearsay evidence
here was offered and received on direct examination as original
evidence of the market value of the land involved which value
was the very issue to be determined.” (Our emphasis.) The Court
of Civil Appeals also cites the following from the opinion of
this Court in City of Austin v. Cannizzo, 158 Texas 324, 267 S.W.
2d 808, 816, and comments that it is not subject to the interpre-

0

tation of “condoning or authorizing, the admission of hearsay
testimony when offered on direct examination as original evi-
dence” :

“A witness may give his opinion of the present market value
of the land, taking into consideration its adaptability to sub-
division for residential and commercial purposes and the cost
of converting it to such uses, but inquiry into the details or
mental processes by which the witness arrives at his con-
clusion is only proper on cross examination for the purpose
of testing the credibility of the witness or for laying a predicate
for impeachment.”

Cannizzo did not have the problem with which we are here
concerned; moreover, as previously recognized and as adverted
to immediately above, the testimony of the expert witness in
the case at bar, as to the other sales which he considered in
reaching his value opinion, was not offered or received by the
trial court “as original evidence” of other sales, and the prices
for which other properties sold, for the purpose of establishing
the market value of the land in question. Inquiry into the details
or mental processes on direct examination was denied by this
Court in Cannizzo in relation to “opinion testimony as to the front
foot value of nonexistent lots in a hypothetical subdivision (which)
is too speculative to be admitted as direct evidence of market
value”.

II In a sense, of course, testimony of an expert witness con-
cerning comparable sales which he has considered in reaching
his opinion touching the value of the property under considera-
tion involves an inquiry into the mental processes of the witness;
the real question, however, is whether such testimony, which is
inadmissible to prove the facts of such sales as evidence of the
value of the property condemned, is likewise inadmissible in
another capacity, that is, to show a basis of the opinion value
stated by the expert witness and in which capacity the testimony
is not hearsay in the true sense. The better reasoned view, in
our opinion, is that the testimony is proper in such latter ca-
pacity, where, as in the case at bar, the testimony is given by a
professionally qualified appraiser whose qualifications, and the
comparability of the sales to which he testifies, are not chal-
lenged. The discretion of the trial judge, particularly in these
latter respects, together with the opportunity on cross-examination
to bring out facts contradictory to the statements and conclusions
of the expert, and the instruction of the court limiting considera-
tion by the jury of the testimony beyond the purposes for which

See am

it was admitted, are substantial safeguards against its misuse.
Moreover, whatever facilitation of expert testimony in a con-
demnation proceeding there may be under our holding is avail-
able alike to the condemnor and condemnee.

The Court of Civil Appeals also considered other points of
respondents “in view of another trial”.

I The first point considered was that a subdivision plat of
the 100-acre tract out of which the 66.1-acre tract was taken
should have been admitted in evidence because, said the court,
“we think the plat would assist the jury in evaluating the evi-
dence.” The plat referred to was offered by respondents as their
Exhibit No. 2 and, according to the Statement of Facts, was
actually received in evidence for the limited purpose of showing
the susceptibility of the property to a particular use and for
no other purpose. This is recognized by counsel for respondents
with the explanation that his point of error in the Court of Civil
Appeals was not with reference to the subdivision plat itself but
to the refusal of the trial court to admit further testimony that
“the property had actually been staked out on the ground.” It
appears that the subdivision plat was given final approval by
the City of Austin on January 6, 1955, but that financial ar-
rangements had not been completed and the plat had not been
recorded. The condemnation proceeding was instituted in No-
vember, 1958. Respondents argue that notwithstanding admission
in evidence of the subdivision plat the refusal of the trial court
to allow the additional proof that “the property had actually
been staked out on the ground was calculated to lead the jury
to believe that the subdivision was on paper only”. A review of
the record convinces us that respondents were given every proper
advantage of the existing status of the subdivision and that
the exclusion of the evidence that the property had been staked
out on the ground was not reversible error.

HH The Court of Civil Appeals also criticized the manner of
special issue submission. The full tract owned by respondents
consisted of one hundred acres out of the interior portion of
which 66.1 acres were taken. Four irregularly shaped and sep-
arated tracts remained. Special Issue No. 2 inquired if the re-
maining property had decreased in market value as a result of
the condemnation, to which the jury answered in the negative.
This rendered answers unnecessary to Special Issues 3 and 4
which inquired as to the before and after market value of the
remaining property. Respondents objected to this manner of
submission and requested the submission of such issues as to each

2 rs

of the remaining tracts considered separately. The Court of
Civil Appeals expressed the opinion that Special Issue 2 should
not have been submitted and that the before and after value
issues should have been separately submitted as to each of the
four tracts.

We do not agree. The manner of submission was not dupli-
citous, as insisted by respondents, nor is the submission re-
quested by respondents called for by the opinion in State v.
Carpenter, 126 Texas 604, 89 S.W. 2d 194, as indicated by the
Court of Civil Appeals. The ultimate issue as to the remaining
property was whether or not its market value was decreased as
the result of the taking of the 66.1-acre interior portion; if not,
respondents were not damaged in this respect. The nature and
location of each of the remaining tracts, and the circumstances
surrounding them, was developed in the evidence and from this
the jury could properly and fairly conclude whether or not there
had been a decrease in the market value of the property remain-
ing. Consideration of the nature of the remaining property was
necessarily involved in reaching this conclusion. Fairness and
justice to respondents did not require submission of the same
body of issues as to each of the four separate tracts which re-
mained. Special Issues 2, 3 and 4 fairly submitted the controlling
issue as contemplated by Rule 279, Texas Rules of Civil Pro-
cedure,

The judgment of the Court of Civil Appeals is reversed and
that of the trial court is affirmed.

Opinion. delivered March 28, 1962.
SMITH, JUSTICE, disssenting.

The witness, Frederick, a real estate broker and professional
appraiser, was sworn and qualified as an expert on land values
in the involved area. He was then allowed over objection to
recite out-of-court statements, made to him by parties not present
at the trial, concerning sales prices for property comparable to
that condemned. The witness, Frederick, had no personal knowl-
edge of these sales. Objection was made that this testimony was
inadmissible because in violation of the rule against hearsay.
The State admits that the testimony was hearsay, but contends
it offered the testimony not to prove the truth of the sale price
but to show one of the bases from which the witness arrived at
his opinion of value. In my opinion, the testimony violated the

eG 413

rule against hearsay, and the introduction thereof was improper
and prejudicial.

“The Hearsay rule, as accepted in our law, signifies a rule
rejecting assertions, offered testimonially, which have not been
in some way subjected to the test of Cross-examination.”! But
it is more than a technical rule. It is a principle, whose purpose
is assurance that a full and truthful disclosure of facts will be
possible. It must be as broad as its purpose:

“The testimony of N. though not, technically, hearsay evi-
dence, is liable to the same objections; for it is resorting to an
inferior or secondary species of proof, without necessity;
* * *, Hearsay testimony is from the very nature of it, at-
tended with all such doubts and difficulties, and it cannot
clear them up. ‘A person who relates a hearsay, is not obliged
to enter into any particulars, to answer any questions, to solve
any difficulties, to reconcile any contradictions, to explain
any obscurities, to remove any ambiguities: He intrenches
himself in the simple assertion that he was told so, and leaves
the burden entirely on his dead or absent author.’ It is against
sound principle, and would at once awaken distrust, for a party
to resort to a secondary species of evidence, so long as the
original and primary evidence exists and can be produced.
The plaintiff, by means of this species of evidence would be
taken by surprise, and be precluded from the benefit of a
cross-examination of S. as to all those material points which
have been suggested as necessary to throw full light on his
information.”

There are factors in the present case which require the ap-
plication of the rule.

« * % certainly most transactions are likely to be influ-
enced by motives of the parties thereto, such as the special
needs or the strong desires of the buyer, the financial or other
exigencies of the seller, and the whims, follies, fancies or
ignorance of local values on the part of one or both of them.
Since these are all matters of which persons with only hearsay
knowledge of a sale can be expected to know little or nothing,
whereas those with first hand knowledge, such as a party
to the sale itself or the broker or agent who effected it, can
be expected to know at least something, we think the hearsay

1 5 Wigmore, Evidence, Section 1362 (8rd Ed. 1940).
2 Coleman v. Southwick, 9 John. 45, 49-50 (N. Y. 1812).

1

rule should be adhered to in the interest of justice to both
parties,”

The main reason for using an expert is to provide a partial
substitution of his judgment concerning the credibility of his
sources of information for that of the jury on the basis that his
experience better qualifies him to evaluate his findings than
the official triers of fact who have only their general knowledge.
Judgment and experience serve the same purpose for the expert
as does cross examination for the jury. The jury rather than
judging the expert’s sources, judges his ability, and cross exam-
ination is available to test him in this regard. When the expert
is allowed to recite in detail the specific bits of information
he receives from others, those facts are before the jury to be
weighed without the benefit of either experience or cross exam-
ination. If I am right in believing the jury will be more im-
pressed by the price recited than by the experts’ own opinion,
then the rule* obtaining in Texas that hearsay has no proba-
tive force and will not support a judgment is violated. The ques-
tion is: What is the best rule from the standpoint of justice
which can be established in a case of this type? It seems to me
it would be the better policy to adhere to the well-settled rule
that hearsay testimony is not admissible as original evidence.

“An expert may testify to value, although his knowledge
of details is chiefly derived from inadmissible sources, be-
cause he gives the sanction of his general experience. But the
fact that an expert may use hearsay as a ground of opinion
does not make the hearsay admissible.’

The Court in the present case puts too great a burden on
Oakley, from the standpoint of surprise, if nothing else. Obvi-
ously, under the rule laid down, if there are circumstances which
could be shown as bearing on the price testified to, even assum-
ing it is not a puffed or deflated price, the opponent must produce
someone with personal knowledge of the transaction. Because
the opponent does not know what sale prices may be testified
about he must in order to protect his client know of every land
sale involving land comparable to that involved in the suit he
is trying and he must be able to produce a witness with first-
hand knowledge of the sale on very short notice. This means,

3 Woodbury, J., United States v. Katz et al, 218 F. 2d 799, 800 (ist Cir. 1954).
4 Texas Co. v. Lee, 188 Tex. 167, 157 S.W. 2d 628 (1941, 1 McCormick & Ray,
Texas Law of Evidence, Section 31 (2d Ed. 1956).

5 National Bank of Commerce of New Bedford v. City of New Bedford, 175
Mass. 257, 56 N.E. 288, 290 (1900).

415

in order to be well prepared, he must know of every sale within
three or four miles,* and perhaps much farther in a rural area,
and over a time span of seven or eight years or longer.” It would
be more in harmony with well-established rules for the party
who wishes the price put in evidence to have the burden of
producing competent proof.

If the Court’s opinion becomes the law, then not only will
the parties be licensed to shop for a favorable expert, this
Court will have licensed the expert to shop for favorable in-
formation to relate on the witness stand. Why use competent
proof of different sales, which would necessitate putting several
witnesses on the stand, with the possibility some unfavorable
fact might turn up on cross-examination? Find a favorable
expert, or two, who are good witnesses and they can put forth
the same information and retire behind the “I was told so” shield.
I fear this would be setting a dangerous precedent. If such
procedure is permitted in this type of case, then there is no logical
reason why it should not extend to medical testimony, for ex-
ample, and allow. a doctor to relate what others have told him
or read excerpts from text books to the jury, or both, to show
a basis for his opinion. The same would be true where a lawyer
might be called upon to testify as to the reasonableness of attor-
ney’s fees. Indeed, the New Jersey case quoted in the majority
opinion would apply the rule broadly enough to include such
testimony.’ Such is not the rule in Texas. Hearsay evidence is
incompetent as original evidence and has no probative force.
In the case of Texas Co. v. Lee, supra, this Court said hearsay
is incompetent as original evidence and has no probative force.
In the case of Texas Co. v. Lee, supra, this Court said hearsay
is incompetent and can never form the basis of a finding of
fact or of the judgment of a court. This is so whether it be ob-
jected to or not, citing Henry v. Phillips, 105 Texas 459, 151
S.W. 533; Austin Bros. v. Patten, Texas Comm. App., 294
S.W. 537.

6 State v. Morse, Tex. Civ. App. (1960), 342 S.W. 2d 165, wr. ref. n.re. (sale
of land four miles from that condemned),

7 Curfman v. State, 240 S.W. 24 482 (Tex. Civ. App. 1951, ref. nrc.) (sale five
years before condemnation), City of Houston v. Collins, 310 8.W. 2d 697 (1958),
(2% years after condemnation).

8 Delaware, L. & W. R. Co. v. City of Hoboken, 16 N. J. Super. 543, 85 A. 2d 200,
206 (1951). Compare: People v- Samuels, 802 N.Y. 163, 96 N.E. 2d 757 (1951),
reversing a lower court holding, in a sanity case, that a doctor could testify he
based his opinion partly on hospital records containing some observations of
laymen with this language: “* * *if it was improper that the jury should
see them, they should not have been received in evidence as a basis of the experts’
opinions.”

The case of Bowles v. Bourdon, 148 Texas 1, 219 S.W. 2d
779 (1949), held that certain medical books which were offered
in evidence were “but hearsay evidence” and not admissible as
original evidence. This Court in holding that such evidence must
be excluded as original evidence, said:

“When a doctor testifies as an expert relative to injuries
or diseases he may be asked to identify a given work as a
standard authority on the subject involved; and if he so recog-
nizes it, eacerpts therefrom may be read not as original evi-
dence but solely to discredit his testimony or to test its weight.”
(Emphasis added.)

This Court apparently is now of the belief that a different
rule should apply in a condemnation suit where an expert is
testifying than the rule applied in the cases I have heretofore
discussed. The case of City of Austin v. Cannizzo, 158 Texas 324,
267 S.W. 2d 808, decided by this Court in 1954, was a condemna-
tion suit. That case, in principle, supports the position taken
in this dissent. The exclusion of an inquiry into the details or
mental processes by which the witness arrived at his conclusion
was held in the Cannizzo case to be proper. This Court at that
time was of the opinion that inquiry into the details or mental
processes by which the witness arrived at his conclusion was
only proper on cross-examination for the purpose of testing the
credibility of the witness or for laying a predicate for impeach-
ment. What were the details in that case? The details were that
testimony as to the front-foot value of non-existent lots in a
hypothetical subdivision was admitted in evidence over objection.
This Court held that such testimony was too speculative to be
admitted as direct evidence of market value. At least the Can-
nizzo case does not indicate a departure from the well-settled
rule that hearsay evidence is not admissible as original evidence.
In the Cannizzo case, this Court said:

«ck & & * A witness may give his opinion of the present
market value of the land, taking into consideration its adapta-
bility to subdivision for residential and commercial purposes
and the cost of converting it to such uses, but inquiry into
the details or mental processes by which the witness arrives
at his conclusion is only proper on cross examination for the
purpose of testing the credibility of the witness or for laying
a predicate for impeachment. * * *”

We have already made one exception to the hearsay rule in
behalf of valuation experts. We let them base their opinion on

es a1

hearsay.® I do not think we should go farther and unnecessarily
allow the hearsay to be paraded through the courtroom. To do
so denies to the opponent a very substantial right without cause.
It denies to him the effective use of our judicial process by
denying him the right of cross-examination. Cross-examination
results many times in obtaining the truth when it otherwise
would not be disclosed.

The cases of City of Houston v. Collins, Texas Civ. App.
(1958), 310 S.W. 2d 697, no writ hist., and City of Houston v.
Huber, Texas Civ. App., 311 S.W. 2d 488, no writ hist., tend
to support the State’s view. These cases should not be followed.
They apparently went off on the theory that the admission of
such evidence was not error in view of the Court’s instructions
in its charge to the jury. It is impossible to eliminate prejudicial
error by written instructions. It would be the best policy to not
allow such evidence over proper objection to get before the jury.
It should be noted that in the Huber case, supra, the Court of
Civil Appeals held the admission of hearsay evidence harmless
in view of the admission of similar testimony by the opposite
party.

The judgment of the Court of Civil Appeals should be affirmed.

ASSOCIATE JUSTICES GRIFFIN, WALKER and HAMIL-
TON join in this dissent.

Opinion delivered March 28, 1962.
De

Dow CHEMICAL CoMPANY, Petitioner
v.
F. Fox BENTON ET AL, Respondents

No. A-8791. Delivered May 80, 1962
857 S.W. 2d 565

9 See for example: Reed v. Barlow, 157 S.W. 2d 983 (Texas Civ. App.
1941, ref.), reversing, in a damage suit for failure to drill an offset well, for
allowing an expert to base his opinion on: “Schlumbergers”, reports of oil
scouts, production data from adjoining wells, logs of nearby wells, and cores
of sand from nearby wells on the ground that none of this was in evidence
and all was hearsay,

is

18

Fulbright, Crooker, Freeman, Bates & Jaworski and Sam W.
Cruse, Houston, for petitioner.

F. F. Benton, Houston, for respondents.
GREENHILL, JUSTICE.

The question here is whether an attorney may prosecute a
cause of action on his own behalf to secure a contingent fee

479

after his client, the original plaintiff, has been properly dis-
missed from the case. The trial court held that he could not. The
Court of Civil Appeals disagreed and held that he could. 351
S.W. 2d 899.

Roy W. Champion filed suit for damages for personal in-
juries against Dow Chemical Company. He was represented by
the Respondent law firm composed of Mr. Fox Benton and
others. More than two years later, Dow took the necessary steps
to secure Champion’s oral deposition. A subpoena was properly
served on Champion, but he failed to appear and has never at-
tempted to show cause for this failure. Champion was urged
by his counsel to appear for his deposition, but he refused. In-
voking Rule 215a of the Rules of Civil Procedure, Dow moved
to dismiss the lawsuit because of plaintiff’s refusal to appear
for his deposition. Thereupon, Benton filed a petition in inter-
vention, based on the contingent interest of the law firm in the
plaintiff’s cause of action. Dow moved to strike the intervention.

At the ensuing hearing, no justification was given for Cham-
pion’s continued refusal to appear. The only witness testifying
was the attorney, Benton, who stated:

“I don’t think at this time I would strongly oppose the
Plaintiff’s case being dismissed, but I do want to strongly
urge my right to intervene * * *,”

The trial court granted Dow’s motion and ordered the entire
eause dismissed. The Court of Civil Appeals reversed and re-
manded, holding that Champion’s cause could be dismissed but
that his attorneys could continue to prosecute the same claim
to secure their contingent fee. That is, that although Champion’s
actions clearly warranted the sanctions imposed by Rule 215a,
the dismissal of his suit, there was no showing that his attor-
neys personally violated any rules which would authorize dis-
missal of their case.

The contingent fee contract involved here is the usual one.
Champion agreed to “sell, transfer, assign and convey to my
said attorneys the respective undivided interests in and to my
said claim as set out above against the aforesaid parties and
to any judgment or judgments that I may obtain or that may
be rendered to me or my heirs and assigns’. If the case were
settled prior to the filing of suit, the attorneys were to receive
one-third of whatever was recovered for Champion. If suit was
filed, the attorneys were to get 40% of the recovery. If the

80

ease were appealed, the percentage for the attorneys increased
to 45%. The attorneys seek 40% of the amount which might
be awarded to Roy Champion. The attorneys’ position is that
this contract created in them an immediate, vested, unrestricted,
separate and distinct interest in the plaintiff's cause of action.
They argue that the rules applicable here are those governing
the rights of any ordinary assignee of a cause of action.

The situation then is this: a plaintiff contends that he is
injured and desires to sue. He employs counsel. He agrees to
pay the attorneys a percentage of whatever they recover for
him, and to assign him a like percentage of the cause of action.
Conversely, the attorneys agree to take for their compensation
a percentage of whatever they recover for the plaintiff. The
plaintiff assigns to the attorneys the agreed percentage of what-
ever is recovered plus a corresponding percentage of the cause
of action of the plaintiff. Then the plaintiff goes out of the case
entirely. The suit as to him is properly dismissed. The question
is, then, may the attorneys press the plaintiff’s suit (in which
they have a contractual interest) in order that the attorneys
may recover their percentage of whatever the plaintiff would
have recovered. We think not.

It should be stated that there is no question of the personal
ethics of the attorneys here in question. They have proceeded
with candor and in good faith toward the courts and their client.
The problem is a broad one and of some importance to the entire
legal profession in Texas. .

In the first place, the fact that the attorney-client relation-
ship is involved here means that we cannot regard this case as
one involving an ordinary assignment, devoid of any potential
public policy considerations. Attorneys are officers of the Court.
They are members of an ancient profession whose members have
the unique privilege, and corresponding responsibility, of being
essentially the sole judges of the propriety of fellow members’
conduct. As a result, the Courts must always carefully examine
every situation involving members of their profession.

The pertinent provision of Rule 215a, Texas Rules of Civil
Procedure, authorizing dismissal of a cause upon failure to give
a deposition, was added by amendment to the Rules in 1957.
It was promulgated to remedy deficiencies in the existing Rules.
See I Franki, Vernon’s Ann. Texas Rules, 1961 Supp., 209-218;
Thode, “Some Reflections on the 1957 Amendments to the Texas
Rules of Civil Procedure”, 37 Texas L. Rev. 33. Respondents’

re 481

position, if upheld here, would go a long way toward nullifying
the effectiveness of Rule 215a.

HM The basic fallacy of respondent’s position, in our opinion,
is that it ignores the fact that the lawyer’s rights, based on
the contingent fee contract, are wholly derivative from those
of his client. The attorney-client relationship is one of principal
and agent. Texas E'mployers Ins. Assn. v. Wermske, 162 Texas
540, 849 S.W. 2d 90 (1961). Therefore, the rights of each in
a cause of action during the existence of that relationship are
necessarily dependent upon and inseparably interwoven with
the other. Neither lawyer nor client should be permitted to
select the good features of his contract and reject the bad. There
is but one cause of action. Our decisions uphold an agreement
to assign a part of the recovery on the cause of action to the
attorney. But we have never held that the cause of action is
divisible and may be tried for only a percentage of the cause
of action.

To illustrate, let us take a closer look at Rule 215a. In addi-
tion to giving the trial court the power to dismiss a cause of
action for failure of a party to give a deposition, this rule pro-
vides alternative sanctions including any orders “as may be
just”. One of the sanctions specifically permitted is the striking
of any part of the pleadings of the defaulting party. Suppose
that the trial court had invoked the latter sanction in this case,
rather than dismissing the cause entirely. Could it be said that
these pleadings would be stricken only as to the plaintiff, but
that they could still be used in the same lawsuit to support the
introduction of evidence and submission of issues on behalf of
the plaintiff’s lawyer? Conversely, most of the actual details
of any lawsuit are necessarily handled by the lawyer on behalf
of his client. Suppose that in a particular lawsuit the lawyer fails
to make proper objections, drafts defective special issues, or is
late in filing a particular document. Could we allow the client to
argue on appeal that all these defects related only to the attor-
ney’s case and not to his? Rule 215a is based on Rule 37d of
the Federal Rules of Civil Procedure. The case of Hammond
Packing Co. v. Arkansas, 212 U.S. 322, 29 S. Ct. 870, 58 L. Ed.
580, indicates that the legal justification for rules such as these
is that failure to produce requested documents or to appear
for a deposition creates a presumption of want of merit in the
defaulting party’s claim. Suppose that in this case Champion
had appeared for his deposition but then proceeded to testify
that there was no merit in his cause of action. Could we hold
that this testimony would not also conclude his lawyer’s case?

8

In our opinion, all of these suggested situations are analogous
to the present case, and all of the questions posed above must
be answered in the negative. The reason is that as long as the
attorney-client relationship endures, with its corresponding legal
effect of principal and agent, the acts of one must necessarily
bind the other as a general rule.

For legal authority in this case, respondents rely primarily
upon those decisions holding that when a client purports to
settle a case with the opposite party, the settlement will not bind
his attorney who had no notice of the negotiations. One of the
attorney’s remedies in such a situation is to continue the liti-
gation on his own account to realize his contingent fee. See,
eg., Texas & P. Ry. Co. v. Vaughan, Texas Civ. App., 40 S.W.
1065 (Err. ref. 1897) ; Powell v. Galveston, H. & S. A. Ry. Co.,
Texas Civ. App., 78 S.W. 975 (no writ 1904) ; Gibson v. Texas
Pac. Coal Co., Texas Comm. App., 266 S.W. 187 (1924);
Davidson v. Gray, Texas Civ. App. 97 S.W. 2d 488 (no writ
1936). We have no quarrel with the result in these cases. They
involve essentially a situation where a client has conspired with
a third party to circumvent the attorney-client relationship with
the intention of terminating it unilaterally. In each case, the
client has attempted to satisfy financially his legal claim with-
out compensating the attorney for his efforts in the case, despite
the fact that the attorney’s previous efforts probably had much
influence on the opposite party’s desire to settle. We believe
that it is the severing of the attorney-client relationship through
the inducements of the opposite party which distinguishes the
settlement cases from the case presently before us.

We do not reject the rationale that a properly worded con-
tingent fee contract may effect an assignment of part of the
recovery and a part of a cause of action to the attorney. However,
the attorney who has received such an assignment invariably
elects to litigate his interest simultaneously with his client’s
interest, in his client’s name, and elects implicitly to be bound
by any judgment properly rendered in the case. We hold that so
long as the existing agency relationship is not terminated, as
by the opposite party’s buying out the client’s interest, the attor-
ney must be bound by that election.

II Since the case of Winston v. Masterson, 87 Texas 200, 27
S.W. 768, it has been the law in Texas that an attorney with a
contingent fee contract is not so directly interested in the subject
matter of a lawsuit as to make him a “party” within the mean-
ing of the statute disqualifying a judge who is related to a party

a 488

in a case tried before him. Art. 15, V.A.C.S. An exception to
this rule is in cases where the judge must approve the attorney’s
fee. Indemnity Ins. Co. of North America v. McGee, 163 Tex.
412. This exception was defined in Postal Mutual Indemnity
Co. v. Ellis, 140 Texas 570, 169 S.W. 2d 482, but the Court
there expressly reaffirmed the general rule of the Winston case.
If we were to adopt respondents’ position’ in the present case,
the effect would be that an attorney is no longer merely the legal
representative of his client. Instead, in every case where the
attorney has a contingent fee contract, he would be more akin
to a co-plaintiff, which would seem to necessitate our overturn-
ing the long-standing principle of Winston v. Masterson, supra.
We are not inclined to do so; but this represents just another
difficulty encountered if we overindulge in the notion that the
attorney with a contingent fee is litigating two distinct, inde-
pendent interests at the same time.

Our holding in this case, of course, does not necessarily apply
to the case where a plaintiff has assigned a portion of his cause
of action to an independent third party. Nor do we have the case
where an insurance company is litigating its subrogation rights
in the name of the insured. Suffice to say that in neither of
these situations does there exist the crucial attorney-client, prin-
cipal-agent relationship between assignor and assignee as that
present here.

The judgment of the Court of Civil Appeals is reversed. The
judgment of the trial court, dismissing the cause of action and
respondents’ petition in intervention, is affirmed.

Opinion delivered May 30, 1962.
De |

CoLomA Om & GAS CORPORATION, Petitioner
v.
RAILROAD COMMISSION OF TEXAS ET AL, Respondents

No. A-8625. Decided June 6, 1962
858 S.W. 2d 566

484

CHIEF JUSTICE CALVERT and ASSOCIATE JUSTICES
SMITH, GRIFFIN and WALKER dissenting.

Wood & Boykin, Corpus Christi, for petitioner.

Will Wilson, Atty. Gen., Houghton Brownlee, Jr., Linward
Shivers and B. H. Timmins, Jr., Assistant Attorneys General,
Perkins, Floyd, Davis & Oden, Alice for respondents.

ASSOCIATE JUSTICE STEAKLEY delivered the opinion
of the Court.

This case reaches us in an exceptional status and under un-
usual circumstances; in view of its disposition the facts will
be noted only briefly.

Respondent Railroad Commission granted Respondent Appell
Petroleum Corporation a permit to drill a first well on the tract
in question as an exception to Rule 87. The recited basis for the
permit to drill was to prevent waste and confiscation. Peti-
tioner, Coloma Oil & Gas Corporation, was a protestant before
the Commission and prosecuted its appeal pursuant to Article

Ss

6049c, Sec. 8, Vernon’s Annotated Civil Statutes. The trial court
and the Court of Civil Appeals sustained the order of the Com-
mission. 348 8.W. 2d 390.

1 The Commission defended its order in the trial court and
before the Court of Civil Appeals, and defends it here on the
proposition that the tract in question was entitled to “its first
well as a matter of law” because it is “separate and non-con-
tiguous”, a voluntary subdivision not being involved. This is
apparent in the series of special exceptions filed by the Commis-
sion to the pleadings of petitioner, eg., “Defendant excepts to
the balance of paragraph III for the reason that common owner-
ship of the tracts is immaterial and irrelevant since the tract
in question is a separate, non-contiguous tract and is entitled to
a first well as a matter of law.” Pursuant to its exceptions, the
Commission stated the following to the trial court with respect
to the offer of evidence by petitioners:

“Your honor, for the sake of the record, we would like
the récord to show that so far as this evidence is concerned,
we object to it insofar as the Rule 37 permit is concerned.
We do not require him to prove it up, but we object to it as
being immaterial and irrelevant as to this case.”

The following excerpts from the brief of respondents states
the same position in this Court:

“Counsel for Appellees timely objected to any evidence
offered by Coloma with respect to alleged common underlying
reservoirs, costs of operations, quantities of production, con-
ditions of the underlying strata of oil and gas sands and
geology with regard to the leases in question, for the reason
that such evidence so offered was irrelevant and immaterial
to any issue in the case, since such tract was entitled to its
first well as a matter of Jaw.
ee

“Under its present rules, the Commission is obliged to grant
a permit to drill one well (the first well) as an exception
to Rule 87 as a matter of law, in the absence of a voluntary
subdivision and in order to prevent confiscation * * *. So
far as we can determine this rule has not been changed,
modified, altered or amended.

ek

“Throughout Appellant’s brief, great stress is placed upon
a comparison between the production from the existing Appell

6 ee

well and the existing Coloma well. An attempt is made to
draw a comparison between the proposed well, and the exist-
ing Appell and Coloma wells. Appellees took the position in
the trial court, the Court of Civil Appeals, and take the posi-
tion here, that such matters are entirely and completely irrele-
vant and immaterial, since this tract of land in question is
unquestionably entitled to its first well as a matter of law
and this case in no way involves allocation, but only a well
permit.”

We add parenthetically that in view of the foregoing it is
not unreasonable to conclude that the hearing before the Rail-
road Commission was upon the same basis, ie, that Appell
was entitled to the permit as a matter of law and no evidence
of waste and confiscation was required.

The decision of this Court in Railroad Commission v. Murel
Williams, 168 Texas 370, 356 S.W. 2d 131, intervened after
the decision of the Court of Civil Appeals in the instant case,
and, indeed, after the filing of the application for writ of error
herein. Thereupon petitioner filed a supplemental brief assert-
ing the controlling effect of Murel Williams, to which respond-
ents did not reply; moreover, counsel for respondent Commission
in oral argument before us urged that Murel Williams was in-
correctly decided and should be overruled and that the position
of the Commission in the trial court and before the Court of
Civil Appeals in the case at bar is still correct. At no time have
respondents contended before us that the permit in question
is sustainable upon any basis except as a matter of law in the
fact that the tract in question is separate and non-contiguous
and a voluntary subdivision is not involved. The decision in
Murel Williams settled this to the contrary and is now final.

Our problem is the proper disposition of the case at bar in
the light of the circumstance that petitioner here, Coloma, of-
fered evidence in the trial court (although over the objection
of respondents that “We do not require him to prove it up” and
that the evidence was “completely irrelevant and immaterial’),
consisting, in brief, of the relative locations and proximity of
an existing Appell well on a separate tract, the second well
granted Appell by the permit in question, and an existing
Coloma well, together with the fact that all three wells would
be in a common reservoir of oil and gas bearing sands of sub-
stantially uniform thickness and character and with free com-
munication between the wells. Respondents offered no evidence.

8

IE In view of the circumstance that except for the one tract-
one well theory, neither the Commission nor Appell attempted
to question Coloma’s evidence tending to show that the second
Appell well was not necessary to prevent either waste or con-
fiscation, we are constrained to hold that Coloma has discharged
the burden placed upon it by Article 6049c, Section 8, V.A.C.S.
In other words, we hold that the uncontradicted evidence in the
trial court establishes that the order of the Railroad Commission
granting Appell a permit to drill on Lot 9, Block 81, is not sup-
ported by substantial evidence.

While the majority of the Court is of the opinion that the
evidence offered by Coloma was sufficient to overcome the statu-
tory presumption of validity in a case of this nature, there is
a minority who is strongly of the view that Coloma did not
meet the minimum standards of proof under the substantial
evidence rule, although this point was not raised or argued
by the parties. The asserted defect in proof lies principally in
the supposed failure to establish that there were not other wells
which would drain—and thus confiscate—the minerals under-
lying the Appell tract for which the permit in question was
granted.

In view of all the circumstances of the case we are hesitant
to reverse and render judgment. In Murel Williams this Court
idisapproved the so-called one-tract one-well theory, and we
adhere to that holding. We feel, however, that the parties should
have further opportunity for development of the facts in the
light of the principles of law declared in Murel Williams, and
that the judgments below should be reversed and the cause
remanded for this purpose. Precedent for this logical disposi-
tion under the unusual circumstances before us is found in
Cook Drilling Co. v. Gulf Oil Corp., 189 Texas 80, 161 S.W.
2d 1035, in which this Court took action, when confronted with
a somewhat similar problem, as follows:

“Apparently the parties misunderstood the character of
trial contemplated by the provisions of V.A.C.S. Art. 6049c,
Sec. 8, wherein interested parties are authorized to test the
validity of an order of the Railroad Commission under the
oil conservation act. Upon the trial of the case the only mate-
rial evidence introduced consisted of the file and transcript
of the hearing before the Railroad Commission for the per-
mit, and this was introduced for the limited purpose only
of showing what evidence the Commission heard at the time
it granted the permit. The defendant introduced no evidence

oe

whatever. It was upon this record that the trial court en-
* tered judgment cancelling the permit.

Cr ed

“From what has been said it is apparent that the district

court did not have before it sufficient evidence to overcome

the prima facie presumption of the validity of the order in

question. It is also apparent that the case has not been fully

developed.

Cr

“For these reasons the judgments of the trial court and

of the Court of Civil Appeals are reversed, and the cause is

remanded for a new trial.”

The judgments of the courts below are accordingly reversed
and the cause is remanded to the trial court for further pro-
ceedings in accordance herewith.

Opinion delivered June 6, 1962.
SMITH, JUSTICE, dissenting.

I respectfully dissent. I cannot accept the theory adopted by the
majority in the case of Railroad Commission v. C. Murel Williams,
163 Tex. 370, 356 S.W. 2d 131, which completely destroyed the
effect of the holdings in many Texas cases, including Halbouty
v. Darsey, Foster v. Railroad Commission, and Atlantic Re-
fining Company v. Railroad Commission. Those cases stand for
the proposition that the owner of an involuntarily segregated
tract is entitled to drill at least one well on his tract, however
small the tract may be. We do not have a situation where just
a theory has been destroyed, but we have the incongruous situa-
tion where it is now, in effect, held by the majority that the
Williams case overruled the above cases and many others with-
out even mentioning such cases. The disposition of this case by
the majority is far more unusual than the case itself. We find
this Court so determined to uphold the fantastic Charles Meyers’
theories lifted out of context and adopted in Williams that it
is now willing to go further and hold that Coloma has dis-
charged its burden and established that the order of the Rail-
road Commission granting Appell a permit to drill on Lot 9,
Block 81, is not supported by substantial evidence. In other
words, the majority is now saying that the holding in the Wil-
liams case demonstrates conclusively that the order of the Rail-
road Commission granting Appell a permit to drill on Lot 9,
Block 81, is not supported by substantial evidence.

es

The Railroad Commission et al, in its application for writ
of error in the Williams case, did not rely upon the Law Review
Article, C. J. Meyers, “Common Ownership and Control in Spac-
ing Cases”, 31 Texas L. Rev. 18 at 22, quoted in a footnote by
the majority in Williams. The only quotation from Meyerst was
in connection with the Commission’s argument that after Smith
Price entered the Addie Stephens unit, the development rights
of H. P. Williams became exactly the same in the 3.3 acres as
they were in the 42.5 acres and the two interests merged. The
Commission et al. made the further argument that “Once merged,
any attempt to repart them would plainly constitute an illegal
subdivision under the spacing rules then in effect.” My concurring
opinion was based largely upon the argument advanced by the
Attorney General, Will Wilson, and the many attorneys repre-
senting the American Petrofina Company of Texas, and the
Southern National Gas Company. The argument was this:

“Viewed from the standpoint of Railroad Commission ad-
ministration, the proposition becomes perfectly clear. When
Smith Price joined the Addie Stephens unit the Commission
had to grant the unit an allowable based in part upon Smith
Price’s interest. If it gave the unit an allowable based upon
8.3 acres and was proper in doing so, then the entire tract
was thereby protected from confiscation and could not properly
be awarded further exceptions to the spacing rules. If the
Commission gave the unit an allowable based upon 1.65 acres,
then the interest of H. P. Williams was rendered entirely free
and separate from the Smith Price interest and became iden-
tical to H. P. Williams’ interest in the 42.5 acres, with which
it could have been fairly developed under the Commission’s
rules.

“If the cotenancy between H. P. Williams and Smith Price
represents an ownership entity entitled to development sep-
arately from the 42.5 acres, then it has been so developed as
a part of the Addie Stephens and Reynolds units and no spac-
ing exceptions are necessary or proper. If H. P. Williams’
development rights in the 3.8 acres are independent of Smith
Price’s, then H. P. Williams’ rights are the same in the 3.3
acres and in the 42.5 acres and the two tracts must be de-
veloped together under the Commission’s rules. Stated another
way, H. P. Williams (and respondent as his successor) is

1 “# # * Thus, whenever the smaller tract could have been developed as part
of a larger tract, the exception should be denied. The meaning of the common
ownership and control doctrine, then, is this: if the tract for which an exception
is sought could have been developed as a part of ‘a larger tract, it was under
common ownership and control and is not entitled to an exception.”

£90 es

not entitled to further protection against confiscation because
his cotenancy interest in the 3.8 acres has been developed
by the activities of cotenant Smith Price or, if not, then be-
cause his interest, being thereby free and clear of Smith
Price, could have been developed along with and on the same
basis as the 42.5 acres.

“Tt may be that the case can be soundly decided on either
of these grounds, but it ought to be decided on one of them.
Accordingly, the judgments of the Court of Civil Appeals and
of the district court should be reversed.”

My concurring opinion in Williams is in harmony with this
view. Williams was not entitled to a permit to drill the recon-
structed 3.8 acres in view of the fact that Mrs. Price, by her
lease and unitization agreement had, in legal effect, secured
a permit from the Railroad Commission to drill one well on the
tract. Since the tract was entitled to only one well, and in view
of the undisputed facts, Williams failed to discharge his burden
of proving that the order of the Railroad Commission was not
supported by substantial evidence. For these reasons, I con-
curred in the result reached by the Court in Williams, but, at
the same time, I dissented and disagreed with the reasoning
expressed by the Court. My only regret is that I did not at the
time fully discuss my reasons for disagreeing with the action
of the Court on lifting from the Meyers’ Article one statement,?
which, when considered in context, was entirely foreign to the
factual situation in Williams. Nevertheless, such was made all
controlling in the disposition of the question before the Court
in the Williams case. Under the circumstances, I have ample
precedent to support my contention that it is my duty and it
is the Court’s duty to review the principles of law announced
by the majority in any given case, when the question later arises
in other litigation. Federal Royalty Co. v. State, 128 Texas
324, 98 S.W. 2d 993.

I sincerely hope that the time will never come when a
member of this Court will be deprived by the majority vote
of his associates of his right of free and constructive expression
and criticism of former opinions of this Court. My dissent in
this case is entirely impersonal and my only desire is to get the
Meyers statement upon which the majority relies in its proper

2 “+ * & The error springs from the assumption that every tract has a vested
right to one well, and that transfers in ownership of the tract cannot destroy
that vested right. The mistake in this reasoning is, of course, that it is not the
tract, as a parcel of land, that is entitled to a well; it is the owner who has
the right. # *

es

setting. One might ask, why so much discussion about Williams
in this Coloma case. My answer is simply this: When the false
premise in Williams is eliminated, this Coloma opinion will have
no support in law. On November 6, 1961, after the opinion in
Williams was rendered, Coloma filed a supplemental brief in
which it was stated that the respondents (Railroad Commission
et al) were relying upon the holding in Halbouty v. Darsey,
and a similar holding in other cases, but that “The holding of
this Court in Railroad Commission v. Murel Williams should
settle any doubt concerning this question. * * * In answer to
this contention, Justice Greenhill, speaking for the Court said:
«« * * The right to a well on a tract of land, however, is not a
vested right in the land itself, but is a right of the owners of
the land. Railroad Commission v. Magnolia Petroleum Co., 130
Texas 484, 109 S.W. 2d 967 (1987) * * *” ” This quotation leaves
out the Footnote Three contained in the opinion immediately
following the Magnolia case citation. The Williams opinion leaves
the impression that the Magnolia case is authority for Meyers’
conclusion that “The error springs from the assumption that
every tract has a vested right to one well, and that transfers
in ownership of the tract cannot destroy that vested right. The
mistake in this reasoning is, of course, that it is not the tract,
as a parcel of land, that is entitled to a well, it is the owner who
has the right. * * *” I cannot find where Magnolia cites or
mentions this Meyers’ theory, nor do I find where Meyers cites
Magnolia in support of this particular conclusion. However, I
do find that Meyers cites Magnolia in support of his declara-
tion that one of the basic rules governing the granting of ex-
ceptions is: “(3) where, however, a tract has been voluntarily
subdivided, so that none of the subdivision thus created is en-
titled to a well as a matter of right, the tract may be recon-
structed as it existed before the subdivision and granted an
exception.” This fits perfectly with my theory in the Williams
ease. The reconstructed 3.3 acres was entitled to only one well,
and since a permit had previously been granted on application
for a permit which included this tract, the Railroad Commission
properly denied the Williams’ application. Meyers says: “Ap-
parently under this (Rule 8), the Rule of the Century Case,
the Commission has discretion to locate the well as it sees fit.”
We applied this portion of the rule in the case of Ryan Con-
solidated Petroleum Corp. v. Pickens, 155 Texas 221, 285 S.W.
2d 201 (1955), and held that Ryan Consolidated was charged
with notice that the “* * * Holmes Heirs had executed a lease
on Lots 10 and 11 to Smith and Morrison (Assigned to Pickens
& Coffield) providing for the exclusive right to drill a well
thereon and containing a general warranty of title, and further

2

that if the Railroad Commission found that the one well, to
which the four lots were entitled to prevent confiscation, should
be drilled on Lots 10 and 11, no well could be drilled on Lot
12 or on Lot 18, except to prevent waste.” (Emphasis added.)

The Court of Civil Appeals in the Williams case refused to
follow the rule announced in Ryan v. Pickens, supra, and over-
turned the Railroad Commission’s order without requiring Wil-
liams to show that the Commission acted in an unreasonable,
arbitrary and capricious manner. The Court of Civil Appeals
refused to follow the Ryan v. Pickens case, stating:

“A harsher, more inequitable result could not be envisioned.
We are so distressed by the inequity of Ryan v. Pickens
that we have concluded that we should not apply it except
under identical facts.”

Thus, the Court of Civil Appeals, in effect, overruled Ryan
v. Pickens by this Court, and a majority of the members of this
Court in the Williams case sidestepped the issue by stating that
“We do not here reach the problem raised in the Ryan case,
and that opinion has no application to the decision which we
have reached.”

By not applying the holding that the Railroad Commission
has discretionary authority to locate the well anywhere on a
reconstructed tract, the Court of Civil Appeals and this Court
have deprived the Commission of the power to perform its
duties, especially its conservation efforts in seeking to properly
locate the drilling of gas wells in Century doctrine situations.

The majority opinion in Williams is unsound when it is
realized that when Meyers said that the error springs from the
assumption that every tract has a vested right to one well, and
that transfers in ownership of the tract cannot destroy the vested
right, he was not speaking of a situation such as we have in
the Coloma case, or had in the Williams case. Before making
the statement properly attributed to him by Justice Greenhill
in Footnote Three, Meyers had stated that several basic prin-
ciples must be kept in mind. The principle immediately appear-
ing before the quoted language, supra, was as follows:

“Second, the purpose of allowing exceptions to tracts smaller
than twenty acres is to give the landowner a reasonable op-
portunity to recover the oil in place. Thus, whenever the

, smaller tract could have been developed as part of a larger

es 498

tract, the exception should be denied. The meaning of the
common ownership and control doctrine, then, is this: if the
tract for which an exception is sought could have been de-
veloped as a part of a larger tract, it was under common own-
ership and control and is not entitled to an exception. Thus, a
segregation of such a tract is a voluntary subdivision.

“Several hypothetical cases are useful in developing the
application of the doctrine.

“Assume that oil has not been discovered in the area.
A is the owner of a ten-acre tract of land. He acquires an
adjoining ten-acre tract. Oil is then discovered and Rule 37
attaches. It is uniformly held that A is not entitled to an
exception for the ten-acre tract which he acquired. While the
former owner of the ten-acre tract was entitled to an ex-
ception (assuming ten acres were his total holdings), A is
not, because when the rule attached, A owned twenty acres.
The source of his title is immaterial. At the time Rule 37
became applicable, A’s twenty acres could be developed as a
single unit, with one well; hence any attempt to develop the
two tracts separately, such as leasing ten acres to one operator
and ten to another, constitutes a voluntary subdivision.

“Although the cases uniformly support this proposition,
there have been occasional instances of judicial language sug-
gesting the contrary. * * *”

Thus, it is seen that Appell is now being deprived of his
right to a well permit on a theory that has no application what-
ever. The Murel Williams case could not have by any stretch
of the imagination overruled the case of Halbouty v. Darsey,
Texas Civ. App., 326 S.W. 2d 528 (1959), wr. ref. n.r.e., where-
in it was held:

“Admittedly the .48 acre tract is not an unlawful sub-
division * * * the tract is not of such size and shape to meet
the acreage and distance requirements of the spacing rule
applicable to the field, however, admittedly it meets the re-
quirements for an exception under Statewide Rule 87A. As
such it is entitled to a well. Kraker v. Railroad Commission,
Texas Civ. App., 188 S.W. 2d 912, er. ref. w.om.; Dailey
v. Railroad Commission, Texas Civ. App., 183 S.W. 2d 1069,
99 A.L.R. 1939. Where Rule 37 and its exceptions were con-
sidered and also the rules of ownership, convenience and vested

ee

rights. Citation of additional authorities on this well settled
question is not deemed necessary.” (Emphasis added.)

For additional authorities, I call attention to: Nash v. Shell
Petroleum Corp., Texas Civ. App., 120 S.W. 2d 522, wr. dism.;
Railroad Commission v. Humble Oil & Ref. Co., 151 Texas 51,
245 S.W. 2d 488; Wencker v. Railroad Commission, Texas Civ.
App., 149 S.W. 2d 1009; Railroad Commission v. Wencker, 140
Texas 527, 168 S.W. 2d 625; Ryan Consolidated Petroleum Cor-
poration v. Pickens, et al., supra.

The majority in the present case has, without first finding
error, reversed and remanded the cause to the trial court for
further proceedings in accordance with its opinion. If this de-
cision becomes final, then I say Appell will be standing before
the trial court in the same position as though there had been
an unlawful subdivision of his tract. Not only that, the trial
court will be called upon to pass upon questions that were not
passed on by the Railroad Commission. The Railroad Commis-
sion is given the power under the statute to determine primarily
all fact issues, that is, all issues that are not established as a
matter of law. Railroad Commission v. Wencker, supra. The
trial court will be considering irrelevant and immaterial evi-
dence if and when it considers the volumes of evidence going
to show a comparison between the proposed Appell well, and
the existing Appell and Coloma wells. The evidence discussed
in the majority opinion and referred to in the dissenting opinion
by Chief Justice Calvert was introduced in evidence in the trial
court, but special exceptions were filed and timely objection
thereto was made by the Railroad Commission. The special ex-
ceptions were not ruled upon but were carried along with the
case. The Commission and Appell objected to the introduction
of any evidence offered by Coloma with respect to alleged com-
mon underlying reservoirs, costs of operations, quantities of
production, condition of the underlying strata of oil and gas
sands and geology with regard to the leases in question, for
the reason that such evidence so offered was irrelevant and
immaterial to any issue in the case, since such tract was en-
titled to its first well as a matter of law. Since it is undisputed
that there is no question of a voluntary subdivision in this case,
the Commission properly granted the permit and the action of
the District Court and Court of Civil Appeals in sustaining
the order of the Commission granting the permit was correct.

Coloma should not be sustained in its contention that since
Appell has one producing well, then he is not entitled to a second

|
_

495

well even though the second well would be located on a separate
noncontiguous tract, some 402 feet from the present producing
well. The law, as heretofore stated, provides that each tract,
regardless of shape, size, or location is entitled to its first well
as a matter of law. See Railroad Commission of Texas, et al v.
Humble Oil and Refining Company, 151 Texas 51, 245 S.W.
2d 488. The holding of the majority amounts to a confiscation
of Appell’s property and destroys his investment in the tract
of land involved and the value thereof without a proper judicial
determination of the issue of confiscation, all of which amounts
to a denial to Appell of his rights under the Fourteenth Amend-
ment to the United States Constitution.

The judgment of the Court of Civil Appeals should be affirmed.
Opinion delivered June 6, 1962.

CHIEF JUSTICE CALVERT, dissenting.

I dissent.

I agree that the validity of the Commission’s order granting
the Appell permit may not be upheld on the ground that the
tract on which it was granted is entitled to separate development
as a matter of law. Our decision in Railroad Commission v.
C. Murel Williams, 163 Texas 370, 356 S.W. 2d 181, destroys that
theory for the granting of drilling permits as exceptions to Rule 37.

The real issue remaining in the case is this: Does the evi-
dence introduced in the trial court discharge Coloma’s burden
of proving that the order of the Railroad Commission granting
the permit is not supported by substantial evidence? The burden
included in the issue is imposed on Coloma by Art. 6049c, Sec.
8, V.A.T.S.C., which expressly provides that the order of the
Commission “shall be deemed prima facie valid” and that on
appeal to the district court “the burden of proof shall be upon
the party complaining” of the order. See also Railroad Com-
mission v. Magnolia Pet. Co., 180 Texas 484, 109 S.W. 2d 967;
Gulf Land Co. v. Atlantic Refining Co., 184 Texas 59, 1831
S.W. 2d 73; Brown v. Humble Oil. & Refining Co., 126 Texas
296, 83 S.W. 2d 935, 87 S.W. 2d 1069; Cook Drilling Co. v.
Gulf Oil Corp., 189 Texas 80, 161 S.W. 2d 1085; Thomas v.
Stanolind Oil & Gas Co., 145 Texas 270, 198 S.W. 2d 420. That
the issue is to be tried under the substantial evidence rule is
settled by Trapp v. Shell Oil Co., 145 Texas 328, 198 S.W. 2d
424. And that the burden imposed in substantial evidence rule

Ce

cases is one of proving that the order is not supported is also
settled by our decisions. Board of Firemen’s Relief, etc. v. Marks,
150 Texas 483, 242 S.W. 2d 181, 183, 27 A.L.R. 2d 965; White
v. Bolner, Texas Civ. App., 228 S.W. 2d 686, 689, writ refused;
Collins v. Board of Firemen, etc., Texas Civ. App., 319 S.W.
2d 174, writ refused.

The majority do not quarrel with those rules. Apparently
they recognize them as well established and sound. But in their
application the majority desert all precedent in ordering a re-
versal of the judgments of the courts below.

Most of the majority opinion is concerned with the erroneous
theory on which the Commission defended the case in the trial
court and has sought to sustain the trial court’s judgment on
appeal. No doubt recognizing, however, that defense of the suit
on an unsound theory is no more a ground for reversing an
errorless judgment than is action of the Commission in granting
the permit for a wrong reason, Railroad Commission v. Mag-
nolia Petroleum Co., 180 Texas 484, 109 S.W. 2d 967, 970;
Gulf Land Co. v. Atlantic Refining Co., 184 Texas 59, 131
S.W. 2d 78, 84, or the giving of a wrong reason by the Court
of Civil Appeals for sustaining the order, Gulf Land Co. v.
Atlantic Refining Co., supra; 4 Texas Jur. 2d 248, Appeal and
Error, Sec. 750,1 the majority, without examination of any
of the myriad of Rule 87 cases heretofore decided, simply an-
nounce the conclusion “that the uncontradicted evidence” in
the record establishes that the Commission’s order is not sup-
ported by substantial evidence. I shall deal only with that con-
clusion as it relates to the issue of confiscation.

While, as indicated, much attention is given by the ma-
jority to the fact that the Commission has defended the case
on a wrong theory, none is given to the fact that Coloma has
prosecuted it on a right theory. Coloma’s petition in the trial
court sought to set aside the Commission’s order on the ground
that the permit was not necessary to prevent either waste or
confiscation and therefore the order granting it was illegal and
arbitrary. It is a standard petition for trying the validity of the
Commission’s orders under the substantial evidence rule. Coloma’s
offer of evidence was on a substantial evidence theory. When
the trial court sustained the validity of the order, Coloma pre-
sented but one point of error in the Court of Civil Appeals, and

1 Our action in Cook Drilling Co. vs. Gulf Oil Corp., 189 Tex. 80, 161 S.W. 2d
1085, cited by the majority, is strictly in accord with the rule that reversal of
an errorless judgment may not be ordered,

Ps

that was that the evidence showed that the Commission’s order
was not reasonably supported by substantial evidence of either
waste or confiscation. A similar point of error is contained in
the application for writ of error. In other words, Coloma has
correctly recognized throughout the course of the litigation that
it was not entitled to a favorable judgment unless it established
by proof that the Commission’s order was not supported by sub-
stantial evidence. The fact that the Commission had a different
theory of the issue to be tried and has consistently stood by that
theory has no bearing on the true issue and should not be held
to supply proof which was essential to Coloma’s case.

Considering the majority’s approach to the real problem
before us, one wonders if the desire to reverse, based on an
individual concept of abstract justice, is not father to their con-
clusion. If so, it is not amiss to recall at this point the philosophy
expressed by Oran M. Roberts, a great former Justice of this
Court, when, in writing on rehearing in Duncan v. Magette,
25 Texas 245, with both parties “strongly demanding the claims
of justice in its behalf, abstractly considered,” he took occasion
to present his views “upon the foundation and force of this
appeal to the sense of justice of the court, whether used as an
influencing consideration, in interpreting and enforcing the rules
of law, or directly urged as a basis of judicial action.” After
defining “Justice” and “Law” and allocating to each its proper
place in the decision of legal controversies, Justice Roberts con-
tinued:

“The act of moulding justice into a system of rules de-
tracts from its capacity of abstract adaptation in each par-
ticular case; and the rules of law, when applied to each case,
are most usually but an approximation to justice. Still, man-
kind have generally thought it better to have their rights
determined by such a system of rules, than by the sense of
abstract justice, as determined by any one man, or set of men,
whose duty it may have been to adjudge them.

“Whoever undertakes to determine a case solely by his own
notions of its abstract justice, breaks down the barriers by
which rules of justice are erected into a system, and thereby.
annihilates law.”

oR ok

“To follow the dictates of justice, when in harmony with
the law, must be a pleasure; but to follow the rules of law,
in their true spirit, to whatever consequences they may lead,

SS

is a duty. This applies as well to rules establishing remedies,
as to those establishing rights. * * *”

If that philosophy be not sound, we had as well amend the
rules of procedure which govern our conduct as a court to au-
thorize those of us who happen at the moment to compose it
to affirm or reverse judgments on the basis of our personal
reactions to their abstract justice.

There was, of course, no burden on the Commission in the
trial court to introduce “contradicting” evidence. The question
before us is strictly a question of law. Thomas v. Stanolind Oil
& Gas Co., 145 Texas 270, 198 S.W. 2d 420; Board of Firemen’s
Relief, etc. v. Marks, 150 Texas 483, 242 S.W. 2d 181. It is our
duty, as it was the duty of the trial court, to decide the question
on the evidence which was introduced, whether by one or by both
parties, and not on whether evidence introduced by one was
contradicted by evidence introduced by the other. If the evidence
introduced overcomes the statutory presumption, the judgments
of the courts below should be reversed. If it does not, the judg-
ments should be affirmed. This should require, at the very least,
an analysis of the evidence and of decided cases for the purpose
of discovering what has been required of other litigants in
Coloma’s situation. Neither is to be found in the majority opinion.

The majority’s holding is that the uncontradicted evidence
in the trial court establishes that the order of the Commission
is not supported by substantial evidence. In so far as that evi-
dence is reflected in the majority opinion it is this: “* * * the
relative locations and proximity of an existing Appell well on
a separate tract, the second well granted Appell by the permit
in question, and an existing Coloma well, together with the fact
that all three wells would be in a common reservoir of oil and
gas bearing sands of substantially uniform thickness and char-
acter and with free communication between the wells.” Con-
sidered as a guide to courts and future litigants the majority
opinion on its face thus lays down a rule (and courts and liti-
gants have no other place to look) that evidence that a drilling
permit is granted as an exception to a field-wide spacing rule;
that the permit is granted to one who has an existing well on
a separate tract; that another operator who protests the permit
has an existing well; that all three wells are in a common reser-
voir with producing sands of substantially uniform thickness
and character, and that there is free communication between
the sands, overcomes the statutory presumption that the permit
is necessary to prevent confiscation. It is difficult to believe

eS 499

that the majority can seriously intend what they say. The hold-
ing gives no weight to the order of the Commission charged
primarily with proper administration of the law, all but nullifies
the presumption of validity expressly created by statute, and
puts all of the burden of developing material evidence in the
trial court on the issue of confiscation on the holder of the permit.

The very nature of the burden imposed by the statute should
require, as a minimum, that a protestant-appellant of a Rule
37 permit introduce readily available evidence negativing the
existence of facts and circumstances which reasonably could form
the basis for the order. In a free communication reservoir con-
fiscation occurs through drainage. Although an operator may
have a well on another tract in the reservoir, whether the oil
and gas underlying the separate tract on which a Rule 87 permit
is sought will be drained by other operators will ordinarily turn
on the density and location of wells in the surrounding area.
The granting of the permit by the Commission raises the statu-
tory presumption that the well is needed to prevent drainage
and thus confiscation of the oil and gas underlying the tract.
The inference from the Commission’s action is that other wells
in the surrounding area are so located that they will drain
the oil and gas underlying the tract. If the presumption and
the inference are false, their falsity is easy to establish by
readily available evidence of the number and location of other
wells in the surrounding area and the direction of drainage.
Coloma offered no such proof in this case.

The flimsy character of the evidence on which the Commis-
sion’s order is being invalidated is brought into sharp focus by
looking at the attached plat introduced in evidence by Coloma:

The only lot in Block 81 owned by Emma Huddleston and
others, on which Appell has a lease, is Lot 9. All of the other
lots in the block are owned. by James BE. Jacks. Whether any
of these lots are drilled and producing, or whether permits have
been granted therefor, we do not know because the evidence
does not show. All of the lots in Block 80, separated from Lot
9, Block 81 by a 60-foot street, are owned by others. Whether
they, or any of them, are drilled and producing, or whether
permits have been granted therefor, we do not know because the
evidence does not show. There is no evidence with respect to
drilling and producing activities on the north 8 lots in Block
92. Evidence of drilling and producing activities on these thirty-
nine lots is of vital and controlling importance on the issue of

whether the minerals under Lot 9, Block 81, will be confiscated
if the permit for drilling that lot is invalidated. A great majority
of the lots are much closer to the proposed drilling site on Lot 9,
Block 81 than is the existing Appell well. Coloma’s producing
well is also much closer to Lot 9, Block 81 than is the existing
Appell well. As a matter of fact, we have no way of knowing,
except by purest surmise, that Lot 9, Block 81 is not completely
surrounded by producing wells.

A —

I have commented on the fact that the majority have cited
no Rule 87 case to support the conclusion reached in this case.
The case was submitted on oral argument and written briefs
on November 22, 1961. If there are any decided cases support-
ing the majority theory of resolving the issue of confiscation
I assume they would have been found in the briefs on file or
by independent research by now. None is to be found in Coloma’s
briefs or in a brief filed by amicus curiae. The only cases cited
in the majority opinion are Murel Williams and Cook Drilling
Co. v. Gulf Oil Corp., 189 Texas 80, 161 S.W. 2d 1035. Neither
is cited in support of the majority’s conclusion that Coloma dis-
charged its burden of proving that the Commission’s order is
not supported by substantial evidence and they do not support it.

In Cook the Commission granted a Rule 37 permit. The trial
court set the order aside even though the contestant introduced
no evidence in court on the issues of waste and confiscation.
The judgment was obviously erroneous and had to be reversed.
The party having the statutory burden had not discharged it.
The fact that the case had been tried on a wrong theory was used
not as a basis for reversing but strictly as a basis for remanding
the cause for retrial.

Murel Williams was the exact opposite of this case. In that
case the Commission denied the permit and the applicant had
the burden in the trial court of proving confiscation. In our
opinion in the case we pointed out substantial evidence in the
record supporting the Commission’s action, not as indicating
that the burden rested on the Commission to offer proof in sup-
port of its order but for the purpose of showing that Williams
had not discharged his burden of proving that the order was
not supported by substantial evidence. But the test of confisca-
tion announced in Murel Williams is pertinent here. We said
the test was whether the permitee “has been accorded a fair
and equal opportunity with other producers of surrounding tracts
within the drainage area to recover his fair share of the oil
in place beneath his tract”. The Commission having granted the
permit in this case, the law presumes that Appell must have
the permit to have equal opportunity with other producers of
surrounding tracts to recover the oil and gas beneath its tract.
There is no proof in the record which overcomes that presump-
tion. The only other cases which have ever been suggested by
independent research as supporting the majority’s holding on
the issue of confiscation are Railroad Commission v. Shell Oil
Company (The Trem Carr case), 139 Texas 66, 161 S.W. 2d
1022, Stanolind Oil & Gas Co. v. Midas Oil Co., Texas Civ. App.,

50

123 S.W. 2d 911, writ dismissed, and Gulf Oil Company v. Smith,
Texas Civ. App., 145 S.W. 2d 280, writ refused, cited in Murel
Williams. Analysis discloses that none of them support the ma-
jority conclusion in so far as the issue of confiscation is con-
cerned.

In Gulf Oil Corp. v. Smith, the Commission granted a Rule
87 permit to Smith. The Court of Civil Appeals invalidated the
order. On the issue of confiscation the court observed that the
uncontroverted testimony showed that Smith had already ex-
tracted a greater proportion of his estimated reserves than own-
ers of adjoining tracts had extracted of theirs, and gave par-
ticular weight to proof of density of wells in the area. With
respect to this factor the court said:

«“* * The uncontroverted proof in the instant case shows
* * * that Smith’s density with four wells was greater than
that of any of the surrounding tracts, and greater than the
eight times surrounding area whether delineated by a square,
rectangle, or circle; * * *.”

Emphasis was thus placed on well density and estimated re-
serves in the area.

In Stanolind Oil & Gas Co. v. Midas Oil Co., Rule 37 permits
granted to Midas were invalidated. It is of particular interest
that in that case the Court of Civil Appeals recognized a differ-
ence in the type of proof which was held to negative waste and
that which was held to negative confiscation. With respect to
the issue of waste, the court said (123 S.W. 2d 916):

«*  %& And when the contestant made proof that no un-
derground conditions obtained in this area which would dif-
ferentiate the tract in question from the surrounding area;
in brief, that no conditions existed which would afford a
factual basis for an exception to the general rule to prevent
waste, we think appellant rebutted the presumption in favor
of the validity (of the) order; and, absent any other evidence
to the contrary, made prima facie proof, under the rule itself,
and our repeated interpretations of it, that the drilling and
operation of such well would tend to cause, rather than to
prevent, waste.”

But the court did not use those reasons for holding that the
presumption of confiscation had been rebutted. Instead, it com-
mented that the presumption of confiscation had been rebutted

Sf:

by evidence that “showed a tract of 2.76 acres with 2 wells
thereon, not including the well here involved, a per acre density
much greater than surrounding tracts; that under the circum-
stances the wells already thereon afforded opportunity to re-
cover an amount of oil equal, if not in fact much greater, than
the quantity of oil originally in place beneath such tract.”

In Railroad Commission v. Shell Oil Co. (The Trem Carr
case), 189 Texas 66, 161 S.W. 2d 1022, it is stated in the very
beginning of the opinion that the issue of confiscation had already
been decided and that the sole issue in the case is that of waste.
It is of more than passing interest that confiscation as a basis
for the permit in the Trem Carr case was denied on well density
in the drainage area and that two other Rule 87 permits granted
to the same applicants to prevent confiscation were upheld on
well density in the drainage area. Richey v. Shell Pet. Corp.,

Texas Civ. App., 128 S.W. 2d 898, writ dismissed, correct judg-
ment.

It will be seen from the only cases suggested as bearing on
the issue that proof on the issue of confiscation which,was held
to rebut and overcome the presumption of validity of the per-
mits was well density in the area and consequent recovery of,
or opportunity to recover, one’s own reserves. So far as I can
discover, no Rule 37 permit, granted to prevent confiscation, has
ever been invalidated on the type of evidence introduced in this
case. Proof of proximity of the tract to Appell’s other well and
that there is free communication of minerals in the underlying
sands is proof of nothing except that the factual situation was
such as to call into play the Commission’s power to grant or
deny the permit as an exception to the spacing rule to prevent
drainage or confiscation by other operators of wells on surround-
ing tracts. Proof of proximity and of free communication, and
no more, is yet used by the majority in this case as evidence that
the Commission was wrong in its determination. That is indeed
a strange holding!

The simple fact is that Coloma misjudged the character of
proof required to meet minimum standards for rebutting and
overcoming the statutory presumption in a confiscation case.
We should not now lower those standards or emasculate rules
heretofore regarded as sound when applied to other litigants
in order to afford Coloma relief from its own failure. We are
confronted constantly with cases in which we know that abstract
justice would require reversal of the judgment to permit a
litigant to retry his case and offer additional evidence, but we

50.

have steadfastly adhered to the rule heretofore that an errorless
judgment will not be reversed for that purpose. Sometimes adher-
ence to the rule saddens us. Application of the rule has often
resulted in far greater injustice than would result in this case
from permitting Appell’s permit to stand. Its application here
should not be avoided through a figmented conclusion of error
where none exists.

I would affirm the judgments of the courts below.

ASSOCIATE JUSTICES GRIFFIN and WALKER join in
the dissent.

Opinion delivered June 6, 1962.
||
D. C. Hatt TRANSPORT, INC. ET AL, Petitioners

v.
J. L. Harp, Respondent

No. A-8990. Decided June 6, 1962
258 S.W. 2d 117

Rawlins, Sayers, Scurlock and Eidson, Fort Worth, for peti-
tioners.

Barwise, Magoffin & Corrigan, and Tilley, Hyder & Law,
Fort Worth, for respondents.

PER CURIAM.

As to those fact issues discussed by the Court of Civil Ap-
peals which are exclusively within its jurisdiction, such as the
contention that the trial court’s findings are against the over-
whelming preponderance of the evidence, this Court should not
and does not express an opinion. We are, however, in agreement
with and accordingly approve the decisions of law announced
by the Court of Civil Appeals in its opinion. This Court may
not refuse a writ of error outright unless the opinion of the

x

50!

lower appellate court be one concerned exclusively with points
over which this Court has jurisdiction. In other words, the
opinion must be one which could properly be written or adopted
by this Court. As the opinion of the Court of Civil Appeals
(355 S.W. 2d 257) discusses fact issues not within this Court’s
jurisdiction, the application for writ of error is refused, no
reversible error. Article 5, Secs. 8 and 6, Constitution of Texas,
Rule 483, Texas Rules of Civil Procedure, Watson v. Prewitt,
159 Texas 305, 320 S.W. 2d 815.

EX PARTE JOE CONGER
EX Parte E. K. BUFORD

Nos. A-8877, A-8878. Decided June 6, 1962
857 S.W. 2a 740

ASSOCIATE JUSTICES SMITH and HAMILTON dissented.
Turpin, Kerr, Smith & Dyer, Midland, for relator.
Clyde Vinson, San Angelo, for respondent.
ORIGINAL HABEAS CORPUS
JUSTICE CULVER delivered the opinion of the Court.

Joe Conger and E. K. Buford, County Commissioners of Upton
County, were found guilty of having violated the terms of a
permanent injunction and the writ issued in pursuance thereof
and served upon them which commanded Upton County, its
agents, servants, officers and employees to desist and refrain
from using the road machinery and other equipment of Upton
County for the benefit of private persons by blading and scrap-
ing off lots, filling in lots or hauling dirt, sand, gravel, or caliche
or using such road equipment for the benefit of private persons
or doing any form of soil or dirt work on private property. The
trial judge, having found Mr. Buford guilty of three separate
violations, imposed cumulative sentences of three days for each
of the first two violations hereinafter discussed and twelve hours

eS 507

for the third. Commissioner Conger was ordered confined twelve
hours for his single violation.

Relators first say that the injunction order was not violated
for the reason that the work which forms the basis of the charges
against them was not carried out for the benefit of private per-
sons, wherefore they should stand discharged from the penalties
inflicted upon them by the District Judge.

Commissioner Buford was charged with doing work with
county equipment on three tracts of land owned by private
parties near or in the town of McCamey. As to the first alleged
violation the Commissioner testified that he had received a re-
quest from some people in the neighborhood to “clean up” a lot
so that the children in the neighborhood would have a playground
and that since he considered this was for the benefit of all the
members of the community he scraped off the weeds and hauled
them away. This action was taken without the knowledge or
consent of the landowner.

Secondly, the Commissioner performed similar work on a
tract owned by William Truesdale. Mr. Truesdale told Commis-
sioner Buford that he was thinking about putting a house on
his lots and requested the Commissioner to “blade” them off.
The Commissioner replied that he had received requests from
several people in that vicinity to clear off the brush on the
corner of these lots because it formed a traffic hazard at the
intersection of two roads. He then proceeded to blade and clean
off the lots and hauled away the trash with county equipment.

The third charge concerned the act of a county employee in
Commissioner Buford’s precinct who complied with the request
of a homeowner to clear away a strip of weeds on a lot next
to his property which he thought to be a fire hazard. In this
instance while no express authority was given, the court found
that the work was done with the Commissioner’s implied consent
because he had allowed the employee to use county equipment
for this same character of work on a previous occasion. We have
not found in the statement of facts any testimony that would
support such a finding of implied consent.

Hf In our opinion the clearing and scraping off a privately
owned lot for the use as a playground of all the children of the
community is not “for the benefit of private persons” in con-
templation of this injunctive order, but is rather for a public
use or public purpose. No all-inclusive judicial definition of

508

that term has been attempted by the courts, but each case is to
be determined by its own peculiar circumstances. Davis v. City
of Lubbock, 160 Texas 88, 326 S.W. 2d 699. While there are
two views as to what constitutes “a public use”, one being more
restrictive than the other, nevertheless where there exists the
direct use or right of use of the utility on the part of the public
or even some limited portion of the public, all agree it is a public
use. 73 C.J.S., Public, p. 280.

We conclude therefore that the order in so far as it holds
Commissioner Buford in contempt of court in respect to the
first and third charges, cannot stand and must be set aside.

‘We are unable to say, however, that there is no evidence
to support the court’s finding that Commissioner Buford did
violate the injunction by scraping off and removing the brush
from the Truesdale lots. The work was actually done at the re-
quest of the landowner and for his benefit, who gave as a
reason for the request that he was thinking about placing a
house on the property which he thereafter actually did do. There
is at least some conflict in the testimony about the height of
the brush and the extent of the traffic hazard it may have oc-
easioned. Taking all the testimony into consideration we cannot
say that the court was unjustified in finding that the work was
done for the benefit of a private person, and therefore the con-
tempt order is not void.

| | The complaint against Commissioner Conger was that by
implied consent he allowed county-owned machinery to be used
for the benefit of private parties in blading and scraping off
two lots in the town of McCamey so that the members of a
church would have a place to park their cars while attending
religious services. The employee who did this work had been
instructed by Commissioner Conger not to use the county equip-
ment on private property. He testified, however, that “I had had
permission to use the equipment on the lands wherein the Lions
Club had given the church permission, and I just presumed that
if it was all right for me to use them for a parking area on one
it would be all right to use it on another lot for the same pur-
poses.” Work performed on privately owned property to furnish
parking facilities for the use of members in attending services
at their church is not for a public use or purpose, whether that
work consists in scraping off weeds or paving the lot or exca-
vating for a foundation. The matter does not turn on the extent
of character of the work, but rather for whose benefit it was
performed. A denominational church is a private institution,

Pe 509

privately owned and operated. While the building and mainte-
nance of religious institutions are in the public interest and
may be said to promote the public welfare they lie without
the domain of public uses and purposes. Smith v. Smythe, 90
N.E. 1121, 197 N.Y. 457. To constitute “public use” all persons
must have an equal right in respect to the property and it must
be in common and on the same terms no matter that only a few
in number may avail themselves of it. Palmyra Telephone Co.
v. Modesto Telephone Co., 167 N.E. 860, 336 Ill. 158. The only
point is whether the Commissioner had impliedly consented and
we are of the opinion that there is testimony to support the
finding of the court in that respect.

li Im the second place relators say that even if the injunction
order was valid nonetheless it was not a contemptuous violation
and for that reason they should be discharged. The argument is
that each of the relators thought that what he did and what use
was made of the county equipment was for the benefit of the
public; that neither intended to do any work “for the benefit
of private persons” and both acted in good faith in their respec-
tive acts. Relators further say that there was a reasonable basis
for the belief that the use of the equipment was for a public
use and not for the benefit of private persons and that the
lack of an intentional disrespect should operate as a purge of
the contempt charges. For this they cite Herring v. Houston
National Exchange Bank, 118 Texas 837, 255 S.W. 1097. That
was an original action in the Supreme Court to have certain
parties adjudged in contempt of that court and not a habeas
corpus proceeding. In that case the Supreme Court was the
trier of the facts and acted within its own discretionary powers.
While lack of intentional disrespect may be considered in miti-
gation that is a matter for the consideration of the trial court.

Hl What we have here is tantamount to a collateral attack on
the contempt judgment and we may order the relators released
only where the judgment is void. We do not have jurisdiction
to weigh the evidence or to consider matters that might be plead
by way of mitigation. Ex Parte Testard, 101 Texas 250, 106
S.W. 319; Ex Parte Helms, 152 Texas 480, 259 S.W. 2d 184.

Relators assert that the burden rested upon the party who
preferred these charges to prove not only a violation of the
court’s order but also a defiant and contemptuous attitude “be-
yond a reasonable doubt” and for this proposition they rely
upon Ex Parte Jones, 160 Texas 321, 331 S.W. 2d 202. We do
not agree with that appraisal. In the Jones case an attorney

50

was held in contempt for making an argument to the jury
which the court construed as being in violation of a ruling there-
tofore made. In that case we said:

“The record discloses no heated and bitter controversy
between judge and counsel and the case turns upon the word-
ing and scope of an order made by the judge which sought
to control the course of oral argument to a jury.”

In summary our holding was based upon the conclusion that
the court’s order was not directly violated and that the particular
order “is not to be enlarged or broadened by construction and
inference” and for that reason the relator was discharged. We
think that decision has little bearing upon the situation here.

In Ex Parte White, 154 Texas 126, 274 S.W. 2d 542, the
point before the court was said to be whether he has “contemptu-
ously” disobeyed a court order. However, the word as used there,
carried no more than the connotation of “knowingly or wilfully”.
The relator was discharged for the reason that under the evi-
dence at the time of the issuance of the order it was beyond his
power to comply. Therefore he had not “contemptuously” dis-
obeyed. In this case it is admitted that the relators had full
knowledge of the injunctive order and the reasons for its issu-
ance. Russell Arnold who was engaged in hauling, moving dirt
and in other construction work in Upton County, filed his
petition against the four County Commissioners and Upton
County alleging that the Commissioners had been cleaning off
and filling in lots, hauling for private use and otherwise using
county equipment for the benefit of private persons and thus
materially injuring his business and causing a substantial loss
of patronage and profits. It appeared that thereafter the parties
agreed that Upton County should be enjoined but that the cause
be dismissed as to the four Commissioners and also agreed upon
the wording of the order as drafted and entered.

HI While individual members of the County Commissioners Court
have no authority to bind the county by their separate actions,
Canales v. Laughlin, 147 Texas 169, 214 S.W. 451, nevertheless
it is no valid defense in this case to say that the acts of the two
Commissioners detailed herein were not official acts ordered by
the Commissioners Court. The writ restrained acts of this char-
acter, both official and otherwise, prohibiting not only Upton
County but its agents, servants, officers and employees from
doing the things complained of. That this was the necessary
effect of the injunction also, see Rule 683, Texas Rules of Civil

ee) Bi

Procedure. In that respect the trial court concluded as a matter
of law and properly so that:

“That the Commissioners of Precincts 4 and 8 while acting
without specific orders entered on the Minutes of the Com-
missioners Court of Upton County, Texas, directing that such
acts be performed, by implied consent acted in their official
capacity as County Commissioners, their having heretofore
defended the basic action upon which said injunction was
issued in that such acts had not been as individuals but in
their official capacity, cannot now come before this Court
and plead that such similar act or acts were in their individual
capacities and not their official capacities and in effect evade
the orders, judgments, decrees and injunctions of this Court.”

It is therefore ordered that the relators be remanded to
the sheriff of Upton County to be by him confined in accord-
ance with the order of the District Court as modified by this
opinion, and that relators pay all costs of this proceeding.

Opinion delivered June 6, 1962.
ASSOCIATE JUSTICE SMITH, dissenting.

I respectfully dissent. The majority assumes that the in-
junction granted in the case of Russell Arnold v. E. K. Buford,
restraining Upton County, Texas, from using road machinery
or other equipment belonging to the county for the benefit of
private persons, etc., is based upon a judgment against Buford
and Conger. The terms of the judgment convince me that this

“ assumption is unfounded. The judgment provides:

“Tt further appearing to the Court that the attorneys for
all parties have conferred and have reached an amicable agree-
ment in settlement of said cause, to the effect that Upton
County should itself be enjoined but that none of the said
Commissioners should be personally enjoined, and it appearing
to the Court that such a provision is right, just and equitable,
it is accordingly ORDERED, ADJUDGED and DECREED
that the above entitled and numbered cause be, and the same is
hereby, dismissed as to E. K. Buford, Joe Conger, H. Wheeler,
and Tommy D. Workman, the said Commissioners of Upton
County, Texas; * * *,”

Following the above paragraph dismissing Buford and Con-
ger from the case appears the decretal portion of the judgment

512

wherein Upton County was restrained from using the road ma-
chinery for the benefit of private persons, but no such order is
made relative to Buford and Conger in the decretal portion of
the judgment.

It is true that the writ of injunction signed by the Clerk
recites that ““* * * Upton County, its agents, servants, officers
and employees” are commanded to desist and refrain from using
the road machinery for the benefit of private persons. This,
however, is no part of the judgment of the Court and cannot
be read into the judgment by implication or otherwise, especially
in view of the fact that the judgment shows on its face that the
controversy between the plaintiff, Arnold, and the defendants,
Buford and Conger, was settled and compromised and these par-
ticular defendants were dismissed from the suit.

Under the circumstances, the judgment of contempt was
void, as the court was without jurisdiction to enter the order of
contempt against the Relators. I am not unmindful of the fact
that a proceeding of this nature constitutes a collateral attack
upon the judgment of the trial court and that in order for the
contempt judgment to be subject to collateral attack it must
be absolutely void. Ex Parte La Rocca, 154 Texas 618, 282 S.W.
2d 700. I insist, however, that contempt proceedings in this case
will never be in order until there exists a valid judgment restrain-
ing these Relators from using road machinery for the benefit
of private persons.

The settlement, compromise, and dismissal by judgment is
forever a bar to any proceedings, contempt or otherwise, against
Buford and Conger growing out of that particular suit. The
judgment in that case cannot be used as a basis for the contempt
action here. This does not mean, however, that proceedings can
never be instituted against Buford and Conger. The judgment
in the case of Arnold v. Buford is not a bar to the institution
of a new suit under new facts. Buford and Conger may be pro-
ceeded against under a state of facts giving rise to a new cause
of action just as though the judgment in Arnold v. Buford had
never been written. See Bute v. Brainerd, 93 Texas 137, 58
S.W. 1017. Buford and Conger can be proceeded against as if
the former suit of Arnold vy. Buford had never been brought.
The new facts pertaining to Buford and Conger can be tried
in the new suit. The majority of this Court has rendered a judg-
ment against both Buford and Conger without a hearing on these
facts in the trial court. In other words, it has never been judicially
determined in the trial court that an injunction was in order.

518

Buford and Conger have not had their day in court. They are
being deprived of their liberty under a void order.

Since the majority has passed upon the facts, I will say
that in my opinion Relators are not guilty of contempt. Each
had the authority to do and perform their duties. It is true no
suit was brought by the county to remove the hazardous condi-
tion of the lot, but Buford removed the brush, etc., which created
the hazard for the protection and safety of the general public.

Conger is not guilty, because the record clearly shows that
Conger instructed the employees not to use road machinery and
equipment for private purposes.

Buford and Conger should be held not guilty of contempt and
they and their sureties should be discharged from further lia-
bility on the bonds filed therein.

ASSOCIATE JUSTICE HAMILTON joins in the dissent.

Opinion delivered June 6, 1962.

||

Ex Parte THOMAS WILBORN JONES

No. A-8915. Decided June 18, 1962
358 S.W. 2d 370

Merritt H. Gibson, Longview, for relator.

K. Baker, Crawford Parker, Jr., Carthage, for respondent.
ORIGINAL HABEAS CORPUS PROCEEDING

ASSOCIATE JUSTICE CLYDE E. SMITH delivered the
opinion of the Court.

Relator, Thomas Wilburn Jones, has filed in this Court a
petition for a writ of habeas corpus alleging that he is illegally
confined and illegally restrained in his liberty at Carthage, in
Panola County, Texas, by Johnie Spradley, the Sheriff of said
county. By this original proceeding, Jones seeks release from
the restraint of a judgment of the District Court of Panola
County, Texas, adjudging him to be in contempt of that court.

I It is necessary for this Court to state the facts, although we
have no authority to evaluate facts. We may consider the facts
only for the purpose of determining whether they constituted
acts sufficient to confer jurisdiction upon the court to make the
particular order. Ex Parte Tyler, 152 Texas 602, 261 S.W. 2d
8338; Ex Parte La Rocca, 154 Texas 618, 282 S.W. 2d 700; Ex
Parte Fisher, 146 Texas 328, 206 S.W. 2d 1000, 1003.

The facts are these: The Relator Thomas Wilburn Jones,
and Marjorie Evelyn Jones, husband and wife, were legally
divorced and the judgment dissolving the bonds of matrimony

a 516

was entered by the District Court of Panola County, Texas, on
September 14, 1961.

On August 30, 1961, prior to the date of the judgment of
divorce, the Relator and Mrs. Jones executed a contract in
settlement of their community property rights. The divorce judg-
ment of September 14, 1961 incorporated the contract by refer-
ence, subject only to the modification (also by agreement) that
the house should be built in Woodcrest Addition instead of
Bel-Aire Addition. The pertinent portion of the contract is as
follows:

“Party of the First Part (Petitioner) hereby agrees to
construct, or cause to be constructed, a three (3) bedroom
brick veneer residence, with living room, kitchen-den combina-
tion, one (1) bath and single carport upon a lot in the Bel
Aire Subdivision to the City of Carthage, Texas, on such
lot and on such plans as the Parties shall agree upon and said
lot and improvements to be conveyed and title thereto vested
in Milton Payne and Lewis Pool, Trustees for Tommie Lynn
Jones, Jennifer Jones, Melinda Jones and Tenna Marie Jones
to be held and administered under the terms of the Trust
Agreement and executed by the parties hereto on the (1)
day of (April), 1961, subject however to the covenant and
right of Party of the Second Part (Marjorie Evelyn Jones)
to the use of such house and lot as a residence for Party of the
Second Part and the children born of this marriage, in her
custody, for as long as Party of the Second Part shall desire
to use same as her homestead, or until such time as the Party
of the Second Part shall remarry, and during the use by Party
of the Second Part she shall pay all taxes assessed against
said lot and improvements. It is understood that such rights
and covenants in favor of the Party of the Second Part shall
be incorporated and made a part of the instrument of convey-
ance of such property in trust, subject, however, also to a
Vendor’s Lien to be reserved in favor of Party of the Second
Part securing the payment of the written agreement as de-
seribed and set forth under Paragraph B (4) hereafter. Such
improvements to be completed within ninety (90) days after
the approval of plans and specifications by Party of the Second
Part.”

On December 6, 1961, Mrs. Jones filed a complaint alleging
that Jones was in contempt because he had failed and refused
to comply with the Court’s judgment “* * * in that he has not
built or caused to be built that certain dwelling house as pro-

|

vided in Paragraph III, Subsection A of the aforementioned
agreement, all as provided for in the judgment of this Court.”

We note that at the time of the filing of this complaint the
plans and specifications for the residence had not been agreed
upon by the parties. Therefore, the ninety-day period fixed in
the contract for the completion of the construction of the im~
provements had not commenced to run when this complaint was
filed.

On December 19, 1961, the court held Jones in contempt
for failure to complete the improvements as provided by the
contract, and sentenced him to confinement in the county jail
for seventy-two hours, and thereafter until he had complied
with the following order of the court:

“1. Pay to the Petitioner the sum of $180.00, being the
amount improperly charged for house payment against the
$250.00 indebtedness.

“2, Pay the automobile insurance on Petitioner’s automo-
bile that was granted to her in the said above referred to
Judgment entered on the 14th day of September, 1961.

“3, That Defendant will complete a three-bedroom, brick
veneer residence with living room, kitchen-den combination,
one bath, and single carport on the lot specified in the above
referred to Divorce Decree, in a good and workmanlike man-
ner, according to good and ordinary construction practice from
one of the plans substantially agreed upon by the parties sub-
ject only to the right of this Plaintiff to select all color schemes
and finishes, but not to include materials of construction.”

The order of December 19, 1961, further reflects that the
court appointed Robert Brown, III, of Carthage, Texas, “* * *
as Chancellor 1 of this Court to certify to the proper construction
of the said brick veneer residence and to make weekly reports
to the Court to the proper construction including materials and
workmanship to insure the adequacy of the residence herein
ordered built so that the Court can determine whether or not
such dwelling is commensurate with the ordinary three bedroom
brick veneer residence in this vicinity.” This order further pro-
vides that “the commitment of this Defendant will be suspended
until February 23, 1962, at 10 a.m., and the Court directs both

1 See Rule 171, T.R.C.P. Master in Chancery.

a BAT

Petitioner and Respondent to be present at that time so that the
Court may determine whether or not the Defendant is discharged
from this contempt or whether or not commitment will issue.”
(Emphasis added.)

Between the date of his appointment and February 18, 1962,
Robert Brown, III, made several reports to the court by letter
as to the progress of the work on the dwelling, and on February
13, 1962, made a report to the court as follows:

“All necessary corrections as listed in our letter of Febru-
ary 12, 1962 have been completed on the above named case.
The writer attempted to contact the court by phone this date
concerning the heating unit as previously discussed, but was
unable to make connections. As far as the writer is concerned
this job is complete and in accordance with standard building
practices in the particular area of its location, and we would
approve it accordingly. With this writing we are leaving the
decision of the heating unit to be settled by the court.”

By agreement of the parties, the next hearing on this matter
was held on February 20, 1962. The only purpose of this hearing
was to determine whether Jones should be discharged or com-
mitment should issue. The court’s order made after such hearing
recites that the court heard evidence “including report and testi-
mony of R. G. Brown III, the Chancellor appointed by the court,
to the effect that the house in question had not been completed
according to ordinary good construction practice, as required by
the original judgment, until Respondent completed the installa-
tion of an attic fan and a central heating unit, properly connected
to the duct system which had been installed, and the court further
having found that Respondent had not delivered for the benefit
of the minor children the lot and residence described in the
property agreement and judgment until the proper Trustees had
been delivered the title to such property free and clear of the
existing Mechanic’s and Materialman’s Lien thereon held by the
mortgagee builder or its assigns.”

The order further recites that

«* * * said Thomas Wilburn Jones, Respondent, continues
in contempt of this Court as heretofore adjudged and will not
be purged to such contempt until he has complied with the
following

“1. Deliver a Deed of Conveyance to the Trustee for the
minor children TOMMIE LYNN, MELINDA, TENNA

51

MARIE and JENNIFER JONES, to the following described
property:

“A lot or parcel of and located in the A. Moorman Survey,
Panola County, Texas, and being further described as the
North 110 feet of Lot 14, Block 94-A, Woodcrest Addition to
the City of Carthage, as per plat ‘recorded in the Plat Records,
Panola County, Texas, free and clear of all incumbrance, save
and except balance now due on that certain first lien in favor
of Petitioner in the original amount of $6,000.00, said lien
being to secure future property settlement payments.

“2, Install an 80,000 B.T.U. Heating System in said above
described residence.

“3. Install a 42 inch attic fan in said above described
« residence.

“It is further ORDERED that the commitment of this
Defendant will be further suspended until March 16, 1962,
at 10 A.M., and the Court directs both Petitioner and Respond-

. ent to be present at that time so that the Court may determine
whether or not the Defendant is discharged from this contempt
or whether or not commitment will issue.”

Pursuant to the February 20, 1962 order, the court on March
16, 1962, held another hearing to determine whether or not
Jones had complied with the conditions of the February 20
order. At the close of the hearing the court entered its final order
in which it is recited that “* * * by order on the 20th day of
February, 1962, the Court found that the Respondent, Thomas
Wilburn Jones, remained in contempt of this Court for the failure
to comply with the Judgment of this Court in the following re-
spects, to-wit:

“1, That the Respondent, Thomas Wilburn Jones, had
not completed, according to good, ordinary construction prac-
tices, the dwelling house as provided for in the original prop-
erty settlement which was incorporated and made a part of
the final judgment in this cause, in that he had not completed
the installation of an attic fan and a central heating unit,
properly connected to the duct system which had been installed.

“2. That the Respondent had not delivered a Deed of

Conveyance to the Trustees for the minor children free and

: Clear of incumbrance as provided for in the aforementioned
judgment; * * *.”

eS 519

The order of March 16, 1962, further recites that on that
date evidence was again heard by the court on the question of
whether Jones had “purged himself of contempt by complying
(with the order of this Court rendered on the 20th day of Febru-
ary, 1962”. The court found that Jones had not complied with
the February 20 order.

Based upon these findings, the court ordered, adjudged and
decreed that “* * * the said Thomas Wilburn Jones is guilty
of contempt of this Court, and it is hereby made final and abso-
lute, that the said Thomas Wilburn Jones is hereby sentenced to
72 hours in the county jail of Panola County, Texas, and there-
after until such time that he has complied with the following:

“1. Completed the dwelling herein referred to in a good
and workmanlike manner by installing an 80,000 B.T.U. heat-
ing system, and a 42 inch attic fan in said dwelling.

“2. Deliver a Deed of Conveyance to the Trustees for
the minor children TOMMIE LYNN, MELINDA, TENNA
MARIE and JENNIFER JONES, to the following described
property:

“A lot or parcel of land located in the A. Moorman Sur-
vey, Panola County, Texas, and being further described as
the North 110 feet of Lot 14, Block 94-A, Woodcrest Addition
to the City of Carthage, as per plat recorded in the Plat
Records, Panola County, Texas, less 25 feet previously sold
James Marshal,

free and clear of all incumbrance, save and except balance now
due on that certain first lien in favor of Petitioner in the orig-
inal amount of $6,000.00, said lien being to secure future prop-
erty settlement payments, all as is provided for in the property
settlement agreement and made a part of the final judgment of
this cause; * * *.”

Although the court did not, by either the judgment of Febru-
ary 20, 1962, or the judgment of March 16, 1962, expressly find
that Jones had purged himself of contempt by paying to Mrs.
Jones the sum of $130.00 and paying to Mrs. Jones the auto-
mobile insurance referred to in the original contempt order
dated December 19, 1961, we are of the opinion and so hold
that, regardless of whether the trial court had jurisdiction to
make the order, the court, by its judgments of February 20, 1962,
and March 16, 1962, in legal effect, found that Jones had purged

50

himself of contempt in so far as these particular items were
concerned.

This leaves for determination the question of whether the
court had jurisdiction to make and enter its final judgment of
contempt in this case. We have concluded that the contempt
judgment is void, and, therefore, is subject to collateral attack.
See Ex Parte La Rocca, supra.

i Relator takes the position that the contempt orders of the
District Court of Panola County, dated December 19, 1961,
February 20, 1962, and the order of commitment dated March
16, 1962, are void for the reason that the contractual provisions
contained in the September 14, 1961, divorce decree cannot be
enforced by contempt proceedings.

Relator and Respondent, the parties to the original divorce
decree, entered into the property settlement agreement and the
court approved the agreement and made the same a part of the
divorce decree by reference. The settlement agreement was filed
for record in the office of the County Clerk of Panola County,
Texas, on September 14, 1961, and recorded in the deed records
of the county.

HM sUpon the face of the judgment, it appears that the pro-
visions relating to the agreement to construct the residence and
convey the property to Trustees for the benefit of the minor
children are based entirely upon the terms of the settlement
agreement between the parties. This agreed judgment must be
interpreted as if it were a contract between the parties and the
interpretation thereof is governed by the laws relating to con-
tracts, rather than laws relating to judgments. See Plumly v.
Plumly, Texas Civ. App., 210 S.W. 2d 177, no wr. hist.; Turman
v. Turman, 123 Texas 1, 64 S.W. 2d 187; Tyner v. City of Port
Arthur, 115 Texas 310, 280 S.W. 523; Edwards v. Gifford, 137
Texas 559, 155 S.W. 2d 786. It is well settled that whether the
trial court has the power and authority to enforce a decree by
contempt proceedings depends upon the nature of the decree.
It is only when the nature of the decree is such as is authorized
by statute that such decree can be enforced by contempt pro-
ceedings. Under Article 4639a, Sec. 1,2 Vernon’s Annotated Civil

2. “Section 1. Hach petition for divorce shall set out the name, age, sex and
residence of each child under eighteen (18) years of age born of the marriage
sought to be dissolved, if any such child or children there be; and if there be no
such child or children, then the petition shall so state. No court having jurisdic-
tion of suits for divorce shall hear and determine any such suit for divorce

es B21

Statutes, the court is given the power and authority to enforce its
decree by a contempt proceeding, Mobley v. Mobley, Texas Civ.
App., 221 S.W. 2d 565, no wr. hist., provided the decree is of
such nature as is authorized by the statute. However, no part
of the agreed settlement decree in this case is derived from the
statute or controlled by the provisions thereof. We do not have
a situation such as was presented in the case of Mobley v. Mob-
ley, supra. In that case the trial judge treated the matter of
child support and the settlement of community property rights
as separate matters. The Court of Civil Appeals, in passing upon
the question presented in the Mobley case, said that the decree
reflected that the provisions relating to child support were based
upon the terms of Article 4639a, supra, and that under the pro-
visions of the statute such support provisions could be enforced
by contempt proceedings and were subject to modification under
the express terms of the statute. However, the Mobley case
clearly announces the principle that this rule has no application
in a case such as we have here where the contractual provisions,
even though made a part of the decree, do not fall within the
statutory orbit. The contractual provisions in the settlement de-
cree or agreed judgment are neither subject to modification nor
can they be enforced by contempt proceedings.

It follows that the District Court of Panola County, Texas,
was without jurisdiction to enter the contempt order and all
proceedings herein are void. Relator, Jones, is discharged from
custody and he and his sureties on the bond furnished for his
release pending our decision are released from further liability.

Opinion delivered June 18, 1963.

unless such information is set out in such petition or in each cause of action
for divorce. Upon the trial of any such cause, and in the event a divorce is
granted by the court, if there are such minor children, it shall be the duty of
such trial court to inquire into the surroundings and circumstances of each such
child or children, and such court shall have full power and authority to inquire
into and ascertain the fimaneial circumstances of the parents of such child or
children, and of their ability to contribute to the support of same, and such court
shall make such orders regarding the custody and support of each such child
or children, as is for the best interest of same; and said court may by judgment,
order either parent to make periodical payments for the benefit of such child
or children, until same have reached the age of eighteen (18) years, or, said court
may enter a judgment in a fixed amount for the support of such child or children,
and such court shall have full power and authority to enforce said judgments by
civil contempt proceedings after ten (10) days notice to such parent of his or
her failure or refusal to carry out the terms thereof, and for the purpose of
ascertaining the ability of the parents of such child or children to contribute to
the support of same, they may be compelled to testify fully in regard thereto,
under penalty of contempt of court, as in other cases. Said court shall have power
and authority to alter or change such judgments, or suspend the samé, as the
facts and circumstances and justice may require, upon notice to such parent as
above provided for, or with his or her consent.” As amended Acts 1953, 58rd
Leg: p. 439, ch. 127, Section 1.

522 |

TARRANT COUNTY WATER CONTROL AND IMPROVEMENT
District NUMBER ONE, Petitioner
v.
WILL WILSON, ATTORNEY GENERAL OF TEXAS, Respondent

No. A-8969. Decided June 13, 1962
358 S.W. 2d 868

Brown, Herman, Scott & Young, Fort Worth, McCall, Park-
hurst, Crowe, McCall & Horton, Dallas, for relator.

Howard Mays, Asst. Atty. Gen., Austin, for respondent.
ORIGINAL MANDAMUS PROCEEDING

CHIEF JUSTICE CALVERT delivered the opinion of the
Court.

Water District seeks in this proceeding to compel the Attor-
ney General to approve an issue of its bonds.

The Attorney General has declined to approve the issue on
the ground that issuance of the bonds and creation of the indebt-
edness evidenced thereby has not been authorized by vote of
the qualified property tax-paying voters of the district as re-
quired by Section 59 of Article 16 of the Constitution of the State
‘of Texas. Vernon’s Texas Constitution. A brief resume of the
facts is essential to an understanding of the Attorney General’s
position.

a 528

HI Water District, situated entirely within Tarrant County, was
created in 1924. On October 30, 1959, the district’s Board of
Directors ordered an election to determine whether the district
should be authorized to issue its bonds in the sum of $55,000,000.00
for the construction of facilities, and whether it should be au-
thorized to pledge revenues and levy and collect ad valorem taxes
on all taxable property in the district for the payment of the
bonds and interest thereon. The election was duly held on De-
cember 2, 1959, and the authority sought was granted. Under
the authority given, the district issued its bonds in the sum of
$6,000,000.00 on February 25, 1960. Those bonds were sold and
delivered to purchasers and are now outstanding.

In 1957 the Legislature enacted a statute authorizing Water
District to annex territory situated in Tarrant County and pro-
viding a procedure therefor. See Acts 1957, 55 Leg. Ch. 268,
p. 569. The Board of Directors is empowered to act on behalf
of the district. If the Board finds that annexation of certain
territory “would be to the interest of the territory and the
District”, it may request the Commissioners Court to annex
such territory on such conditions, if any, as the Board may
stipulate. The Act then provides for an annexation election to
be held in the territory to be annexed, with authority to submit
also at the election “a proposition for the assumption of its
[the annexed territory’s] part of the tax-supported bonds of the
District then outstanding and those theretofore voted but not yet
sold, and for the levy of an ad valorem tax on taxable property
in said territory along with the tax in the rest of the District for
the payment thereof.”

Following the prescribed statutory procedure, an election
was ordered and was held in the Village of Edgecliff on two
propositions, summarized as follows: (1) Whether the territory
constituting the Village of Edgecliff should be annexed to Tar-
rant County Water Control and Improvement District No. 1,
and (2) whether the annexed territory should assume its part
of the outstanding tax-supported bonds and of those theretofore
authorized by the voters of the District but not yet issued. There
was a favorable vote on both propositions. Thereafter the Board
of Directors of Water District directed issuance of its bonds
aggregating $13,500,000.00. It is this issue the Attorney Gen-
eral has declined to approve. As heretofore indicated, declina-
tion is rested solely on the ground that the issue has not been
authorized as required by Section 59, Article 16 of the Con-
stitution.

52

Section 59 of Article 16 is the conservation amendment to
the Constitution and was adopted in 1917. Paragraph (b) of
the Section authorizes the creation of conservation and reclama-
tion districts “as governmental agencies and bodies politic and
corporate”. Paragraph (c) provides:

“The Legislature shall authorize all such indebtedness as
may be necessary * * * and all such indebtedness may be
evidenced by bonds of such conservation and reclamation dis-
tricts, to be issued under such regulations as amy [may]
be prescribed by law * * *; provided the Legislature shall
not authorize the issuance of any bonds or provide for any
indebtedness against any reclamation district unless such
proposition shall first be submitted to the qualified property
tax-paying voters of such district and the proposition adopted.”

The position of the Attorney General is that under the
language of the proviso of paragraph (c) a district enlarged
by annexation may not issue bonds unless the issue is authorized
by a vote of the qualified property tax-paying voters of the
district as it is constituted at the time of issuance, and that the
Legislature is without power to circumvent the constitutional
requirement for a district-wide election by authorizing annexed
territory by election to assume “its part” of an issue authorized
by election before annexation. Thus, the only question presented
is whether because of the annexation a second district-wide elec-
tion is prerequisite to the validity of the bond issue. We think not.

The underlying reason for refusal by the Attorney General
to approve the bond issue is stated by him as follows:

“There is no way to determine whether the original elec-
tion held in the District on December 2, 1959, would have
carried, and we can not say, as a matter of law, that it would
have carried if the voters at that time had known that other
areas would later be annexed and participate in the ownership
and benefits of the project to be constructed by the issuance
of the bonds. Conceivably, through the procedure followed,
the original District could be doubled or tripled in size resulting
in the dilution of the rights of the tax-paying voters of the
original District. Under such procedure this particular group
of voters might be forced to stand by powerless to prevent the
bulk of the improvements being located at some distant place

. not even part of the original District.”

That reasoning seems to argue more against the wisdom of

a 525

permitting the district to annex territory without a favorable
vote of the qualified voters of the original district than against
validity of the bond issue. An answer to the argument is that
the annexation statute was in existence when the voters of the
original district authorized issuance of the bonds, and they are
presumed to have known that other territory might be added
without their approval by vote.

The only case cited by the Attorney General is Brown County
Water Improvement District No. 1 v. Austin Mill and Grain
Co., 1385 Texas 140, 188 S.W. 2d 523. In that case the district
directors sought to levy and collect a maintenance tax without
an authorizing election. The power to do so was denied by this
Court on the ground that such a tax would constitute a lien on
property in the district and would thus create an indebtedness
within the meaning of the proviso quoted above. The decision
does not rule the question in this case.

Water District cites no cases in point. Several cases from
other jurisdictions are cited for the proposition that constitu-
tional prohibition against school districts creating indebtedness
without an election does not prohibit reorganized or enlarged
school districts from assuming existing indebtedness without an
authorizing election. But that is not the problem here.

HH Our conclusion that an election in the enlarged district is not
prerequisite to the power to issue the bonds stems from recogni-
tion of the corporate character of the district. Indebtedness is
not created until bonds are issued and sold, Town of Freeport
v. Sellers, 144 Texas 389, 190 S.W. 2d 818; City of Austin v.
Valle, Texas Civ. App., 71 S.W. 414, writ refused, but the Board
of Directors of the corporate entity was empowered by the 1959
election to create indebtedness to the extent of $55,000,000.00
by the only voters then having a right to vote. The $13,500,000.00
issue will not create an indebtedness in excess of that sum. We
find nothing in the Constitutional provision which would au-
thorize us to say that the power once given is nullified by the
subsequent addition of property to, or inclusion of other voters
in, the district.

This disposes of the only objection to the bond issue raised
by the Attorney General and we assume he will approve the bond
issue in compliance with this opinion. If he should fail to do so,
writ of mandamus will issue as prayed.

Opinion delivered June 13, 1962.

or

C. H. LANGDEAU, RECEIVER, Petitioner
v.
BurkE INVESTMENT COMPANY, Respondent

No, A-8818. Decided June 20, 1962

C. H. LANGDEAU, RECEIVER, Petitioner
v.
HIGHLAND Hinus, INc., Respondent

No. A-8810. Decided June 20, 1962
C. H. LANGDEAU, RECEIVER, Petitioner
v.
E. J. BURKE, JR., Respondent

No. A-8812. Decided June 20, 1962
858 S.W. 2d 553

527

Cecil C. Rotsch, Horace Wimberly, Kerns B. Taylor, and
Harold G. Kennedy, Austin, for petitioner.

John Peace, San Antonio, for respondent.
MR. JUSTICE WALKER delivered the opinion of the Court.

HM The San Antonio Court of Civil Appeals has held that the
venue of an action in trespass to try title against the receiver of
an insurance company is governed by Exception 14 of Article
1995, Vernon’s Ann. Texas Civ. Stat., rather than by Section
A(f) of Article 21.28, V.A.T.S. Insurance Code 351 S.W. 2d
287. We have jurisdiction under Subdivision 2 of Article 1728,
because such holding is in conflict with the decision of the Austin
Court of Civil Appeals in Bennett v. Langdeau, 348 8.W. 2d 179.

It is well settled that Exception 142 is mandatory where
the privilege is properly claimed by any party to a suit which
falls within its terms. South Texas Development Co. v. Williams,
130 Texas 217, 107 S.W. 2d 378; Pena v. Sling, 185 Texas 200,
140 S.W. 2d 441, 128 A.L.R. 1223; Thomson v. Locke, 66 Texas
383, 1 S.W. 112. The purport of the words used by the Legisla-
ture in Section 4(f)* is quite different. It does not provide that

1. The provisions of Article 21.28 of the Insurance Code are cited by
section number, and those of Article 1995 by exception number. Other statutes
are referred to by the article number under which they appear in Vernon’s
Ann. Texas Civ. Stat.

2 “14, Lands—Suits for the recovery of lands or damages thereto, or to
remove incumbrances upon the title to land, or to quiet the title to land, or to
prevent or stay waste on lands, must be brought in the county in which the
land, or a part thereof, may lie.”

3. “(2) New Lawsuits. The court of competent jurisdiction of the county
in which the delinquency proceedings are pending under this Article shall have
venue to hear and determine all action or proceedings instituted after the
commencement of delinquency proceedings by or against the insurer or receiver.”

5: ee

the actions mentioned therein shall or must be brought in the
county where the receivership is pending. Venue to hear and
determine the proceedings is conferred upon the courts of that
county, but there is nothing to suggest that the lawmakers in-
tended for such courts to have exclusive venue of all suits by
or against the receiver. Exception 28a,‘ which contains language
of similar import, has been held to be permissive and not man-
datory. Mutual Fire & Automobile Ins. Co. v. Kirkham, Texas
Civ. App., 231 S.W. 2d 459 (no writ). As pointed out by the
court in that case, a declaration that “venue shall lie” in a certain
county is not equivalent to a command that the suit “must be
brought” in that county. It merely signifies an intention to give
the plaintiff the legal right, if he chooses, to maintain such a
suit there. This, it seems to us, is the meaning which should be
attributed to the provisions of Section 4(f).

Petitioner contends that Section 4(f) is mandatory and ex-
clusive in effect even though couched in language which would
generally be regarded as permissive. He says that in the absence
of statutory authorization, leave of the appointing court must
be obtained before a receiver may sue or be sued in any other
court. Under the provisions of Article 2310, an ordinary receiver
may sue or be sued in any court having jurisdiction of the cause
of action without leave of the appointing court, and Article 2311
deals with the venue of actions against such receivers. Section
4(e) provides that these two statutes shall not apply to insolvent
dimsurance companies being administered under Article 21.28
of the Insurance Code. Petitioner argues that it is only by virtue
of Articles 2310 and 2311 that the general venue statute ever
applied to receivers. Since they have no efficacy in the present
case and consent of the appointing court has not been obtained,
petitioner reasons that the action cannot properly be main-
tained in Bexar County, that Exception 14 has no application,
and that venue is necessarily controlled by Section 4(f). We
do not agree.

The necessity for obtaining leave of the appointing court
before maintaining an action in another court and the proper

4, “28a. Fraternal benefit societies and statewide mutual assessment com~
panies—In all actions brought against Fraternal Benefit Societies and/or
Statewide Mutual Assessment Companies, regardless of the plan upon which
they operate and whether incorporated or not, growing out of or based upon
any alleged right or claim or loss or proceeds due, arising from or predicated
upon any policy or contract issued or made by such Fraternal Benefit Society
and/or Statewide Mutual Assessment Companies, venue shall lie in the county
where the policyholder or beneficiary instituting such suit resides or in the
county of the principal office of such association or where such cause of action
arose.”

Se

court in which to institute the suit under our statutes relating
to venue are separate problems which are dealt with separately
by Articles 2310 and 2811. The absence of express statutory
authority for the prosecution of suits by or against receivers
of insurance companies without the consent of the receivership
court does not indicate that Section 4(f) is intended to be ex-
clusive. It does not give a plaintiff the freedom of choice al-
lowed by Article 2311, but we think the Legislature has simply
laid down a different permissive venue rule for actions involving
an insurance company receiver.

i There is no conflict between the mandatory provisions of
Exception 14 and the permissive terms of Section 4(f), and
Section 16° does not require that the former yield to the latter
in a case like the present. Petitioner also directs our attention to
Exception 30.6 While that subdivision is expressed in mandatory
terms, it does not convert a merely permissive venue provision,
wherever it may be found, into a mandatory prescription. Me-
Donald, Texas Civil Practice, Vol. 1, Sec. 4.87, p. 420. A per-
missive statute applicable to actions of a particular kind must
always yield to a mandatory provision of Article 1995. See
Mitchell v. Porter, Texas Civ. App., 194 S.W. 981 (reversed on
other grounds, Com. App., 223 S.W. 197). We agree with the
Court of Civil Appeals that Exception 14 governs the venue of
an action which falls within its terms even though the suit is
brought by or against the receiver of an insurance company.

By his fourth point of error, petitioner says that even if
Exception 14 is applicable to actions against an insurance com-
pany receiver, his pleas of privilege should have been sustained
because the present suits are mere subterfuges. An additional
statement is necessary. On June 17, 1960, petitioner instituted
suit against respondents and others in the 126th District Court
of Travis County, seeking to set aside certain releases, notes,
deeds and deeds of trust affecting the title to two tracts of land
in Bexar County and to foreclose a deed of trust lien thereon.
Respondents filed pleas of privilege which were overruled by
the trial court. It was this ruling which was appealed to and

5. “Section 16. Conflicts of Law. In the event of conflict between the pro-
visions of this Article and the provisions of any existing law, the provisions of
this Article shall prevail, and all laws, or parts of law, in conflict with the
provisions of this Article, are hereby repealed to the extent of such conflict.”

6. “80. Special Venue—Whenever in any law authorizing or regulating
any particular character of action, the venue is expressly prescribed, the suit
shall be commenced in the county to which jurisdiction may be so expressly
given.”

30

affirmed by the Austin Court of Civil Appeals in Bennett v.
Langdeau, supra.

About three months after such action was instituted in Travis
County, respondents as plaintiffs filed the present suits in Bexar
County. Each petition contains the formal allegations required
for an action of trespass to try title, and prays that the plaintiff
have judgment for title and possession of part of the land in-
volved in the Travis County suit, for the removal of encumbrances
therefrom and for the quieting of the plaintiff’s title thereto.
Petitioner filed his pleas of privilege in the Bexar County suits,
and the same were duly controverted.

Petitioner answered the controverting affidavits, alleging
that the present suits are not good faith actions to recover or
remove encumbrances from the title to land, but are mere sub-
terfuges used in an effort to confer upon the District Court of
Bexar County jurisdiction and venue over matters already before
and under the jurisdiction of the 126th District Court of Travis
County. Pleas in abatement based on the pendency of the prior
action in Travis County had previously been filed.

II At the hearing on the pleas of privilege petitioner adduced
evidence tending to show that the three suits were instituted in
Bexar County for the purpose of litigating there the issues in-
volved in the Travis County suit. That does not make the suits
fraudulent for venue purposes but is a matter which must be
reached by the pleas in abatement. If respondents are actually
seeking to recover or clear the title to Bexar County land, venue
under Exception 14 is not defeated by establishing that their
suits were brought in an effort to litigate matters over which
the court of another county had already acquired jurisdiction.
There is nothing in the record to support the conclusion that
respondents were guilty of any bad faith in filing trespass to
try title suits rather than some other form of action. Venue
under Exception 14 is determined by the location of the land
and the nature of the relief sought, and it does not appear that
the allegations of the petitions were fraudulently made to take
advantage of a venue exception which would not be applicable
if the true character of the suit were disclosed. We hold that the
trial court did not err in overruling petitioner’s plea of privilege.

The judgments of the Court of Civil Appeals are affirmed.

538i

TEXAS AND NEW ORLEANS RAILROAD COMPANY, Petitioners
v.
JAS. R. ALEXANDER ET AL, Respondents

No, A-8717. Decided June 20, 1962
358 S.W. 2d 584

Keith, Mehaffy, McNichols & Weber, Beaumont, for petitioner.

Bill J. Sanders and Carl Waldman, Don Sanders and D. F.
Sanders, Beaumont, for respondents.

JUSTICE CULVER delivered the opinion of the Court.

This suit was instituted by James R. Alexander, Tommy
Pasley, Joseph Palique and Charles Worthy against The Texas
and New Orleans Railroad Company to recover damages for
personal injuries alleged to have been sustained by them as a
result of the automobile in which they were riding being driven
over and upon the defendant’s railroad tracks at a point where
there was no crossing and where the rails were exposed.

One of them, Charles Worthy, on his motion, was granted a
non-suit. At the conclusion of plaintiff’s testimony the court in-
structed a verdict in favor of the defendant, Railroad Company.

5

The Court of Civil Appeals has reversed and remanded, holding
“that the evidence raised an issue to go to the jury as to whether
appellee was negligent in failing to place a warning sign at the
intersection of Franklin Street and the railroad tracks to warn
oncoming traffic that the street did not continue straight across
the tracks in a southerly direction.” We are not in accord with
that decision.

These respondents met in Beaumont, Texas, one evening and
decided to proceed to Lake Charles, Louisiana. On arrival there
they drove about the town, stopping at various places for food,
drink and entertainment until about 4 o’clock the following morn-
ing. At that time they were driving south on Franklin, a paved
street, which swerved slightly to the east before it reached the
railroad right-of-way and the tracks. The driver of the automo-
bile, proceeding at a rate of 80 to 85 miles per hour, failed to
take note of this fact and drove directly forward upon the ex-
posed rails. A railroad crossbuck warning sign was in place
on the railroad right-of-way variously estimated at some 25 to
40 feet to the right of the roadbed of Franklin Street. An expert
witness, a safety engineer, testified that the crossbuck sign was
located 28 feet west of the Franklin Street crossing. He also
testified that from the point where Franklin Street began to
slant to the east, the distance to the nearest exposed rail, was
85 feet. There was a gravel street running east and west and
parallel with the railroad right-of-way which intersected Frank-
lin Street.

The Court of Civil Appeals was of the opinion that the posi-
tion of this crossbuck sign tended to create an illusion to the
automobile driver that the street continued directly across the
tracks. The court points out, however, that this fact was not
pleaded as a ground of negligence and therefore is one on which
the respondents could not rely. Nevertheless the court holds that
since the circumstances did create that illusion, whether the
railroad company was negligent in failing to place a warning
sign at the intersection of Franklin Street and the railroad tracks
to warn that the street did not continue straight across the
tracks, became a question of fact.

It is argued that the railroad company is obligated to main-
tain that part of a street lying within its right-of-way in a
reasonably safe condition for the traveling public, and the com-
pany owes the duty to warn the public of any unsafe condition
of the crossing. With that principle of law we do not disagree,
but in the case here there was nothing unsafe about the crossing.

Ss

The change of direction in the street did not lie within the rail-
road right-of-way. The matter of laying out a street and determin-
ing its direction are matters within the sole control of the city.
Just what warning sign the railroad could place at the intersec-
tion of its right-of-way and Franklin Street we do not know
unless it would be another crossbuck sign and under the evidence
in this case it is difficult to see how that would have warned
the driver of this automobile that Franklin Street changed its
direction prior to reaching the railroad right-of-way. As we
understand the evidence in this case the negligence on the part
of the railroad, if any, lay in creating an illusion rather than its
failure to warn of the illusion. The principal case relied upon
by the respondents is that of Darby v. N. O. T. & M. R. Co.,
139 La. 213, 71 So. 490. In that case the railroad company had
made an excavation across the public road and graded down the
sides of the cut, but the approach to the crossing had not been
kept in repair. There was a depression about 12 or 15 feet from
the track apparently within the railroad right-of-way which went
partially or wholly across the approach and the roadway had been
so narrowed as to make the passage of vehicles unsafe. This case
does not stand for the proposition that the railroad company
must caution or warn the traveling public of a curve in the street
that lies outside of the railroad’s right-of-way or its control.

Moreover, in our opinion there is no evidence in this case
that the location of the crossbuck sign, located some 28 feet
west of the intersection of the railroad right-of-way and Frank-
lin Street, created any illusion on the part of the driver of this
automobile and its occupants that proximately caused this acci-
dent. The only testimony relating to any illusion created by the
location of the crossbuck sign is that of Alexander, the driver of
the automobile, in his deposition. He testified that he was driving
between 30 and 35 miles per hour with his headlights. turned on.
In response to the question if he saw the crossbuck sign as he
approached the railroad crossing he replied: “I saw it after I
van off the blacktop on the gravel, I saw it, and the way the
sign was situated, there was all indication the road goes straight
over the railroad track, but it didn’t.” The trial court sustained
an objection to all of this answer except to that portion which
was in response to the question, namely, “I saw it after I ran
off the blacktop on the gravel.” But regardless of the correctness
of the trial court’s action in this respect the answer is determina-
tive of the fact that the location of the crossbuck did not cause
Alexander to fail to follow and stay on Franklin Street as it
made the change in direction. He had left Franklin and was
headed for the exposed rails before he ever saw the crossbuck.

_

5

The Court of Civil Appeals quotes from the testimony of one
of the parties, Pasley, as to the location of the crossbuck sign
west of the crossing and its being lined up with telephone poles
and structures along Franklin Street which caused him to think
the street extended across the railroad tracks. But all this testi-
mony relates to observations that this witness made in the day-
time when he returned to take pictures of the scene. He testified
that he did not see the crossbuck at any time prior to the accident
and he himself was not aware that the automobile had left the
traveled portion of Franklin Street until it came in contact
with the exposed rails.

There being no evidence that any illusion caused the respond-
ents to fail to proceed along the street on which they were travel-
ing, there can be no basis for the holding that the evidence raised
an issue of fact as to the negligence of the railroad company in
failing to place some sign at the intersection of Franklin Street
and the railroad right-of-way to warn the driver of the change
in direction in the street. Under the evidence in this case we are
of the opinion that the trial court properly instructed a verdict
for the petitioner.

The judgment of the Court of Civil Appeals is therefore
reversed and that of the trial court is affirmed.

Opinion delivered June 20, 1962.
Dn

ST. PAUL FIRE & MARINE INSURANCE COMPANY, Petitioner
v.
J. T, MURPHREE, Respondent
No. A-8548. Delivered May 23, 1962

Rehearing Denied June 20, 1962
857 S.W. 2d 744

585

ASSOCIATE JUSTICES CULVER and GRIFFIN dissented.

Crenshaw, Dupree & Milam, Lubbock, Max Addison, Lubbock,
with firm, for petitioner.

Splawn & Maner, Lubbock, Tom H. Davis, Austin, for re-
spondent.

ASSOCIATE JUSTICE SMITH delivered the opinion of the
Court.

This is a Workmen’s Compensation case. Murphree’s peti-
tion alleged a general injury to his back and that such injury
occurred on April 30, 1959, while he was attempting to lift a
tractor engine head while employed by Meadow Implement
Company. Murphree pleaded that as a result of such injury he
was totally and permanently disabled. He further pleaded, in
the alternative, that the injury of April 30, 1959 aggravated a

56

previously existing physical condition “and that as a result of
said accident (April 30th) and reinjury of his prior existing
physical condition he is totally and permanently disabled from
doing manual labor all within the terms and provisions of the
Workmen’s Compensation Act of Texas.”

St. Paul pleaded a general denial and specifically pleaded
as a defense that Murphree sustained injuries to his body both
before and after the alleged April 30 accident and that “such
injuries, singly or collectively, constitute the sole cause of any
ineapacity he may have had after April 80, 1959, or alternatively,
after May 15, 1959, or alternatively, after September 1, 1959.”
The answer contained the further allegation that:

«ce ® ® defendant says that any incapacity plaintiff may
have had after April 30, 1959 was contributed to by injuries
sustained by plaintiff at times and places other than his em-
ployment with Meadow Implement Company, both before and
after April 30, 1959.”

The jury found that the combination of prior and subsequent
injuries was not the sole cause of Murphree’s incapacity. The
jury did find, however, that certain injuries were sustained by
Murphree before and after April 30, 1959, and that such injuries
contributed an aggregate of 80% to his incapacity, as follows:

An injury in 1951 contributed 25%
An injury on June 28, 1957 contributed 25%
An injury on July 15, 1959 contributed 25%,

and that an injury on September 1, 1959 contributed 5%.

The trial court sustained Murphree’s motion to disregard the
jury finding that the June 28, 1957 injury contributed 25% to
Murphree’s incapacity on the ground that this injury was general
and noncompensable. Judgment was thereafter entered for Mur-
phree for total and permanent disability less 55% contribution
by the two remaining prior injuries and the one subsequent in-
jury. The Court of Civil Appeals affirmed the judgment of the
trial court. 347 S.W. 2d 817.

St. Paul presents various points of error urging a reversal
of the judgment of the Court of Civil Appeals. St. Paul’s first
six points of error present matters which, if sustained, would re-
quire this Court to reverse the judgments of both the trial court
and the Court of Civil Appeals arid remand the cause to the trial

537

court for a new trial. These points are directed at the action
of the trial court in sustaining Murphree’s motion in limine, the
contention being that St. Paul was entitled to introduce evidence
concerning claims, settlements, and payments arising out of any
previous or subsequent injury sustained by Murphree.

St. Paul also contends that the ruling of the trial court on
Murphree’s motion in limine was broader than the motion itself
and that in addition to the prejudicial error committed in exclud-
ing evidence of settlements, etc., the ruling of the Court effectively
and prejudicially prevented St. Paul from introducing into evi-
dence the original petition and amended petition filed by Mur-
phree in his suit growing out of the injury alleged to have been
sustained in September, 1959.

St. Paul presents two contentions which, if sustained, would
require a reversal of both Courts’ judgments and a rendition of
judgment in favor of St. Paul. These points are: (1) that the
verdict and judgment cannot stand in view of the jury finding
that the subsequent injury of September, 1959, contributed 5%
to the total and permanent incapacity found by the jury to have
been sustained by Murphree from the prior injury of April
80, 1959; and (2) that there is no evidence to support the find-
ings of the jury upon which the judgment was based.

Finally, St. Paul contends that it was error for the trial court
to disregard the jury finding of the contribution of 25% by
the prior noncompensable general injury sustained by Murphree
on June 28, 1957. Should this Court overrule all other points,
but sustain this one, then it would naturally follow that the proper
judgment of this Court would be to reform and affirm the judg-
ment of the trial court in favor of Murphree.

We have concluded to overrule all points and affirm the judg-
ment of the Court of Civil Appeals for the reasons now to be
stated.

i The motion in limine, filed by Murphree and considered by
the Court, recited that under the plain provisions of Article
8306, Subdivision 12c,1 Vernon’s Annotated Civil Statutes, St.

1. “Sec. 12c. If an employee who has suffered a previous injury shall suffer
a subsequent injury which results in a condition of incapacity to which both
injuries or their effects have contributed, the association (‘Texas Employers’
Insurance Association) shall be liable because of such injury only for the com-
pensation to which the subsequent injury would have entitled the injured employee
hhad there been no previous injury; * * *.”

8

Paul would be “only entitled to show what incapacity any previ-
ous injury to the one at issue contributed to and is not entitled
to ask of the plaintiff or any other witness the dollar amounts
of any settlements of claims”.

The following colloquy between the district judge and counsel
shows that the Court in sustaining this motion went further
than the prayer contained in the motion in limine and ruled that
an offer to introduce the pleadings would be in violation of the
Court’s action in sustaining the motion in limine:

“THE COURT: As I told you, I will sustain his motion
requesting that any evidence of claims and settlements and
payments arising out of any previous or subsequent injuries
to the plaintiff will not be introduced in evidence before the
jury. Of course, previous and subsequent injuries may be plead
and proof made respecting them as to their effect and their
contribution to the plaintiff’s incapacity to work, but as to any
claims or payments that were made, that should not be brought
before them, according to this case that was submitted by
counsel for the plaintiff. Now, then, you may dictate your
exceptions, Mr. Addison.

“MR. ADDISON: Yes, sir, your Honor. I want to be clear.
The Court has ruled that I am not permitted, for example, to
introduce a claim filed by the plaintiff before the Industrial
Accident Board; I would be limited to showing, if I can, that
he had an injury at a certain time, and that he was off work
for a certain time, but further than that I am not supposed
to go, is that the ruling?

“THE COURT: That is the ruling, yes, sir.”

This ruling effectively prevented counsel for St. Paul from
even attempting to lay a predicate for impeachment. In develop-
ing the bill of exceptions, however, no attempt was made to lay
a predicate for impeachment. St. Paul seems to have been pri-
marily interested at that time in the amounts paid to respondent
in settlement of his other claims. Murphree was also asked whether
certain claims had been filed with the Industrial Accident Board,
and whether he had filed through his attorneys the petition and
trial amendment in the suit growing out of the September 8,
1959 injury. Copies of such claims and pleadings were made part
of the bill, but Murphree was not interrogated with reference
to the allegations contained therein.

a 589

I Pleadings in other actions which contain statements incon-
sistent with the party’s present position are receivable as ad-
missions. See McCormick and Ray, Texas Law of Evidence,
2nd ed. 1956, Vol. 2, Sec. 1145, p. 84. However, it does not
necessarily follow that the trial court committed reversible error
in excluding the pleadings filed in the suit involving the Septem-
ber, 1959 injury. The essence of St. Paul’s contention is that
evidence of the claims, settlements and payments arising out of
the previous and subsequent injuries to Murphree, as distinguished
from evidence as to the injuries themselves, was admissible and
would have established that the previous and subsequent in-
juries were, in fact, to Murphree’s back, which was the injury
claimed in the instant suit, which evidence would have been per-
suasive to the jury in resolving the extent of Murphree’s back
injury attributable to the particular injury involved in the
present suit. This is also the purport of St. Paul’s position with
reference to the admissibility of Murphree’s pleadings in his suit
filed on February 3, 1960, for benefits growing out of the Sep-
tember 1, 1959 injury, the suit having been filed prior to the
instant suit and settled before the trial of the case at bar.

St. Paul argues that it did not offer the pleadings for the
purpose of convincing the jury that the September, 1959 injury
was the sole and only cause of Murphree’s incapacity, but “what
Petitioner was trying to do was to show the jury that Respondent
had previously claimed that the incapacity he had after Septem-
ber, 1959 was caused by that injury, and that he had previously
claimed that he had a very good average wage for a year prior
to September, 1959. What is important relative to the petition
in Cause No. 5184 is that, had the jury known of Respondent’s
claims made for the September injury, the jury would have found
that the September injury contributed a great deal more to the
incapacity of Respondent than the mere 5% it did find.”

St. Paul was permitted to and did interrogate respondent re-
garding his testimony in the suit growing out of the September
injury. He admitted having stated on the other trial: (1) that
some of the symptoms which followed the September injury
existed for a short time but not for long after the April injury;
(2) that his back could have been weaker after the April injury,
but he was able to and did work; (8) that he did not know
whether or not it was weaker; and (4) that his back quit hurting
when he went to work for J. B. Knight, who was his employer
at the time of the September injury. Murphree’s wife testified
that after he went back to work following the April injury
he had no trouble with his back until the September accident;

520

that all she could tell was that he would say his back was weak-
ened. With all of this testimony before it, the jury found, in
effect, that 20% of Murphree’s incapacity was caused by the
April injury and 5% by the September injury. Under these
circumstances, we cannot agree that the jury answers would have
probably been any different if St. Paul had been allowed to read
to the court and the jury the unverified allegations made by
Murphree’s attorneys in the suit based on the September injury.
The error is, therefore, harmless and under Rule 503, Texas
Rules of Civil Procedure, a reversal of the trial court’s judgment
is not authorized. That Rule specifically provides that no judg-
ment shall be reversed on appeal and a new trial ordered in any
cause on the ground that an error of law has been committed
by the trial court in the course of the trial, unless the appellate
court shall be of the opinion that the error complained of amount-
ed to such a denial of the rights of the petitioner as was reason-
ably calculated to cause and probably did cause the rendition
of an improper judgment in the case, or was such as probably
prevented the petitioner from making a proper presentation of
his case to the appellate courts.

I The action of the court in excluding evidence of the sums of
money obtained by Murphree in settlement of other claims was
proper. The amount paid in settlement of a compensation claim
cannot amount to proof of the extent of the injury. The amount
agreed upon in settlement, therefore, can have no bearing on the
actual extent of the injury. See Great American Indemnity Co.
v. Blakey, Texas Civ. App., 107 S.W. 2d 1002, wr. dism. 1937;
Goodwin v. Texas Employers’ Ins. Assn., Texas Civ. App., 73
S.W. 2d 660, wr. dism. 1934; Caffey v. Aetna Casualty & Surety
Company, Texas Civ. App., 219 S.W. 2d 530, wr. ref. n.r.e. 1949.

I The injury directly involved in this suit is alleged to have
been sustained on April 30, 1959. Prior injuries and one sub-
sequent injury are also involved. Evidence showing the nature
and extent of these injuries was introduced before the jury.
Such evidence was admissible, inasmuch as it is the extent of the
prior and subsequent injuries that reduces the insurer’s liability,
not what the employee was paid in settlement of his claim grow-
ing out of the injury. The settlement agreements and the sums
paid in settlement of other suits or claims could not serve the
jury or the trier of the facts materially in determining the extent
of the prior and subsequent injuries contributing to Murphree’s
disability. See Myers v. Thomas, 143 Texas 502, 186 S.W. 2d
811 (1945) ; Sullivan v. Missouri, K. & T. Railroad Company of
Texas, 110 Texas 360, 220 S.W. 769; Ricks v. Smith, Texas Civ.

eee] BAL

App., 204 S.W. 2d 12, wr. ref. n.r.e. (1947) ; Brinkley v. Liberty
Mutual Insurance Company, Texas Civ. App., 331 S.W. 2d 423,
no wr. hist.; City of Wichita Falls v. Chandler, Texas Civ. App.,
848 S.W. 2d 48, wr. ref. n.r.e.

St. Paul’s seventh and eighth points are presented and argued
together. These points present the contention that (1) the trial
court erred in entering judgment on the verdict in this case
because there is no evidence that the injury of April 80, 1959
caused total permanent disability, and (2) that if the Court
should hold that there is some evidence in the record to support
these jury findings, then and in that event there is irreconcilable
conflict with the jury findings in answer to Special Issues 27
and 28 that the injury sustained by Murphree in September,
1959 contributed to the April 30, 1959 incapacity to the extent
of 5%.

HL St. Paul admits that it did not assign in its motion for new
trial any error as to conflict. There was no assignment of error
contained in the motion for new trial sufficient to bring this
question to the trial court’s attention. However, St. Paul contends
that if in fact there is a fatal conflict, then such conflict cannot
be waived, is fundamental and may be considered by the Court,
citing Little Rock Furniture Manufacturing Co. v. Dunn, 148
Texas 197, 222 S.W. 2d 985. We cannot agree with this conten-
tion. The entry of judgment by a trial court on conflicting find-
ings does not constitute fundamental error. See Ramsey v. Dun-
lop, 146 Texas 196, 205 S.W. 2d 979; McCauley v. Consolidated
Underwriters, 157 Texas 475, 304 S.W. 2d 265.

We turn now to the contention that there is no evidence sup-
porting the findings of the jury that Murphree sustained total
and permanent disability as the result of the April, 1959 injury.
We overrule this contention. The lay and medical testimony in
this case support the findings of total and permanent disability.
St. Paul argues that when the finding of the jury that the Sep-
tember, 1959 injury contributed 5% to Murphree’s incapacity
is considered, it is evident that there is no evidence to support
the findings that Murphree sustained total and permanent dis-
ability as the result of the April, 1959 injury. This particular
argument has nothing to do with the question of conflict and
bears solely on the no evidence question. In view of the fact that
this case was pleaded, tried, and submitted to the jury on the
theory that the legal effect of a subsequent injury (September,
1959) is no different than that of a prior injury, and the fact
that no contention is made that St. Paul is legally responsible

54

only for the incapacity that Murphree would have sustained
absent the subsequent injury, St. Paul cannot be sustained in its
contention that the jury findings that Murphree was totally and
permanently disabled by the April injury are not supported by
the evidence merely because the September, 1959 injury con-
tributed 5% to Murphree’s incapacity.

i The jury found that following the April, 1959 injury, Mur-
phree sustained some total incapacity as a result of this injury.
It further found that at the time of the trial his total incapacity
was permanent. For Murphree to recover for total and permanent
incapacity, it was not necessary for the jury to find that the
April, 1959 injury was the sole cause of his incapacity. See Texas
Employers’ Insurance Association v. Upshaw, Texas Civ. App.,
329 S.W. 2d 144, wr. ref., n.r.e. (1959); Texas Indemnity In-
surance Company v. Staggs, 184 Texas 318, 184 S.W. 2d 1026
(1940) ; Texas Employers’ Insurance Association v. Ham, Texas
Civ. App., 383 S.W. 2d 488, wr. ref, nr.e. (1960); Texas In-
demnity Insurance Company v. Dean, Texas Civ. App., 77 S.W.
2d 748, wr. dism. (1935).

This leads to our consideration of the remaining point pre-
sented in the petition for writ of error. The question presented
is: Did the trial court err in disregarding the answers of the
jury to Special Issues 21 and 22 that the June, 1957 noncompensa-
ble injury contributed 25% to Murphree’s incapacity?

We hold that the word injury, as used in Section 12c, Article
8306, Vernon’s Annotated Civil Statutes, as related to a general
injury, means compensative injury. Unless the prior general
injury is one for which compensation is provided under the terms
of the statute, the insurer’s or carrier’s liability cannot be re-
duced by reason thereof. See Texas Employers’ Insurance Asso-
ciation v. Clark, Texas Civ. App., 23 S.W. 2d 405, wr. dism.
(1930) ; Texas Employers’ Insurance Association v. Upshaw,
supra; Texas General Indemnity Company v. Bledsoe, Texas
Civ. App., 844 S.W. 2d 527, wr. ref. n.r.e. (1961); Southern
Underwriters v. Grimes, Texas Civ. App., 146 S.W. 2d 1058,
wr. dism. judg. corr. (1941).

The judgments of both the trial court and the Court of Civil
Appeals are affirmed.

JUSTICE CULVER dissenting.

The Court in this case has held that the trial court erred

| 54

in refusing to permit the compensation carrier to offer in evi-
dence the claimant’s petition filed on account of the subsequent
September injury, but has also held that the error was harmless
in the light of the fact that the claimant was questioned as to
the nature and extent of the injury he received in September.
The jury found that five per cent of his total and permanent
disability was a result of the subsequent injury.

The injury in this case was alleged to have occurred on
April 30. Both petitions were filed by the same law firm. The
allegations are so similar that one might have served as a model
for the other. With respect to the April injury which formed
the basis of this case, the allegations were as follows:

“« * * plaintiff was suddenly, accidentally and unexpectedly
injured in that while he was pulling a tractor engine head
and while in an awkward and strained position felt a tearing
sensation in back and low back and as a result of said acci-
dent, plaintiff sustained and suffered the following injuries:
Severe damage to plaintiff’s back and low back with severe
pain in both legs, with areas of anesthesia on the left leg on
the anteri-lateral aspect from the hip to the knee, and postero-
lateral from the knee to the ankle, narrowing of the interspace
between the 4th and 5th lumbar vertebrae, displacement of
the 5th lumbar segment to the right on the 4th; a cupping of
the body of the 5th lumbar segment at its inferior plate, osteo-
phytic spurring on the body of the 5th lumbar vertebrae, ex-
treme nervous condition, together with rupture and contusion
of all the nerves, ligaments, tendons, blood vessels, soft tissues
and blood vessels and muscles in the plaintiff’s back and low
back all of which have rendered the plaintiff totally and perma-
nently disabled under the provisions of the Workmen’s Com-
pensation Act of Texas.”

The September petition alleged that:

« & * plaintiff was suddenly, accidentally and unexpect-
edly injured in that while pulling a motor out of a combine
and while in an awkward and strained position suddenly felt
a burning and tearing sensation in his back and low back and
as a result of said accident, plaintiff sustained and suffered
the following injuries: severe damage to plaintiff’s back and
low back, with such severity that a spinal fusion operation
was performed on plaintiff’s back, tenderness over the scar
where the fusion operation was performed, inability to stoop
over or bend, constant and severe pain in his back and left

5 ee

leg, areas of anesthesia on the left leg, sclerosis of the lower
lumbar spine, a narrowing of the interspace between the 4th
and 5th lumbar and the 5th lumbar and the 1st segment, to-
gether with a rupture and contusion of all the nerves, tendons,
muscles, ligaments, soft tissue and blood vessels in plaintiff’s
back and low back, and all of which have rendered him totally
and permanently disabled from performing manual labor under
the provisions of the Workmen’s Compensation Act of the State
of Texas.”

Both petitions in the alternative alleged that only if the
plaintiff was mistaken then the accident reinjured and aggra-
vated a previous physical condition and as a result he was totally
and permanently disabled. Incidentally the September case was
settled before this one came on for trial.

The September petition further alleged: “That by reason of
the heretofore mentioned accident and resulting injuries which
were sustained by him in the scope of his employment with J. B.
Knight Company, he has been rendered and is totally and perma-
nently disabled, with reference to performing labor, and that
said disability was caused by reason of the said accident and
resulting injuries heretofore described.”

Although Murphree was cross-examined as to the September
injury, nowhere was there shown nor permitted to be shown to
the jury all of the bodily damage and impairment detailed in the
September petition, the similarity of those claims to the ones
made in the April petition and the repeated assertion of total
and permanent disability as a result of the September accident
and the consequential injuries. In the light of all of these claims
the jury might well believe and probably would have found that
at least the September injury contributed more than five per
cent to the total and permanent disability which Murphree may
have had at the time of the trial, and thus determine he was
not totally and permanently disabled as a result of the April
injury. There was no reason for the jury to believe that the Sep-
tember allegations were fictitious or not made in good faith.
They constituted in effect a denial by Murphree that he had
been totally and permanently disabled by reason of the April
injury. The jury might also with reason have thought it rather
incredible that the claimant would have asserted that he had
been totally and permanently disabled twice within a period of
four months. I think it reasonable to presume that the jury
would have attached considerable weight to the allegations made

545

in the September petition. The ruling of the trial court should
not be brushed aside as harmless error.

The jury found that Murphree as a result of the injuries
received on April 30, 1959, sustained total incapacity. That the
total incapacity began on April 830 and was permanent. The jury
also found that the injuries received by Murphree on September
1, 1959, contributed to plaintiff’s incapacity to the extent of five
per cent. Obviously this constitutes a conflict. Both cannot be
true. If the September injury contributed in any degree to the
total and permanent incapacity then he was not permanently
incapacitated on April 80. However, neither party objected to
the submission of the issue relating to the September injury and
I do not find in St. Paul’s motion for a new trial any support for
a complaint on this score.

I would reverse and remand the case for a new trial.
ASSOCIATE JUSTICE GRIFFIN joins in this dissent.
Opinion delivered May 28, 1962.
as
Mrs. ILA Maz KRUEGER, Petitioner

v.
Mrs. Exa WILLIAMS, Respondent

No, A-8806. Decided June 20, 1962
859 S.W. 2d 48

4

Abney, Hammett & Lynch, J. N. Hammett, Lampasas (This
firm appeared in Supreme Court only). Chas. K. Word, Meridian,
Cureton & Cureton, Meridian, for petitioners.

| BAT

Byron L. McClellan and Robert W. Brown, Gatesville, for re-
spondent.

ASSOCIATE JUSTICE CULVER delivered the opinion of
the Court.

In Hilley v. Hilley,t we expressly reserved for later decision
the validity vel non of the survivorship right provided for in the
case where bonds or certificates are purchased by the husband
with community funds and issued in his name and that of some
third person as co-owners. That question is here raised.

This case was tried upon an agreed statement of facts. Some
five years before his death W. T. Williams purchased an invest-
ment share account in the principal sum of $10,000.00 from a
savings and loan association. The certificate was issued in the
name of W. T. Williams and/or Mrs. Ila Mae Krueger who was
the daughter of Mr. Williams by a prior marriage. The certificate
is not in evidence, but the receipt card recites “W. T. Williams
and/or Ila Mae Krueger or payable to the survivor of either”.
Mr. Williams signed his name and that of Mrs. Krueger on the
card. Shortly after her father’s death Mrs. Krueger surrendered
the certificate to the savings and loan association and on her
demand the proceeds were paid to her. Later Mrs. Krueger as
executrix of her father’s will filed an inventory and appraise-
ment of the estate setting out the facts with reference to the
certificate and claiming the proceeds to be her individual prop-
erty and not an asset of the estate. Over the objections of the
surviving wife, Mrs. Exa Williams, the County Judge approved
the inventory and appraisement. From that order Mrs. Williams
took an appeal.

The district court decreed that the inventory should be cor-
rected by the addition of $5,000.00 to the assets of the community
estate, holding in effect that half of the proceeds of the certificate
belonged to Mrs. Krueger as a gift from her father and half to
the community. That court rejected the contention of Mrs. Krue-
ger that the terms of the certificate created in her the right
of survivorship, concluding that the parties failed to comply with
the provisions of Sec. 46 of the Probate Code in that the written
instrument was not signed by each of them. The Court of Civil
Appeals reversed and rendered judgment directing that the entire
proceeds of the certificate be inventoried as a community asset
of the estate. 851 S.W. 2d 932.

1, 161 Texas 569, 342 S.W. 2d 565.

5

Although the inventory of the estate filed in the probate court
is not conclusive of the title to the property therein listed or
omitted, it is prima facie evidence of that fact. White v. Shep-
perd, 16 Texas 168; Moore v. Wooten (Com. App.) 280 S.W.
742, (1926).

I We are of the opinion that the order of the probate court
in this respect was appealable. Section 28, Probate Code, pro-
vides in part as follows: “Any person who may consider himself
aggrieved by any decision, order, decree, or judgment of the court
shall have the right to appeal therefrom to the district court
of the county.” See also Moore v. Mertz, Texas Civ. App., 1905,
85 S.W. 312, no writ history; Dulaney v. Walsh, Texas Civ.
App., 90 Texas 329, 38 S.W. 748; Brown v. Fleming (Com.
App.) 1919, 212 S.W. 483.

The principal holding made by the Court of Civil Appeals
was that this transaction did not constitute a gift in praesenti
by Mr. Williams to Mrs. Krueger, and the court incidentally
observed that no attack was made in the trial court’s determina-
tion that the evidence failed to establish a joint tenancy and
survivorship contract. From an inspection of the briefs filed in
the Court of Civil Appeals it appears that Mrs. Krueger raised
that issue by counter point. While we agree that the transaction
did not constitute a present gift to Mrs. Krueger of either half
or all of the certificate proceeds nevertheless we are concerned
with Mrs. Krueger’s claim of a survivorship right to the entire
proceeds.

While some contention is made to the contrary by Mrs. Krue-
ger, we will assume that the funds used to purchase this certificate
belonged to the community estate of Mr. Williams and his sur-
viving wife since admittedly separate funds of Mr. Williams
and those belonging to the community estate had been commingled
over the years of that marriage in the joint bank account. The
check given to the association was drawn on this account.

II It is well settled in this state that in the absence of fraud
upon the wife the husband has the sole right of control and dis-
position of the community property as he sees fit. Martin v.
McAllister, 94 Texas 567, 63 S.W. 624, 56 L.R.A. 585; Volunteer
State Life Ins. Co. v. Hardin, 145 Texas 245, 197 S.W. 2d 105,
168 A.L.R. 337. There is no claim of fraud here except it is
asserted that this certificate purchase transaction constitutes con-
structive fraud upon the wife in depriving her of a portion of
the community estate to which she would be otherwise entitled.

See) 49

The evidence, in our opinion, fails to show fraud either actual
or constructive, but rather the contrary affirmatively appears.
At the time of his marriage to Mrs. Exa Williams, Mr. Williams
was possessed of substantial separate property. There was in
his bank account then something over $5,000.00. The account did
not fall below that figure during the period that intervened up
to the time of the purchase of the certificate when there was
$19,000.00 in the account. Some time after the purchase of the
certificate Mr. Williams sold certain of his separate real property
for a consideration in excess of $10,000.00 and deposited the
proceeds in the joint bank account. In his will he provided that
his wife should take the one-half of their community property
to which she was entitled under the law and in addition he de-
vised and bequeathed to her one-fourth of all the property that
he might own or be interested in at the time of his death. Accord-
ing to the inventory this one-fourth will amount to approxi-
mately $5,000.00. The three-fourths remaining he devised and
bequeathed to his daughter, Mrs. Krueger, and to the children
of a deceased child of the former marriage. No children were
born to Mr. Williams and Mrs. Exa Williams.

Hi Absent fraud it seems to be clear from the decisions relating
to this problem that the status of the funds used to purchase the
property, that is, whether it is community or separate, is im-
material and of no importance except in the husband and wife
situation as presented in Hilley. Therefore, since no fraud is
shown here the holdings in Chandler v. Kountze, Texas Civ. App.,
130 S.W. 2d 327, er. ref.; Edds v. Mitchell, 143 Texas 307, 184
S.W. 2d 828, 158 A.L.R. 470; Adams v. Jones, Texas Civ. App.,
258 S.W. 2d 401; Chamberlain v. Robinson, Texas Civ. App.,
805 S.W. 2d 817, er. ref.; Johnson v. Johnson, Texas Civ. App.,
806 S.W. 2d 780, er. ref., and McFarland v. Phillips, Texas Civ.
App., 258 S.W. 2d 958, n.r.e., have some application to this
survivorship problem.

In Chandler v. Kountze, where there was a conveyance of land
to Kountze and another “as joint tenants, with all the rights of
such tenants at common law, including the right of survivorship”,
the right of survivorship was upheld. The opinion in that case
cited with approval Holt v. Bayles, 85 Utah 364, 30 P. 2d 715,
718, wherein one party claimed the proceeds of a bank account
under an agreement with the deceased that the entire remainder
of such bank account should go to the survivor and the claim was
upheld as follows:

“Where there is a joint agreement executed by the parties

50 ee

which clearly declares the intention to create a joint interest
of each in the deposit or credit, the courts will sustain such
intention thus expressed.”

In Edds v. Mitchell at issue was the ownership of certain
United States Savings Bonds that were payable to Julia H. Rhode
and on her death to Retta B. Edds. The court adjudicated the
ownership of these bonds to be in the beneficiary without refer-
ence to the contention that this result would follow because of
the supremacy of the federal statute and U. 8. Treasury regula-
tions. The ownership in the beneficiary was predicated on the
rule that a third person for whose benefit a contract is made
whether he is a creditor or a donee has a right that he may
enforce against the promisor. In so holding the court adopted
the following language from Reynolds v. Danco, 134 NJ. Eq.
560, 36 A. 2d 420, 421:

“There was here * * * a contract between the decedent and
the government, by the terms of which the defendant, as
registered beneficiary, acquired a present vested though de-
feasible interest, contemporaneous with the superior rights of
the decedent, and his death terminated his rights and left the
defendant with an indefeasible ownership entitling her to de-
mand payment of the proceeds.”

In Davis v. East Texas Savings & Loan Association, 163
Texas 861, 354 S.W. 2d 926, where a savings and loan stock
certificate was issued in the name of the husband or wife and a
signature card was signed by each stating that the certificate
was held by them as joint tenants with the right of survivorship,
we recently held, that upon the death of the husband, the wife
became the owner of the proceeds of the certificate as her separate
property on the theory that the contract made by Davis with
the association in respect to his separate funds was a valid and
enforceable contract for the benefit of the third party.

The case here does not embrace the terms of such a contract
as the one made with the government in Edds v. Mitchell nor
that made with the savings and loan association in Davis v. East
Texas, nor does it lie within the provisions of Sec. 46 of the
Probate Code. The evidence does not even reveal whether or not
Mrs. Krueger knew prior to her father’s death of the purchase
of the certificate. In our opinion the recitation falls short of
expressing a clear intention to vest the absolute right of the
ownership of the funds in the survivor.

CU 551

i The phrase “payable to the survivor” is not tantamount to
the provision that “the certificate is held by them as joint tenants
with the right of survivorship”. However, the language appear-
ing on this receipt card does serve to vest in Mrs. Krueger some
present interest in and control over the certificate as well as
the contractual right to possession of the proceeds as survivor.
‘We therefore say that it does create a presumption of such in-
tention on the part of the purchaser of the certificate and places
the burden of proof on one claiming to the contrary. We have
found no Texas authority squarely in point and the decisions
in other jurisdictions reveal considerable diversity in approach
to and in the solution of this problem, but it appears that the
majority support the result we have reached.

In Staver’s Estate, 218 Wis. 114, 260 N.W. 655 (1985) the
right of the survivor to the proceeds of a certificate of deposit
made payable to Joseph Staver or Frank J. Staver was upheld.
The court pointed out that in the absence of clear evidence that
the contract was a convenience account or was created under an
express agreement that the third party would hold the proceeds
for the benefit of the depositor or his heirs, the complete owner-
ship must be held to be in the survivor. See also In re Pfeifer’s
Estate, 1 Wis. 2d 609, 85 N.W. 2d 360; Erwin v. Felter, 288
Ill. 36, 119 N.E. 926 (1918).

In Holbrook v. Hendrick’s Estate, 175 Ore. 159, 152 P. 2d
573 (1944), the agreement setting up a joint bank account read
“to us or either of us, or to the survivor of us”. This provision
was held to be some evidence of an intention on the part of the
survivor to make a gift of a joint interest in the account that
would suffice to make out a prima facie case in favor of the sur-
vivor asserting such an interest. This theory finds support in
Castle v. Wrightman, 303 Mass. 74, 20 N.E. 2d 486 (1939);
Tangren vy. Ingalls, 12 Utah 2d 388, 867 P. 2d 179 (1961) In
re Estate of Mueth, 179 N.E. 2d 695 (Ill. App. 1962).

Other jurisdictions hold that the burden rests upon the sur-
vivor to prove that the deposit was not merely a convenience
account. Cournoyer v. Bank, 98 N.H. 385, 102 A. 2d 910 (1958) ;?
Barbour v. 1st Citizens Bank, 77 S.D. 106, 86 N.W. 2d 526
(1957) ; King v. Merryman, 196 Va. 844, 86 S.E. 2d 141 (1955) ;
In re Elliott’s Estate, 378 Pa. 495, 106 A. 2d 458 (1954).

We therefore hold that the County Judge correctly approved

1, By statute in New Hampshire the presumption has been reversed. Chretien
v. Duhaime, 100 N.H. 254, 124 A, 2d 208 (1956).

an

5
the inventory and appraisement as filed by the executrix. The
judgments of the trial court and the Court of Civil Appeals are

both reversed and the District Clerk of Bosque County is directed
to certify this judgment to the County Court for observance.

Opinion delivered June 20, 1962.
De

Mary E. McGeorce, Petitioner

v.
RUTH VAN METER ET AL, Respondents

No, A-8797. Decided June 20, 1962
358 S.W, 2d 580

Hardwicke, Haddaway & Pope, Fort Worth (Claude D. Brown
with above firm) for petitioner.

Sewell & Forbis, Decatur, for respondent.

es 558

ASSOCIATE JUSTICE JAMES R. NORVELL delivered the
opinion of the Court.

This is an action in trespass to try title brought by Ruth Van
Meter and others against Mary E. McGeorge for the recovery of
title and possession of an undivided one-half of all the oil, gas
and other minerals in, on and under a 95.34 acre tract of land
situated in Wise County, Texas. Judgment for the plaintiffs was
rendered by the District Court and affirmed by the Court of
Civil Appeals.

The case turns upon the question of whether or not a deed
of trust foreclosure sale held on January 5, 1937 effectively
passed the Stokes (Van Meter et al) interest to Arthur McGeorge,
the purchaser at said sale. The petitioner, Mary E.: McGeorge,
claims under Arthur McGeorge.

It was agreed that the common source of title was M. A.
Small and wife, Laura C. Small.

On June 8, 1916, M. A. Small and Laura A. Small conveyed
the 95.34 acre tract to Walter Stokes for a cash consideration.

On June 10, 1916, Walter Stokes and wife, Corine Stokes,
executed a deed of trust to W. A. Bonner, Trustee, conveying
among other lands, the 95.34 acre tract here involved. This deed
of trust was given to secure four promissory notes including one
for $1450.00 due December 1, 1922 and payable to The Bonner
Loan & Investment Company. In the briefs this instrument is
generally referred to as the first deed of trust.

On November 10, 1919 at a time when all of the notes above
mentioned, except the $1450.00 note, had been paid, Walter Stokes
and wife conveyed the 95.34 acre tract to G. W. Griffith for a
cash consideration of $6500.00 and the assumption of the $1450.00
note above mentioned. In this deed the grantor reserved the min-
eral interest which is the subject matter of this action. The word-
ing of the reservation was that, “Grantor reserves one-half of
the royalty and one-half of the mineral lease rights on the here-
inafter described tract.”

On March 1, 1923 G. W. Griffith and the heirs of his deceased
wife executed a deed of trust to secure a promissory note for
$3,000.00 due February 1, 1933 and payable to Percy McGeorge.
This deed of trust contained the following provision:

5 ee

“The holder of the indebtedness secured hereby is expressly
subrogated to any and all liens paid by the proceeds of this
mortgage.

“The note secured hereby is given in renewal and in ex-
tension of a note for $1,450.00 dated October 10, 1916, and due
December 1; 1922, executed by Walter Stokes and wife to the
Bonner Loan and Investment Company, and secured by a deed
of trust recorded in Book 82, Page 188, of the trust deed
records of Wise County, Texas and the holder hereof is sub-
rogated to all the rights, powers, and equities of the original

- owners and holders of said note.

“The money loaned by the said third party is borrowed for
the purpose of providing funds necessary for the payment of
debts owing by the estate of Addie EH. Griffith, deceased, and
constituting valid claims against said estate.” (Italics supplied.)

In the briefs this 1923 deed of trust is generally referred to
as the second deed of trust.

On March 14, 1923, Percy McGeorge received a written
assignment of the Stokes $1450.00 note from J. A. Simmons who
held the same under mesne assignments from Bonner Loan &
Investment Company.

Griffith defaulted in the payment of the $3,000.00 note se-
cured by the second deed of trust and on January 5, 1937 the
95.84 acre tract was sold at trustee’s sale to Arthur McGeorge
for $500.00.

Hi Deed of trust sales are largely controlled by statute in this
state, Article 3810, Vernon’s Ann. Texas Stats., and the pro-
visions of the deed of trust given by Stokes to W. A. Bonner,
trustee, on June 10, 1916, were substantially the same as those
contained in the later deed of trust of March 1, 1928, insofar
as the procedures relating to an extra-judicial foreclosure in
ease of default in the payment of indebtedness were concerned.
The Court of Civil Appeals held in effect that Griffith could
have agreed with McGeorge that the power of sale contained in
the second deed of trust would be effective to foreclose the Stokes
reserved mineral interest insofar as the indebtedness originally
represented by the $1450.00 note was concerned, but that the

555

language selected by them in their wording of the second deed
of trust did not disclose such intention.

We are unable to agree with this latter conclusion.

I The Stokes $1450.00 indebtedness was originally secured by
a deed of trust lien covering the entire 95.34 tract. Griffith had
assumed payment of this indebtedness and was authorized to
extend the payment thereof without the joinder of Stokes. He
could not however subject the Stokes retained mineral interest
to any additional indebtedness. The second deed of trust was,
however, effective to extend the $1450.00 note and preserve the
lien securing the payment thereof. Article 5522, Vernon’s Ann.
Texas Stats. As pointed out by the Court of Civil Appeals, the
controlling question presented is whether the exercise of the power
of sale under the second deed of trust effectively foreclosed the
Stokes mineral interest.

We think that it did. While the second deed of trust does
not contain the words “merge” and “incorporated”, it did ex-
pressly provide that the note secured by the second deed of trust
was given in renewal and extension of the Stokes $1450.00 note
and that the holder thereof was “subrogated to all the rights,
powers, and equities of the original owners and holders of said
$1450.00 note”. This is the usual and customary language em-
ployed in instruments which have for their object the carrying
forward of an indebtedness and its securing lien for the purpose
of incorporating the same into a new form of security.

The facts disclosed by the opinion in Countiss v. Baldwin,
Texas Civ. App., 151 S.W. 2d 285, dism., judg. cor., are similar
to those shown by the record before us. In Countiss, it appears
that in 1919 one Kirk executed a deed of trust to secure an in-
debtedness due the Federal Land Bank. In 1920 he conveyed a
mineral interest to Baldwin. In 1925 the Federal Land Bank
advanced further monies to Kirk, extended the time of payment
of the 1919 loan, and took a new deed of trust from Kirk. In
commenting upon the effect that a foreclosure under this deed of
trust had on the Baldwin interest, the Court of Civil Appeals said:

“Appellees (the holders of the Baldwin mineral interest)
contend that their royalty interest was not foreclosed by the
trustee’s sale made under the 1925 deed of trust, because they
did not join in the execution of this deed of trust. Appellees

1. 351 S.W. 623, Lc. 626,

56 ee

took their mineral deed burdened by the deed of trust lien
of 1919, and Kirk could renew and extend this lien without
the necessity of a joinder of the representatives of the Baldwin
estate. Allison-Richey Gulf Coast Home Co. v. Welder, Texas
Civ. App., 220 S.W. 392; Templeman & Son v. Kempner, Texas
Civ. App., 223 S.W. 298; Richmond v. Nowlin, Texas Civ.
App., 185 S.W. 2d 521.

“Appellees could have protected their royalty interest by
paying off the indebtedness secured by the 1919 deed of trust
prior to either one of the trustee sales. Hampshire v. Greeves,
104 Texas 520, 148 S.W. 147; Texas Company v. Tucker, supra.

“After the trustee’s sale of February 5, 1935, appellees
were possessed, at most, with a mere equity of redemption, as
distinguished from title, legal or equitable, and such equity
if any, was barred by the four-year statute of limitation, Art.
5529, Vernon’s Civ. St., and lost to appellees under the doctrine
of laches and stale demand. Parks v. Worthington, 39 Texas
Civ. App., 421, 87 S.W. 720; Pierce v. Moreman, 84 Texas
596, 20 S.W. 821; Groesbeck v. Crow, 85 Texas 200, 20 S.W.
49; Jasper State Bank v. Braswell, 180 Texas 549, 111 S/W.
2d 1079, 115 A.L.R. 329; Richmond v. Nowlin, supra; Texas
Company v. Tucker, supra.

The Court of Civil Appeals in this case points out that the
opinion in Countiss v. Baldwin does not set out the language
contained in the 1925 deed of trust relating to the prior deed of
trust executed by Kirk in 1919. It is inferred that the language
of the second deed of trust may have been entirely sufficient to
have vested the trustee in the second deed of trust with full power
to sell the property covered by the 1919 deed of trust in order
to discharge the indebtedness secured by said mortgage which
had been extended by the execution of the second deed of trust.
This seems to be the only possible legal distinction between
Countiss and this case. We believe the propositions of law dis-
cussed in the excerpt from the Countiss opinion above set out were
correctly decided, and consequently we are again met by the
recurring question: Was the subrogation language contained in
the Griffith-McGeorge deed of trust of 1928 sufficient in law
to vest in the trustee in said deed of trust the power to sell the
property and thus foreclose the lien as it existed in 1916 at the
time the Stokes-Bonner deed of trust was executed. We hold the
language used in the 1928 deed of trust was sufficient and this
holding settles the case as it appears that the indebtedness evi-

567

denced by the original note for $1450.00 had not been discharged
at the time of the 1937 deed of trust foreclosure sale.

This does not mean that any second deed of trust given upon
property automatically carries forward the power to sell such
property under the second deed of trust in order to pay an indebt-
edness secured by a first deed of trust even though the time for
the payment of such indebtedness be extended by a valid agree-
ment. One of the cases cited by the Court of Civil Appeals is
illustrative of this situation. In Winters v. Slover, 151 Texas
485, 251 S.W. 2d 726, this Court considered an unusual deed of
trust provision reading as follows:

“Tt is especially understood and agreed by all parties hereto
that this (second) Deed of Trust may be declared void * * *
in case the interest which matures on the 1st of November,
1925, secured by a (prior) deed of trust, * * * and in case the
interest which matures on the first of October, 1925, secured
by (another prior) deed of trust * * * shall not have been paid
at maturity and any action taken by the beneficiary under said
former deeds of trust and extension agreement shall be evi-
dence of the fact that such payment and interest has not been
made.”

In view of this provision a subsequent clause relating to an
extension of time for the payment of notes and the liens securing
the same could not operate to vest a power of sale in the trustee
under the subsequent deed of trust which would foreclose all the
liens mentioned in the prior deeds of trust. Obviously, if a failure
to pay interest under the prior deeds of trust could result in a
valid sale under the prior deeds of trust and could render the
subsequent deed of trust void, it could not be said that the parties
intended an “incorporation” or a “merger” of deed of trust liens.

It was also pointed out in Winters that the portion of the
second deed of trust relating to an extension of notes and liens
referred only to vendor’s liens. This Court held that such pro-
vision showed “no intention to incorporate the prior deeds of
trust, but shows only an intention to extend the express vendor’s
liens, and perpetuate the superior legal title in the mortgagee
to all surface and all mineral rights. This Chilton had a right
to do, both under an authorization by statute, Article 5520, 5522
and their predecessors, Texas Civ. Stats., 1925, Vernon’s Ann.
Civ. St. Arts. 5520, 5522; Texas Land & Mortgage Co., Ltd. v.
Cohen, Texas Com. App., 188 Texas 464, 159 S.W. 2d 859. Under
the authority of that case, Chilton and Hancock Mutual also would

5S

have had the right to renew and extend the former deed of trust
covering the entire surface and minerals without T. J. Slover’s
consent. The absence of a provision to such effect shows that this
was not done. The renewal of the express vendor’s liens was merely
to negative any intention on the part of the mortgagee to waive
his rights to judicial foreclosure or trespass to try title under
the same.” (Italics added.)

In the second deed of trust involved in this case, the first
deed of trust lien is mentioned specifically, the indebtedness se-
eured thereby is carried forward and incorporated in the note
secured by the second deed of trust and the holder of such note
acquired all the rights, powers and equities of the original owner
of the note secured by the first deed of trust. The point of differ-
ence between the Court of Civil Appeals and this Court is com-
paratively narrow and turns upon the wording of the second deed
of trust. The language of this instrument, in our opinion, places
the case within the rule of Countiss v. Baldwin as above stated.

The judgments of the lower courts are reversed and judgment
here rendered that petitioner do have and recover of and from
the respondents the title and possession of the real property which
is the subject matter of this action, namely, an undivided one-
half of all the oil, gas and other minerals in, on and under the
95.84 acre tract here involved.

Opinion delivered June 20, 1962.
a
KATHERINE KAISER ET AL, Petitioners
CLARA C. LOVE Ba AL, Respondents

No. A-8844, Decided June 27,1962
358 S.W. 2d 586

5B!

co)

Warren W. Shipman, III, McGown, Godfrey, Logan & Decker,
Fort Worth, for petitioners.

Hugh D. Reed, Jr., Fairfield, for respondents.
JUSTICE GREENHILL delivered the opinion of the Court.

This oil and gas case involves the construction of a reserva-
tion in a deed. In that deed, the grantors reserved “all the oil
and gas rights in the above tract of land hereby conveyed in
the full terms as set forth” in a particular oil and gas lease. The
question is whether this provision reserved to the grantors only
the royalty under the lease referred to or whether it reserved
to the grantors the mineral estate upon the termination of the
oil and gas lease; ie., whether it reserved the royalty only under
the particular lease or whether it reserved also the possibility
of reverter. In a suit for declaratory judgment, the trial court,

50

sitting without a jury, held that reservation reserved only the
royalty under the existing lease. That action was affirmed by the
Waco Court of Civil Appeals. 352 S.W. 2d 885.

The facts are not disputed. No evidence was introduced in the
trial court except the stipulations of the attorneys and the written
instruments. It was stipulated that the land was owned jointly
by T. R. Collard and B. F. Love. Hach owned a one-half interest.
The Petitioners here, Katherine Kaiser et al., are the heirs and
devisees of T. R. Collard and his wife. The Respondents here,
Clara Love et al., are the heirs and devisees of B. F. Love. In
February, 1915, T. R. Collard, joined by his wife F. R. Collard,
and Love executed an oil and gas lease to Breeding. The lease
provided for a primary term of five years during which the
lessee could defer the drilling of a well by the payment of delay
rentals. It was an “unless” lease: after the first year, the lease
terminated unless the lessee drilled or paid the delay rentals. And,
as applicable here, it provided that if a well were drilled and
production were had, the lease would continue as long thereafter
as oil or gas was produced in paying quantities. The conveyance
was made “subject to the royalties hereinafter mentioned”. The
royalties were 1/8th on oil and $200 per year on gas.

i Under such an oil and gas lease, the lessee is conveyed a
determinable fee. Stephens County v. Mid-Kansas Oil and Gas
Co., 118 Texas 160, 254 S.W. 290 (1923); Waggoner Estate v.
Sigler Oil Co., 118 Texas 517, 19 S.W. 2d 27, (1929); Walker,
“The Nature of the Property Interests Created by an Oil and Gas
Lease in Texas”, 7 Texas L. Rev. 1, at 8 (1928), and 8 Texas
L. Rev. 488, at 492 et seq. (1930). Upon the termination of such
lease, the mineral estate ordinarily reverts to the grantors of
the lease, their heirs or assigns. Thus, the “possibility of reverter”,
while not expressly described in the lease, is created by the lease.

Up to this point, ‘there could be no question but that the
grantors, Collard and Love, owned not only the rents and royalties
under the lease but also the possibility of reverter. Had the lease
terminated without further conveyances or occurrences, Collard
and Love would have again owned equally the full mineral estate.

In 1916, after the execution of the above oil and gas lease,
Collard, joined by his wife, executed to Love the deed in question.
Under this instrument, Collard conveyed the land to Love with
this reservation:

“But we F. R. Collard and T. R. Collard do hereby reserve

561

to ourselves all the oil and gas rights in the above tract of land
hereby conveyed in the full terms as set forth in a oil and gas
lease executed and entered into by B. F. Love, F. R. Collard
and T. R. Collard of the first part and ——__.___ Breeding of
the second part on the 18th day of February A. D. 1915.”

IE The oil and gas lease from Love and Collard was assigned
ultimately to The Texas Company. There is no evidence that a
well was drilled. In 1928, The Texas Company executed a release
and quitclaim of its rights under the lease. The release was to
B. F. Love et al., and referred to the original lease by the book
and page in which it was recorded. Thus the lease was terminated.
The question is, to whom did the mineral estate (the working
interest) revert? As above stated, the Loves contend that it
reverted to them; that all that the Collards reserved was the royalty
under the original lease to Breeding; and when that lease term-
inated, the rights of the Collards terminated also. The Collards
(represented by Kaiser et al. here) argue that they reserved
“all of the oil and gas rights in the above tract of land” which
includes the right of reverter ; that this is more than simply rights
to royalty under a particular lease. Under this construction, the
mineral estate reverted one-half to the Loves and one-half to the
Collards. We agree with this construction.

The reservation was of “all the oil and gas rights in the above
tract of land hereby conveyed in the full terms as set forth” in
the oil and gas lease to Breeding. The reservation is of “all”
oil and gas rights; not simply the royalty. “Oil and gas rights” is
a broader term than “royalty”. The term, at least as applied
here, includes the royalty but is not limited to the royalty. Murphy
v. Jamison, 117 S.W. 2d 127 (Texas Civ. App.), 1938, error
refused. In the Murphy case, it was held that “His ‘mineral rights’
consisted of his royalty rights * * * and the possibility of reverter
under that lease.” 117 S.W. 2d at 180. The distinction between
the reservation of “royalty rights” and the reservation of “min-
eral rights” was drawn in Schlitiler v. Smith, 128 Texas 628,
101 S.W. 2d 543 (1937). We think the reservation of “all the
oil and gas rights in the above tract of land” is a reservation of
the “mineral rights” under the Schliitler case and that the re-
mainder of the words in the reservation here in question are not a
limitation of those rights.

I Counsel for Love argues that the deed reserved to the Collards
only those rights set forth in the oil and gas lease from Collard
and Love to Breeding; that the rights reserved (set forth) under
this lease were the royalties and no more. While the lease does

56

provide for the payment of royalties to the grantors, the possi-
bility of reverter is also created by the lease. And while it is not
expressly mentioned by name in the lease, the law implies the
right of reverter upon termination of the determinable fee of
the lessee. It is a right of the lessors which may be sold or conveyed.
Murphy v. Dilworth, 187 Texas 32, 151 S.W. 2d 1004 at 1006
(1941). It is a “right set forth in the oil and gas lease” by neces-
sary legal implication. We therefore hold that it was reserved
as part of “all the oil and gas rights in the above tract of land
hereby conveyed in the full terms as set forth” in the lease from
Collard and Love to Breeding.

Moreover, we regard the reference to the lease from Collard
and Love to Breeding as being descriptive and as being a refer-
ence to the document wherein the rights conveyed or retained
may be found. Those rights include the possibility of reverter and
are not, by the reference to the lease, limited to the royalties
contained in the lease.

The judgments of the courts below are reversed and judg-
ment is here rendered for the Petitioners, Katherine Kaiser et al.,

that they are the owners of one-half of the mineral estate under
the 593 acres of land here in question.

Opinion delivered June 27, 1962.
Es
Ropert S. CALVERT BT AL, Appellants
Epwarp E. McLEMORE, JR., v/Bia “Bic ‘D’ JAMBOREE”, Appellee

No. A-8883, Decided June 27, 1962
S.W. 2d 5:

Pa
R
%
BY
2

es 568

P|
Will Wilson, Attorney General, Austin, J. H. Broadhurst,
Asst. Atty. Gen., for appellant.

Jackson C. Burroughs, Dallas, for appellee.

JUSTICE RUEL C. WALKER delivered the opinion of the
Court.

This is a direct appeal under the provisions of Article 1738a,
Vernon’s Ann. Texas Civ. Stat. The trial court denied a tem-
porary injunction on the ground that Section 1 of Article 21.02,
V.A.T.S. Tax.-Gen., is unconstitutional. This statute purports to
levy a tax of one cent on each ten cents or fractional part thereof
paid as admission to entertainments such as motion pictures,
operas, plays and like amusements “held at places other than
at a fixed and regularly established motion picture theater”,
where the admission charged is in excess of fifty-one cents per
person. Section 2 of Article 21.02 deals with admissions to such
entertainments when held at a fixed or regularly established
motion picture theater, and no tax is imposed thereon unless
the amount charged is in excess of $1.05. In either situation the
tax is payable by the person who owns or operates the place of
amusement. Article 21.01, V.A.T.S. Tax.-Gen.

HE The tax in question is not a tax upon property or upon per-
sons but is imposed on the business of exhibiting motion pictures,
operas, plays and other like amusements. It is an occupation tax
within the meaning of Article VIII, Section 2, of our Constitu-
tion, which provides that all occupation taxes shall be equal and
uniform upon the same class of subjects within the limits of the
authority levying the tax. See Pullman Palace Car Co. v. State,
64 Texas 274, 53 Am. Rep. 758; H. Rouw Co. v. Texas Citrus

50 ee

Commission, 151 Texas 182, 247 S.W. 2d 231. There can be no
doubt as to the power of the Legislature to classify the subjects
of occupation taxes and impose varying burdens upon the dif-
ferent groups. It is essential, however, that there be a reasonable
basis for the classification. Exemption of persons who are en-
gaged in the same occupation as those who are taxed renders
the levy discriminatory and therefore unconstitutional.

“The considerations upon which such classification shall be
based are primarily within the discretion of the Legislature.
The courts, under the provisions relied on, can only interfere
when it is made clearly to appear that an attempted classifica-
tion has no reasonable basis in the nature of the businesses
classified, and that the law operates unequally upon subjects be-
tween which there is no real difference to justify the separate
treatment of them undertaken by the Legislature. This is the rule
in applying both the state and federal Constitutions, and it has
been so often stated as to render unnecessary further discussion
of it.” Texas Co. v. Stephens, 100 Texas 628, 103 S.W. 481.

The classification established by the Legislature in this in-
stance is based on the place where the entertainment is given.
In Davis v. White, Texas Civ. App., 260 S.W. 138 (wr. ref.), a
statute purporting in general terms to levy an occupation tax on
all traveling shows but exempting those that exhibited in regu-
larly established and licensed theaters was held to be violative
of the Constitution. After observing that the show was the same
whether exhibited in a licensed theater or elsewhere, the court
said that the difference seized upon by the Legislature, i.e., the
place of exhibition, did not justify the classification.

The Attorney General cites decisions upholding the levy of
occupation taxes on peddlers although merchants having estab-
lished places of business and traveling persons selling at whole-
sale were not taxed. South v. State, 72 Texas Cr. Rep. 381, 162
S.W. 510; In re Butin, 28 Texas App. 304, 13 S.W. 10. He says
that motion pictures, operas and plays exhibited at places other
than regularly established motion picture theaters are usually
itinerant entertainments which do not pay regular occupation
taxes and often escape the payment of any tax whatsoever. This
is not, however, the line drawn by the Legislature in Article
21.02. As a matter of fact, respondent regularly exhibits shows
of various kinds at a fixed place of business in Dallas, but that
place of business is not a motion picture theater.

IZ The statute is plainly a revenue measure. It does not relate

565

in any way to the public safety, morals, convenience or general
welfare. Under the provisions of Section 1, anyone who exhibits
a motion picture or play at a place other than a fixed and regu-
larly established motion picture theater must pay the tax. An-
other person who exhibits the same picture or play to a similar
audience in an adjoining building of the same construction escapes
payment of the taxes merely because he regularly shows motion
pictures in that building. The discrimination is too plain to admit
of argument, and we agree with the trial court that Section 1
of Article 21.02 is unconstitutional. See H. Rouw Co. v. Texas
Citrus Commission, 151 Texas 182, 247 S.W. 2d 281; San Antonio
Retail Grocers v. Lafferty, 156 Texas 574, 297 S.W. 2d 813.

The judgment of the trial court is affirmed.
Opinion delivered June 27, 1962.
as
THE STATE OF TEXAS, EX REL GEORGE DISHMAN ET AL, Relators
HONORABLE GORDON D. GARY, Disarcr JUDGE, ET AL, Respondents

No. A-9088. Decided July 2, 1962
359 S.W. 2d 456

56

ASSOCIATE JUSTICE SMITH dissents.

Will Wilson, Attorney General, Austin, W. C. Lindsey, Crim-
inal District Attorney, Jefferson County, W. G. Walley, J7., Beau-
mont, for relators.

Keith, Mehaffey, McNicholas & Weber, Quintin Keith of the
firm. Gilbert T. Adams, Beaumont, for respondents.

ORIGINAL MANDAMUS

ASSOCIATE JUSTICE JAMES R. NORVELL delivered
the opinion of the Court.

This cause grows out of a judicial stalemate existing in
Jefferson County, Texas, which was brought about by conflicting
orders issued by the judges presiding over the courts of the 60th
and the 136th judicial districts. A legal question as to the juris-
diction of courts is involved and there is nothing in the record
before us which reflects upon the integrity or good faith of the
judges or the district attorneys involved.

The specific relief requested by the State of Texas is a writ
of mandamus requiring the Honorable Gordon D. Gary, judge
of the 60th District Court, to expunge from the record a certain
order, said to be void, entered by him on June 6, 1962, which
purports to reinstate an ouster suit originally brought by the
State against Charles H. Meyer, the Sheriff of Jefferson County,
Texas. Articles 5970 et seq., Vernon’s Ann. Texas Stats. The
State also sought vacation of the ancillary injunctive orders con-
tained in said decree of June 6. Our original jurisdiction is in-
voked under the provisions of Article 1733, Vernon’s Ann. Civ.
Stats. See, State v. Ferguson, 133 Texas 60, 125 S.W. 2d 272.

PE

Briefly stated, the circumstances giving rise to this case
are these:

On March 27, 1961, an ouster suit on behalf of the State was
filed against Meyer in the 60th District Court and docketed as
Cause No. B-77,308. Various proceedings were had in this cause;
a cross-action was filed by Meyer, the petition was amended and
attempts made to take depositions. These need not be examined
in detail because on May 21, 1962, the State moved to discontinue
the cause “without prejudice to the right of the defendant to
be heard on his counterclaim”. This motion was contested by
the defendant but the Court sustained the motion and ordered
a dismissal of the ouster suit.

On May 381, 1962, at a time when no ouster suit was pending
in the 60th District Court, the State of Texas, through W. G.
Walley, Jr., the acting Criminal District Attorney of Jefferson
County, filed an ouster suit in the 136th District Court of Jef-
ferson County against Meyer.! This suit was docketed as Cause
No. D-79,254. After citation was ordered issued on the petition,
Article 5979, a motion requesting that Sheriff Meyer be sus-
pended from office was also filed. Article 5982.

On May 31, 1962, the Honorable Connally McKay,? who was
presiding as judge of the 136th District Court, entered an order
temporarily suspending Meyer from the office of Sheriff of Jef-
ferson County and appointing Richard E. Culbertson to discharge
the duties of such office “for the time being and during the
pendency of the suit”. This order recited that the requirements
of Article 5979 as to citation, etc. had been complied with. Cul-
bertson duly qualified as acting sheriff by complying with the
provisions of Article 5982.

Also on May 81, 1962, and about thirty minutes after the
rendition of Judge McKay’s order suspending Sheriff Meyer
from office, the Honorable Gordon D. Gary issued a temporary
restraining order enjoining and restraining Richard E. Culbertson
from acting or purporting to act as Sheriff of Jefferson County
or from interfering in any way with Charles H. Meyer in the
conduct of the office of Sheriff of Jefferson County. This re-
straining order remained in force until June 1 at 10 A.M., when

1, Subsequent to the filing of this suit, W. C. Lindsey was appointed Crim-
inal District Attorney of Jefferson County and has joined in these proceedings.
Article 52-160b, Vernon’s Ann. C.C.P.

2. Regular Judge of the 114th Judicial District, sitting for the Honorable
Harold R. Clayton, Judge of the 186th Judicial District who had recused himself.

56 es

it was continued until June 6, 1962, at which time Judge Gary
extended the terms of the temporary restraining order against
Culbertson “until further order of this Court”. The result of
this order was to bring about a judicial impasse. Sheriff Meyer
cannot act as sheriff without violating the order of the 136th
District Court suspending him from office. Mr. Culbertson can-
not act as sheriff without violating an injunction of the 60th
Judicial District. In effect Jefferson County, with a population
of 245,659, is left without a chief law enforcement officer.

The order of June 6, 1962, as well as the restraining orders
heretofore mentioned, were all entered in Cause No. B-77,303
on the docket of the 60th District Court. The Court, by its order
of June 6, sought to reinstate this dismissed ouster suit over the
protest of the Criminal District Attorney by directing that the
State’s amended petition and suit in said Cause No. B-77,303
“be and the same is hereby reinstated on Defendant’s Amended
Motion therefor”.

This provision purporting to reinstate the cause and reassert
jurisdiction over the subject matter of the suit is the basic cause
here involved. The injunctive orders relating to Mr. Culbertson,
as well as those provisions of the June 6 decree, restraining the
parties representing the State, ie. the relators and the Criminal
District Attorney from taking any further action in the cause
pending in the 136th District Court, No. D-79-254, or any other
court excepting an appellate court” are ancillary to and dependent
upon the order reinstating said Cause No. B-77,308. If reinstate-
ment falls, the ancillary orders fall with it.

As we view the case the controlling question presented is
whether or not a District Court having relinquished jurisdiction
over a statutory ouster cause may thereafter reassert jurisdic-
tion over such dismissed cause, so as to defeat the jurisdiction
of another co-ordinate court which acquired jurisdiction of the
ouster suit at a time when there was no ouster suit pending on
the docket of the first court mentioned.

I Article 5, Sec. 24 of the Texas Constitution and Title 100 of
the Revised Civil Statutes, (Articles 5691 to 5997, inclusive, Ver-
non’s Ann. Texas Stats.) relate to the removal of certain public
officers. Articles 5970 to 5987, inclusive, provide that a district
judge may remove a sheriff as well as other designated officers
from office and prescribe the procedures that govern such suits.
The remedy of ouster is one which “belongs to the State, in its
sovereign capacity, to protect the interests of the people as a

a — :!

whole and guard the public welfare by ousting incumbents of
office who wrongfully hold to the injury of the public”. State
Railroad Commission v. People, 44 Colo. 345, 98 P. 7, 22 L.R.A.,
N.S. 810. In such proceeding the district attorney is a proper
representative of the State and by virtue of his office has control
of the prosecution of the cause. Article 5, Sec. 21, Constitution
of Texas; Staples v. State, ex rel. King, 112 Texas 61, 245 S.W.
639; Reeves v. State ex rel. Mason, 114 Texas 296, 267 S.W.
666; State ex rel. Hancock v. Ennis, Texas Civ. App., 195 S.W.
2d 151, ref. n.r.e. Except where otherwise provided by statute, the
rules of practice governing other civil cases control. Article 5981.

Under the procedures set forth and clearly inferable from
the pertinent constitutional and statutory provisions, as well as
under the express wording of the Texas Rules of Civil Procedure,
it appears that the district attorney, as leading counsel for the
State, was empowered to discontinue Cause No. B-77,303 on the
docket of the 60th District Court. State ex rel. Hancock v. Ennis,
Texas Civ. App., 195 S.W. 2d 151, ref. n.r.e.; Ex parte Norton,
118 Texas 581, 17 S.W. 2d 1041.

In Norton’s case above mentioned, the plaintiff, J. F. Norton,
took a nonsuit under Article 2182 from which Rule 164 is taken
with no change in verbiage. The court refused to allow the nonsuit
until the plaintiff should pay up some back alimony. The case
came to this Court upon habeas corpus with Norton contending
that the order of contempt entered as a result of his refusal to
pay such back alimony was void. This Court agreed with this
contention and held that the right to take a nonsuit is absolute
and unqualified when a motion therefor is made before the jury
has retired, in a jury case, or before the judge has announced
his decision in a non-jury case. This Court further said:

“Had the court granted relator his legal rights and dis-
missed the divorce suit when he in open court took a nonsuit,
he would have lost jurisdiction of the divorce proceedings as
such, and would have had no power or jurisdiction to enter a
contempt order for failure of relator to pay alimony, and, had
the relator been accorded the right which was absolutely given
him under the statute, there would have been absolutely no
way to enforce the payment of the back alimony claimed by
the wife. Wright v. Wright, 6 Texas 29. Inasmuch as the relator
had the right to dismiss his divorce action, and thus end the
divorce proceedings, we are of the opinion that the trial court
could not prejudice his rights by refusing to allow the nonsuit
and dismiss the suit for divorce.”

510

The order of contempt which was rendered subsequent to the
motion for nonsuit was held void and Norton was discharged.

Norton’s case would seem conclusive of the question before
us unless a valid distinction can be made between that case and
this one based upon the circumstance that in Cause No. B-77,303
(60th District Court), Meyer had filed a cross action and the
order permitting the State to nonsuit was entered “without
prejudice to the right of the defendant to be heard upon his
counterclaim”.

Seemingly the prosecution of a cross action in a statutory
ouster suit is a procedure without precedent. Counsel has cited,
and we have found, no reported case in which a cross action
was considered in connection with an ouster suit brought under
the Texas Constitution and statutes. When we consider the nature
of the remedy which, as above pointed out, is a remedy prosecuted
by the State in its sovereign capacity, it is difficult to imagine
a set of circumstances under which a cross action would properly
lie? except perhaps where it was shown that the district attorney
had clearly abused the discretion vested in him by law and re-
peatedly filed and dismissed ouster suits against a defendant for
the purpose of harassment so as to make applicable the rule an-
nounced by this Court in University of Texas v. Morris, 162 Texas
60, 344 S.W. 2d 426. It is one thing to attack the discretion of
the district attorney in taking one nonsuit, and another thing
when it appears that repeated nonsuits have been taken as to
suits based substantially upon the same state of facts. It further
seems that the remedy in case of the filing of repeated vexatious
lawsuits does not lie in preventing the taking of a nonsuit or the
reinstating of dismissed causes but rather in the preventing of
the filing of another suit. The ouster statutes provide a safe-
guard against the repeated filing of vexatious suits in that Article
5979 provides that after an ouster petition is filed, an applica-
tion for citation shall be made to the district judge who shall
either order the issuance of citation or refuse to do so. In the
event the latter action is taken, the statute directs that the “peti-
tion shall be dismissed.” Whether an exclusive remedy lies with
an attack upon the discretion of the district judge in permitting
citation to issue upon a vexatious suit, ie, one that has been

3. While the factual situation in Anderson, Clayton & Co. v. State, 122 Texas
530, 62 S.W. 2d 107 is wholly different from that now before us, it should be
pointed out that an exception to the rule that the State, having invoked the
Jurisdiction of a court to determine a civil cause, may be held to answer on a
cross action is recognized where “exemptions inherent in sovereignty” are in-
volved. See, State v. Humble Oil & Refining Co., 141 Texas 40, 169 S.W. 2d 707.

ee BTL

repeatedly filed, or an injunction could issue in another suit
is a question which is not presented by the record before us.

I The nature of the ouster suit is such that ordinarily it admits
of no cross action. There is no statutory provision for a cross ac-
tion. The proceeding is quasi criminal in nature, State v.
Reyna, 160 Texas 404, 383 S.W. 2d 882, and it would seem
that the only issue presented would be whether or not the
defendant were guilty of the charges brought against him. This
issue is to be determined by a jury under a general charge. The
cross action here involved consists in little more than the af-
firmative assertion of a defense under Article 5986 which pro-
vides that “No officer in this State shall be removed from office
for any act he may have committed prior to his election to office.”
Reeves v. State, 114 Texas 296, 267 S.W. 666; In re Laughlin,
153 Texas 183, 265 S.W. 2d 805, 348 U.S. 859, 75 S. Ct. 84,
99 L. ed. 677. In our opinion the assertion of this cross action,
or any amendment thereto,* could not operate to deprive the
district attorney of his control of the statutory ouster suit nor
serve as a basis for the reinstatement of a suit in which he had
taken a voluntary nonsuit.

The respondent Meyer has cited a number of cases relating
to the right of a public officer to sue in equity and enjoin inter-
meddlers from interfering with his conduct of his office. In
none of these cases was it sought to enjoin a district attorney
from bringing an ouster suit and if Meyer’s cross action be con-
sidered as an independent suit for that purpose, the authorities
cited by him do not support his position.

In Caruthers v. Harnett, 67 Texas 127, 2 S.W. 523, the ap-
pellant, county treasurer of Presidio County, brought an action
alleging inter alia that defendants, members of the county com-
missioners’ court, had issued bonds to pay for the erection of a
courthouse and jail at the new county seat, and that some of
these bonds had been presented to him for registration. He had
refused to register the bonds for stated reasons and alleged that
he feared that the commissioners’ court would seek to remove
him from office because of his refusal to register the bonds.
The prayer was for an injunction to restrain the commissioners
from interfering with the appellant’s office or official records.
The trial court denied the injunction, finding that appellees had

4, It is undisputed that the two ouster suits mentioned are the only ones
that have been filed by the district attorney against Meyer. It therefore appears
that no allegation of repeated filings and dismissal can be made.

512

no intention of interfering with appellant’s office or the public
records in his charge. This was affirmed on appeal.

Although respondent cites this case for the general proposi-
tion that a public official may seek an injunction against anyone
attempting to remove him, the following language in the opinion
clearly distinguishes the case from the present situation:

“There can be no doubt that a district court has power to
issue an injunction to restrain the illegal seizwre or use of the
books and papers pertaining to any public office; and it would
seem not only the right, but also the duty, of any public officer
intrusted with the records, books, and papers of his office
affecting his own right, as well as the public welfare, to protect
them from an illegal seizure or use; and to do this, if necessary,
he may ask the interposition of a court of equity. The relief
sought by the appellant brings him within this rule, in so far
as he asks that the defendants be enjoined from seizing and
carrying away the records, books, and papers pertaining to
his office of county treasurer.” (Italics supplied.)

The three Callaghan cases by the San Antonio Court of Civil
Appeals (Callaghan v. McGown, 90 S.W. 319; Callaghan v. Tobin,
90 S.W. 328; and Callaghan v. Irvin, 90 S.W. 335, wr. ref. in
all cases) are likewise of little value to respondents. This language
from the Tobin case describing the nature of the suit is typical
of all three cases and demonstrates that they are not in point here:

“Tn this suit the petition alleges the case of an officer duly
appointed, and in lawful possession of the office, and property
appertaining thereto, to which he was appointed by lawful
authority, and the threatened interference with him in such
possession and his removal therefrom by persons alleged to
have no legal authority therefor and having no title to the
office.” (Italics supplied.)

In Ehlinger v. Rankin, Texas Civ. App., 29 S.W. 240, no writ
hist., it was held that a temporary injunction could be obtained
by the legally elected county clerk to prevent an appointed suc-
cessor from carrying out the duties of the office without a judicial
determination that he (the elected clerk) was not qualified to
hold the office. The question was whether the elected clerk had
vacated his office under Article 16, Sec. 14 of the Texas Con-
stitution relating to the residence qualifications of civil officers.
The Court merely held that this question must be determined by
a district court rather than the commissioners’ court.

5

Stockwell v. Parr, Texas Civ. App., 819 S.W. 2d 779, in-
volved a dispute between claimants to an office and is not in
point here. Moreover, the judgment in that case was subsequently
vacated and the opinion therefore lacks precedential value. Parr
v. Stockwell, 159 Texas 440, 322 S.W. 2d 615.

The present cause is in no sense a suit for office between
contesting claimants to the title to such office. The cause out
of which the present proceedings arose is a statutory ouster suit
in which it is contended that a duly elected official should be
removed from office because of official “misconduct”. Article
5973.

I We hold that the order purporting to reinstate Cause No.
B-77,308 on the docket of the 60th District Court dated June
6, 1962, and the injunctive ancillary orders contained in the
decree bearing said date are nugatory and void for the reasons
herein set forth and should accordingly be expunged from the
records of said 60th District Court.

The appeal from the temporary injunction which the State
took to the Court of Civil Appeals from the injunctive order
restraining Richard E. Culbertson from acting as sheriff is in-
adequate to grant the State the relief to which it is entitled.
The Court of Civil Appeals in passing upon the question of
whether the trial judge abused his discretion in granting the
temporary injunction may or may not pass upon the basic order
which purports to reinstate Cause No. B-77,303 upon the docket
of the 60th District Court. This is the order which brings about
the seeming jurisdictional conflict between two co-ordinate courts
and is the order together with its incidental injunctive provisions
which the State is entitled to have expunged from the record.

We assume that the judge of the 60th District Court will
comply with the holdings of this Court herein set out and ex-
punge the order of June 6, 1962 from the records of his Court.
In the event he should not so proceed, a writ of mandamus will
issue. Lord v. Clayton, 163 Texas 62, 352 S.W. 2d 718.

No motion for rehearing will be entertained.
Mandamus conditionally granted.

JUSTICE SMITH, dissenting.

5

The writ of mandamus should be denied. The majority opin-
ion has not been written. This dissent is being prepared without
waiting for the written views of the majority.

Relator Lindsey recently received the nomination to the office
of District Attorney of Jefferson County, Texas, and, upon the
resignation of his immediate predecessor, was appointed by the
Governor of Texas to fill the vacancy, and is now the District
Attorney of the County where this case is now pending. Obviously,
he has not been responsible for the actions of those who have
been responsible for conducting the trials and proceedings prior
to his election and appointment. However, he must realize that
the citizens elected him not to persecute, not to “dally” with the
courts, but to inform himself at once as to the merits of any
case pending or to be investigated to the end that justice is
done in that case. It should not require much time for him to
realize that a district judge should not be subjected to embar-
rassment and ridicule merely because the judge exercised his
discretion, and declined to temporarily suspend a man from office
in a situation where the removal proceedings had remained stag-
nant for a period of 15 months solely because of the action of
the acting district attorney and the Attorney General of Texas
in seeking to suspend rather than to remove. It should not require
a long period of meditation or the spending of sleepless nights
for Mr. Lindsey to realize that the taking of Mr. Meyer’s de-
positions can add nothing to the State’s removal proceedings.
In other words, if the State does not have facts within its knowl-
edge sufficient to present to a court and jury, and to support a
jury finding in its favor, it will never have such facts, The foot-
prints of the State made prior to Mr. Lindsey’s appointment in-
dicate very clearly to me that unless Mr. Lindsey gets busy and
takes charge of this case, we will have an endless continuation
of the turmoil and strife in Jefferson County that has needlessly
existed for many months. Mr. Lindsey has a mandate from the
people to act with diligence to the end that Meyer or any other
public official is given a speedy trial and either cleared of the
charges against him or convicted of such charges. As has been
heretofore stated, there should be an ending to all litigation and
especially that of the type involved here. It is the solemn duty
of a State’s Attorney to prosecute the guilty and to protect the
innocent. In performing this duty he should forever remember
that when he invokes the jurisdiction of a particular court he is
subject to the same rules of procedure that govern and control
other lawyers. I cannot understand how the special prosecutor
(former Acting District Attorney) can in one breath admit that
Judge Gary has at all times acted in good faith, and then say that

Cee

because of Judge Gary’s adverse rulings on the State’s motion to
suspend and its motion to take depositions, he took a nonsuit and
filed the same removal suit in the 186th District Court, because it
was his opinion that he could not win his case before Judge Gary.

This Court has before it the transcription of the several rul-
ings made by Judge Gary on the many motions presented for
his consideration and action thereon. The State took a nonsuit
after Judge Gary ruled on its motion to temporarily suspend Mr.
Meyer from office. Judge Gary’s remarks made in connection
with his refusal to temporarily suspend Mr. Meyer demonstrate
very clearly that the State would have obtained a fair trial in
Judge Gary’s court. After stating that he was not, in making
his ruling, taking into consideration petitions signed by certain
individuals and a petition signed by the Grand Jury, the Court
went on to say:

« * * Your urging of this motion, Mr. Walley, the various
acts required of the Sheriff which you mentioned, are all min-
isterial in nature, except the investigation of his own alleged
offenses, and that, I am sure, has been largely accomplished.
I realize that there will be delicate situations if he is permitted
to remain in office. There may well be serious questions as to
his conduct in that office if he is permitted to remain in office.
If he is permitted to remain in office, he certainly will be under
a greater burden than ever before in all his life to enforce
law and order.

“Your motion for temporary suspension mentions only the
indictments. If you like, I will read you my exact notation on
that. ‘Presumption of innocence under the Constitution and
Jaws, not even considering indictments for any purpose in the
criminal proceedings.’ It seems to me that for this Court to
consider the petitions which have been presented by the de-
fendant, I guess that’s what you would call them, on the one
hand, or the request by the Grand Jury on the other hand,
would be NOT to exercise discretion, as the law requires, but
rather would be to submit to the discretion of someone else,
NOT as the law requires.

“To base the requested action on the indictments alone, it
seems to me, would amount to a submission by this court to
the discretion of the Grand Jury, rather than exercising dis-
cretion myself, as the law requires. In the Laughlin case, I have
been meditating for some several days on the part of that
opinion that you finally read to me, Mr. Adams, where respon-

56

dent testified in his own behalf, occupying the witness chair
for several days. He was confronted by the witnesses against
him. Following the filing of the Master’s report, a motion by
relators to suspend the respondent from office while the court
had the Master’s findings under consideration, was denied.
As I read, that opinion, the action of the Supreme Court per-
mitted that district judge to continue to function as a district
judge even though it had before it at that time evidence which
was ultimately held sufficient for removal of that district judge.
Am I correct in that statement of the opinion?

“MR. ADAMS: That’s correct.

“Considering some of the broad discretion that does exist in
district judges, I think that is a rather significant milestone
in the law. I would point out again, the secrecy of Grand Jury
proceedings is as it should be. But the discretion of the Grand
Jury, or the discretion of any segment of our public, will not be
substituted for the discretion of this court so long as I occupy
this bench.

“The motion for temporary suspension is therefore denied.”

In the interest of time, I am adopting very largely Judge
Gary’s brief filed in this Court as my reasons why the writ of
mandamus should not issue. His logical and legally sound con-
clusions against granting the writ cannot be improved upon.
Therefore, it is unnecessary to delay the rendition of my decision
in this case solely for the purpose of making an independent study
of the case, especially in view of the announcement made in open
court by the Chief Justice that a decision would in all probability
be announced at anytime before the regular date for the formal
announcement of orders.

If, as respondent contends, jurisdiction still lies in the 60th
Court (Judge Gary’s Court), and I think it does, then the only
appropriate order to be made by this Court would be one requir-
ing the dismissal of the proceedings in the 186th District Court.
Cleveland v. Ward, 116 Texas 1, 285 S.W. 1063. I will first dis-
cuss the action of the State in taking a nonsuit.

There can be no doubt but what the 60th District Court
first acquired jurisdiction to hear and determine the removal suit
against Sheriff Meyer, and actively asserted its jurisdiction at
least until May 22, 1962, when Judge Gary’s order granting the

so

State’s motion to take a nonsuit was handed down. Unless the
actions of the 60th Court were void, Judge Gary must prevail.

This Court spoke in Clayton v. Hurt, 88 Texas 595, 32 S.W.
876, 877, discussing jurisdiction, saying:

“Where a court of general jurisdiction in the exercise of
its ordinary judicial functions, renders a judgment in a cause
which it has jurisdiction over the person of the defendant and
the subject-matter of the controversy, such judgment is never
void, no matter how erroneous it may appear, from the face
of the record or otherwise, to be.”

Citing Renfroe v. Johnson, 142 Texas 251, 177 S.W. 2d 600,
the relators say that “absent the filing of the ‘cross-action’ * * *
there can be no question but that the State of Texas had the ab-
solute right to take a non suit.” Renfroe does not support the
position taken by counsel. Another thing, courts are neither blind
to outward evidence of bad faith nor powerless to prevent litigants
from “dallying” with the court; and, then we must remember
that the court had control of its judgments for 30 days after
May 22, 1962.

Renfroe, supra, contrary to the assertion of relators that it
upholds its “absolute right” to take the nonsuit, is probably the
leading case qualifying such right, as witness this language quoted
by the court from the decision of the Court of Civil Appeals in
that case.

“« %* ® In a case tried without a jury, at any time before
the decision is announced, the plaintiff may take a nonsuit, but
the privilege given by the statute is not entirely without limita-
tion. It is the policy of the law to avoid needless litigation, and
public policy requires that there be an end to legal contro-
versies, * * *? 7

In the present case, every necessary party was before the
court on May 21, 1962, and a definite trial date had been set for
June 4, in a proceeding in which issue had been joined for more
than a year. “Fearing what would happen, as it actually did
happen, Sheriff Meyer contested the taking of the nonsuit, alleg-
ing an absence of good faith on the part of counsel representing:
the State.”?

1. All matters in quotations, unless otherwise indicated are taken from
Judge Gary’s brief.

5S

Good faith has been held to be a limitation upon the right to
take a nonsuit. J. A. Walsh & Co. v. R. B. Butler, Inc., 260 S.W.
2d 889, er. dism. w.o.j, 262 S.W. 2d 952. The prior statute
(Art 2182, R.S.) and the present Rule 164, T.R.C.P. has a built-
in limitation therein, as witness this language from Walsh:

«« * ® However, as said in the case of Renfroe v. Johnson,
175 S.W. 2d 92, Id., 142 Texas 251, 177 S.W. 2d 600, the privi-
lege thus extended to the plaintiff to take a nonsuit is not en-
tirely without limitation. Indeed, the rule expressly provides
that the action in exercising such right shall not thereby pre-
judice the right of an adverse party to be heard on his claim
for affirmative relief, and we think the rule implies that a
plaintiff, in the exercise of such right, must act in good faith.
* * *” (260 S.W. 2d at 890.)

Walsh, in my opinion and Judge Gary’s, is not nearly as strong
a case as the one which was presented to Judge Gary below. When
the State made its motion to dismiss, the cross-action had been on
file for months and had been amended after a hearing. The cross-
plaintiff was actively asserting that the motion on behalf of the
State was not made in good faith, but for the purpose of cir-
cumventing the jurisdiction of the 60th District Court. Sworn
allegations were made that the State having been unsuccessful
in procuring the temporary suspension of Sheriff Meyer upon at
least two occasions, would change courts and procure his sus-
pension without a hearing, and without tender of witnesses or
evidence. ‘In the face of this sworn challenge to the Acting Dis-
trict Attorney, he failed to attend the hearing and his assistant
refused to deny the allegations of bad faith.”

Judge Gary, although he may well have had doubts in his
mind concerning the motives leading up to the motion for the
nonsuit, lacked evidence upon which could be predicated a finding
of bad faith on the part of State’s Counsel. It has been said that:

“Acting in good faith means acting honestly, innocently,
without unlawful purpose, and in the absence of all informa-
tion or belief of facts that would render such action uncon-
scientious. * * *” (Yarbrough v. Brookins, 294 S.W. 900, 904,
er. dism., citing 28 C. J. 716).

Sheriff Meyer, and his counsel, may well have had suspicion
that immediately upon the dismissal of the 60th District suit, a
new one would be filed in another court and the sheriff suspended
without notice, hearing, evidence, or representation by counsel.

es

Proof of such fact could come only from knowledge of counsel
then appearing before Judge Gary. “The Acting District Attorney
absented himself from the proceeding and his assistant refused
to disclose the plans of counsel.” (Emphasis added.)

If “acting in good faith” means acting honestly and innocently
and in the absence of information or belief of facts which would
render such action unconscientious, as the case cited indicates,
subsequent circumstances disclosed beyond peradventure of doubt
that the sheriff’s predictions and fears were exactly, completely,
and unerringly accurate. Nine days after Assistant Acting Dis-
trict Attorney Maynard refused to reply to questions asked in an
open hearing which impugned the good faith of his action, we
find the Acting District Attorney going before another court on
substantially the same pleadings and summarily suspending the
sheriff without a hearing.

This would seem to be an appropriate time to recall the Canons
of Ethics governing our profession, with particular emphasis on
No. 19, binding State’s Counsel just as it does every other lawyer:

“The conduct of a member before the court and with other
members should be characterized by candor and fairness. * * *”

To say that “candor and fairness” permits a shopping for a
forum by counsel for the Sovereign State of Texas under the
circumstances shown by this record is to place the emphasis on
form rather than substance. “It is plainly apparent that Judge
Gary, and every other person who has knowledge of the maneu-
vers of State’s Counsel now knows as a fact (what was sus-
pected before) that the actions in taking the nonsuit were not
motivated by candor and fairness; and the only reasonably in-
ference, it is submitted, is to avoid the jurisdiction of the 60th
District Court to procure something elsewhere which had been
denied on two prior occasions.”

Right to Reinstate Cause

“Judge Gary reinstated the ‘original suit’ filed by the relators
only nine days after he had entered the order granting leave to
take the nonsuit. This was done at a time when the acts of the
relators had demonstrated beyond question that their motives in
seeking the nonsuit were not clean; but, upon the contrary, the
evidence of a lack of good faith was then apparent. By that time,
the relators had done just what Sheriff Meyer’s counsel had pre-
dicted they would do — refile in another court and procure his

50

summary suspension — four days before the date set for trial on
the merits in the 60th District Court.”

During the thirty-day period following the entry of an order
or judgment the district court retains jurisdiction over the same
and may take such action thereon as to the court seems proper.
See Gulf, C. & S. F. R. Co. v. Muse, 109 Texas 352, 207 S.W.
897, 4 A.L.R. 618. See also, 4 McDonald, Texas Civil Practice,
1421, Sec. 1803; 33 Texas Jur. 2d 657; Dallas Storage & W. Co.
v. Taylor, 124 Texas 315, 77 S.W. 2d 1031, 1034; McEwen v.
Harrison, 162 Texas 125, 345 S.W. 2d 706.

This Court said in Garza v. Baker, 58 Texas 483, 487:

«“« %* % Tn its own peculiar sphere, the district court is itself
independent and supreme in its power, and this court has no
authority to inquire into or revise its judgments during the
period of time when, by its very organization and constitution,
it still has the power to alter or to change them. This has been
the uniform decision and practice of this court with reference
to judgments of the district courts from its first organization.

soe I?

It is well to remember that the State first invoked the juris-
diction of the 60th District Court. Having done so, it became
subject to the usual rules governing litigation in district courts,
one of which is Rule 829-b, TRCP, spelling out the inherent
jurisdiction which a trial court has over its own judgments,
simply placing a time beyond which the control ceases. Counsel
for the State knew that at any time during the month following
May 22, 1962, the order granting the nonsuit could be revised or,
set aside — either on the motion of Sheriff Meyer or on the
Court’s own motion; and, further that the action could be taken
“with or without good reason”. [Muse, supra].

“We might mention, in passing, that nothing is more calcu-
lated to provoke protective action in a judge than open and flagrant
efforts to evade, avoid, and flaunt prior judgments of the Court.”
Having made two efforts to suspend Sheriff Meyer, without
tender of a witness or proffer of admissible testimony, and dur-
ing a time when Judge Gary had control over his own order of
May 22, 1962, relators brought on the action from which they
now seek relief. Had relators waited until June 23, 1962, another
situation might be presented. But, procéeding with unseemly
haste, it ill behooves them to complain now because a district.

a :

court simply invoked its constitutional right to control its own
orders so as to protect the jurisdiction of the court.

I next contend that the 60th District Court had jurisdiction’
over the parties and the subject matter of the cross-action filed
by Sheriff Meyer, and that the State was served with Process of
the Cross-Action of Meyer.

In September, 1961, after the proceeding had been on file for
some six months, Sheriff Meyer filed his cross-action seeking
affirmative relief against the relators in whose behalf the re-
moval proceedings were then being maintained, W. G. Walley, Jr.,
their counsel, the State of Texas. Allegations were made to the
effect that the Sheriff was being hampered in the discharge of
his duties because of the activities of the several persons men-
tioned. He sought to “quiet title” to his office together with a
permanent injunction against the State and the relators, together
with their counsel, to prevent further interference with the per-
formance of his duties. Process was served.

The State, through Mr. Walley, filed a motion to quash the
citation upon the ground that (a) the State had been “improperly
served” because the service was not in accordance with the Rules
of Civil Procedure, none being specified as controlling; (b) the
service “was not begun in a lawful and correct manner” as re-
quired by the Rules, again no particular rule being cited; and (c)
the service was not completed nor was the return made in “a
lawful and correct manner” as required by some undisclosed rule.
The prayer was that the citation be quashed, set aside and held
for naught.

In an amended motion to quash citation and service thereof
filed by Mr. Walley, the State and the other parties defendant to
the cross-action reiterated the same contentions previously made.

By an order dated November 8, 1961, Judge Gary sustained
the motion to quash filed by all of the defendants, including the
State, and an order to that effect was so entered. Without filing
any answer, the State and the relators, still acting under the
guidance of Mr. Walley, filed a second amended original peti-
tion, on December 29, 1962. Again, as he had done on the prior
occasions, Judge Gary granted leave, fixed an answer date, or-
dered service of process, and set a date for hearing on the motion
to temporarily suspend Sheriff Meyer.

The suit for removal of Sheriff Meyer was originally insti-

53 ee

tuted by and in the name of “The State of Texas, ex rel, George
Dishman, et al” as plaintiffs and was filed by W. G. Walley, Jr.,
“Acting District Attorney of Jefferson County, Texas”. Mr.
Walley was so “acting” under an appointment issuing out of an
ex parte temporary suspension by Judge Harold Clayton in the
186th District Court a few days prior thereto. Service of process
on the cross-action was served upon the State by delivering copies
thereof to the several relators “acting by and through the said
defendants”.

If it be conceded that process might have been insufficient to
bring the State of Texas into the litigation (a fact which is not
necessary for a decision herein), nevertheless, the State, acting
through its counsel, filed not one but two motions to quash the
process. In so doing, the State came within the full ambit of
Rule 122:

“If the citation or service thereof is quashed on motion of
the defendant, such defendant shall be deemed to have entered
his appearance at ten o’clock a.m. on the Monday next after the
expiration of (20) days after the day on which the citation or
‘service is quashed, and such defendant shall be deemed to have
been duly served so as to require him to appear and answer

- at that time, and if he fails to do so, judgment by default may
be rendered against him.”

An answer was due by said defendants, including The State
of Texas, on December 4, 1961, and at any time thereafter, a
default judgment could have been entered. Mr. Franki, in his
notes of decisions under the statute antedating Rule 122, cites
many decisions by this court for the proposition that any ap-
pearance operates as a general appearance, and it is immaterial
whether the motion is sustained or overruled.

This Court has now promulgated new Rule 120a, providing
for special appearances, a statutory move. However, this Rule is
not effective until September 1, 1962, and it can scarcely be urged
that it may be made retroactively effective, for this case only,
to September, 1961.

Had the State of Texas ignored the process, but continued
to appear in the prosecution of its suit for removal, another ques-
tion would be presented; and, possibly a different result might
be reached. However, having acknowledged the citation, having
appeared to move to quash, the State became a party to the cross-
action and was before the Court. The cross-action of Sheriff Meyer

ee ee

was within the jurisdiction of the 60th District Court to hear and
determine.

Remember that the State was required to appear and answer
the cross-action filed by Sheriff Meyer on December 4, 1961.
It has not filed any pleading, even yet, therein challenging the
jurisdiction to hear and determine the cross-action. Now, and
before this Court, for the first time, counsel for the State, in-
cluding Mr. Walley, who has been in the litigation from its in-
ception, make a collateral attack thereon contending: (a) it is
wholly independent and unrelated to the main suit, and is in fact
a suit against the State of Texas; (b) there is no claim that the
State has given its consent to be sued in said cross-action; (c)
the same is “wholly independent of, unconnected with, and has
not grown out of the transaction which constitutes the subject
matter of the main suit”.

The contention that the cross-action is independent and un-
related to the main suit is obviously frivolous and without merit.
Counsel for the Sheriff makes it abundantly clear that the State of
Texas, acting by the very persons before this Court as relators,
has brought many proceedings against him in various courts over
the State. He has been indicted in the Criminal District Court of
Jefferson County (the indictment being attached to the original
petition) and some of the relators were members of that Grand
Jury; he has been indicted by the Grand Jury empaneled by the
186th District Court,? and members thereof have joined the ranks
of “relators” in proceedings against him; criminal cases against
him have been transferred to distant counties without a hearing
in his home county. These matters are fully pleaded in the Sec-
ond Amended Original Answer and Cross-action of Sheriff Meyer.

In every instance, The State of Texas has been a party to the
proceeding and one or more of the relators in this matter have
been involved therein. Many of the instances have occurred since
the filing of the cross-action of Sheriff Meyer.

Under these circumstances, the opinion of this Court in An-
derson, Clayton & Co. v. State, 122 Texas 530, 62 S.W. 2d 107,
is peculiarly appropriate. The suit was brought by the State, “on
the relation of James V. Allred, Attorney General, and James V.
Allred, as Attorney General” to secure an injunction restraining

2 The legality of the action of the 186th District Court empancling a
Grand Jury when one was already in existence in the Criminal District Court
was the subject of this Court’s opinion in Lord v. Clayton, 163 Texas 62, 352
S.W. 2d 718.

5

the defendants from further violation of a penal statute regu-
lating trucks, and the recovery of monetary penalties therefor.
An application for a temporary injunction having been denied, by
agreement of the State, numerous arrests of employees of An-
derson, Clayton were made by State officers. Thereupon, the
original defendants, Anderson, Clayton filed a cross-bill and pro-
cured a temporary restraining order preventing further arrests,
making parties thereto many law enforcement officials as well as
the. members of the Railroad Commission.

Then, the State, when the case was called for trial, took a
nonsuit as to its prayer for affirmative relief, and the attention
of the trial court was called to the cross-bill. Upon the hearing
thereon, a month later, the State then contended that the bill
showed upon its face that the relief sought was an injunction
against the enforcement of a penal statute without showing a vio-
lation of vested property rights. 62 S.W. 2d at 107-108.

This Court, recognizing the rule and that the State may not
be sued without its consent, then said:

“But the authorities sustain the further rule that, where a
state voluntarily files a suit and submits its rights for judicial
determination, it will be bound thereby, and the defense will
be entitled to plead and prove all matters properly defensive.
This includes the right to make any defense by answer or cross-
complaint germane to the matter in controversy * * * (citing
cases).

“The state having invoked the jurisdiction of the district
court of Nueces County, a court of competent jurisdiction, for
a judicial determination of the question as to whether the
defendants were subject to the provisions of the foregoing act,
and liable for the penalties described therein. It became subject
to the same rules as other litigants, except in so far as such
rules may be modified in favor of the state by statute or may
be inapplicable or unenforceable because of exemptions inherent
in sovereignty * * * (Citing cases).

“That court [of competent jurisdiction] at the instance of
the state acquired jurisdiction of the parties and subject-matter
in controversy, and, the defendants having sought affirmative
relief in a cross-bill, the jurisdiction of the court cannot after-
wards be defeated by the state upon a plea that the cross-peti-
tioners were seeking an injunction against the enforcement
of a penal statute. * * *” (62 S.W. 2d at p. 110).

ee 585

In Glenn v. McCarty, Texas Civ. App., 75 S.W. 2d 165, no
wr. hist., the Court said:

“A court which is prior in jurisdiction may enjoin the
bringing of prosecution of interfering suits in other courts,
whenever it appears that conflicts of jurisdiction may arise.
This is so even though the second suit is not identical and is not
abatable as one for the same purpose between the same parties.”

Relators rely upon the case of Ex Parte Norton, 118 Texas
581, 17 S.W. 2d 1041, by this Court for authority to take a non-
suit. I cannot agree that the Norton case has any application in a
case such as the instant case where a cross-action has been filed
involving matters related to the removal suit. In the Norton case
where no cross-action had been filed, the Court said:

“Had the Court granted relator (Norton) his legal rights
and dismissed the divorce suit, * * * he (the) [Court] would
have lost jurisdiction of the divorce proceedings as such, and
would have no power or jurisdiction to enter a contempt order
for failure of relator to pay alimony, and, had the relator been
accorded the right which was absolutely given him under the
statute, there would have been absolutely no way to enforce
the payment of the back alimony claimed by the wife. * * *”

It is my contention that in the present case, if it should ap-
pear that there exists some deficiency in Meyer’s petition in cross-
action, the Court may look to the State’s third amended original
petition in aid of Meyer’s cross-action. In the case of McElyea
et al. v. Parker, 125 Texas 225, 81 S.W. 2d 649 (1985), this
Court said:

“Even though the plaintiff has taken a nonsuit, his peti-
tion may be looked to in aid of the defendant’s cross-action
seeking affirmative relief.”

Bear in mind that this Court has, upon at least two occasions,
spoken of removal suits as being penal in character. We said in
State v. Reyna, 160 Texas 404, 3833 S.W. 2d 832, 835:

«ce # * As pointed out by the Court of Civil Appeals, this
Court held in 1890 that the ouster suit is ‘penal in character,
and must be construed as though it were one defining a crime
and prescribing its punishment.’ State ex rel. Hickman v. Alcorn,
78 Texas 387, 14 S.W. 663, 665.”

586

Here, the State, after bringing indictments against Sheriff
Meyer, sought his removal; and, in the time preparatory to a final
trial, sought his temporary suspension. It was within the power
of the State (and Mr. Walley was counsel in both cases), to
proceed to trial on the criminal case. Had he been successful in
procuring a conviction, permanent removal of Sheriff Meyer
would have followed as a matter of law. See Art. 5968, Vernon’s
Annotated Civil Statutes. But, no effort was made to procure
a trial in the criminal proceedings, either the original or the
subsequent ones.

Instead, we find the State, all the while being a party to a
proceeding seeking to determine whether or not Sheriff Meyer
should be removed from office for official misconduct, with issue
joined, persisted in bringing repeated indictments against the
sheriff on charges which, if not already within their pleadings
in the removal proceedings, were invariably inserted therein
shortly after the new indictments.

As was said in the Anderson case, supra:

« * * To hold, in the face of this record, that the State
could invoke the jurisdiction of a court to determine the issues
involved in this suit, and during the pendency of the proceed-
ings in that court could, by its agents, institute criminal pro-
ceedings in many instances against the defendants, as was
done here, upon the very issue then pending in that court for
determination, would be repugnant to the well-settled rules
announced in the foregoing opinions * * *”

The fact that Sheriff Meyer would continue to draw his pay
during any period of suspension and would not sustain pecuniary
injury if he were suspended does not alter my view. Judge
Brown, speaking for this Court in Terrell v. Greene, 88 Texas
539, 31 S.W. 631, 684, said:

« %* % When an officer is denied the privilege of discharg-
ing the functions of his office, he suffers a wrong which can-
not be compensated merely by the payment of fees which might
have been derived from the discharge of the duties of the office.
A legal and moral obligation rests upon every officer to dis-
charge the duties of his office, independently of the question
of compensation. Compensation is an important matter to the
officer, as furnishing him the means of supporting himself,
while engaged in a public duty, but to every honorable man
there is more than simple pecuniary compensation; there is

Se

that which attends to the faithful discharge of a public duty.
The fact that Terrell might have recovered from the county
commissions allowed him by law would not prevent him
from demanding that he should be lawfully admitted to the
discharge of the duties of the office to which the people of
Tarrant County had elected him. * * *”

Relators in this case have filed against the Sheriff civil pro-
ceedings in the 60th District Court embodying the substance of
indictments in the Criminal District Court. “Failing in the effort
to suspend him temporarily, they took another swing with an
indictment in the 136th Court which was transferred to the
Criminal District Court; and, again, and for the third time, they
procured indictments against the Sheriff [which were immediately
transferred to Williamson County and just as promptly remanded
by Judge Wood to the 186th Court of Jefferson County] where
they still remain, albeit they are embodied in the removal pro-
ceedings.”

Definitely, the cross-action of Meyer to prevent molestation
and harrassment presents a justiciable question for consideration
by the Court. Certainly, it arises out of the activities of the small
group of relators and their counsel. It appears to me to be
repugnant to the sense of justice to see such matters continue
unchecked.

This case is in no manner analagous to State v. Ferguson,
133 Texas 60, 125 S.W. 2d 272, because there Judge Ferguson
had granted injunctions restraining state officials from enforce-
ment of highway restrictive user statutes [not an open ques-
tion”, 125 S.W. 2d at p. 274] and the State procured the issuance
of the appropriate writs to prevent this interference with law
enforcement. We have no such case presented here. On the other
hand, ours is one much more similar to the fact situation present-
ed in University of Texas v. Morris. 162 Texas 60, 344 S.W.
2d 426. Three suits with Morris as plaintiff pending in Travis
County were consolidated for trial; and, Morris seeking to delay
the consolidated trial until he could try a suit in New Mexico
against one of the defendants, was enjoined from proceeding in
the New Mexico case until the consolidated case had been dis-
posed of. The Court of Civil Appeals reversed (337 S.W. 2d
169) and this Court, after carefully considering the matter, re-
instated the judgment of the trial court.

Order of Reinstatement Not Void.

5

Relators, in the proceeding before this Court labor under the
burden of showing that Judge Gary had no jurisdiction and that
his orders were void. In so stoutly maintaining their position, the
relators overlooked the fundamental principle of law that an
order of the court of general jurisdiction in a matter wherein
it has acquired jurisdiction over the subject matter and of the
parties is presumptively valid, certainly against a collateral
attack. See State Board of Insurance v. Betts, 158 Texas 83,
808 S.W. 2d 846. Also consider the cases following Cleveland
v. Ward, 116 Texas 1, 285 S.W. 1063, as well as the cases therein
cited. One of those following Cleveland v. Ward, is Barrier v.
Lowery, 118 Texas 227, 11 S.W. 2d 298, rehearing denied, 13
S.W. 2d 688. That court in reviewing the holding in Cleveland
v. Ward said:

«* * * The decision in that case clarified the law of this
state with reference to the jurisdiction of a district court to
enter any order or take any action in a case where the juris-
diction of another district court has previously attached to the
subject-matter and the parties involved therein. It is distinctly
held that jurisdiction of a district court once acquired cannot
be destroyed, diminished, or suspended by any one of the
parties, pending an action in another court, and any judgment
or order of the latter is void so far as it conflicts with any
judgment or order of the court first acquiring jurisdiction.
* * #9? 11 S.W. 2d 298. (Emphasis ours.)

The rule is firmly entrenched in Texas jurisprudence that
when a court of general jurisdiction has acquired jurisdiction
of a cause for one purpose it will retain jurisdiction as to all
questions which are properly involved in the suit or which may
become involved therein. See Chambers & Thigpen v. Cannon,
62 Texas 2983; Witt v. Kaufman, 25 Texas Supp. 384; Willis v.
Gordon, 22 Texas 241; 15 Texas Jur. 2d 479 Courts, par. 53;
Freeman v. Freeman, 160 Texas 148, 8327 S.W. 2d 428.

In the second Betts case, State Board of Insurance v. Betts,
158 Texas 612, 315 S.W. 2d 279, 281, this Court said:

“Tt is recognized that this Court’s power or control over
the orders of a district or county court is extremely limited.
We have no general supervisory authority over proceedings
pending in trial courts. Since our jurisdiction is primarily
appellate, the correction of errors made in the course of a
trial or other proceedings must, as’ a general thing, await the
entry of a final judgment or concluding decree. A well settled

a —_:!

exception to this general rule is that which permits this Court
through an exercise of its original jurisdiction to order a trial
court to vacate a void order and expunge the same from its
records. * * *” (315 S.W. 2d at p. 281 emphasis by the Court.)

See also the first Betts case, supra; Ex parte Tyler, 152 Texas
602, 261 S.W. 2d 833; Ex parte La Rocca, 154 Texas 618, 282
S.W. 2d 700, 703; Mitchell v. Mitchell, 283 S.W. 2d 187, no writ
history; Frazier v. Hanlon Gasoline Co., 29 S.W. 2d 461, er.
ref.; Burdett v. Silsbee, 15 Texas 604, 619.

Before turning to still another reason why relators should
not prevail herein, the doctrine of clean hands, it might be well
to consider just what it is relators seek to do in this protracted
litigation. Obviously, they seek the temporary suspension of the
Sheriff as the end result of the litigation. For, if they were
seeking his removal, the way has been open to procure trials
of any one of the many criminal cases brought; and, despite
repeated insistence on the part of Judge Gary, no announcement
of ready to proceed to trial on the merits has ever been made
unconditionally. Rather, repeated efforts have been made to
“temporarily suspend” Sheriff Meyer.

We should consider the statutory authority for removal of
officers, as distinguished from temporary suspension, in Art.
5968, Vernon’s Annotated Civil Statutes, it is only a conviction
by a petit jury which authorizes the removal of an official. Vernon
lists an Attorney General’s Opinion (No. O-2619, 1940) as hold-
ing that a conviction of a school trustee of a felony in a nonjury
trial does not constitute an automatic removal from office. Nev-
ertheless, in so far as the school trustee was concerned, the
judgment of conviction of a felony was just as binding and ef-
fective as one based upon a verdict by a petit jury.

Certainly, automatic removal not following a judgment of
conviction by a court, as distinguished from a conviction by a
petit jury, it is apparent that a mere indictment by a Grand
Jury constitutes no ground for suspension, except as a matter
of the exercise of judicial discretion.

The Legislature, in a single-sentence enactment, using only
plain English words of clear and unmistakable meaning, has
spelled out how, other than a conviction by a petit jury, an
officer can be removed. It is Article 5971, reading:

“Tn every case of removal from office for the causes named

50

in the preceding article, the cause or causes thereof shall be
set forth in writing, and the truth of said causes be found by
@ jury.”

Putting these two articles together, and they constitute the
only statutory authority for removal of county officials, it is
erystal clear that no district judge, without the intervention of
a jury, can remove a county official from office.

With reference to suspension, a great deal of discretion is
vested in the district judge. The only power to suspend is to
be found in the first few lines of Art. 5982, Vernon’s Annotated
Civil Statutes, which reads:

“At any time after the issuance of the order for the cita-
tion, as herein provided, the District Judge may, if he sees fit,
suspend temporarily from office, the officer against whom the
petition is filed. * * *”

This statute is permissive, not mandatory, and is to be exer-
cised with discretion confided by law in the district judge. The
framers of the Constitution, with the fresh memory of the Re-
construction Period, wrote into our basic law the provision for
removal only upon a jury verdict (Art. V, Sec. 24), making it
certain that such power was never to be conferred on any one
man, even though he be a judicial officer. Considering the en-
tire removal procedure, I submit that it was the intention of the
Legislature to cause the power to remove to be vested, ultimately,
in the same body having the power to place in office: the citizen-
ship as represented on the petit jury and in the polling place.

So, it is not unreasonable to say that temporary suspensions
should not follow automatically the filing of a petition for re-
moval. Rather, it should be upon the basis of facts presented
in open court in an adversary proceeding at which both parties
may be heard, witnesses observed, and an informed judge put
in position to exercise the discretion confided to him.

When the State undertakes the task of expelling what it con-
siders an unfaithful officer from his position of trust, it should
be ready and able to proceed into open court armed with the
evidence to sustain the position taken; and, there in accordance
with the rules of law and evidence, at least make a prima facie
proof of its allegations. In view of the admissions of the State
made here in open court that Judge Gary is an honorable Judge

ee

and has at all times acted in good faith, and, in view of ‘the
courageous actions of Judge Gary, as reflected by this record,
it can reasonably be said that at any time during the 15 months
this case was actively before him, the State would have received
such orders as were justified by the evidence. But, no evidence
was offered, no witnesses produced, no proof tendered—just plead-
ings. And, under these circumstances, judicial discretion was
exercised in favor of the officer who had been elected by the
citizens. He was and is entitled to remain in office until one of
two things occurred: (a) proof warranting his suspension was
presented; or (b) a petit jury found the truth of the charges
brought against him.

Relators Had An Adequate Remedy At Law Through
An Appeal to the Court of Civil Appeals.

The relators herein had a perfect legal right to test the validity
of the injunction order issued by Judge Gary by a single appeal
therefrom within the 20-day period authorized by law. As a mat-
ter of fact the appeal has been perfected to the Court of Civil
Appeals for the Ninth Supreme Judicial District at Beaumont,
Texas. Apparently, however, the State is allowing this appeal
to remain dormant just as it has failed to prosecute in good faith
the removal suit and the criminal indictments pending against
Meyer. Relator Lindsey does not deny that on June 21, 1962,
he addressed the following letter to the District Clerk:

“In view of the fact that the Honorable Supreme Court of
the State of Texas has acquired jurisdiction of the above en-
titled and numbered cause by allowing the State of Texas to
file its petition for Writ of Mandamus and Prohibition in said
cause, the State of Texas will not proceed to pursue its appeal
to this Honorable Court of Civil Appeals, Ninth Judicial Dis-
trict of Texas.

“Please submit cost statements for the preparation of the
transcript, pursuant to our letter of June 13, 1962, to this
office.”

But, relators labor under still another impediment, the ancient
and honored rule of clean hands. I take the liberty of quoting
from this Court’s opinion on the subject, somewhat copiously
because it illustrates the position in which the relators now find
themselves. In Westerman v. Mims, 111 Texas 29, 227 S.W.
178, 181, Judge Greenwood said:

50

“Our statute empowers this Court to issue writs of man-
damus ‘agreeable to the principles of law regulating such
writs.’ Article 1526, Vernon’s Sayles’ Texas Civil Statutes.

“Among the principles regulating the issuance of writs
of mandamus, which cannot be regarded otherwise than as
clearly settled, is one which is thus stated in Section 1880 of
Spelling’s Extraordinary Relief:

“While the remedy by mandamus is not equitable, but
strictly legal, yet by analogy to the principles prevailing in
courts of equity it is a uniform requirement that the relator
in seeking this remedy must come into court with clean hands.’

“To the same effect, see Section 26, High’s Extraordinary
Legal Remedies.

“Justice Lamar, speaking for the Supreme Court of the
United States, announces the rule to be that—

“Mandamus * * * will not be granted in aid of those, who
do not come into court with clean hands,’ since the writ issues
‘to remedy a wrong, not to promote one.’ Turner v. Fisher,
222 U.S. 209, 32 Sup. Ct. 38, 56 L. Ed. 165.

“See, also, Nevell v. Terrell, 99 Texas 856, 87 S.W. 659,
89 S.W. 971; Hale v. Risley, 69 Mich. 598, 37 N.W. 570;
U.S. ex rel Stevens v. Richards, 83 App. D.C. 418, 419.

“The rule that he who seeks a mandamus must present
his application with clean hands has no different meaning from
the general maxim in equity that ‘he who comes in to equity
must come with clean hands.’ Prof. Pomeroy states the mean-
ing of the maxim as follows:

“Tt says that whenever a party, who, as actor, seeks to
set the judicial machinery in motion and obtain some remedy,
has violated conscience, or good faith, or other equitable prin-
ciple in his prior conduct, then the doors of the court shall be
shut against him in limine; the court will refuse to interfere in
his behalf, to acknowledge his right, or to award him any
remedy.’

“He adds:

Ss |:

“<Tt is not alone fraud or illegality which will prevent
a suitor from entering a court of equity; and really uncon-
scientious conduct, connected with the controversy to which
he is a party, will repel him from the forum whose foundation
is good conscience.’ 1 Pomeroy’s Equity Jurisprudence. Secs.
397, 404.

“Having concluded that the petition of relators is grounded
on conduct amounting to an invitation to, and hence partici-
pation in, an act violative of good faith and of conscience, it
follows that relators did not come into court with clean hands,
as required to entitle them to the relief prayed for, and hence
the mandamus is denied.”

In addition to the above enumerated facts, I call attention
to the following: After taking the nonsuit, the State on May 31,
1962, (only 9 days afer nonsuit) acting through two assistants
to the Acting District Attorney, W. G. Walley, Jr., appeared
together at the filing window of the District Clerk’s office with
a number of papers, including the new removal suit. These at-
torneys inquired of Deputy District Clerk Gowling what court
was open. According to the Clerk’s affidavit the following rather
unusual events transpired: The Clerk checked and stated the
58th District Court was open for filing of suits. (The custom
was to file with the courts in rotation.) Thereupon, one of the
assistants handed the Clerk a petition in a criminal case and it
was filed in the 58th Court. Then inquiry was made as to the
next open court for filing, and when told that the next was the
60th Court, one. of the assistants handed to the Clerk another
case and it was filed in the 60th. Then, Carl Griffith, one of the
assistants, stated that the next court open ought to be the 136th
and when the Clerk replied in the affirmative, Griffith handed
to the Clerk a petition which proved to be the removal suit by the
State against Sheriff Meyer.

All of the conduct and actions herein outlined indicate a
conscious and deliberate disrespect for Judge Gary as the result
of Gary’s action in refusing to suspend Meyer without evidence,
and indicates very clearly to me, and no doubt convinced Judge
Gary, that here was a masterpiece in the art of trifling with
the administration of justice. The acts of the relators in leading
Judge Gary to believe on May 17, 1962, that they would be ready
for trial in the 60th Court on June 4, 1962, their filing of a
nonsuit immediately thereafter, their refusal to testify under
oath as to their good faith in taking a nonsuit, their immediate
filing of a new suit in the 186th Court do not rest upon the

|

foundation of good conscience, and the State should be compelled
to prosecute its appeal from Judge Gary’s rulings to the Court
of Civil Appeals at Beaumont, Texas.

It must be remembered that we have a statute in Texas,
Article 5986, which provides that “No officer in this State shall
be removed from office for any act he may have committed prior
to his election to office.” This Article applies to actions for
removal of officers. The fact that Meyer was last elected Sheriff
of Jefferson County, Texas, on November 8, 1960, after the alleged
acts of misfeasance, it was not an abuse of discretion for Judge
Gary to refuse to temporarily suspend Meyer, and Judge Gary’s
actions were with due regard to the Constitution and laws of
Texas.

_ Judge Gary’s order reinstating the removal suit should be
upheld, and the case should proceed to trial without delay. In
any event, the Sheriff is entitled to proceed to trial on his cross-
action without interference by orders of other courts. The State
should realize that it has filed a removal suit and not a sus-
pension suit, and it owes the public a duty to act promptly. In
the event that Judge Gary should conclude that under all the
circumstances he should recuse himself, then that should be made
known within a reasonable time in order that the Presiding
Judge of the Administrative District may immediately assign
another Judge to the 60th District Court to preside in the trial
of this case. Since writing this dissent, I have read the majority
opinion, and I see nothing in that opinion that would prevent a
trial of the cross-action even though the new removal suit is
never tried in Jefferson or any other county.

I would deny the petition for writ of mandamus.
Opinion delivered July 2, 1962.
a
JAMES F. BLAND

No. A-8079. Decided July 11, 1962
359 S.W. 24 297

Olin P. McWhirter, Greenville, Florence, Garrison & Holt,
for petitioner.

Fulton, Hancock & McClain, Gilmer, for respondent.
PER CURIAM.

As reported in 344 S.W. 2d 435, acting under Rule 483, Rules
of Civil Procedure, we reversed the judgment of the Court of
Civil Appeals and affirmed the judgment of the trial court in
this cause. (837 S.W. 2d 805.)

The Supreme Court of the United States granted a writ of
certiorari, and on May 21, 1962, reversed our decision and re-
manded the cause to us for proceedings not inconsistent with their
opinion. U.S. _.; 82 S. Ct. 38 L, Ed. 2d 180.

In the course of its opinion the Court said:

“The regulations are not intended to be a shield for fraud,
and relief would be available in a case where the circumstances
manifest fraud or a breach of trust tantamount thereto on
the part of a husband while acting in his capacity as manager
of the general community property. However, the doctrine of
fraud applicable under federal law in such a case must be
determined on another day, for this issue is not presently here.”

We have examined the transcript of the pleadings in the trial
court, and there are no allegations of fraud contained in any

56 es

of the pleadings filed by petitioner, James F. Bland. Under this
record no such issue is raised in this cause.

Our judgment heretofore entered March 8, 1961 is set aside,
and the application for writ of error is refused, no reversible
error.

Opinion delivered July 11, 1962.
Dt

T. W. BRYANT, Petitioner
v.
Mrs. CHARLES S. CLARK, Respondent
No. A-8547. Decided May 28, 1962

Rehearing Denied July 11, 1962
358 S.W. 2d 614

ee 597

ASSOCIATE JUSTICES SMITH and HAMILTON dis-
senting.

Allen & Smith, Austin, for petitioner.
Gay & Meyers, Coleman Gay, III, Austin, for respondents.

ASSOCIATE JUSTICE FRANK P. CULVER delivered the
opinion of the Court.

Hl Petitioner, Bryant, brought this suit to compel specific per-
formance of a contract entered into between him and Mrs. Clark
to convey to him certain real estate situated in Travis County.
The principal question in the case is whether the terms of the
‘written contract were sufficiently certain and definite so as to
warrant this character of relief. Both the trial court and the
Court of Civil Appeals with one Justice dissenting have answered
the question in the negative. 347 S.W. 2d 635.

The contract, after describing the property to be conveyed,
provided as follows:

“Price to be $10,000.00 (Ten thousand dollars). Mr. Bryant
agrees to pay $2,000.00 cash and balance at 6% interest, pay-
ments to be agreed upon by seller and buyer. We have agreed
as follows: 15 annual installments as balance.”

Mr. Bryant testified that he had no agreement with Mrs.
Clark other than as set forth in the written contract above, but
that he was ready and willing to “sign the notes”.

In Langley v. Norris, 141 Texas 405, 173 S.W. 2d 454, 148
A.L.R. 555, cited by petitioner, we said that absolute certainty
is not necessary, but that “the certainty required in a contract
which renders it subject to an action for specific performance is
a reasonable certainty.” That case turned upon the construction
of the language used in the written contract, rather than upon
the question, as here, whether any material and basic elements
of the contract are wanting. In Langley the contract provided
that the vendee would purchase the land for $15.00 an acre
to be paid for in cash. The vendors were to furnish title subject
to an existing lien securing $4600.00. The vendors made the con-
tention that the contract was indefinite and uncertain because
it could not be said whether the grantors were obligated to pay
the lien indebtedness out of the cash consideration or whether

58

the vendee was to pay $9300.00 cash and take the land subject
to the indebtedness. The court had no difficulty in determining
“with reasonable certainty” that the indebtedness was to be paid
out of the cash consideration.

Mr. Bryant also relies strongly upon Wilson. v. Beaty, Texas
Civ. App., 211 S.W. 524 (1919), wr. ref., wherein specific per-
formance was enforced, the court holding that the contract was
certain and definite in its terms and left no reasonable doubt as
to what the parties intended and no reasonable doubt of the
specific thing equity was called upon to have performed. In that
case the purchaser agreed to execute notes payable on or before
the 15th day of December of each year with the option of paying
them at any time not later than five years from the date of their
execution. The court correctly held that although the number
of notes was not specified in the contract that fact was immate-
rial and would create no uncertainty since the purchaser had the
option of paying all or any part of the contract at any time before
the end of the five-year term as provided in the contract. Neither
of the above cases are very persuasive from the petitioners’ stand-
point.

The authorities generally concur in the rule announced in
Wilson v. Fisher, 144 Texas 58, 188 S.W. 2d 150, although in
that case the lack of certainty was with reference to the descrip-
tion of the property, as follows:

“In the absence of equities removing the case from the
operation of the statute of frauds, which do not here exist, it is
well settled that before a court will decree the specific perform-
ance of a contract for the sale of land, or entertain a suit for
damages for the breach thereof, the written agreement or
memorandum required by the statute must contain the essential
terms of a contract, expressed with such certainty and clarity
that it may be understood without recourse to parol evidence
to show the intention of the parties; * * *.”

Pomeroy in his Specific Performance of- Contracts, 3rd ed.
(1926), Sec. 159, states the rule with regard to the certainty
required for specific performance to be:

«ce * * its object is to procure a performance by the de-
fendant, and this demands a clear, definite, and precise under-
standing of all the terms; they must be exactly ascertained
before their performance can be enforced. * * *”

See 599

Restatement of the Law, Contracts, Sec. 870, states the rule
as follows: “Specific enforcement will not be decreed unless the
terms of the contract are so expressed that the court can render
with reasonable certainty what is the duty of each party and the
conditions under which performance is due.”

We are of the opinion that the contract in question is too
indefinite and uncertain to authorize a judgment of specific per-
formance.

The contract provides for the payment of the deferred bal-
ance of the purchase price of the property in fifteen annual in-
stallments, but it contains no provision with respect to the amount
of the several installments. The contract provides for 6% interest
on the deferred balance, but it does not provide when the interest
is payable or in what amounts.

Petitioner says it is reasonable that the “15 annual install-
ments” were to be paid in equal amounts since it was not other-
wise provided. But the question is whether it is reasonably cer-
tain that the parties so intended. They had the right to provide
otherwise and not infrequently is it so arranged. Oftentimes the
seller, for investment purposes, may consider it more advantage-
ous to have the greater part of the indebtedness fall due in the
last installment, and this condition might be equally desirable
on the part of the purchaser for other reasons.

If, as petitioner suggests, we should hold that the parties
intended to provide for payment of the deferred balance in fifteen
equal annual installments and write that provision into our judg-
ment, what do we then hold the parties intended with respect
to interest payments and what would we write into our judg-
ment with respect thereto? Would we provide that the interest
be paid annually on the unpaid balance? Or would we amortize
interest and provide that the deferred balance and interest be
paid in fifteen equal annual installments? Or would we provide
that the payment of interest be deferred until the last payment
on principal? To require any of these methods of paying interest
is to make a contract for the parties by supplying terms with
respect to important subject matter of the contract which they
left totally uncertain in their written memorandum. Uncertainty
as to interest provisions was held to render a contract incapable
of specific performance in Harter v. Morris, 72 Ind. App. 189,
123 N.E. 28. It has been so indicated in at least one Texas case.
Goode v. Westside Developers, Inc., Texas Civ. App., 258 S.W.
2d 844, ref. nr.e.

600

In discussing the required certainty of the contract to enable
one to obtain specific performance, the Georgia Supreme Court
in Williams v. Manchester Building Supply Co., 218 Ga. 99, 97
§.E. 2d 129, stated:

«s * * its terms must be such that neither party can rea-
sonably misunderstand them. It would be inequitable to carry
a contract into effect where the court is left to ascertain the
intention of the parties by mere guess or conjecture, because it
might be guilty of erroneously decreeing what the parties never
intended or contemplated.”

Additionally, petitioner urges that a court of equity should
intervene and declare specific performance for the reason that
he has materially changed his position in reliance on the binding
quality of his agreement by causing the land to be surveyed and
the abstract brought to date at his expense and deposited $400.00
earnest money to apply on the cash purchase price. The earnest
money check has not been cashed and was tendered back by Mrs.
Clark. Although as further set out in the Restatement, supra:
«ox % Even though subsidiary terms have been left to be de-
termined by future agreement, if performance has been begun
by mutual consent justice may require specific enforcement, the
court supplying the missing terms in such a way as to assure
to the defendant all advantages that he reasonably expected,”
nevertheless we think the expense incurred by Mr. Bryant in
having the property surveyed and the abstract brought down to
date would not be such performance as to warrant specific en-
forcement of this contract.

We are therefore of the opinion that the judgments of the
courts below denying specific performance of this contract must
be affirmed.

Opinion delivered May 28, 1962.
JUSTICE HAMILTON, dissenting.
I respectfully dissent.

This is a suit for specific performance of a simple contract
drawn by two laymen in the handwriting of the respondent, who
refused to perform. There has been no claim by allegation or
otherwise that the contract was unjust or that it was procured
through frdud, misrepresentation or mistake, but is merely a

es 601

case of a refusal to perform a plain, just and reasonable contract.
Respondent attempts to avoid its performance by technicalities
and objections not justified by the terms of the contract or upheld
or countenanced by the law. Respondent’s whole case is based
on the affirmative defense as set out in her allegations as follows:

“Defendant says further that plaintiff is not entitled to
specific performance of said alleged contract for the reason
that said contract is so vague and indefinite as to the terms
and conditions of the conveyance that no Court could specifically
order the enforcement of said contract.”

Respondent agreed to sell her lake property to petitioner for
a consideration of $10,000, $2,000 cash, the balance to be paid
in fifteen annual installments which are to draw interest at the
rate of 6%.

This court has held that specific performance is not available
to petitioner because the contract is too uncertain in that the
amount of each of the fifteen annual installments was not stated,
and that it was not said when the interest was to be paid. It is
my opinion that this contract is not so incomplete or uncertain
that it cannot readily be made clear and plain by the aid of com-
mon usage and reasonable implications of fact. This suit is an
excellent example of that type of case in which a court should
exercise its equitable powers.in order to see that that is done which
ought to be done.

While the deal was pending respondent notified petitioner
that she was not going through with it for the following reasons:

“Well, I simply said that I couldn’t part with my place,
because it had such temperamental attachment to me. There
are a lot of reasons. It means a lot to me to go out there. I can
go out there and relax, and I need the place in lots of ways,
because it is just so relaxing when I go out there, and when
I went out there to get some of my things out * * * I just don’t
see how I can do it. * * *

«« * * T just love my place, and I just don’t feel like I can
give it up, because I think it’s going to mean so much to me
to keep it. My relatives all like it.”

There was not the slightest hint in her testimony that there
was a misunderstanding as to what the amount of each of the

60, es

fifteen installments would be or as to when the interest would
be payable or any misunderstanding as to any of the terms of
the contract. There was nothing in her testimony to indicate that
the terms of the contract were unfair to her in any way. Her only
reasons for backing out on this contract are given in her testi-
mony as quoted above.

When respondent and petitioner provided that the balance of
$8,000 would be paid in fifteen annual installments without pro-
viding for the amount of each installment, it stands to reason
that they intended the installments to be in equal amounts. Like-
wise, by providing that the deferred payments should bear 6%
interest it is only reasonable to conclude that the parties meant
that such interest would be payable annually as it accrued.

This court should not entertain the proposition that the parties
could have provided that the major part of the deferred indebt-
edness would fall due on the last installment, or that they could
have provided that the payment of interest be deferred until the
last payment on the principal. Neither should the court entertain
the proposition that the parties could have provided that the in-
terest would be amortized and the balance of the consideration
and interest be paid in fifteen equal annual installments. The very
fact that the contract contained no such provisions is why the
court can conclude with reasonable certainty that the parties
intended that the deferred balance of the consideration would
be payable in fifteen equal annual installments and the interest
would be payable annually as it accrued. It is the absence of the
suppositions proposed by the court that compels this construction
of the contract. The court by reaching this construction would
not be making a new contract for the parties, but would be merely
enforcing the obvious intent of the parties.

The case of Wilson v. Beaty, 211 S.W. 524, Texas Civ. App.,
opinion by Chief Justice Fly, is a leading case in Texas on the
subject of specific performance. It so happens that the facts
involved in that case are fairly similar to the facts of the instant
ease. It has been cited many times by this court and other courts
on the following proposition, which we quote from the opinion:

«cs %&* %&* Where a contract is in writing, is certain in its
terms, is fair and just in its provisions and capable of being
enforced with fairness to both parties, it is a matter for en-
forcement in a court of equity. * * * *

“The contract is certain and definite in its terms if it leaves

ee) 608

no reasonable doubt as to what the parties intended and no
reasonable doubt of the specific thing equity is called upon to
have performed. Pom. Eq. Jur. 764; Ward v. Stuart, 62 Texas
835; Munk v. Weidner, 9 Texas Civ. App. 491, 29 S.W. 409.”

The opinion of this court quotes with approval the rule as
stated in Restatement of the Law, Contracts, Par. 370, Ch. 12,
p. 678, as follows:

“Specific enforcement will not be decreed unless the terms
of the contract are so expressed that the court can determine
with reasonable certainty what is the duty of each party and
the conditions under which performance is due.” _

However, a comment of the Restatement under that paragraph
can be very helpful to a court in applying the rule. I quote:

«« * % The usual aids to interpretation will be availed of
by the court, just as in the case of enforcement by other
remedies. Expressions that at first appear incomplete or un-

- certain are often readily made clear and plain by aid of common
usage and reasonable implications of fact. Apparent difficulties
of enforcement due to uncertainty of expression may disappear
in the light of courageous common sense.’ (Emphasis added.)

I particularly approve of the last sentence of that comment.

To say that “fifteen annual installments” as used in this
contract cannot be determined with reasonable certainty to mean
“equal” annual installments is like saying that where a man is
employed for a salary of $12,000 per year payable monthly that
it cannot be determined with reasonable certainty that the monthly
payments are to be equal.

If this court cannot say with reasonable certainty that the
provision in the contract for “6 per cent interest on the balance”
means the interest is payable annually, then the banks and sav-
ings and loan associations are wasting money on advertising for
time deposits and savings accounts. It is common knowledge that
they advertise in newspapers, on the radio, television and on
large billboards up and down the highways that “We pay 4%
on savings.” Never a word is said about payment being made
annually—but is there any question about the public understand-
ing that the interest is payable annually? From common usage,
whenever provision is made for the payment of interest and

nothing said about when it is payable, it is understood to be
payable annually.

I do not regard the following authorities cited in the court’s
opinion in support thereof as being very helpful, because the fact
situations involved are so different from the facts of the instant
case.

In the case of Wilson v. Fisher, 144 Texas 58, 188 S.W. 2d
150, the court refused to enforce specific performance because
the description of the property in the written memorandum was
deficient. The only description of the property was “brick duplex
& garage apt located at 4828-80 Cedar Springs * * *. Room at
back not included.” The court said:

«ee % & No city, county or state is mentioned in connection
with its location. No lot or block number is given nor is there
any indication as to the amount of land. No description by any
particular name appears. Moreover, the instruments show that
it was intended that a portion of the property was reserved
from the sale, but the part which was to be included and that
to be reserved is not shown.”

In the case of Harter v. Morris, 72 Ind. App. 189, 123 N.E.
28, the alleged contract contained the following:

« * % T am to give you a first mortgage of $1,800 on the
land drawing 6 per cent. from date of closing, said note to
mature January 21st, 1918, and to provide the usual prepay-
ment privileges.”

The court held that the complaint in the suit was insufficient
to withstand a general demurrer, stating:

«ce * * We are not prepared to say what such usual prepay-
ment privileges are.”

It will be noted that the court was not disturbed by what
was meant by the phrase “drawing 6 per cent” contained in the
provision “first mortgage of $1,800 on the land drawing 6 per
cent”.

In Williams v. Manchester Building Supply Company, 213
Ga. 99, 97 S.E. 2d 129, the court refused to enforce by specific
performance a contract to sell a tract of land containing 1101.87

a 605

acres, which contained a reservation granting “seller the right
to reserve the home house where the seller now lives, together
with Fifty (50) acres of said land lying East of said House
and Fifty (50) acres of said land lying West of said house. The
house and the said One (100) acres of land to be particularly
designated by a survey to be completed at a later date.” The
court said that this reservation made the contract so vague,
uncertain and indefinite as to be incapable of enforcement.

In the case of Goode v. Westside Developers, Inc., 258 S.W.
2d 844, Texas Civ. App., writ refused, n.r.e., the court refused
to enforce specific performance because the contract was not
signed by the owner, nor did the agent purporting to sign for
the seller have any authority to execute the contract for the
owner. However, the court did go ahead to say by way of dicta,
in effect, that since the contract did not state the rate of interest
which the deferred payments would bear it was presumed that
the details relating thereto were left open for future negotiation,
and for this reason the trial court did not abuse its discretion
in refusing specific performance.

No case has been found which supports the proposition that
specific performance will not be enforced on such highly tech-
nical grounds as are relied on in this case. The court can with
reasonable certainty determine the intent of the parties and
ought to give the petitioner the relief prayed for.

I would reverse the judgment of the Court of Civil Appeals
and remand the case to the trial court with instructions to grant
petitioner’s request for specific performance.

ASSOCIATE JUSTICE SMITH joins in this dissent.

Opinion delivered May 23, 1962.

es
JAMES H. REARDON, Appellant
v.
KATHERYN REARDON

No. A-8997. Decided July 18, 1962
859 S. W. 2d 329

po

6

Galvan & Galvan, El Paso, for appellant.

Woodward & Woodward, El Paso, for appellee.

ASSOCIATE JUSTICE NORVELL delivered the opinion of
the Court.

This is a divorce case in which the El Paso Court of Civil
Appeals prepared a tentative opinion holding that the trial court
erred in awarding to the wife all of the real property owned by
the community. Being in considerable doubt as to the correctness
of this holding, in view of the statement made by this Court in
Hailey v. Hailey, 160 Texas 872, 331 S.W. 2d 299, which was
subsequently made the basis of the decision of the Eastland Court
of Civil Appeals in Hellums v. Hellums, 335 S.W. 2d 390, the
presiding judge of the El Paso court certified the following ques-
tion to us in accordance with Rule 461, Texas Rules of Civil
Procedure:

“In view of the prohibition in the statute (Art. 4638)
did we, in our tentative opinion, err in holding that a trial
court may not, in a case where the only real estate owned by
the parties is not subject to partition in kind and is community
realty, divest one of the parties of his title to such real estate
and award to the other title to all of the community real estate
as his or her sole and separate property?”

It appears from the tentative opinion accompanying the cer-
tificate that the community estate consisted of both real and

1. “The court pronouncing a deeree of divorce shall also decree and order
a division of the estate of the parties in such a way as the court shall deem
just and right, having due regard to the rights of each party and the children,
if any. Nothing herein shall be construed to compel either party to divest himself
or herself of the title to real estate.” Art, 4688, Vernon’s Ann. Texas Stats.

eS 607

personal property. All of the community real estate and a portion
of the community personal property was awarded to the wife.
No question as to whether the settlement decreed by the trial
court was just and right is before us. We are limited to a con-
sideration of the question propounded in the certificate.

The question assumes that a decree dividing community prop-
erty between divorcing parties which awards real property to
one and personal property to another operates as a technical di-
vesture of title to real property. It seems to be the sense of the
El Paso court’s tentative opinion that community personal property
and community real property must be considered as two distinct in-
terests or estates for division purposes under Article 4638. How-
ever, the obvious purpose of the question is to ascertain whether
or not this Court regards the proviso of the article prescribing
the divestiture of title to real estate as being applicable to com-
munity property.

In Hailey v. Hailey, supra, this Court said:

“That part of Art. 4638 contained in the last sentence,
which prohibits the divestiture of title by either party to real
estate, has no application to community real estate but applies
only to the separate property of each party.”

The above statement was deliberately made by this Court
after a careful consideration of the matter and we now reaffirm
the position taken by us in the Hailey case. Any question as to
whether the holding evidenced by the quoted portion from the
Hailey case may be classified as obiter dicta is now academic.
The question is squarely before us in this case and we hold that
the proviso in Article 4638—‘nothing herein shall be construed
to compel either party to divest himself or herself of the title
to real estate’—has no application to community real estate.

The question certified is answered in the affirmative.

Opinion delivered July 18, 1962.

08

CLARENCE WISE, Petitioner

v.
M. E. ANDERSON ET AL, Respondents

No. A-8425. Decided July 18, 1962
859 S.W. 2d 876

Orrin W. Johnson, Harlingen, for petitioner.

Kelly, Looney, McLean & Littleton, Edinburg, for respondents.

es 609

ASSOCIATE JUSTICE GREENHILL delivered the opinion
of the Court.

Clarence Wise brought this suit against M. E. Anderson and
the Anderson Oil and Gas Company of Texas. He alleged that
he was fraudulently induced by Anderson to execute an oil and
gas lease. Among other things, Wise asserted that Anderson false-
ly promised him orally that he would begin the drilling of a
well on his land within 90 days. His action was for damages
under Art. 4004 of Vernon’s Civil Statutes of Texas dealing with
actionable fraud. In a jury trial, Wise recovered actual and ex-
emplary damages. The judgment was reversed by the Eastland
Court of Civil Appeals and judgment was rendered that plaintiff
take nothing. It held that Wise’s cause of action was barred by
the two-year statute of limitations. 345 S.W. 2d 803. We have
determined that the correct result was reached by the Court of
Civil Appeals and that its judgment should be affirmed. This
opinion, therefore, will be confined to the limitations questions.

On October 25, 1954, Wise executed an oil and gas lease to
Anderson. It was for a primary term of five years. It provided
that it should terminate after one year unless Anderson drilled
a well on the land within one year or paid specified delay rentals
to a depository bank. The lease further provided that “In like
manner and upon like payments or tenders, the commencement
of a well may be further deferred for like periods” of one year.

Wise testified that before the signing of the lease, Anderson
promised him a test well would be drilled on Wise’s property
within 90 days from the execution of the lease: i.e, by January
23, 1955. He also testified that Anderson represented that he
had previously secured a lease from the owners of the other
half of the minerals under the Wise land, and that he, Anderson,
had enough acreage to secure a permit from the Railroad Com-
mission to drill on the Wise property. Wise alleged that his
property is in a gas field and that he had been suffering drainage
from other wells in the field for several years because there was
no well on his property. For these reasons and because a well
on his property would have the effect of stopping or minimizing
the drainage, Wise alleged that he was induced to execute the
lease to Anderson by reliance on Anderson’s oral representations
which indicated that Anderson had the ability and intention to
drill on the Wise land within 90 days after the execution of the
lease.

The jury made findings which support these allegations of

10

Wise. As particularly applicable here it found that Anderson
orally promised that he would drill a well within 90 days from
the date of the lease; that the promise was made without any
intention to perform it; that it was made to induce Wise to
execute the lease; that it was a material inducement but for
which Wise would not have executed the lease.

It is undisputed that a well was not drilled on the Wise prop-
erty on January 28, 1955, 90 days after the execution of the
lease. Wise was farming this land. During the 90-day period,
he observed that no roads were built or other operations performed
to indicate that Anderson was about to drill. He admitted in his
pleadings that when Anderson did not have a rig on the land
within the 90-day period, he “decided at once to inquire into the
entire matter”.

Wise instituted this suit on July 12, 1957, more than two
years from January 23, 1955, by which date Anderson had
promised Wise that he would drill a well.

On November 18, 1955, Anderson assigned the Wise lease
to the Anderson Oil and Gas Company of Texas. This company
was not in existence on the date of the execution of the lease
on October 25, 1954, or at the time on which the well was sup-
posed to have been drilled. It was not formed until about a year
after the lease was executed. The Anderson Oil and Gas Com-
pany of Delaware, according to Anderson’s testimony, owned
all of the stock in the Anderson Oil and Gas Company of Texas,
and Anderson was the principal stockholder of the Delaware
company and the president and a director of both companies.
On May 16, 1957, Anderson Oil and Gas Company of Texas,
over the protest of Wise, assigned the Wise lease to Coastal
States Gas Producing Company. The consideration for the as-
signment was $3,000 and the reservation of an overriding royalty.
Wise concedes that Coastal States had no knowledge of the alleged
oral fraudulent representations of Anderson.

As has been stated, Wise brought this action against Ander-
son individually and the Anderson Oil and Gas Company of Texas.
We shall consider the claims against the two defendants separ-
ately. We consider first the claim against Anderson.

fl The statute of limitations which is applicable to the claim
of Wise against Anderson is one which says that a suit shall be
commenced within two years after the cause of action accrues
“and not afterward”. Art. 5526, Vernon’s Texas Civil Statutes

| 611

Annotated. It is undisputed that this suit was. not brought within
two years after the expiration of the 90-day period within which
Anderson promised to drill. The problems, therefore, are (1)
when the two-year statute began to run, and (2) whether Wise
established that the two-year limitations period was interrupted
or tolled by the absence of Anderson from the State of Texas.

We have concluded that the statute of limitations began to
run immediately upon the expiration of the 90-day period. This
was the time when Wise knew that a well had not been drilled on
his land within 90 days as promised. While fraud will prevent
the running of the statute of limitations until it is discovered,
or by the exercise of reasonable diligence should have been dis-
covered, Sherman v. Sipper, 187 Texas 85, 152 S.W. 2d 319
(1941), knowledge that no well had been commenced was “nowl-
edge of facts that would cause a reasonably prudent person to
make inquiry which would lead to a discovery of the fraud”.
Glenn v. Steele, 141 Texas 565, 61 S.W. 2d 810 (1933). Such
knowledge is in law knowledge of the fraud itself. The holding
of this Court in Glenn v. Steele, is particularly strong when con-
sidered in the light of the opinion of the Court of Civil Appeals
in that case, 57 S.W. 2d 908.

If Since Wise did not file this lawsuit until July 12, 1957, more
than 2 years and 5 months after he had acquired the knowledge
just discussed, the two-year statute of limitations bars his cause
of action against Anderson unless the statute was interrupted
or tolled for a sufficient period of time. Wise contends that the
statute was tolled by virtue of Anderson’s absence from the state;
that Anderson was absent about six months during the period
in question. Art. 5537, V.A.C.S., provides that absence of the
defendant from the state “shall not be accounted or taken as a
part of time” of the limitations period. Anderson was not a resi-
dent of Texas. While it has been held that the above article
has no application, as a general rule, to nonresidents, Simonds
v. Stanolind Oil & Gas Co., 184 Texas 332, 114 S.W. 2d 226,
at 233 (1988), it does apply to nonresidents who were present
in the state at the time the cause of action accrued or had its
inception and who later leave the state. Gibson v. Nadel, 164 F.
2d 970 (5th Cir. 1947).

Neither the absence of Anderson from the state for sufficient
time to avoid the running of the statute of limitations nor the
suspension statute, Art. 5537, was pleaded by Wise. As we in-
terpret the voluminous statement of facts, this issue was not
deliberately tried. Such evidence as there is on Anderson’s pres-

Ce

ence in, or absence from, the state came in on other issues, such
as whether Anderson was a nonresident and whether Wise ex-
ercised diligence in discovering the fraud. This evidence can be
summarized as follows: Anderson admitted in his deposition,
taken on February 14, 1958, that he was then and had constantly
been for 55 years a resident of Warren County, Pennsylvania.
His testimony at the trial shows that he was present in Texas
when the alleged fraud was committed, and that the meetings
during which he made the fraudulent representations to Wise
took place on the Wise farm in Texas prior to the execution of
the lease on October 25, 1954. He remained in Texas after Octo-
ber 25, 1954, and did some additional work on his oil operations
until he “left the latter part of April to go back home”. He thus
testified that, except for a trip out of Texas during this period
“for a week or some such matter”, he was present in the state
from October 25, 1954, until the latter part of April, 1955. The
record is then virtually silent as to his whereabouts after April,
1955. Wise points out that there is no evidence to indicate that
Anderson returned to Texas during the remainder of 1955 or
until April, 1957; but it is equally true that there is no evidence
that he continuously or generally remained out of Texas, or which
shows where he was during this period.

There is some evidence that Anderson was not present in
Texas on certain specific dates during the months and years
following April, 1955. Anderson’s Texas lawyer, Higdon, testified
that he told Wise that Anderson was in Pennsylvania in October,
1955. Higdon states that Wise came to see him about a delay
rental payment he had received and to inquire how he could “get
in touch” with Anderson. Wise testified that he had been trying
to find Anderson since January, 1955, when he learned that a
well had not been drilled on his property within 90 days as
promised. Higdon states that he gave Anderson’s address to
Wise and told him that “Mr. Anderson would be down shortly.”
A notary acknowledgment to Anderson’s affidavit on his as-
signment of the Wise lease to the Anderson Oil & Gas Company
of Texas states that Anderson personally appeared before the
notary on November 25, 1955, in Warren County, Pennsylvania.
Anderson testified that a unitization agreement, dated May 1,
1956, was sent to him in Pennsylvania. Anderson testified that
he was in the Rio Grande Valley shortly after April 12 and met
with Wise and Wise’s attorney there about April 27, 1957. An-
derson, testifying as an adverse witness, testified that he had
pought a home in the Valley; that it was for his daughter and
son-in-law. He stated that “we live in it too.” The date of the
‘purchase or the time that he stayed in the home is not developed

ee 618

in the record. Apparently he meant that he stayed in his daugh-
ter’s home when he was in Texas. On cross examination he ad-
mitted that he voted in Texas; that he paid his poll tax and
voted in Texas for the first time in 1958.

Wise contends that it was proved as a matter of law that
Anderson was absent for at least six months: that Anderson
stated that he returned to Pennsylvania in April, 1955, and while
Wise had no proof that he remained there until October, 1955,
there is no evidence that Anderson returned to Texas. The Court
of Civil Appeals and Anderson say that the “evidence shows only
that Anderson was out of the state on two or three occasions
during the limitation period, each of which was of about two
weeks duration.” We have reviewed the record and do not be-
lieve that Anderson’s presence or absence was conclusively proved,
as a matter of law, either way.

The burden of pleading and proving the defendant’s absence
from the state is upon the plaintiff. Griffiths v. Travis, 102
S.W. 2d 445 (error refused, 1937). As stated, Wise did not plead
the defendant’s absence or that the statute of limitations had
been suspended. The character of the evidence in this case demon-
strates the reason that the matter should be pleaded.

HI But assuming that Wise is over the hurdle of the issue
having been properly raised, the burden of proof is also upon
him. His burden is not simply to introduce proof that the de-
fendant left the state but that he was absent from the state a
sufficient period to toll the statute. It has been held that it is
not necessary for the plaintiff to prove the precise periods of the
defendant’s absence, and that it is sufficient that he establish
facts from which the jury might reasonably conclude the de-
fendant had not, in the aggregate, been in the state the full statu-
tory period. Phillips v. Holman, 26 Texas 276 (1862). We think,
at best, there was an issue of fact for the jury as to whether
Anderson was out of the state for sufficient time to toll the
statute. No special issues were requested or submitted to the
jury upon this important issue. The burden was upon the plain-
tiff Wise to request issues for the jury and to obtain fact find-
ings of Anderson’s absence. His failure to do so constituted a
waiver of those issues under Rule 279 of the Texas Rules of
Civil Procedure.

Wise relies heavily upon Phillips v. Holman, 26 Texas 276
(1862). We believe the case to be distinguishable on several
grounds. First, the issue of absence from the state was pleaded

Ce

in the Phillips case. The defendant likewise pleaded his return
to the state and his presence in Texas. This Court said that “the
evidence shows that (defendant) Holman left the Republic of
Texas in 1840, and was generally absent from the state for sev-
eral years.” The defendant proved his presence in Texas upon
specific dates, including his attendance upon the Legislature.
A jury issue was raised, and the question was upon the instruc-
tions to the jury. The case does not hold that plaintiff would
have been entitled to an instructed verdict, ie., that he estab-
lished defendant’s absence as a matter of law. The defendant in
the Phillips case contended that the burden was upon the plain-
tiff to prove the precise period or periods of his absence. It was
contended that the jury should be instructed in weighing the
evidence presented by plaintiff of the defendant’s absence, and
presented by the defendant of his presence in Texas. The Court
said it would have been proper to have instructed the jury that
when the plaintiff had shown facts from which the jury might
reasonably conclude that the defendant had not been in Texas
four years between the accrual of the cause of action and the
institution of the suit, it then devolved upon the defendant to
rebut such reasonable conclusion. This is not the equivalent of
saying that Wise would have been entitled to an instructed ver-
dict upon his having introduced evidence that Anderson left the
state in April of 1955 and was in Pennsylvania on the isolated
dates mentioned above.

The claim against Anderson Oi] and Gas Company of Texas
arises out of the assignment of the lease to that company by
Anderson on November 18, 1955. The essence of Wise’s position
here is that the statute of limitations did not begin to run against
the company until that date because that was when the company
derived “the benefit of said fraud” within the meaning of Art.
4004, and therefore that is the date when his cause of action
against the company accrued.

There was only one fraud committed against Wise, and that
was perpetrated by M. E. Anderson alone. That occurred before
the corporation was even formed. It obviously, therefore, could
not have participated in the perpetration of the fraud. No argu-
ment is made that Anderson was acting as the agent of the cor-
poration when he committed the fraud. The company, therefore,
had no direct connection with the fraud. The only connection
shown by Wise is that the lease was assigned to the corporation
for a recited consideration of $1 and other valuable consideration.
The assignment occurred over a year after the fraud was com-
mitted.

| 615

Doubt has been raised in some cases as to whether a person
can constitutionally be made liable for damages for merely “de-
riving the benefits of said fraud” under Art. 4004. Ulrich »v.
Krueger, 272 8.W. 824 (no writ history, 1925); Krueger v.
Waugh, 261 S.W. 196 (error dism., w.o.j., 1924). The question
is not raised here. As applied to a corporation not in existence
when the fraud was perpetrated, we experience difficulty in de-
termining what the Legislature meant by “deriving the benefit
of said fraud” so as to make a person or corporation liable in
actual damages who had no connection with the fraud. The statute
goes further to say that persons “knowingly taking advantage
of said fraud shall be liable in exemplary damages * * *” (Em-
phasis ours.)

Be that as it may, we hold that, for limitations purposes,
whatever claim Wise may have against the company was neces-
sarily governed by the accrual of the cause of action against
Anderson individually. To hold otherwise would lead to an un-
workable rule. Limitations would not begin to run against sub-
sequent transferees of the subject matter of the fraud until
the date of the transfer or the date of realizing a profit. If, for
example, Wise had asserted a claim against Coastal States, which
bought the lease from Anderson Oil and Gas Company of Texas
on May 16, 1957, for “deriving the benefit of said fraud” under
Art. 4004, the cause of action against Coastal States would have
accrued no earlier than May 16, 1957, under Wise’s theory. If
Coastal States had assigned the lease, and it had been further
assigned to others, the accrual of the cause of action would be
postponed indefinitely.

Anderson Oil and Gas Company also argues that since it is
not clear under Art. 4004 what “deriving the benefit of said
fraud” means, it could logically be argued that the cause of
action, if any, against the Anderson Oil and Gas Company would
not accrue until it sold the lease or realized a profit from it.
If this argument was sustained, the cause of action against An-
derson Oil and Gas Company would not have accrued for limita-
tions purposes until May 16, 1957; and the cause of action
against Coastal States would not have accrued until it later sold
the lease or otherwise realized a profit.

We have already held that limitations began to run after the
expiration of 90 days from the execution of the lease on the
cause of action against Anderson individually, and that limita-
tions was not suspended under Art. 5537. We think these con-

es

clusions apply with equal force to the claim against Anderson
Oil and Gas Company of Texas.

Anderson has other points which we do not reach. These
include the legal effect of the acceptance by Wise of delay rentals
for two years after he knew the well in question had not been
drilled, and also the question as to whether an oral promise to
drill a well within 90 days may be the basis of a suit when the
written lease provided that the lessee, by the payment of delay
rentals, could defer the drilling of a well for five 1-year periods.
We express no opinions on these questions.

The judgment of the Court of Civil Appeals is affirmed.
Opinion delivered July 18, 1962.
as

JANUS Fitms, Inc., Petitioner
v.
Crry oF Fort WorTH ET AL, Respondents
No, A-8946. Decided June 13, 1962

Rehearing Denied July 18, 1962
358 S.W. 2d 589

St
Tobolowsky, Hartt, Schlinger & Blalock, Dallas, for petitioner.
S. G. Johndroe, City Attorney, Fort Worth, for respondent.
PER CURIAM.

This case is before us as an appeal from the denial of a tem-
porary injunction. Petitioner Janus sought an injunction to en-
join the City of Fort Worth from interfering with the exhibition
of the film “The Virgin Spring” in Fort Worth. The Censorship
Board of that city had refused to grant an unconditional permit to
display the film but had conditioned its approval upon the de-
Jetion by the petitioner of the so-called “90 second rape scene”.
The Court of Civil Appeals has affirmed the action of the trial
court in denying the temporary injunction.

In suits for temporary injunctions, the trial judge is endowed
with broad discretion to grant or deny the injunction. Railroad
Commission vs. Shell Oil Co., 146 Texas 286, 206 S.W. 2d 235.
Accordingly, the scope of appellate review in such cases is limited
to the narrow question of whether the action of the trial judge
in granting or denying the temporary injunction constitutes a
clear abuse of discretion. Texas Foundries v. International Mould-
ers & Foundry Workers’ Union, 151 Texas 239, 248 S.W. 2d 460.

The purpose of a temporary injunction is to preserve the status
quo of the subject matter of the suit pending a final trial of the
ease on its merits. Transport Co. of Texas v. Robertson Trans-
ports, Inc., 152 Texas 551, 261 S.W. 2d 549. In the last cited
case, we defined “status quo” as being “the last, actual, peace-
able, noncontested status which preceded the pending contro-
versy”. Applying that definition to the case at bar would result
in the status quo to be properly preserved being that time at
which petitioner had no permit to display his film, conditional or
otherwise. By his petition, petitioner sought to have the board
enjoined from interfering with the display of the film in ques-
tion thus affording him the opportunity to display the film as if
he had an unconditional permit.

To have granted the petitioner that relief could quite possibly
have rendered the questions in this case moot rather than have
preserved them for ultimate decision when the case came on for
trial as a suit for permanent injunction. Such a result would de-
feat the purpose of the temporary injunction proceeding. Thus,
we are of the opinion that no abuse of discretion has been shown
in denying the injunction. .

2

SS

This opinion is not to be construed as passing on the merits
of the case in any respect. Its sole function is to uphold the action
of the trial court in denying the temporary injunction. The ap-
plication for writ of error is refused, no reversible error.

Opinion delivered June 18, 1962.

LEON GAINES, Petitioner

v.
BLAKE HAMMAN, Respondent

No. A-8462. Decided June 13, 1962
Rehearing Denied July 18, 1962
358 S.W. 2d 557

619

ASSOCIATE JUSTICE CLYDE E. SMITH concurring in
written opinion.

ASSOCIATE JUSTICE RUEL C. WALKER, joined by AS-
SOCIATE JUSTICES GRIFFIN and CULVER dissent.

Settle & Settle, Fort Worth, for petitioner.

Hudson, Keliner, Jordan, Smith & Cunningham, Fort Worth,
for respondent.

ASSOCIATE JUSTICE NORVELL delivered the opinion of
the Court.

The Court of Civil Appeals affirmed a summary judgment ren-
dered in favor of the defendant Blake Hamman and against the
plaintiff Leon Gaines, 346 S.W. 2d 186. Being of the opinion, since
confirmed by a plenary examination of the record, that the de-
cision of the Court of Civil Appeals is contrary to the decisions of
this Court in Fitz-Gerald v. Hull, 150 Texas 39, 237 S.W. 2d 256
and Omohundro v. Matthews, 161 Texas 367, 341 S.W. 2d 401,
we granted writ of error and now reverse the judgments of the
trial court and the Court of Civil Appeals and remand the cause
to the District Court.

In this Court the respondent Hamman raises questions re-
lating to the summary judgment practice under Rule 166A, Texas
Rules of Civil Procedure. Hamman asserts and strongly main-
tains that Gaines in his deposition which is a part of the summary
judgment record, swore to facts which, if true, would defeat his
asserted cause of action based upon the theory of a constructive
trust. It is also urged that Gaines’ testimony was too vague and
uncertain to support a judgment based upon said trust theory.

1. By express provision, constructive trusts are not affected by the Texas
Trust Act. Article 7425-b-2, Vernon’s Ann. Texas Stats. Fitz-Gerald v. Hull,
150 Texas 89, 287 S.W. 2d 256.

00

As this cause must be retried under our holding that issues
of fact are indicated by the record, we purposely refrain from
making an exhaustive statement. Other and further evidence will
undoubtedly be received upon another trial.

Such facts as are disclosed by the record and are necessary
to an understanding of our holdings are as follows:

Leon Gaines is a geologist of wide experience in the Texas
counties of Palo Pinto, Wise, Jack and Young. He had acquired
an extensive collection of oil well logs and other data relating to
oil exploration and discovery activities in the counties named.
Hamman is an oil and gas lease broker. It appears that from
1954 to 1958 Hamman and Gaines were engaged in numerous
transactions together. As a general rule Gaines would work up
the geological information upon a particular tract of land upon
which they planned to acquire a lease; Hamman would under-
write the expenses incidental to the deal, and generally take a
lease upon the property in his own name. He would then interest
others in the lease and transfer the same to such third parties,
retaining an overriding royalty. After Hamman’s expenses had
been recouped, the override would be divided equally between
Hamman and Gaines. While the taking of title in Hamman’s
name was the usual thing, it was not the invariable practice. In
his affidavit counter to Hamman’s motion for summary judg-
ment, Gaines said:

“The agreement which we had was that as to any lease or
prospect on which I developed or prepared the geology, and
which Hamman, or both of us working together, attempted to
sell, we would own an equal interest in the lease or prospect
and would share equally in any interest reserved when a lease
was turned. It was also understood and agreed between us that
in making a trade, Hamman would be entitled to recoup the costs
which he had incurred in acquiring it. The original agreement
was made in 1954. It was oral, and it was repeatedly reaffirmed
from time to time by Hamman and by myself; however, I am
unable to state at this time when and with respect to which
prospect such statements were made.”

According to Gaines’ affidavit, some four years after the
original agreement or understanding was made, he and Hamman
became interested in an oil and gas lease on some land in Young
County owned by C. H. Rogers. The lease was held in the name
of Gaines and one of his employees. It was necessary that a well
be drilled to prevent the lease’s termination. Hamman offered to

a oat

try to turn the lease for a half interest therein. Gaines’ employee
ceased to figure in the deal and a short extension of the lease
was procured by Gaines. Hamman then succeeded in working out
a deal whereby Al Addyman, Jess Harwell and Clarke Cummins
agreed to pay the costs for drilling a well to the casing point in
return for a 3/4 interest of the 7/8 working interest of the lease.
This left Hamman and Gaines sharing a 1/4 of the 7/8 working
interest equally, subject to a $1900.00 oil payment held by the
lessor. Gaines executed the necessary written instrument to vest
Hamman with his part of the working interest. This transaction
was similar to numerous others had between the parties in which
Gaines furnished the geology and Hamman secured operators to
drill the lease, retaining an override which was divided between
the parties. In the case of the Rogers lease the lease was in Gaines’
name, whereas usually Hamman was the record holder of the
Tease.

Shortly after the Rogers deal, the transactions and occurrences
took place with reference to the Logan lease which gave rise
to this lawsuit. Again we refer to Gaines’ affidavit. He stated that
a portion of the Logan properties became open acreage because
of the expiration of a lease insofar as it covered the particular
tract involved. Gaines had done geological work on the tract and
discussed with Hamman the advisability of securing a lease upon
the open acreage concerned. In the early part of November 1958
both he and Hamman talked to L. M. Logan, the owner of the
property. On November 17, L. M. Logan and wife executed an
oil and gas lease to Hamman covering some 376.4 acres of land.
This lease was placed in a Fort Worth bank with directions that
the lease be delivered upon the payment of an attached draft. On
November 27, 1958, a successful drill-stem test was made on the
Rogers well which brought about a conversation between Gaines
and Hamman in which, according to Gaines’ best recollection,
Hamman said:

“We have to get a deal for these people (Addyman, Har-
well and Cummins). They are ready to go on another well, be-
cause they have gotten a good well on your geology, on the
Rogers. It will be the same deal as the Rogers.”

According to Gaines he met with Hamman, Addyman, Har-
well and the completion engineer on the Rogers well in Jacksboro,
Texas on November 29, 1958, and “discussed in detail the geologi-
cal possibilities of the Logan prospect and gave them my inter-
pretation. of its subsurface geology”. He thereafter completed a

62.

geological report and plat which he delivered to Hamman around
the first of December.

On December 22, 1958, Addyman and his associates paid the
draft above mentioned and as a consequence, the bank delivered
the lease to Hamman. The Addyman group financed entirely the
drilling of the initial well to the casing point on the Logan tract,
put paid only their proportionate part of the cost of the drilling
of the second well thereon. Addyman and associates now hold
8/4 of the 7/8 working interest. The remaining 1/4 of the 7/8
working interest now stands in the name of Blake Hamman and
it is this interest upon which Gaines seeks to impress an equitable
trust to the extent of a 1/8 interest in and to the 7/8 working
interest in the Logan lease.

I If Gaines’ statements be credited, we think it reasonable to
conclude therefrom that Gaines and Hamman, for a number of
years, had been engaged in acquiring oil and gas leases which they
were to own jointly. These leases would then be “turned” or
transferred to third parties and an override or other mineral
interest retained and held jointly by the parties in equal portions,
subject to Hamman’s right to recoup his out-of-pocket expenses.
Under the arrangement between the parties, Gaines would con-
tribute the “geology” and Hamman would pay the expenses in-
cident to the procuring of the leases and the turning of the deal.
Undoubtedly if Gaines’ version of the parties’ dealings be accepted,
there existed a confidential relationship between the parties in-
sofar as the Logan lease was concerned. The Rogers transaction
had just been completed. Hamman wanted another deal for the
Addyman group and said in effect that it would be “the same
deal as the Rogers”. Addyman, according to his affidavit, re-
ceived Gaines’ geological reports and largely upon the strength
thereof decided to enter the Logan venture. Should Hamman keep
the entire 1/4 of the 7/8 working interest after production upon
the Logan had been obtained, he would be the recipient of an
unjust enrichment resulting from the breach of a confidential
relationship. This conclusion is fully supported by Fitz-Gerald
v. Hull, 150 Texas 39, 237 S.W. 2d 265; Omohundro v. Matthews,
161 Texas 367, 341 S.W. 2d 401 and Peckham v. Johnson, Texas
Civ. App., 98 S.W. 2d 408, affirmed, 132 Texas 148, 120 S.W.
2d 786.

It is not a complete answer to Gaines’ asserted cause of action
to say that in some of the Gaines-Hamman ventures the pro-
cedures followed varied in detail from the general scheme of
operation above outlined. Nor was it essential that at the com-

Sr 623

mencement of each particular venture, the parties reiterate ver-
bally the terms of the general agreement under which they had
operated in order to make such understanding effective insofar as
a new venture was concerned. Of course it is Hamman’s conten-
tion that all of his deals with Gaines were separate and inde-
pendent transactions and there was no general understanding
or agreement between them. He says that at most, Gaines was
employed to do a certain piece of work, namely provide geological
information and was to receive petroleum interests therefor in-
stead of money. It is asserted that Gaines’ remedy, if any, lies
in assumpsit and not in equity to establish a constructive trust.
These contentions and theories, however, simply raise fact issues.
On summary judgment we must accept Gaines’ version which,
as above pointed out, clearly supports the theory of a general
understanding as to methods of operation. Particularly is this
true with reference to the Rogers and the Logan leases.

lM It is further no objection to the theory of constructive trust
that the parties may have contemplated a division of property in
the form of overrides or something similar thereto rather than
a division of parties in the form of money. The same may be said
with reference to the general understanding of the parties, that
Hamman was to pay all expenses, subject to his right of recoup-
ment. It was not essential that the parties should agree that losses
(unrecouped expenses) should be borne equally.2 We are not here
concerned with the question of the technical existence of a partner-
ship or a joint venture insofar as third persons are concerned.
The important circumstance from which the law will raise a con-
structive trust is the breach of a confidential relationship which
may exist, although such relationship may not meet the technical
requirements of a partnership or joint venture. Mills v. Gray,
147 Texas 33, 210 S.W. 2d 985.8 If we consider an agreement to

2, Gaines’ statement in regard to losses was not clear. He said that he
supposed that if Hamman had given him a bill of half the losses on an unsuccess-
ful deal, he would have paid it. He gives no instance where he had done so.

3. Cf. Cartwright v. Minton, Texas Civ. App. 818 S.W. 2d 449, wr. ref.,
n.re, wherein it was said that:

“The term fiduciary is derived from the civil law. It is impossible to
give a definition to the term that is comprehensive enough to cover all cases.
Generally speaking, it applies to any person who occupies a position of peculiar
confidence towards another. It refers to integrity and fidelity. It contem-
plates fair dealing and good faith, rather than legal obligation, as the basis
of the transaction. The term includes those informal relations which exist
whenever one party trusts and relies upon another, as well as technical
fiduciary relations.”

Also see Holland v. Lesesne, Texas Civ. App-, 850 S.W. 2d 859 in which

it was said that:
“Since the decision of the Supreme Court in Fitz-Gerald y. Hull, 150
Texas 89, 237 S.W. 2d 256, 261, it has been well established that such strict

2

share money losses, for example, as a prerequisite to the existence
of a joint venture, it is difficult to find this element in the case
of MacDonald v. Follett, 142 Texas 616, 180 S.W. 2d 334 in
which this Court held that evidence supported the theory of a con-
structive trust giving rise to an equitable title upon which tres-
pass to try title could be maintained. This Court took a broad
view of the equity power and announced that:

“Whether or not joint owners of overriding royalty inter-
ests sustain relations of trust and confidence toward each other
depends upon the facts and surrounding circumstances. They
do not sustain that relationship by virtue alone of their being
joint owners. Our question then is whether the facts above re-
cited, viewed in the light most favorable to Follett’s conten-
tion, raise an issue for the jury on the question of the existence
of a relation of trust and confidence.

“This is a suit in equity and in that realm the conduct of
parties is judged by refined standards. No rules can be pre-
scribed and no attempt should be made to formulate rules for
the measurement of conduct by courts of equity, but that such
conduct must be measured by standards exacting the utmost
fidelity between the parties is universally recognized. We ex-
perience no difficulty in arriving at the conclusion that the
facts above narrated, if found to be the true facts, establish
that a relation of trust and confidence existed between Follett
and MacDonald prior to the execution of the 1938 top leases.”

In his brief respondent places much emphasis upon the oral
deposition of Leon Gaines and complains of petitioner’s statements
from the record because they refer to Gaines’ affidavit rather
than to his deposition. It is asserted that the deposition controls
over the affidavit where there is inconsistency or contradiction
between them. The thrust of the argument is that Gaines’ deposi-
tion evidence does not make out a cause of action but on the
contrary demonstrates that petitioner, as plaintiff, cannot re-
cover. As bearing upon this contention, a chronological statement
from the record may be helpful.

This suit was filed by Gaines on December 17, 1959. On Janu-
ary 18, 1960 his deposition as an adverse party was taken by
Hamman. This deposition is some 105 pages in length and all

and technical zelationships as trustee and cestui que trust, principal and
agent, attorney and client, are not indispensable, but that such informal
relationships, such as moral, social, domestic, or merely personal ones where
one person trusts in and relies upon another, are sufficient.”

Sr 62s

questions were propounded by Hamman’s attorney. Gaines’ at-
torney made no attempt to rehabilitate his client or afford him
an opportunity to explain his answers in any way, as he evidently
preferred to leave this to the actual trial of the cause.

On May 16, 1960, Hamman filed a motion for summary judg-
ment based largely upon petitioner’s deposition asserting, among
other things, that Gaines testified in his deposition that he had
no expressly stated contract with Hamman relating specially to
the Logan lease. It is argued that Gaines’ deposition failed to
show an enforceable cause of action.

On June 22, 1960, Gaines, having employed new attorneys,
answered the motion for summary judgment and in connection
therewith filed affidavits executed by I. B. Beren, Al Addyman
and himself.

On July 11, 1960, Gaines filed an additional affidavit which
was quite detailed and in content largely supported the allegations
of his petition which Gaines had attempted to place in affidavit
form by his earlier statement of June 22 wherein he had sworn
that he personally knew that all the allegations of his petition
were true except those that were made on information and belief.
The statement of the facts of the case given in the forepart of this
opinion is largely taken from the last affidavit made by the
petitioner.

i The issue in a summary judgment proceeding is whether or
not there is a genuine issue of fact in the case; and in determin-
ing this issue, we apply the rule applicable to instructed verdict
cases in that the evidence is viewed in the light most favorable to
the party opposing the motion. Gulbenkian v. Penn, 151 Texas
412, 252 S.W. 2d 929; Smith v. Bolin, 153 Texas 486, 271 S.W.
2d 93.

Rule 166A, Texas Rules of Civil Procedure, provides that a
summary judgment “shall be rendered forthwith if the plead-
ings, depositions, and admissions on file, together with the affi-
davits, if any, show that, except as to the amount of damages,
there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law’. The
record of a summary judgment proceedings then consists of the
pleading whose office it is to outline the claims and defenses of
the respective parties, the depositions and admissions on file and
affidavits submitted either in support of or opposing the motion.
With the exception of the pleadings it is not essential that any

60

or all of the other possible components of the summary judgment
record be present. While admissions on file may be likened to
pleadings and considered as written judicial admissions, there is
no basis for giving controlling effect to a deposition as compared
to an affidavit. Neither does the fact that the deposition is more
detailed in some respects than the affidavit vest it with dominant
authority, provided of course that the affidavit possesses the
necessary requisites prescribed by this Court in Tobin v. Garcia,
159 Texas 58, 316 S.W. 2d 396 wherein it was said that under
the provisions of Rule 166A affidavits to be effective either to
support or oppose a motion for summary judgment “must be
made by competent affiants with personal knowledge of the state-
ments in them, which statements must be so worded that if given
on the witness stand they would be admissible as evidence.” Ob-
viously mere conclusions will not suffice* and cases so holding do
not support the thesis that in cases of inconsistency or conflict,
the deposition prevails over the affidavit. If conflicting infer-
ences may be drawn from the deposition and from the affidavit
of the same party, a fact issue is presented. United States Fidelity
& Guaranty Co. v. Carr, Texas Civ. App., 242 S.W. 2d 224, wr.
ref., New St. Anthony Hotel Co. v. Pryor, Texas Civ. App., 182
S.W. 2d 620, wr. ref. It is not the purpose of the summary judg-
ment rule to provide either a trial by deposition or a trial by
affidavit, but rather to provide a method of summarily termin-
ating a case when it clearly appears that only a question of law
is involved and that there is no genuine issue of fact. The present
record does not disclose a case for summary judgment. In view
of the detailed discussion of authorities contained in this Court’s
opinions Fitz-Gerald v. Hull, 150 Texas 39, 237 S.W. 2d 256 and
Omohundro v. Matthews, 161 Texas 367, 341 S.W. 2d 401, further
comment is unnecessary here.

The judgments of the courts below are reversed and the cause
remanded to the District Court for further proceedings not in-
consistent with this opinion.

Opinion delivered June 18, 1962.
ASSOCIATE JUSTICE SMITH, concurring.

4. Such cases as Bliss v. City of Fort Worth, Texas Civ. App., 288 S.W.
2a 558, wr. ref. ne; Mugrage v. Texas Employers Ins. Co., Texas Civ. App,
304 S.W. 24 189, wr. dism.; Farmers State Bank v. First State Bank, Texas
Giv. App. 817 S.W. 24 768, no wr. hist.; Duffard v. City of Corpus Christi,
Texas Civ. App, 882 S.W. 2d 447, no wr. hist. are not authority for giving
dominant effect to detailed deposition statements upon motion for summary
judgment. These cases, and those of like holdings, simply support the well
yecognized rule that mere statements of legal conclusions in an affidavit are
insufficient to raise fact issues.

a ear

I concur in the result reached by the majority only because,
in my opinion, there is evidence of probative force other than
the evidence which has been rendered ineffective by the Texas
Trust Act, Article 7425b, which raises a genuine issue of fact
as to whether a fiduciary relationship, a relation of trust
and confidence, existed between Gaines and Hamman. The facts
in this case meet the test contained in my dissent in Omohundro
v. Matthews, 161 Texas 367, 341 S.W. 2d 401. Therefore, the
case should have been determined by the trier of the facts and
the trial court erred in granting Hamman’s motion for summary
judgment.

Opinion delivered June 13, 1962.
ASSOCIATE JUSTICE WALKER, dissenting.

I respectfully dissent. The majority holding rests entirely on
petitioner’s unsupported general statement, made in the affidavit,
which is simply his conclusion as to the nature of the agreement
and understanding of the parties. This is the ultimate issue to
be decided by the trier of fact upon the remand. If the case had
been tried in the conventional manner, petitioner’s statement of
such a conclusion from the witness stand would be entitled to
no weight in the face of his deposition testimony regarding the
details of the agreement. I do not think it should be given the
effect accorded to it by the majority in this summary judgment
proceeding. In the testimony of a witness as in the findings of a
jury, the general must always yield to the specific.

Petitioner’s deposition testimony makes it clear that, contrary
to the statement made in his affidavit, he was not to own an equal
interest in any lease on which he prepared the geology and which
‘was purchased by respondent. It was understood that the lease
would be taken in the name of respondent, who would either pay
for it or get it financed. The principal details of the agreement
are disclosed by the following excerpts from petitioner’s deposi-
tion:

“Q. But he would take it in his name and then try to get
it financed where he would recoup the money he had put in it
and then pay for getting a well drilled.

“A. Yes, sir.

“Q. Now, that was the basic deal?

“A. That was the basic deal.

2S

“Q. And then after that was done you were to get an as-
signment of half of what he had left?

“A. Yes, sir.

“Q. And if he ended up with nothing but an override, why,
you got half of that?

“A. Half of that.

“Q. And if he ended up with a working interest you got
half of the working interest?

“A. Yes, sir.
“Q. And if he ended up with nothing —

“A. Why, we just forgot it.”
kok oR
“Q. And if he was able to turn it and clear it where he
retained any interest, whether it was a working interest or

carried interest, or an override, you were supposed to get an as-
signment from him of half of what he had left?

“A. Yes, sir.

“Q. But you weren’t supposed to get the assignment until
after it was determined how much he had left?

“A. believe you stated that right, yes, sir. In other words,

he would give me an assignment then.”
x Ok #

“Q. Now, the only thing, the only fraud or only promise
that Blake ever has broken, if he has broken any, is his failure
to give you an assignment after he got this Logan deal fi-
nanced and drilled?

“A. Yes, sir, that’s right.”
eRe

“Q. Suppose that he turned it and made $50,000 in cash,
would you get part of the cash?

“A. That wasn’t the understanding.”

a 629
oR oe

“Q. In other words, getting down to it: If you worked up

the geology and he took a deal on that same tract, and if he

was able to turn it where he retained any interest in the lease
you were to get half of what he retained?

“A, Yes, sir.”

Petitioner did not testify that he was to own a one-half in-
terest in the property as soon as it was purchased by respondent,
or that he would be responsible for any of the expenses thereafter
incurred. Respondent was at liberty to sell any interest he desired
to such persons, for such prices and upon such terms as he
deemed proper. If he received all cash and retained nothing in
the way of an override, oil payment or working interest, petitioner
was to receive nothing.

Both parties testified that there was no character of general
partnership between them. Each made deals during the five-year
period in which the other did not participate. It is equally clear
that they did not agree to engage in a joint venture. Petitioner
had no control whatsoever, and there was no agreement that
he would share in either profits or losses. When all of the un-
derbrush and window dressing are removed, we have a suit to
enforce an agreement that in return for petitioner’s geological
services, respondent would, after buying and paying for the lease
and selling part of it to other parties, convey to petitioner one-
half of whatever interest had been retained. In other words, the
action is brought to recover an interest in real estate which
respondent promised to convey in consideration for services ren-
dered by petitioner.

In my opinion enforcement of the contract is plainly pre-
cluded by the statute of frauds. Sorrells v. Coffield, 144 Texas
81, 187 S.W. 2d 980; Tolle v. Sawtelle, Texas Civ. App., 246
S.W. 2d 916 (wr. ref.). The facts of the Sorrells case are quite
similar to those involved here. The plaintiff there testified, and
the jury found, that land was purchased in the name of and
paid for by the defendant pursuant to a previous agreement that
as and when a part of the minerals thereunder were sold suf-
ficient to repay him therefor, the remaining interest in the land,
if any, would be owned jointly by the plaintiff and defendant.
In holding that the agreement was unenforceable under the statute
of frauds, the Court pointed out that the jury’s finding was that
the plaintiff would become invested with his equitable title as
and when mineral interests were sold sufficient to reimburse,

0

the defendant. That is precisely the effect of the agreement which
petitioner is attempting to enforce in the present case.

According to petitioiner’s testimony, he was entitled to no
specific interest in the property unless and until respondent had
disposed of a part on such terms as enabled him to recoup his
investment and expenses. Then and only then could the interest
which petitioner was to receive be determined. Then and only
then was respondent obligated to convey an interest to petitioner.
If respondent sold the entire property for cash, petitioner was
entitled to nothing. How can it be said then that petitioner was
invested with the equitable title at a time when the nature and
extent of the interest he would receive was unascertained and
unascertainable? Under the agreement of the parties, respondent
necessarily became the legal and equitable owner of the property
when it was purchased. His promise was that he would there-
after convey an interest to petitioner in consideration of the
latter’s services. This is nothing more nor less than a contract
for the sale of real estate.

The term “constructive trust” is not a magic phrase that
makes the statute of frauds go away when it is uttered. It does
not refer to a substantive relationship, legal or equitable, but
to a remedial device which courts of equity use when they decide
to compel a person holding title to property to convey it to an-
other on the ground that the former would be unjustly enriched
if permitted to retain it. In the words of Judge Cardozo, it “is
the formula through which the conscience of equity finds ex-
pression. When property has been acquired in such circumstances
that the holder of the Jegal title may not in good conscience
retain the beneficial interest, equity converts him into a trustee”.
See Beatty v. Guggenheim Exploration Co., 225 N.Y. 380, 122
N.E. 878. “He is not compelled to convey the property because
he is a constructive trustee; it is because he can be compelled
to convey it that he is a constructive trustee.” Scott on Trusts,
2nd ed. 1956, Vol. IV, Sec. 462, p. 3108. It seems to me, therefore,
that courts should be somewhat slow to compel a conveyance in
situations where the Legislature has declared that the defendant
shall not be compelled to convey. Bogert says that when the
fiduciary obligation happens to be identical with the obligation
required to be manifested by writing under the statute, the fact
that it is a fiduciary obligation should not exempt it from obed-
ence to the statute any more than if it were a nonfiduciary con-
tract. Bogert, Trusts and Trustees, 1960 ed. Sec. 488, p. 188.
In such a situation, enforcement of the promise on the “con-
structive trust theory” does not render the statute of frauds in-

re 631

applicable; it is simply a polite way of saying that the court will
not abide by the statute.

It is no answer to say that compelling performance of the
contract in the present case is merely an extension of the holdings
in Fitz-Gerald v. Hull, 150 Texas 39, 287 S.W. 2d 256; Omohun-
dro v. Matthews, 161 Texas 367, 341 S.W. 2d 401; Mills v. Gray,
147 Texas 33, 210 S.W. 2d 985; and McDonald v. Follett, 142
Texas 616, 180 S.W. 2d 834. Omohundro and McDonald were
“reacquisition” cases. The parties in FitzGerald had entered
into a joint venture for the acquisition, development and opera-
tion of an oil and gas lease, and the defendant took the lease in
his own name in violation of such agreement. In all three of
these cases the defendants were compelled to convey interests
which they had wrongfully acquired in breach of a fiduciary
duty owing by them to the plaintiffs. Mills was a pure restitu-
tion case in which the constructive trust was predicated on a
confidential relation that was in no way dependent upon the
agreement sought to be enforced. These four decisions should
not now be homogenized so as to justify a decree requiring per-
formance of an oral promise to convey where there is no rela~
tionship of trust and confidence apart from the agreement made
the basis of the suit and no acquisition by the defendant of an
interest in the land in breach of a duty owing by him to the
plaintiff.

A person in petitioner’s position who has made a contract
that is unenforceable under the statute of frauds is entitled,
of course, to restitution. Alworth vy. Ellison, Texas Civ. App.,
27 S.W. 2d 639 (wr. ref.). But restitution could not give peti-
tioner an interest in land he had never owned. It would entitle
him to the reasonable value of the services rendered. Respondent
acquired no interest in the land by breaching a fiduciary duty
owing by him to petitioner. His only obligation was to convey
to petitioner one-half of whatever interest remained after the
lease had been sold to others. By enforcing that obligation, the
Court gives to petitioner the full benefit of a contract which the
statute of frauds declares shall not be enforced. If this trend
continues indefinitely, the statute will finally become meaningless.
It is my opinion that the present case opens an avenue which
should remain closed. Petitioner has not sought restitution of
that to which he is entitled, and I would affirm the judgments
of the courts below.

ASSOCIATE JUSTICES GRIFFIN and CULVER join in
this dissent.

Opinion delivered June 13, 1962.

632,
GENELL, INC. Petitioner
v.
Rory FLYNN ET AL, Respondents

No. A-8592. Decided June 20, 1962
Rehearing Denied July 25, 1962
358 S.W. 2d 543

Bailey & Williams, Dallas, for petitioner.
Woodruff, Hill & Boder, Dallas, for respondents.

ASSOCIATE JUSTICE SMITH delivered the opinion of the
Court.

eS 633

Charles H. Flynn, individually, and in behalf of his seven
year old daughter, Rory Flynn, filed this suit for damages against
Genell, Inc., a corporation, and Southern Oak Apartments, Inc.,
a corporation, alleging injuries sustained by Rory Flynn on June
21, 1959, as the result of the negligence of both corporations.
Southern Oak Apartments, Inc., was later dismissed from the
suit and the case proceeded to trial as between the named plain-
tiffs and the defendant, Genell, Inc. For convenience the parties
will hereinafter be designated either as plaintiffs, defendant,
or by name.

The defendant was the manager and operator of a group of
apartments (504 units) in the City of Dallas, known as Park
Forest Apartments. Rory Flynn and her parents were living in
one of the units of Park Forest Apartments at the time of the
alleged accident.

The facts are stated in plaintiffs’ and defendant’s briefs. The
pertinent facts are these: Rory Flynn, at the time of the acci-
dent, was seven years of age and was a child of above average
intelligence. On June 21, 1959, she had been playing in the gen-
eral area of the apartment where she lived, but sometime that
afternoon decided that she would like to go play with a friend,
Pamela McCullum, who lived upstairs in a unit apart from that
in which Rory Flynn and her parents lived. Pamela was older
than Rory. When Rory was informed by Pamela’s mother that
her daughter could not play, Rory left the Pamela McCullum
apartment unit and returned downstairs by walking down the
same stairs, which she had gone up, holding on to the rail and
walking fast. When she reached the second from the bottom stair
she stopped and leaned over toward the door to push on the door
in order to make her exit. She testified that she intended to push
on the wooden part of the door but as she leaned over she missed
(the wooden part) and her arms went through the glass. The
record shows that the injuries she sustained were confined to
the arms and were caused by the broken glass. The door Rory
was using was the back door to the Pamela McCullum apartment.
Rory’s mother testified that she had been through this particular
back door a few times and that the door was “awfully” heavy and
difficult for her to open. The father, Charles Flynn, had never
had occasion to use the door prior to the accident, but, after the
injury, he had tested the door and found it was hard to push
open. Rory testified to facts showing that she was aware of the
fact that the door which she pushed open was difficult to open.
She stated that the door would not close entirely and could be
pushed open without the necessity of turning the door knob. Rory

3

had used this method before in opening this particular door. In
fact, she had been taught by her friend, Pamela, how to open
the door in this manner, and she testified: “We just did it because
it was easier to open that way.” She testified further that on
previous occasions when she opened the door she had not pushed
upon the glass. Rory and her parents testified that they did not
know anything about the strength of glass, had made no inquiry
about glass, and as laymen could not look at the glass in the
door and tell its relative strength.

Carl O’Neal, a structural engineer, testified in regard to
single strength glass. He further testified that the door closer
in the condition that it was in would not latch the door; it came
almost closed but it would not latch; that the door was quite
hard to open; that it was more than normally hard to open and
he further testified that there was definitely something wrong
with the door closer; that a door closer which failed to latch the
door is not functioning properly.

The witness, William C. Willis, who designed a replica, which
was introduced in evidence, of the door and the stairs leading
to it, testified that the landing was twenty-five inches in width,
measuring from the nose of the first tread to the door, and the
dimensions of the stairs were “seven and a half inch risers and
eleven and a half inch treads”.

The manager of the apartment, Don Carter, testified that all
the back doors were about alike and what he would term heavy
doors; that it was his duty to replace broken glass or have it
done and that on Monday, following the Flynn accident which
occurred on Sunday, he inspected the door and found that the
glass had been replaced in the door. He further testified that the
door closers were placed on the doors in early 1955 when the
apartments were constructed; that he had no inspection of the
door closers made to see if they were working properly. Carter
testified that no complaints were made as to the door closers on
any of the doors and that he did not inspect them; that no com-
plaint had been made as to this particular door closer and that
he did not know whether this particular door would close or not.
Much of Carter’s testimony, both on cross and redirect examina~
tion, was in answer to questions pertaining to the type of glass
in the doors and the putty holding the glass in place.

The Flynns alleged a number of acts of commission and
omission constituting negligence on the part of Genell, Inc., and
that each act was a proximate cause of Rory Flynn’s injuries.

eS 635

However, only three of such acts were submitted to the jury
for determination. The jury, in answer to the special issues in-
volving the grounds of negligence inquired about, found that (1)
Genell, Inc. maintained a glass that was loose in the frame of
the door in question, but that such act was not negligence; (2)
that Genell, Inc. maintained single strength glass in the door in
question and that such act was negligence, but was not a proxi-
mate cause of the accident and resulting injuries sustained by
Rory Flynn; (8) that Genell, Inc., on the occasion in question,
maintained an adjustment on the door closer that made the door
in question difficult to open and that such conduct was negligence
and a proximate cause of the injuries sustained by Rory Flynn.
The jury made these additional findings: (a) that Rory Flynn
was not negligent in any manner proximately causing the acci-
dent; and (b) that the occurrence in question was not the result
of an unavoidable accident.

Based upon the jury finding that the damages involved were
proximately caused by Genell, Inc. maintaining a door closer
upon the door in question in such a way as to make the door dif-
ficult to open, and the jury findings awarding damages to each
of the Flynns, the trial court entered judgment for the Flynns.
The judgment has been affirmed by the Court of Civil Appeals.
348 S.W. 2d 196. .

This appeal presents four basic questions, either of which,
if sustained, would require a reversal of the judgment of the
trial court and the Court of Civil Appeals and the rendition of
judgment in favor of Genell, Inc. Briefly stated, the questions
are these:

(1) Was there a duty which devolved upon Genell, Inc.
to change the condition found by the jury to have! existed
in its answer to special issue number four or to alter the
premises so as to do away with the condition found by the
jury to have existed on June 21, 1959?

(2) Was it foreseeable on the part of Genell, Inc. that
the damages alleged to have resulted to the Flynns and found
by the jury would have occurred as a consequence of its per-
mitting the existence of the condition found by the jury in
answer to special issue number four?

1, Do you find from a preponderance of the evidence that on the occasion
in question the defendant Genell, Inc., maintained an adjustment on the door
closer that made the door in question difficult to open?

6

(83) Was Rory Flynn guilty of contributory negligence
as a matter of law in attempting to open the door as she
did; and

(4) Did Rory Flynn assume the risk involved in utilizing
the door in the condition it was in as found by the jury, and
did Rory’s conduct in this regard invoke the doctrine of volenti
non fit injuria so as to preclude a recovery against Genell,
Inc. as a matter of law?

We have concluded that as a matter of law the injury sus-
tained by Rory Flynn as a result of the fact that the adjustment
on the door closer made the door in question difficult to open
was not foreseeable on the part of Genell, Inc. Therefore, we
pretermit a discussion of the question as to whether Rory Flynn
was guilty of contributory negligence as a matter of law, and
the question as to whether Rory Flynn as a matter of law as-
sumed the risk involved in utilizing the door in the manner
heretofore described.

Rory Flynn occupies the status of an invitee. Genell, Inc. is
in the same status as that of a landowner in so far as duty toward
an invitee is concerned. In some of the reported cases, it is said
that the duty of the landowner to an invitee is to exercise ordi-
nary care to keep the premises in a reasonably safe condition
so that the invitee will not be injured. See Carlisle v. J. Wein-
garten, Inc., 137 Texas 220, 152 S.W. 2d 1078, 1074; Walgreen-
Texas Co. v. Shivers, 187 Texas 493, 154 S.W. 2d 625, 628, 629;
Renfro Drug Co. v. Lewis, 149 Texas 507, 235 S.W. 2d 609, 615.
Where the duty to keep premises in a safe condition is imposed
on a person in control of them, this duty may include the duty
to inspect the premises to discover dangerous conditions. See
R. E. Cox Dry Goods Co. v. Kellog, Texas Civ. App., 145 S.W.
2d 675, wr. ref. (1940) ; Smith v. Henger, 148 Texas 465, 226
S.W. 2d 425, 20 A.L.R. 853 (1950).

Genell admits that no inspection of the door was made after
the building was constructed in 1955, but argues that the Court
of Civil Appeals erroneously assumed that there existed on the
part of Genell, Inc. a duty to change the adjustment on the door
closer. Genell, Inc. contends that the duty to keep the premises
safe for invitees applies only to defects or conditions which are
in the nature of hidden dangers, traps, or snares not known to
the invitee and would not be observed by him in the exercise of
ordinary care, citing such cases as A. C. Burton, Inc. v. Stasny,
Texas Civ. App., 223 S.W. 2d 310 (1949), wr. ref.; C. W. Craw-

eS 6st

ford et al v. Givens Brothers, a Corporation, Texas Civ. App.,
818 S.W. 2d 123 (1958), wr. ref. nr.e.; and Marshall v. San
Jacinto Building, Inc., Texas Civ. App. (1938), 67 S.W. 2d
372, wr. ref.

Assuming, without deciding, that Genell, Inc. knew or should
have known of the condition of the adjustment on the door closer
and that Genell, Inc. was under a duty to change such condition,
a recovery of damages is not sustainable where there is no evi-
dence that the failure to inspect and change the condition of the
door closer was the active cause which produced the injury and
that Genell, Inc. could have reasonably anticipated that Rory
Flynn was likely to utilize the door, either deliberately or acci-
dentally, by stopping on the second step from the bottom stair
and intentionally thrusting her arms and hands forward for the
purpose of opening the door by pushing on the wooden surface
of the door, and that she would accidentally strike the glass
with her hands.

Hl Although injury may result from a person’s act or omission,
yet, if the actor could not have reasonably foreseen the resultant
injury, or injuries, similar in character, he is not to be held
responsible therefor. Liability is grounded in the public policy
behind the law of negligence which dictates that every person
is responsible for injuries which are the reasonably foreseeable
consequence of his acts or omissions. A person is not legally
responsible for consequences which cannot be foreseen. Liability
for negligence rests primarily on reason to anticipate injury and
failure to perform the duty arising on account of such anticipa-
tion. See Texas & Pacific Railway Co. v. Bigham, 90 Texas 223,
88 S.W. 162, 163 (1896) ; Uvalde Construction Co. v. Hill, 142
Texas 19, 175 S.W. 2d 247 (1948). It is recognized in this state
that anticipation of consequences is a necessary element in de-
termining whether the injury complained of is proximately caused
by such act or omission. Actual anticipation, of course, is not
in any sense the test, but what one should under the circum-
stances reasonably anticipate as consequences of his conduct.
See City of Dallas v. Maxwell, Texas Com. App., 248 S.W.
667, 670 (1923), opinion approved by the Supreme Court, 27
ALR. 927; East Texas Motor Freight Lines v. Loftis, 148
Texas 242, 223 S.W. 2d 618 (1949) ; Dallas Ry. & Terminal Co.
v. Black, 152 Texas 848, 257 S.W. 2d 416 (1953); Houston
Lighting & Power Company v. Brooks, 161 Texas 32, 336 S.W.
2d 603 (1960).

With the above rules of law in mind, and when the record

8

in the case is considered most favorably to the Flynns, as we
must consider it, we are of the opinion and so hold that there
is no evidence to support the judgment of the trial court. There
is no evidence that Genell, Inc. could have anticipated the ad-
mitted and undisputed activity of Rory Flynn in opening the door.
Foresight should not be arbitrarily imputed. Genell, Inc., in the
light of all the attending circumstances, could not have reasonably
foreseen that because it maintained any particular adjustment
on the door in question that a person, including a child of the
age of Rory Flynn, would have attempted to utilize the door in
the manner described by her testimony. In making this holding,
we have due regard for the rule that it is not required that this
particular act should have been foreseen. All that is required
is that the injury be of such general character as might rea-
sonably have been anticipated. Genell, Inc. has properly raised
the question that there is no evidence that any act of omission
on its part (even assuming negligence) proximately caused the
accident and resulting injuries sustained by Rory Flynn. Keep-
ing in mind that the test as to whether a given act may be deemed
the proximate cause of an injury, is simply whether in the light
of all the attending circumstances the injury was such as ought
reasonably to have been anticipated as a consequence of the act,
we must sustain Genell’s contention.

The judgments of the District Court and the Court of Civil
Appeals are reversed and judgment is rendered for Genell, Inc.

Opinion delivered June 20, 1962.
a

Teresa LosoyA LEYVA, JOINED HEREIN BY HER HUSBAND,
MANUEL LEyYVA, Petitioners
v.
Luz T. PACHECO, SR., Respondent
No. A-8867. Decided June 27, 1962

Rehearing Denied July 25, 1962
358 S.W. 2d 547

639

Guinn & Guinn, Al Truex, El Paso, for petitioners.
Andress, Lipscomb, Peticolas and Fish, El Paso, for respondent.

ASSOCIATE JUSTICE HAMILTON delivered the opinion of
the Court.

This suit in the form of trespass to try title was brought by
petitioner against respondent to recover title and possession of
a four-room house and two lots on which it is located. The respond-
ent entered pleas of not guilty and title by limitation under the
three-year statute of limitations. The jury answered ten of twelve
special issues favorable to the petitioner, but the trial judge
granted respondent’s motion for judgment notwithstanding the
verdict. Judgment was entered that the title to and possession of

0s

the property be awarded to the respondent Luz T. Pacheco. The
Court of Civil Appeals has affirmed the judgment of the trial
court. 352 S.W. 2d 898.

It is the opinion of this court that the judgments be reversed
and that judgment be rendered for petitioner, Teresa Losoya
Leyva. There is an abundance of conflicting testimony in this
case. However, it is undisputed that in 1944 the two lots in ques-
tion were conveyed by deed to Antonio Pacheco from Manuel
Gallegos. Antonio Pacheco is the father of the petitioner and
the respondent. Petitioner sought to establish that the property
was the subject of a resulting trust in her favor. She alleged, and
witnesses so testified, that she provided the funds for the pur-
chase of the property and that her father was holding it in trust
for her. Testimony by the father, Antonio Pacheco, which was
submitted through deposition and affidavit, was conflicting.

The respondent argued that petitioner did not contribute the
funds to purchase the property and that in 1949 the property
was deeded to him by his mother and father. He also asserted
title under the three-year statute of limitation. Article 5507;
V.T.C.S.

The case was submitted on special issues, and the jury made
the following findings of fact:

1. That petitioner paid the $300.00 purchase price for the
land.

2. That respondent knew that petitioner paid for the prop-
erty.

8. That the property was taken in the name of Antonio
Pacheco in trust for the use and benefit of petitioner.

4. That petitioner paid $975.00 to a contractor for construc-
tion of the house on the property.

5. That respondent knew that petitioner paid for the house.

6. That the signature of Valentina M. Pacheco (mother of
petitioner and respondent) on the deed was a forgery.

7. That Antonio Pacheco did not receive any consideration
from respondent for the 1949 deed.

So

8. That Antonio Pacheco did not knowingly sign and deliver
the deed to respondent.

9. That petitioner was claiming an interest in the property
prior to December 4, 1949.

10. That respondent knew petitioner was claiming the prop-
erty prior to the 1949 deed.

11. That respondent had peaceable and adverse possession
through himself or tenants for as long as three years prier to
the filing of this suit.

12. That after the 1949 deed Valentina and Antonio Pa-
checo occupied the premises in controversy with the permission
of respondent.

Upon return of the answered special issues the trial court
refused petitioner’s motion for judgment on the verdict and
granted respondent’s motion for judgment notwithstanding the
verdict. It is our opinion that the trial court erred in granting
the motion for judgment notwithstanding the verdict. It is ele-
mentary that juries are the exclusive judges of the credibility of
the witnesses and the weight to be given their testimony. See 27
Texas Jur. 415, Law and Fact, Sec. 6, Note 19. Also, Rule 301,
T.R.C.P., states:

“The judgment of the court shall conform to the * * *
verdict * * * * * * provided, that upon motion and reasonable
notice the court may render judgment non obstante veredicto
if a directed verdict would have been proper, and provided
further that the court may, upon like motion and notice, dis-
regard any Special Issue Jury Finding that has no support in
the evidence. * * * *”

HE To sustain the action of the trial court in granting the motion
for judgment notwithstanding the verdict it must be determined
that there is no evidence on which the jury could have made the
findings relied upon. In acting upon such motion all testimony
must be considered in a light most favorable to the party against
whom the motion is sought and every reasonable intendment
deducible from the evidence is to be indulged in such party’s
favor. Burt v. Lochausen, 151 Texas 289, 249 S.W. 2d 194.

By examining petitioner’s evidence in its most favorable light
it is our opinion that the trial court could not give a directed ver-

dict nor overturn ‘a jury verdict Gn: the’ ground of no evidence to
support the findings. Petitioner, her sister, and her fathér. all gavé
evidence to support the jury’ 8 indings.

i | Special Issues 1,8 and4 adequately. support petitioners 's theory
of resulting trust. Where a transfer of property is made to one
‘person and the purchase price-is paid by another, and the trans-
feree is a natural object of bounty of the person by whom’ the
purchase price is paid, and the latter manifests an intention that
the transferee should not have the beneficial interest in the prop-
erty, a resulting trust arises. Restatement, Trusts, See. 443
(1935).

Respondent’s claim of title under the three-year statute of
limitation will not stand. At best, disregarding the finding of
forgery and lack of proper signature, the deed through which
respondent claims title would be deemed a conveyance of trust
property by a trustee to one not a bona fide purchaser. The jury
found in Special Issues 2 and 5 that respondent was aware that
petitioner had paid the purchase price for the house and lots.
There was testimony by petitioner, her father and her sister that
respondent often admitted that the property belonged to peti-
tioner, and he sought to buy it from her. This would preclude
respondent from acquiring the status of innocent purchaser.
John v. Battle, 58 Texas 591.

Article 5507, V.T.C.S., reads as follows:

“Suits to recover real estate, as against a person in peace-
able and adverse possession thereof under title or color of title,
shall be instituted within three years next after the cause of
action accrued, and not afterward.” (Emphasis added). °

I It is our opinion that a deed from a trustee to a purchaser
with nowledge of the trust is not “title” or “color of title” as
contemplated in Article 5507. os

The word “title” in Article 5507 has been held to include both
the legal and equitable title as granted by the sovereign in the
original grant, to the extent that the original grant so conveyed
them. District Grand Lodge No. 25, ete. v. Logan, 177 S.W. 2d
818, wr. ref.; Burnham y. Hardy Oil Co., 108 Texas 555, 195
S.W. 1139; St. Louis Union Trust ‘Co. v. Harbaugh, 205 S.W.
496 (Texas Civ. App.), wr. ref. The purported conveyance here
from a trustee to one not an innocent purchaser could only con-
vey ‘the legal title, which is not sufficient title to support the

PE  —«:

three-year statute of limitation. 2 Texas Jur. 2d 281, Adverse
Possession Sec. 162.

IM Article 5508, V.T.C.S., states:

«x & + [Bly ‘color of title’ is meant a consecutive chain of
such transfers down to such person in possession, without being
regular, as if one or more of the memorials or muniments be
not registered, or not duly registered, or be only in writing,
or such like defect as may not extend to or include the want
of intrinsic fairness and honesty; * * * *.”

A conveyance by a trustee to one with knowledge of the trust
is wanting in intrinsic fairness and honesty, therefore will not
support the three-year statute of limitation under color of title.

The jury findings, supported by evidence, establish a result-
ing trust in favor of petitioner, and respondent failed to establish
title under the three-year statute of limitation. It is there-
fore ordered that the judgments of the trial court and Court of
Civil Appeals be reversed and judgment rendered for petitioner,
Teresa Losoya Leyva.

Opinion delivered June 27, 1962.