author: FELIPE REYNA, Justice. TOM GRAY, Chief Justice,

text:
    James H. BYRD, Appellants, v. The ESTATE OF H.G. NELMS, Appellee.
    No. 10-01-00241-CV.
    Court of Appeals of Texas, Waco.
    Nov. 17, 2004.

      Laura B. Herring, Braeewell & Patterson, Debra Jo Catlett, Houston, John E.S. Kramar, Richmond, for appellants.
    Russell S. Briggs, Kenneth T. Fibich, Fibich, Hampton, Leebron & Garth, L.L.P., Houston, for appellee.
    Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.
   OPINION

FELIPE REYNA, Justice.

James H. Byrd, along with others in a joint venture, signed an agreement guaranteeing a debt incurred by the joint venture. Years after Byrd assigned away his interest in the joint venture, he was sued by The Estate of H.G. Nelms, one of the current venture partners and also a co-guarantor, which, after purchasing the underlying debt, sought payment of the debt from its fellow co-guarantors. A jury found that the Nelms Partnership paid the debt in its capacity as a co-guarantor and not as a partner in the joint venture. The trial court held Byrd jointly and severally liable for the debt. Byrd appeals from this judgment. We find that there is sufficient evidence that the Nelms Partnership paid the debt in its capacity as a guarantor. We also hold that a co-guarantor can purchase a note and sue its fellow co-guarantors as an assignee. However, despite “joint and several” language in the guaranty agreement at issue, the Nelms Partnership is limited in its recovery to the proportionate share of the co-guarantors.

THE ISSUES ON APPEAL

Byrd contends in nine issues that: (1) there is no evidence or factually insufficient evidence to support the jury’s finding that the Nelms Partnership paid the note in its capacity as a guarantor; (2-5) the trial court erred by refusing to submit proposed jury questions and instructions; (7) the trial court erred by finding that Byrd was jointly and severally liable; (8) there is no evidence or factually insufficient evidence to support the judge’s finding that the Nelms Partnership had standing to sue or that it sustained any damages in the capacity in which it brought suit; and (9) there is no evidence or factually insufficient evidence to support the judge’s finding that the note matured by its own terms on March 1, 1995, and that the Nelms Partnership established notice of default to the co-guarantors. The Nelms Partnership contends in a single cross-point that the trial court erred in finding that it waived the right to recover prejudgment interest. We affirm in part, reverse and remand in part.

BACKGROUND

In 1981, Byrd, the Nelms Partnership, and others formed a joint venture for the purpose of owning, maintaining, and leasing a building in Houston. The interest of each partner was as follows: James H. Byrd, 12.5%; John O’Leary, 25%; W.D. Culwell, 25%; William R. Dean, 25%; the Nelms Partnership, 6.25%; and Elouise A. Nazro, 6.25%. In order to pay the $8,000,000 purchase price, the venture executed a promissory note (first note) payable to Holland Mortgage and Investment Company in the amount of $2,250,000. The partners contributed to the $750,000 down payment in proportion to each one’s interest in the venture. The note was secured by a deed of trust and by unconditional guaranty agreements executed by all the partners. Over time the note went though a series of re-financing arrangements ultimately resulting in Texas Commerce Bank obtaining ownership.

In 1986, Dean and O’Leary assigned all their interest in the venture to Byrd, Cul-well, Nazro, and the Nelms Partnership. They did not revoke their guaranty agreements. After the assignment, Dean and O’Leary had no further dealings with those remaining in the venture. Shortly thereafter, Byrd assigned his interest in the venture to the Nelms Partnership, Nazro, and Culwell without revoking his guaranty agreement. He did indicate that he thought that the Nelms Partnership, through Frank Nelms, orally agreed to assume his obligations under the note if he paid the taxes for that year. Thereafter, Byrd had no further dealings with those remaining in the venture. Soon after, Cul-well also conveyed his interest in the venture equally to the Nelms Partnership and Nazro, but did not revoke his guaranty. As a result of that conveyance, the Nelms Partnership and Nazro each became 50% owners in the venture.

In November 1989, the property was sold to Buffalo Speedway Investments, Inc., a corporation formed by the venture. On March 10, 1992, Buffalo Speedway Investments sold the property and the building to Lamar Council of Co-owners for $1,100,000. The day before the sale, Texas Commerce Bank released its lien on the property. The net proceeds of that sale were applied to the note at Texas Commerce Bank, leaving a balance of $1,052,758 on the note. On July 21, 1992, the Nelms Partnership and Nazro entered into a reimbursement agreement in which they agreed that they were each obligated to the other as partners in the joint venture for one half of the amount owed on the note. On that same day, Nazro paid for his half due on the first note, and the Nelms Partnership executed an installment loan note (second note) payable to Texas Commerce Bank in the amount of $526,379.09 towards his half of the indebtedness on the first note. Subsequently, Texas Commerce Bank assigned its interest in the first note and guaranty agreements to the Nelms Partnership and Naz-ro. The assignment made no mention .of the joint venture. The Nelms Partnership paid the balance due on the second note in October 1992.

On November 11, 1993, the Nelms Partnership and Nazro filed suit against the co-guarantors, including Byrd, seeking compensation for breach of the guaranty agreements as assignees of the note and in the alternative contribution as co-guarantors. The plaintiffs did not pursue their claim against O’Leary, because he declared bankruptcy. Nazro was subsequently dismissed from the case for lack of jurisdiction. Judgment was entered against Byrd, Dean, and the Estate of W.D. Culwell in the amount of $459,428.79 plus attorney’s fees. After reaching a settlement agreement, the Nelms Partnership partially dismissed its appeal as to Dean and the Estate of W.D. Culwell. Byrd and the Nelms Partnership are the only parties in interest in this appeal.

SUFFICIENCY OF EVIDENCE-CAPACITY TO SUE

In Byrd’s eighth issue, he urges that there is no evidence, or insufficient evidence, to support the trial court’s finding that the Nelms Partnership had standing to sue or sustained any damages in the capacity in which it brought suit. Before trial, Byrd filed a verified plea in abatement, in accordance with Rule 93(1) of the Texas Rules of Civil Procedure, contending that there was insufficient information to determine the capacity in which the Nelms Partnership brought this suit. The plea indicated that the Nelms Partnership could not maintain such a suit if it had failed to file an assumed name certificate in the county in which it is conducting business under that assumed name. It also stated that the Nelms Partnership did not specify the type of entity by which it operated. Byrd contends that it cannot tell whether “the Estate of H.G. Nelms” acting as the estate of the deceased H.G. Nelms is suing based on the note, or whether “the Estate of H.G. Nelms” acting as the Nelms Partnership is suing on the note.

As a result, the Nelms Partnership filed a verified response, showing that before trial in 1992 it had filed an assumed name certificate in Harris County indicating that it was a general partnership. The trial court subsequently denied Byrd’s plea in abatement.

Whether a party has capacity to sue is a question of law. Anderson v. New Property Owners’ Ass’n of Newport, Inc., 122 S.W.3d 378, 384 (Tex.App.-Texarkana 2003, pet. denied) (citing Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928-29 (Tex.1998)). A trial court’s conclusions on questions of law cannot be attacked on factual insufficiency grounds. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.2002); Hardy v. State, 50 S.W.3d 689, 696 (Tex.App.-Waco 2001), aff'd, 102 S.W.3d 123 (Tex.2003). Rather, they are reviewed de novo and are analyzed for their correctness. BMC Software, 83 S.W.3d at 794; Hardy, 50 S.W.3d at 696. Even if the conclusions of law are not correct, the error will not require reversal if the trial court rendered the proper judgment. BMC Software, 83 S.W.3d at 794; Hardy, 50 S.W.3d at 696.

The Texas Business and Commerce Code requires every business operating under an assumed name to file an assumed name certificate in the county where the entity is doing business. Tex. Bus. & Com. Code Ann. § 36.10(a) (Vernon 2002). If an assumed name certificate is not filed, the entity loses the privilege of bringing suit in any court under the state of Texas under that name. Tex. Bus. & Com.Code Ann. § 36.25 (Vernon 2002).

In response to Byrd’s plea in abatement, the Nelms Partnership presented evidence that it had indeed filed an assumed name certificate in Harris County. The certificate states that the entity doing business in Harris County is a general partnership called “The Estate of H.G. Nelms,” the very name of the entity listed as the plaintiff in this case. See Tex.R. Civ. P. 28. The certificate was filed June 12, 1992, over one month before the Nelms Partnership signed a promissory note with Texas Commerce Bank with which to pay off the original note. Furthermore, the Nelms Partnership also produced a 1996 partnership agreement between four testamentary trusts. The partnership was called “The Estate of H.G. Nelms.”

We find that the trial court’s conclusion that the Nelms Partnership had the legal capacity to sue Byrd was correct. BMC Software, 83 S.W.3d at 794.

Throughout his various issues, Byrd consistently argues that the Nelms Partnership lacks the ability to recover in the capacity in which it sued. This argument is restated in various ways, such as: the Nelms Partnership lacks the ability to recover in the capacity in which it sued because it was not a partnership at the time the note was purchased; the Nelms Partnership cannot prove it is the holder of the note because it did not acquire the note in the capacity that it is now suing under, i. e., it was not a partnership at the time the note was purchased. Byrd brought some evidence to prove his theory of capacity during the trial, apparently seeking to put the issue before the jury; however none of his evidence was presented to the trial court in his plea in abatement, the proper pleading for questions of capacity to sue. El T. Mexican Restaurants, Inc. v. Bacon, 921 S.W.2d 247, 250 (Tex.App.-Houston [1st Dist.] 1995, writ denied); Rimco Enterprises, Inc. v. Texas Elec. Serv. Co., 599 S.W.2d 362, 365 (Tex.Civ.App.-Fort Worth 1980, writ ref'd n.r.e.). In his plea in abatement and in his argument at the hearing, Byrd argued only that they could not discern what entity was bringing an action against him, and that the pleadings should be amended. Byrd did not argue to the trial court that the partnership was not in existence when the note was purchased and seeks to do so only on appeal. Therefore we will not consider it in reviewing the issue on capacity to bring suit. Loera v. Interstate Inv. Corp., 93 S.W.3d 224, 228 (Tex.App.-Houston [14th Dist.] 2002, pet. denied).

However, in passing, we note the following facts. In 1981, at the inception of the joint venture, the joint venture agreements and original guaranty agreements were all signed “The Estate of H.G. Nelms by” with the trustees • of the trusts signing underneath. This method of signing continued until 1987. At that time, the note was assigned to Texas Commerce Bank. The assignment documents and renewed guaranties were signed “The Estate of H.G. Nelms, a Texas General Partnership, a Joint Venturer” and underneath this notation, each trust was named and designated as a general partner beneath which were the signatures of the trustees for each trust. The Nelms Partnership continued this method of signing for almost every transaction thereafter. The signed partnership agreement is dated 1996, but there need not be a written partnership agreement for a partnership to be legally recognized. Tex.Rbv.Civ. Stat. Ann. art. 6132b, § 1.01(12) (Vernon 2002). The assumed name certificate stating that “The Estate of H.G. Nelms” was a general partnership consisting of four trusts was on file in Harris county more than a month before the July 21, 1992, transaction between the Nelms Partnership and Texas Commerce Bank.

We overrule Byrd’s eighth issue.

SUFFICIENCY OF EVIDENCE-PAYMENT AS GUARANTOR

The jury found that the Nelms Partnership paid the note in its capacity as a guarantor. Byrd contends in his first issue that there is no evidence or factually insufficient evidence to support the jury’s finding. We find that there is sufficient evidence that the Nelms Partnership paid the note as a guarantor.

Standard of Review

Byrd, as the defendant, did not have the burden of proof at trial. See Escalante v. Luckie, 77 S.W.3d 410, 416 (Tex.App.-Eastland 2002, pet. denied). To prevail on a no-evidence complaint, an appellant who did not have the burden of proof at trial must show that there is no evidence to support the contested finding. Beard v. Beard, 49 S.W.3d 40, 55 (Tex.App.-Waco 2001, pet. denied). The appellate court must consider only the evidence and inferences that support the adverse finding and ignore all evidence and inferences to the contrary. Lenz v. Lenz, 79 S.W.3d 10, 19 (Tex.2002). A “no evidence” claim will be sustained if: (a) there is a complete absence of evidence of a vital fact; (b) the rules of law or evidence prevent the court from giving weight to the only evidence offered to prove a vital fact, (c) the evidence offered to prove a vital fact is not more than a scintilla, or (d) the evidence conclusively establishes the opposite of the vital fact. Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex.1998) (citing Robert W. Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 Tex. L.Rev. 361, 362-63 (1960)). When the evidence “rises to a level that would enable reasonable and fair-minded people to differ in their conclusion,” then there is more than a scintilla of evidence. Beard, 49 S.W.3d at 55 (quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex.1995)).

When an appellant who did not have the burden of proof at trial complains of factually insufficient evidence, the appellate court must examine the entire record. The court will reverse only if the trial court’s finding is “so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust.” Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986); Beard, 49 S.W.3d at 55. If the proponent’s proof, while adequate, if taken alone, is so overwhelmed by the opponent’s contrary proof, or if the finding is based on weak evidence, reversal can occur. Checker Bag Co. v. Washington, 27 S.W.3d 625, 633 (Tex.App.Waco, pet.denied) (citing William Powers, Jr. & Jack Ratliff, Another Look at “No Evidence” and “Insufficient Evidence,” 69 Tex. L.Rev. 515, 519 n. 11 (1991)).

In resolving this issue, we must first look to what the Nelms Partnership was required to prove at trial. Byrd argues that the Nelms Partnership must prove (1) Byrd executed the guaranty; (2) the underlying note is in default; (3) the Nelms Partnership in its capacity as a guarantor is the present holder of the note and the guaranty agreements; and (4) there is a balance due and owing on the note. Sunbelt Savings, FSB, Dallas, Texas v. Birch, 796 F.Supp. 991, 995 (S.D.Tex.1992). However, Byrd relies on federal precedent that is not binding upon this court. In order that we might be consistent with our sister courts, we find that in order to recover on a breach of guaranty agreement, the plaintiff must prove: (1) the existence and ownership of the guaranty agreement; (2) the terms of the underlying contract by the holder; (3) the occurrence of the conditions upon which liability is based; and (4) the failure or refusal to perform the promise by the guarantor. Escalante, 77 S.W.3d at 416; Marshall v. Ford Motor Company, 878 S.W.2d 629, 631 (Tex.App.-Dallas 1994, no writ). Byrd does not argue about the terms of the underlying contract or his refusal to perform his promise. His arguments regarding whether there is a balance due under the note and whether the note is in default will be discussed in our review of his ninth issue. He argues only that the evidence establishes that the Nelms Partnership paid the debt as a partner in the joint venture, and not as a guarantor. Therefore we will conduct our sufficiency review under (1).

Capacity in which the Nelms Partnership Obtained the Guaranty Agreement

A guaranty creates a secondary obligation whereby the guarantor promises to answer for the debt of another, and a creditor may call upon the guarantor to perform once the primary obligor has failed to perform. Garner v. Corpus Christi Nat. Bank, 944 S.W.2d 469, 475 (Tex.App.-Corpus Christi 1997, writ denied) (citing Republic Nat’l Bank v. Northwest Nat’l Bank, 578 S.W.2d 109, 114 (Tex.1978)). In this instance, the primary obli-gor was the joint venture. The co-guarantors can be called to answer for the debt only if the joint venture cannot fulfill its duties and pay the debt. Id.

The question asked of the jury is the method in which the Nelms Partnership acquired the note: by payment or by purchase. The Nelms Partnership is both a partner in the joint venture and a co-guarantor to the debt executed by the joint venture. This makes the Nelms Partnership liable on the note in two ways: (1) as a partner in the joint venture it is the principal debtor on the note; and (2) as a co-guarantor, it is secondarily liable on the note. Byrd argues that the Nelms Partnership did not purchase the note as a guarantor, but paid the note as a partner in the joint venture, thereby extinguishing Byrd’s liability for the debt. The Nelms Partnership asserts that the money given to Texas Commerce Bank was not to pay off the debt, but to buy the debt and underlying agreements as a co-guarantor. An overview of the testimony and evidence at trial demonstrates conflicting evidence on this issue.

Jack Lyons, the trustee of each of the four trusts comprising the Nelms Partnership, testified that the Nelms Partnership bought the debt in the capacity of a guarantor. While acknowledging the existence of a reimbursement agreement between the Nelms Partnership and Nazro as partners in the joint venture, he insisted that they paid it because they were obligated as guarantors to pay it. He indicated that because there was a balance on the debt after the sale of the property, “we had to make up the deficit.” He further testified that the October 1992 payment on the second note was made by check on the Nelms Partnership’s account. He said that Nazro also paid its proportionate share, and that no payment was made from a joint venture account. He related that there would not have been funds in a joint venture account from which to make such a payment. He admitted testifying previously that the Nelms Partnership and Nazro paid the indebtedness as partners in the joint venture.

In contrast to Lyons trial testimony, the 1992 federal income tax return of Buffalo Speedway Investments (the company formed by the joint venture) reflected that the Nelms Partnership and Nazro each made a capital contribution of $579,381 and $579,377, respectively. The return shows that the bulk of their respective capital contributions represented an assumption of debt from Buffalo Speedway Investments.

James Kelly, an attorney board certified in the areas of commercial and residential real estate, testified concerning the tax return, which he had seen for the first time a few minutes prior to his testimony. He acknowledged that the tax return reflected a loss for the joint venture of $947,143, largely occasioned by a long-term capital loss of $945,226. Yet, he explained that the loss was an assumption of debt in connection with the purchase of the notes that the Nelms Partnership had done in its individual capacity. He also stated that the capital contributions were necessary to zero out the capital accounts in the joint venture, and that the transaction was outside the venture. Kelly further testified that although the Nelms Partnership and Nazro, as the only partners in the joint venture, were primarily liable for all debts of the venture, nothing in the tax return indicated that the Nelms Partnership and Nazro acquired the note in any capacity other than their individual capacities.

Kelly also testified in the area of financial obligations relating to real estate. He concluded, based upon his examination of the documents in this case, that the Nelms Partnership and Nazro purchased the note in their individual capacities because the money came from them individually, not from the venture, and that the bank’s assignment was made to them individually, not to the venture.

After reviewing the evidence, we find that the evidence is such that reasonable minds could come to different conclusions. That being so, it is not within our power to invade the province of the jury. Beard, 49 S.W.3d at 55. The evidence contrary to the verdict is not so against the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain, 709 S.W.2d at 176. Therefore, we hold that there is sufficient evidence to support the jury’s finding that the Nelms Partnership paid the debt in its capacity as a guarantor.

SUFFICIENCY OF EVIDENCE-NOTE MATURITY AND NOTICE OF DEFAULT

Byrd contends in his ninth issue that there is insufficient evidence that the note matui'ed or that he received notice of default. In its judgment, the trial court stated, “It is further found by the Court, as a matter of law, that the Texas Commerce Bank note matured by its own terms on March 1, 1995, and Plaintiff has established notice of default provided to the Co-Guarantors by the filing of suit and by evidence produced at trial.... ” Byrd contends that there is no evidence to support the trial court’s finding.

The trial court’s finding that the note matured on its own terms was based on the trial court’s interpretation of the note. The “Thud Renewal and Extension of Note and Liens” provided that the note was to be fully and finally paid in its entirety by March 1, 1995. Apparently, Byrd’s argument is twofold. He first asserts that because the Nelms Partnership paid the note as a partner in the joint venture in 1992, the note does not mature at all. And secondly, because Byrd was sued eighteen months before the maturity date, the note could not have matured on its own terms.

The question raised in the first argument was answered by the jury. The jury found that the Nelms Partnership purchased the loan in its capacity as a co-guarantor. In doing so, the Nelms Partnership becomes an assignee of the note, allowing the Nelms Partnership to stand in the shoes of the creditor and seek payment from the principal debtor (the venture) or the guarantors. Fox v. Kroeger, 119 Tex. 511, 35 S.W.2d 679, 681 (1931).

Regarding Byrd’s second argument, normally, an assignee must wait until the note matures or there is a default on the note before pursuing its claims against the principal debtor or the guarantors. However, as long as the note is mature and due at the time of trial, there is no error. See Arnold v. Willis, 68 Tex. 417, 4 S.W. 485 (Tex.1887). The trial was held in 2001, well after the note became due on its own terms. Furthermore, there was testimony at trial that after the building was sold in 1992, the note became due at that moment, and the joint venture had no funds with which to pay off the amount owed on the note. We find there was sufficient evidence for the court to conclude that the note matured before trial.

Byrd further argues that the trial court erred in finding that he received notice that the venture defaulted on the note, thereby triggering his liability. However, by the very terms of his guaranty agreement, Byrd is not entitled to notice of default. His guaranty agreement states that “[gjuarantors hereby expressly waive .... (c) notice of demand for payment, notice of default or nonpayment, presentment, protest and notice of protest, as to the note.... ” “A guarantor is not entitled to have demand made for payment nor notice of default unless expressly provided for.” Roseborough v. Phillips, 389 S.W.2d 593, 595 (Tex.Civ.App.-Dallas 1965, no writ); see also Vaughn v. DAP Financial Services, Inc., 982 S.W.2d 1, 6-7 (Tex.App.-Houston [1st Dist.] 1997, no writ). The guaranty agreement expressly provides the opposite. We overrule Byrd’s ninth issue.

JUDICIAL ESTOPPEL

Byrd further asserts, in conjunction with his first issue, that the Nelms Partnership is judicially estopped from contending that it paid off the indebtedness in the capacity of a guarantor because such a position is inconsistent with the 1992 tax return of Buffalo Speedway Investments. He argues that the Nelms Partnership should not be allowed to pay the debt as a partner in the venture, taking the benefit of a valuable tax loss, and then claim that it paid as a guarantor and gain the benefit of contribution from the co-guarantors.

Judicial estoppel prevents a party from asserting a position in a legal proceeding which is inconsistent with a position previously taken by the party. In re Coastal Plains, Inc., 179 F.3d 197, 205 & n. 1 (5th Cir.1999). We have recently held that in cases of judicial estoppel, we apply the law applicable to the prior proceeding. Dallas Sales Co., Inc. v. Carlisle Silver Co., Inc., 134 S.W.3d 928, 931 (Tex.App.Waco 2004, pet. denied). Because the tax return was made under oath to a federal agency, we will apply federal law.

Byrd cites Ashman v. Commissioner of Internal Revenue in support of his position. 231 F.3d 541, 543 (9th Cir.2000). However, Ashman’s holding is based on the “quasi-estoppel” theory used by the Tax Court in actions against taxpayers and is not precedent for the argument that a tax return can be used to judicially estop a party from arguing an inconsistent position in a judicial proceeding that is not before the Tax Court. See id. On the contrary, while the majority of the federal courts have not addressed this issue, two circuits have decided that judicial estoppel would not apply to sworn statements in a tax return. Atlantic Limousine, Inc. v. N.L.R.B., 243 F.3d 711, 715 n. 2 (3rd Cir. 2001); Smith v. Travelers Ins. Co., 438 F.2d 373, 377 (6th Cir.1971). Therefore, we find that judicial estoppel is inapplicable in this case. We overrule Byrd’s first issue.

JURY QUESTION — WHETHER A PARTNERSHIP EXISTED

Byrd contends in his second issue that the trial court erred by failing to submit a question as to whether, on the date that the Nelms Partnership paid the bank for the assignment of the note, a partnership existed between the four trusts that comprised the Nelms Partnership.

We review a trial court’s decision to submit or refuse a particular instruction under an abuse-of-discretion standard. See Tex. Dep’t of Human Services v. E.B., 802 S.W.2d 647, 649 (Tex.1990). Pursuant to the Texas Rules of Civil Procedure, a trial court is required to submit questions and instructions that are raised by the pleadings and evidence. Tex.R. Civ. P. § 278. The trial court has broad discretion in submitting jury questions and instructions. See Plainsman Trading Co. v. Crews, 898 S.W.2d 786, 791 (Tex.1995). When a trial judge refuses to submit a proper question or instruction, a reversal is not required unless the error probably caused the rendition of an improper judgment. See Tex.R.App. P. § 44.1; Union P.R. Co. v. Williams, 85 S.W.3d 162, 170 (Tex.2002).

The question of whether a partnership existed at the time the note was paid is relevant to the ownership of the note. If the Nelms Partnership did not exist at the time the note was paid, then the Nelms Partnership may not have ownership of the note upon which to sue. Ownership of a note is an issue of capacity and requires a verified denial in order to preserve error. Pledger v. Schoellkopf 762 S.W.2d 145, 145-46 (Tex.1988) (per curiam); Nootsie, Ltd. v. Williamson County Appraisal Dist., 925 S.W.2d 659, 662 (Tex.1996). Any question concerning the Nelms Partnership’s capacity to sue was determined by the trial court as a matter of law in ruling on Byrd’s plea in abatement. We have already held in Byrd’s eighth issue that the trial court was correct in holding that the Estate had the requisite capacity to sue.

Issues of capacity to sue are questions of law. Mayhew, 964 S.W.2d at 928-29. Issues found as a matter of law should not be submitted to the jury. Star Enterprise v. Marze, 61 S.W.3d 449, 459 (Tex.App.-San Antonio 2001, pet. denied) (citing T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 222-23 (Tex.1992)). Therefore, the trial court did not abuse its discretion in refusing to submit Byrd’s question. We overrule Byrd’s second issue.

JURY QUESTION — BREACH OF GUARANTY AGREEMENT

Byrd insists in his third issue that the trial court erred by failing to submit his requested jury questions and instructions on whether he breached his guaranty agreement. Whether a party has breached a contract is a question of law for the court, not a question of fact for the jury. See Willis v. Donnelly, 118 S.W.3d 10, 25-26 (Tex.App.-Houston [14th Dist.] 2003, no pet.); Chappell Hill Bank v. Lane Bank Equip. Co., 38 S.W.3d 237, 245 (Tex.App.-Texarkana 2001, pet. denied); Lafarge Corp. v. Wolff, 977 S.W.2d 181, 186 (Tex.App.-Austin 1998, pet. denied). “The judge determines what conduct is required of the parties and, insofar as a dispute exists concerning the failure of a party to perform the contract, the judge submits the disputed fact questions to the jury.” Lafarge, 977 S.W.2d at 186.

Byrd acknowledged at trial that he was a guarantor, and the guaranty agreements were admitted into evidence without objection. Byrd argues that because there was conflicting evidence of the elements necessary to prove breach of contract, the trial court should have submitted his breach of contract question. Regarding the conflicting evidence, Byrd argues that he offered evidence that the note was not in default, that the Nelms Partnership was not the holder of the note, and that there was no balance due on the note.

Whether the Nelms Partnership is the holder of the note is an issue of capacity, was found by the trial court as a matter of law, and was addressed in our disposition of Byrd’s eighth issue. Whether the note was in default was found by the court as a matter of law and was addressed in our disposition of Byrd’s ninth issue. Issues found as a matter of law should not be submitted to the jury. See Star Enterprise, 61 S.W.3d at 459.

Additionally, whether the note was in default or whether there was a balance due are questions resolved by the jury. The only reason Byrd gives as to why there is no balance, or the note is not in default is because the Nelms Partnership paid the note as a partner in the joint venture. Therefore, any fact question as to Byrd’s breach of the guaranty agreement is resolved by the jury’s answer to the charge. Lafarge, 977 S.W.2d at 186. The trial court did not abuse its discretion in refusing to submit Byrd’s question on whether he breached the guaranty agreement. We overrule Byrd’s third issue.

JURY QUESTION — AMOUNT OWED

Byrd contends in his fourth issue that the trial court erred by failing to submit an issue concerning the amount of damages owed by him. As we will discuss under our review of Byrd’s seventh issue, under general surety law, Byrd is responsible for his contributory share of the unpaid debt as a matter of law. Mandolfo v. Chudy, 253 Neb. 927, 573 N.W.2d 135 (1998). Therefore, there was no factual issue to submit to the jury with respect to it. The trial court did not abuse its discretion in refusing to submit Byrd’s question on damages. We overrule Byrd’s fourth issue.

JURY QUESTION — WAIVER

Byrd argues in his fifth issue that the trial court erred by failing to submit his requested jury question and instruction regarding whether the breach of the guaranty agreement was excused by waiver.

Waiver is “an intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right.” United States Fid. & Guar. Co. v. Bimco Iron & Metal Corp., 464 S.W.2d 353, 357 (Tex.1971); Hatch v. Williams, 110 S.W.3d 516, 523 (Tex.App.-Waco 2003, no pet.). Waiver is an affirmative defense that can be established by a party’s express renunciation of a known right, or by silence or inaction for so long a period as to show an intention to yield the known right. Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 643 (Tex.1996). Intent is the key element needed to establish waiver. Hatch, 110 S.W.3d at 523.

Byrd’s first argument is that waiver was shown by the fact that the joint venture’s claim of a long-term capital loss on its 1992 tax return is inconsistent with claiming a right based on payment of the note by the Nelms Partnership as a guarantor. Even if this were error, it did not probably cause the rendition of an improper judgment. The jury considered the tax return when resolving the issue of whether the Nelms Partnership paid the note as a co-guarantor. The jury found that the Nelms Partnership paid the note as a guarantor, and we have held that the evidence is sufficient to support that finding, despite the tax return. Consequently, any error in the trial court’s failure to submit the waiver issue is harmless. See Tex.R.App. P. § 44.1; Union P.R. Co., 85 S.W.3d at 170.

Byrd also argues that the agreement between Frank Nelms and Byrd is additional evidence of waiver. He points to testimony that Frank Nelms had a 1986 oral agreement with Byrd that Nelms would take over Byrd’s obligation on the venture in exchange for his assignment of his interest to the venture and payment of $12,000 in property taxes. We first note that Byrd has not referred us to any evidence that Byrd ever accepted Nelms’s offer or paid the $12,000 in property taxes that was a condition of the waiver. We also note that under the Statute of Frauds an agreement to assume the debt of another must be in writing. Tex. Bus. & Com. Code § 26.01(a) and (b)(2) (Vernon 2002). Consequently, inasmuch as any agreement by Nelms to assume Byrd’s obligations to the holder of the note was not in writing, it could not form the basis for a valid agreement to that effect. We overrule Byrd’s fifth issue.

JOINT AND SEVERAL LIABILITY

Byrd argues in his seventh issue that the trial court erred in making a finding that the co-guarantors are jointly and severally hable. The guaranty agreements provide that the guarantors’ liability is joint and several. In its sixth amended petition, the Nelms Partnership sought to recover for breach of the guaranty agreements in its capacity as the holder of the note and guaranty agreements and, alternatively, for contribution in its capacity as a co-guarantor. In the portion of the petition relating to its suit for contribution, the Nelms Partnership alleged that it was entitled to contribution from “[defendants, their co-guarantors, of the [sic] their pro rata share of the indebtedness paid by plaintiffs under the agreements.” With respect to its claim for breach of the guaranty agreement, the Nelms Partnership alleged that “[defendants are each severally liable to plaintiffs for such amounts pursuant to their guaranty agreements.”

Byrd argues that despite the provision in his guaranty agreement that he is jointly and severally liable, the Nelms Partnership is barred from asserting so because it judicially admitted that it was seeking only each defendant’s proportionate share. The assertion in the pleading relied upon by Byrd is not a judicial admission, but an alternative pleading. See Brooks v. Center for Healthcare Servs., 981 S.W.2d 279, 283 (Tex.App.-San Antonio 1998, no pet.) (citing Houston First Am. Sav. v. Musick, 650 S.W.2d 764, 767 (Tex.1983)).

Though the pleadings of the Nelms Partnership are not judicial admissions, Byrd is correct in arguing that he is liable to the Nelms Partnership for only his proportionate share. Because a guaranty is a type of surety, we will look to the laws of suretyship for clarification. See Tex. Bus. & Com.Code Ann. § 34.01 (Vernon 2002).

Issues of suretyship and guaranty were decided long ago in Texas legal history. See generally Roberson v. Tonn, 76 Tex. 535, 13 S.W. 385 (1890) (recognizing that a surety must contribute to fellow co-surety’s payment of the underlying debt); Hollis v. Winfree, 216 S.W.2d 625, 628-29 (Tex.Civ.App.Beaumont 1948, writ ref'd) (holding surety has no right to compel fellow co-sureties to contribute more than their proportionate share). However, the issue of whether a guarantor, by purchasing the underlying debt, can recover the full amount due on the note from a co-guarantor based upon “joint and several” language in the guaranty agreement is a more recent conundrum.

In an unpublished opinion, the Fifth Court of Appeals acknowledged the issue of a guarantor recovering more than its proportionate share, but declined to address it. Dealing with a related question, the court found that a co-guarantor can purchase the underlying debt and then sue on the debt as an assignee.

Tomaszewicz’s main argument is that a guarantor should not be allowed to improve his position in relation to other co-guarantors by obtaining an assignment of the note and guaranty agreement. In other words, a guarantor should not be able to sue based on the loan documents for the entire amount of the debt or deficiency, thereby eliminating his liabilities as a guarantor and increasing the liabilities of the co-guarantors.... We agree with Tomaszewicz that a guarantor does not necessarily escape responsibility for his share of the obligation under a promissory note by purchasing the note and guaranty agreement from the creditor.... But this is not the issue before us. The issue is whether Wiman can assert a cause of action against To-maszewicz in his capacity as holder of the note and transferee of the guaranty agreement. We conclude he can.

Wiman v. Tomaszewicz, 1997 WL 459084, **4-7, (Tex.App.-Dallas Aug. 13, 1997, pet. denied) (not designated for publication).

The Fifth Court cited Fox v. Kroeger in support of its finding that a guarantor can purchase the underlying note.

From what we have said it follows that we now announce the rule in Texas to be that, where the surety pays the debt of the principal, he has his election to either pursue his legal remedies and bring an action on an assumpsit, or the obligation implied by law in his favor for reimbursement by the principal; or he can prosecute an action on the very debt itself, and in either event he stands in the shoes of the original creditor as to any securities and rights of priority.

Fox v. Kroeger, 119 Tex. 511, 35 S.W.2d 679, 681 (Tex.1931).

We agree with the Dallas court, and find that the Nelms Partnership can purchase the underlying note and guaranty agreements and assert a cause of action against the co-guarantors as an assignee. However, finding no precedent in Texas on the issue at hand, we look to other jurisdictions for guidance.

While other jurisdictions disagree on whether a guarantor can purchase the underlying note and sue his co-guarantors as an assignee, they agree that the guarantor is limited in his recovery to only the contri-butive share of the other co-guarantors. They reason that contribution is an equitable remedy that implies a contract between guarantors ensuring that in the event one of the guarantors is called to pay the debt, the other guarantors would contribute their proportionate share, and no more. See Curtis v. Cichon, 462 So.2d 104, 105-06 (Fla. 2d DCA 1985). The assignment of an underlying note and guaranty agreement to a guarantor does not change the status of the guarantor in relation to his co-guarantors. Mandolfo, 253 Neb. at 931, 573 N.W.2d at 138. Therefore, as a matter of law, the relationship between guarantors restricts recovery to their contributive share. Weitz v. Marram, 34 Md.App. 115, 121-22, 366 A.2d 86, 89-90 (1976).

The holdings of these jurisdictions are based primarily on section 149 of the Restatement of Security. The applicable provisions of the first edition of the Restatement and the current edition are reproduced below.

A cosurety who has paid more than his proportionate share is also subrogated to the creditor’s rights against the co-sureties, provided the principal’s duty has been satisfied, see § 141. The co-surety’s right of recovery is, however, limited to the amount to which he is entitled as contribution.

Restatement of Security § 149 cmt. e (1941).

(1) Subject to subsection (2) and to any express or implied agreement between or among the cosureties, a cosurety’s contributive share is the aggregate liability of the cosureties to the obligee divided by the number of cosureties.

Restatement (Third) of Suretyship and Guaranty § 57 (1996).

General Principle — With respect to the obligee, each cosurety is liable to the full extent of its secondary obligation. When an obligee obtains recovery from one of the cosureties, however, the cost of that performance should not ultimately rest completely on that cosurety. Rather, the cosureties are treated as though they agreed among themselves to share the cost of their performance. Thus § 55(2) gives the performing co-surety recourse against the nonperforming cosureties in order to bring about a sharing of that cost. The share of that cost to be borne by each cosurety is that cosurety’s contributive share. Under subsection (1), the contributive share of each cosurety is presumed to be the total liability of the cosureties to the obligee divided by the number of co-sureties.

Restatement (Third) of Suretyship and Guaranty § 57 cmt a (1996); See also Restatement (Third) of Suretyship and Guaranty § 55.

The policy concerns for holding that a guarantor’s recovery against his co-guarantors is limited only to them proportionate share are best expressed thus:

Common sense dictates this result. All ... sureties agree to be liable for full payment of the note if the principal debtor defaults and are further liable for contribution to the co-surety who actually pays the creditor. Thus, each surety’s ultimate liability may be fixed at his virile share of the note. If one of several sureties, as here, could purchase the note (or otherwise contractually subro-gate to the creditor’s rights) and then collect the full amount of the note from a co-surety, the purchasing surety would thereby escape liability for his virile portion of the debt. If [Appellants] were able to succeed on their theory, then upon the debtor’s default, every surety would race to the bank to purchase the note. The Civil Code does not contemplate that a surety’s liability should be premised upon the fortuity of being the first to purchase the debtor’s note.

Boyter v. Shreveport Bank and Trust, 65 B.R. 944, 948 (W.D.La.1986).

We agree with the reasoning of these jurisdictions, and hold that the Nelms Partnership’s right to sue on the note and guaranty agreements as a purchaser/as-signee is limited as a matter of law to the eontributive share of its co-guarantors.

The trial court calculated the amount of damages against Byrd as $459,428.79, which represents the $525,061.47 payment made by the Nelms Partnership less the Nelms Partnership’s proportionate share of 6.25 percent ($65,6S2.68). However 6.25 percent is not the Nelms Partnership’s proportionate share as a guarantor, but its original percentage of ownership in the joint venture. The Nelms Partnership did not bring this action against Byrd in its capacity as a partner in the joint venture or under any joint venture agreement, but as a co-guarantor and under the guaranty agreements. The jury found that the Nelms Partnership purchased the debt in its capacity as a guarantor. Absent an express agreement among the guarantors to the contrary, the eontributive share of the Nelms Partnership is limited to the total amount of liability divided by the number of co-guarantors. Restatement (Third) of Suretyship and Guaranty § 57 (1996).

The Nelms Partnership paid $525,061.47 for the note. There are six guarantors; therefore, Byrd’s eontributive share would be one-sixth of the note. We reverse the damages portion of the judgment and remand this cause to the trial court to recalculate the damages as to Byrd’s contri-butive share of $87,510.25. We sustain Byrd’s seventh issue.

PREJUDGMENT INTEREST

The Nelms Partnership filed a notice of appeal and asserted in a single cross-point that the trial court erred by failing to award it prejudgment interest. We first consider Byrd’s contention that we should not consider the cross-point because the Nelms Partnership did not present it in a timely filed appellant’s brief, but included the cross-point in his appellee’s brief. Byrd contends that the Nelms Partnership was required to do so because it seeks, by means of the cross-point, to alter the trial court’s judgment.

A party seeking to alter the trial court’s judgment must file a notice of appeal. Tex.R.App. P. 25.1(c). An appellant is a party taking an appeal to an appellate court. Tex.R.App. P. 3.1(a). As we interpret these rules, the Nelms Partnership is an “appellant” (or “cross-appellant”) with regard to its cross-point.

The Texas Rules of Appellate Procedure do not clearly delineate when a cross-appellant must file its brief raising issues on a cross-appeal. In appeals from a judgment notwithstanding the verdict, Rule 38.2(b) suggests cross-issues can be raised as part of the appellee’s brief. Tex.R.App. P. 38.2(b). In any event, Rule 38.8(a)(2) says our choices in this situation are to dismiss the cross-appeal for want of prosecution or decline to dismiss it and give further direction to the case as we consider proper. Tex.R.App. P. 38.8(a)(2).

Byrd in its appeal seeks to reverse the judgment in its entirety, whereas the Nelms Partnership'seeks to affirm it except for the additional recovery of prejudgment interest. Had Byrd and the Nelms Partnership both presented themselves as appellants, as apparently contemplated by the rules, it would have created the possibility of confusion with respect to the reference of the parties in this opinion. Under the circumstances, it makes sense, even if not technically correct, for the Nelms Partnership to present its cross-point in its appellee’s brief, as it has done. Under these circumstances, we will exercise our discretion and consider the merits of the issue as briefed by the parties.

Byrd does not dispute that the Nelms Partnership would ordinarily be entitled to prejudgment interest. He argues only that the Nelms Partnership’s attorney’s declaration in its opening statement that it was not suing for interest, constitutes a judicial admission, precluding recovery of interest.

The pertinent part of the statement by the Nelms Partnership’s attorney is as follows:

“Think about through the years too. We’re not even suing for operating costs, interest, and everything, all the debt that was lost throughout all the years just to try to keep this building afloat when all their partners left them and abandoned them. That’s not even a part of this case. So pursuing its case in accordance with being the holder of the note and being entitled to reasonable attorney’s fees, that’s why you’re asked that today. Bottom line is we paid more than our fair share. We owed some on it too. Yes, we’re guarantors.”

In order to be a judicial admission, the statement relied upon must be deliberate, clear, and unequivocal. See Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 568 (Tex.2001); Thomas v. Cornyn, 71 S.W.3d 473, 487-88 (Tex.App.-Austin 2002, no pet.) (quoting Gevinson v. Manhattan Constr. Co., 449 S.W.2d 458, 466 (Tex.1969)). A reasonable interpretation of the statement is that it is a reference to the interest that the Nelms Partnership paid on the building that it otherwise would not have paid had the other partners not abandoned the joint venture. That being the case, the statement, as related to the issue of prejudgment interest, was not deliberate, clear, and unequivocal. Consequently, it did not constitute a judicial admission barring the Nelms Partnership from recovering prejudgment interest. See Wolf, 44 S.W.3d at 568. Therefore, we find the court erred in failing to award the Nelms Partnership prejudgment interest. We sustain the Nelms Partnership’s cross-point.

CONCLUSION

Though we approve of the disposition as to Byrd’s liability, we reverse the judgment and remand this cause to the trial court with instructions to re-calculate damages as to Byrd’s contributive share of $87,510.25, plus pre-judgment interest and attorney’s fees. Tex.R.App. P. 44.1(b).

Chief Justice GRAY dissenting.

TOM GRAY, Chief Justice,

dissenting.

There are three major aspects of the Court’s opinion with which I disagree. These are (1) the resolution of the capaeity/liability issue, (2) the charge issue on damages, and (3) the damage computation. The charge issue is dispositive of the appeal, but I must address the other two issues, at least briefly.

There is a question presented in this appeal that appears to be a question of first impression in Texas. To reach this question, we must first agree upon the answer to another question: what is the liability of co-sureties when one, of several, co-surety “purchases” the underlying debt that all have guaranteed? The answer is not all that remarkable. First, we look to an agreement that defines the relationship between the co-sureties. If, as in this case, the only express agreement signed by each surety was with the lender, then we turn to the common law to determine the relationship between the various sureties. The holding is unremarkable because, absent an express agreement to the contrary, each surety is held hable for them “contributive share.” See Restatement (Third) on Suretyship and Guaranty §§ 53 & 55 (1996). I will come back to the Court’s holding of what constitutes “contributive share;” but with this part of the opinion, I find no particular fault, other than it may not be necessary to a disposition of the appeal.

It may be unnecessary because the relationship of the co-sureties in this case involved what I would characterize as a dispositive twist. You see, the most significant issue in this aspect of this ease is a question of first impression regarding the merger of legal rights and obligations — the right to receive payment and the obligation to pay. In particular, what is the proper result when the entity that owes a debt is a joint venture and a general member of the joint venture, who is also a co-surety guaranteeing payment of the note, subsequently acquires ownership of the note? The Court holds that if one co-surety acquires the note, that co-surety can collect from the other co-sureties their contributive share of the note. The holding of the Court works fine if the co-surety that acquires the note is not also a debtor with an obligation for payment of the debt. But the purpose of the secondary obligation is to stand behind the obligation of the principal obligor to perform the underlying obligation. Restatement (Third) on Suretyship and Guaranty § 34, Comment a (1996).

My common sense question is why should the Nelms Partnership, which was a general member of the joint venture with the primary obligation to pay the note, be allowed to recover anything from anyone because of the acquisition of a note for which it owed the entire amount? Why does acquisition of the note by the Nelms Partnership not extinguish the obligation, or at the very least limit the acquiring general partner’s ability to recover from other general partners of the joint venture according to the terms of their joint venture agreement? Can an entity owe itself money, guarantee payment of the debt itself, default on the debt, and then collect any part of the debt from a co-surety? I have seen nothing to indicate that is, or should be the law, that is, until this Court’s opinion.

But the first issue to discuss on our way to resolving this case has to be capacity. I do not disagree with the analysis of the Nelms Partnership’s capacity to sue. But the Court has not fully appreciated the issue regarding the Nelms Partnership’s capacity. As I understand Byrd’s argument, it is that even if the Nelms Partnership has the legal capacity to sue, the Nelms Partnership has not proved its capacity to recover the damages for which it has sued. Cf. Tex.R. Civ. P. 93.1 and Tex.R. Civ. P. 93.2. This is an entirely different question regarding capacity than one of capacity to bring suit in a Texas court. And it is broader than simply having paid the note as a surety. It is about the factual and legal question of whether the Nelms Partnership has shown itself to be the owner of the note or entitled to a recovery because it paid the note.

Byrd has always argued that the Nelms Partnership was not entitled to sue in the capacity in which the note was paid; that is, the Nelms Partnership paid the debt when it was not in default. And the question submitted to the jury said “paid.” Therefore, the Nelms Partnership could not collect from the other co-sureties. For example, a surety may be entitled to sub-rogation, meaning it steps in as the obligee or creditor, if it pays the entire obligation owed. See Restatement (Third) Surety-ship and Guaranty § 27 (1996). However, performance by a surety in the absence of a default by the principal obligor will not entitle the surety to subrogation. Id. Comment c. If a surety cannot step in as the creditor when it pays prior to a default, then why should the Nelms Partnership be able to do so as a co-surety and then collect from the other co-sureties? It should not.

This brings us to the charge issue. It is the issue regarding the submission of a question regarding the Nelms Partnership’s damages that should resolve this appeal. Byrd objected to the failure to submit a damages question. The Nelms Partnership had the burden to establish the extent of its damages. First, how could the Nelms Partnership be damaged by acquiring a note that it owed? Second, why would the extent of the tax savings the Nelms Partnership enjoyed not be an offset to its damages, if any? But most importantly, if the Court were correct in its analysis that Byrd is responsible for his contributive share of the debt, the extent of that obligation is not limited to a simple mathematical computation of debt divided by the number of co-sureties. It is undisputed that at least one of the co-sureties is bankrupt and did not pay its contributive share. Why should Byrd not have to incur some of the debt of the bankrupt co-surety? The simple answer is that he should. To properly determine the amount of damages, the Nelms Partnership needed to establish which co-sureties were insolvent so that the remaining co-sureties’ payment could be proportionally increased to cover the bankrupt co-surety’s contributive share of the note. See Restatement (Third) Suretyship and Guaranty § 57(2) (1996). This question should have been addressed and answered by the Nelms Partnership upon the original trial. These issues were not addressed because a damages issue was not submitted, and Byrd objected to that failure.

At least one of the other disputed issues regarding the amount of a contributive share would be whether a smaller settlement was taken as to some co-sureties than their contributive share due to their insolvency. Does this mean their contri-butive share should be treated as fully paid? Would the same rule have applied to those settling co-sureties that paid less than their contributive share to resolve the dispute with the Nelms Partnership? As to those co-sureties that settled with the Nelms Partnership for less that their con-tributive share, if Byrd does have to pay the shortfall, can Byrd then pursue them for their unpaid portion of the note payments, that portion that Byrd ultimately must pay in addition to his contributive share? And in making all these computations of damages, the other co-sureties that suffered through this trial would have had their damages calculated, and we would now be able to determine exactly what portion of the judgment was released by the post-judgment settlement with those co-sureties.

The Court has simply taken a short-cut to a result, knowing that damages were not properly established by the Nelms Partnership, but not holding the Nelms Partnership responsible for its own'failure in this regard. By his objection to the charge, Byrd preserved the issue and is entitled to a reversal and rendition because no damages issue was submitted. See Clayton W. Williams, Jr., Inc. v. Olivo, 952 S.W.2d 523, 530 (Tex.1997); Stripling v. McKinley, 746 S.W.2d 502, 505 (Tex.App.-Dallas 1988), aff'd, 763 S.W.2d 407 (Tex.1989).

Of course, this also brings us back to the third aspect of the case with which I disagree which you will see also brings us back to where we began: A damages computation is immaterial if this case is resolved by the simple holding that when an entity that is primarily responsible on a note, like a general partner in a joint venture, acquires the note in any form of transaction, as a matter of law the duty to pay the note is merged with the right to receive payment on the note, and thus no surety can be called upon to pay the obligation. Any other rule seems a bit circular. Upon the payment as a co-surety of the note by Byrd to the Nelms Partnership, the Nelms Partnership will immediately become liable to Byrd for repayment of that amount because it has primary liability on the note as a member of the joint venture (the maker of the note). See Restatement (Third) Suretyship and Guaranty § 58 (1996). And the Nelms Partnership will obviously have assets with which to pay Byrd, the very money Byrd just paid to the Nelms Partnership, even if the Nelms Partnership had no other assets before the payment.

What the Court is actually doing is forcing Byrd to pay, not as a surety of a note, but as a general partner of a joint venture who has been assessed for an additional capital contribution. We miss the mark. Further, due to the failure of the Nelms Partnership to obtain a damages finding necessary in support of its claim, a finding necessary for the trial court to render a proper judgment, the trial court erred when it calculated the Nelms Partnership’s damages over Byrd’s objections to the refusal to submit a damages issue. I would therefore reverse and render judgment that the Nelms Partnership take nothing from Byrd. Because the majority does not, I respectfully dissent.

      . "The Estate of H.G. Nelms” is an entity acting as a Texas general partnership comprised of four testamentary trusts. To avoid confusion, "The Estate of H.G. Nelms” will hereinafter be called the "Nelms Partnership.”

      . Byrd’s sixth issue concerns the party the Estate of W.D. Culwell. Because that party is no longer a part of this appeal, we will not address Byrd’s sixth issue.

      . Rodehorst v. Gartner, 266 Neb. 842, 669 N.W.2d 679 (2003); Backman v. Hibernia Holdings, 1998 WL 427675 (S.D.N.Y. July 28, 1998) (unpublished); Mandolfo v. Chudy, 253 Neb. 927, 573 N.W.2d 135 (1998); Albrecht v. Walter, 1997 N.D. 238, 572 N.W.2d 809 (N.D.1997); Estate of Frantz v. Page, 426 N.W.2d 894 (Minn.Ct.App.1988); Curtis v. Cichon, 462 So.2d 104 (Fla. 2d DCA 1985); Koeniger v. Lentz, 462 So.2d 228 (La.Ct.App.1984); Collins v. Throckmorton, Del.Supr., 425 A.2d 146 (1980); Weitz v. Marram, 34 Md.App. 115, 366 A.2d 86 (1976).

      . We note that the trial court miscalculated the percentage. The Nelms Partnership's proportionate share of 6.25 percent of $525,061.47 should be $32,816.34.

      . The jury found the Nelms Partnership paid the note as a guarantor. The majority opinion uses "guarantor” and “surety” interchangeably. These days, there is not much distinction between the two terms. For the sake of consistency and ease in referencing the Restatement, I will use the terms "surety” and "co-surety.”


source: Caselaw Access Project

author: JOHN T. BOYD, Senior Justice.

license: Public Domain

text:
    James L. KILLION, Appellant, v. Chuck LANEHART, Successor Independent Executor of the Estate of Bill A. Davis, Deceased, Appellee.
    No. 07-03-0292-CV.
    Court of Appeals of Texas, Amarillo.
    Dec. 3, 2004.
    Rehearing Overruled Feb. 15, 2005.

      Robin M. Green, Leslie J. Searle, Law office of Robin M. Green, Lubbock, for Appellant.
    Aubrey J. Fouts, Fouts Fouts & Joplin, Lubbock, for Appellee.
    Before REAVIS and CAMPBELL, JJ„ and BOYD, S.J.

      . John T. Boyd, Chief Justice (Ret.), Seventh Court of Appeals, sitting by assignment. Tex. Gov't Code Ann. § 75.002(a)(1) (Vernon Supp.2004-2005).

   OPINION

JOHN T. BOYD, Senior Justice.

In seven points of asserted error, appellant James L. Killion challenges a judgment in favor of appellee Chuck Lanehart, as successor Independent Executor of the Estate of Bill A. Davis, deceased. In those seven points, appellant asserts: 1) the trial court erred as a matter of law in rendering judgment against him for contingent attorney’s fees when there was no written and signed contract for the payment of such fees; 2) the evidence does not support the jury finding in jury question 1 that the parties did not have an agreement as to attorney’s fees; 3) the evidence does not support the jury’s answer to question 2 finding that appellee was not to pay Bill A. Davis an hourly fee of $150 plus expenses with a minimum fee charge of $5,000; 4) the evidence does not support the jury’s answer to question 3 finding that the parties agreed to “an unspecified fee following the application of the original $5,000.00 paid by James Kil-lion”; 5) the trial court cannot, as a matter of law, use the jury’s answer to question 4 to support a judgment based upon quantum, meruit; 6) the evidence does not support the jury’s answer to question 4 finding that Bill A. Davis performed com-pensable work; and 7) the evidence does not support the jury’s answer to question 5 finding that $40,000 is a reasonable fee for appeal to the Court of Appeals. For the reasons expressed below, we affirm the judgment of the trial court.

In order to properly discuss the issues in this appeal, it is necessary to refer to the rather complicated facts giving rise to the appeal. Sometime prior to 1997, Ben-net Wells (Wells), an employee of the City of Lubbock (the City), while in the course of his employment with the City, was rendered a quadriplegic by a drunk driver. The City, as Wells’ self-insured employer, paid Wells the workers’ compensation benefits to which he was entitled as a totally disabled employee. Ronnie Agnew, a Lubbock attorney, initially represented Wells in a third party suit under the Texas “dram shop” law against the seller of the intoxicating beverages sold to the driver of the automobile who had caused the accident.

The City engaged appellant to act as its attorney on a contingent fee arrangement to attempt to recover its subrogation interest under the workers’ compensation law from the dram shop defendant. The ease was ultimately settled for the limits of the dram shop’s insurance of $1,000,000 plus $20,000 in uninsured motorist proceeds, or a total of $1,020,000. The amount of $870,000 from that settlement was placed in escrow pending resolution of a suit filed on behalf of Ronnie Agnew seeking an apportionment of attorney’s fees due.

In early June of 1997, appellant hired Bill A. Davis (Davis), another Lubbock attorney, to represent him in the Agnew attorney apportionment suit. In that regard, appellant testified that he and Davis had only one conversation about Davis’ employment. He averred that he told Davis that he, appellant, would want to do all the work and he anticipated that Davis would only have “two, three, four hours in the case.” Appellant further testified that Davis told him that he did not want to get involved unless he could make at least $5,000. Appellant said he then responded: “Well, okay, Bill. It will be an hourly fee, and I’ll guarantee you the minimum of $5,000.00. And that’s what happened.” There was no written or signed fee agreement at the time. However, on June 4, 1997, appellant wrote Davis a letter, which in material part, stated:

I am certainly agreeable to pay your hourly fee of $150.00 per hour plus expenses with the understanding that your minimum fee charge will be $5,000.00.

It is undisputed that the $5,000 was paid to Davis.

In deposition testimony, and in regard to the conversation with appellant, Davis averred: “I wouldn’t touch it for less than $5,000.00, just to look into it and see where we stood. And, of course, that might be all of it. It might not be all of it. It just depended on what happened in the case.” Davis denied that he had a specific fee agreement with appellant and said that the $5,000 was just supposed to be a retainer “to get me in on the show, because we didn’t know how long that show was going on.” He denied that he had any discussion about the total fee he would charge and that “we would just sit down and work out something that was fair and reasonable when it was all over with, see what happened, the result, and how much time the whole kit and caboodle — sit down and just come up with something; be reasonable.” Davis averred he had considered and advised on pleadings filed in the case, that he had various conferences with appellant’s office and others about the case and the documents in the case, and that he successfully conducted the summary judgment hearing, the trial, and the appeal, although the appeal brief was prepared by appellant’s office and reviewed by Davis.

On June 6, 1997, appellant sent Davis a letter enclosing various documents relating to the case and a check in the amount of $2,500. Other than a reference to the check being one-half of the agreed minimum fee, no reference to an agreed fee was made. On June 26, 1997, appellant again wrote Davis enclosing a check in the amount of $2,500, which was referred to as “the remainder of the $5,000 retainer.” These are the only written references to the parties’ fee arrangement and it is undisputed that Davis made no response to the 1997 letters.

Although appellant only recalled one discussion about the fee arrangement itself, he testified that on two occasions he spoke to Davis about keeping his hours. The first time was on April 13, 1998, and the second was in this court at the time of the argument during the appeal of the trial court’s apportionment of the attorneys’ fees held in escrow. On each of these occasions, appellant averred he told Davis to “keep his hours.” Other than those requests, appellant never requested any billing or time accounting from Davis.

Davis testified that after he was retained, he maintained an incomplete time record for about two months. He said that during the period of time during which he was keeping a time record, he did not put all of his time on it. According to Davis, the first occasion appellant saw or requested any record of his time was on November 16, 1999, which was when his deposition was taken for this case. He also testified that during the period this case was on appeal, he asked appellant what his idea of a reasonable fee would be, to which appellant responded that he had $10,000 that he could get his hands on “real quick,” to which Davis replied, “That ain’t going to do it, Jim.” Under cross-examination about his fee and when queried whether “this was a contingency fee that you were taking a percentage of,” Davis’ reply was “... there wasn’t no percentage mentioned, but I was counting on success.” Subsequently, when asked if he “thought that since he [appellant] got a lot of money, you should get a percent of it,” his reply was, “That’s right; as to how much good I did him, yeah.” Davis also admitted he did not know just how many hours he put in on the case.

Clyde William “Pete” Harland, a Lubbock attorney, who said he had 32 years trial experience primarily representing plaintiffs, testified that based upon his review of the work done by Davis, the nature of the case, and the factors related to a reasonable fee under Texas Rule of Professional Conduct 1.04, a fair and reasonable fee would be “somewhere in the range of between 25 percent and 33 and a third percent of the amount in dispute.” In arriving at that conclusion, he assumed that the parties did not have a contingent fee contract and he was aware that Davis’ position was that there was no agreement as to the amount of his fee after the initial payment of $5,000. Harland also testified that the time spent by an attorney on a case could be determined without an attorney maintaining hourly records and that an attorney could easily spend 33 hours in a two-week period on a case. Those conclusions were strongly contested on cross-examination.

John Simpson was called by appellant and averred that he was the one who had recommended Davis to appellant. He had been an attorney since 1974 initially representing plaintiffs. He also had been mediating eases since 1992. Simpson said he had some personal knowledge of the case in question. In his opinion, after reviewing the letter from appellant to Davis, it amounted to “a nonrefundable retainer agreement of $5,000 and the hourly rate for the time will be $150.00 an hour.” However, Simpson did admit that he could “see how the parties could argue that there was not a meeting of the minds.” He also testified: “Quantum Meruit — as I understand the law, you cannot have Quantum Meruit if there is an agreement. If there is no agreement, then you can have a Quantum Meruit recovery.”

The rules by which we consider and determine legal and factual insufficiency questions are by now axiomatic. When a party challenges the legal sufficiency of the evidence supporting an adverse finding on an issue on which he does not have the burden of proof, that party must demonstrate on appeal that there is no evidence to support the adverse finding. Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex.1983). We consider all the evidence in the light most favorable to the jury’s verdict, indulging every reasonable inference in favor of the prevailing party. Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 285-86 (Tex.1998). A legal sufficiency point will be sustained when (a) there is a complete absence of evidence of a vital fact, (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (c) the evidence offered to prove a vital fact is no more than a mere scintilla, or (d) the evidence conclusively establishes the opposite of a vital fact. Merrell Dow Pharms. v. Havner, 953 S.W.2d 706, 711 (Tex.1997), cert. denied, 523 U.S. 1119, 118 S.Ct. 1799, 140 L.Ed.2d 939 (1998). If the record contains any evidence of probative force to support the jury’s finding, the legal insufficiency challenge must be overruled. ACS Investors Inc. v. McLaughlin, 943 S.W.2d 426, 430 (Tex.1997).

When a party attacks the factual sufficiency of an adverse finding on an issue on which he has the burden of proof, he must demonstrate on appeal that the adverse finding is against the great weight and preponderance of the evidence. Croucher, 660 S.W.2d at 58. The court of appeals must consider and weigh all of the evidence, and may only set aside the finding if the evidence is so weak, or if the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and unjust. See Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex.1986), overruled on other grounds by Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378 (Tex.2000). Thus, appellant’s matter of law point would only be valid if the evidence establishes conclusively that the parties had entered into a contingent fee contract and if there is any evidence of probative force to raise a fact question in that regard, his point must fail. Further, if in applying the rule, the court feels that reversal is mandated, it must detail all of the relevant evidence and state in what regard the contrary evidence greatly outweighs the evidence in support of the verdict. Pool v. Ford Motor Co., 715 S.W.2d at 635.

If any finding is challenged for factual sufficiency of the evidence, all of the evidence in the record must be reviewed. See Plas-Tex, Inc. v. U.S. Steel Corp. 772 S.W.2d 442, 445 (Tex.1989). In order to require reversal, the jury’s verdict must be so contrary to the overwhelming weight and preponderance of the evidence as to be clearly wrong and unjust. See Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986). If there is conflicting evidence on a disputed fact question, it is the sole and peculiar province of the jury to judge the credibility of the witnesses and assess the weight to be given their testimony in order to arrive at the answer deemed the most reasonable. In discharging its function, the jury has the sole right to believe all, some, or none of the testimony of the witnesses. Benoit v. Wilson, 150 Tex. 273, 239 S.W.2d 792, 796-97 (1951). We are not authorized to set aside a jury verdict merely because the jury might have drawn a different conclusion from the evidence. Id at 797.

The gist of appellant’s argument under this first point is that, because under the evidence, there was no definite agreement as to the amount of Davis’ fee, his fee must have been a contingent one. If it was a contingent fee agreement, he reasons, it would be invalid because it is not in writing and thus fails to meet the legal requirements that a contingent fee agreement should be in writing and signed by the attorney and the client or it is voidable by the client. See Tex. Gov’t Code Ann. § 82.065 (Vernon 1998); Tex. Disciplinary R. Prof'l Conduct 1.04, reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G app. A (Vernon 1998).

Under this record, the jury could reasonably have deduced that there was no meeting of the minds between appellant and Davis other than the $5,000 non-refundable retainer and that Davis contended he would seek recovery of the remainder of his fee on a quantum meruit basis, with one of the aids to the jury in arriving at a figure that they might consider a percentage of the amount recovered. In Texas, the parties to a contract may agree upon some terms of a contract, and understand them to be a contract and yet leave other terms of the agreement to be made later. Scott v. Ingle Bros. Pacific Inc., 489 S.W.2d 554, 555 (Tex.1972). Moreover, it is a corollary of the rule that as to those terms left for future discussion, that portion of the agreement is not part of the enforceable portion of the contract. Thus, the resolution of the difference between appellant and Davis as to whether there was or was not an agreement as to the manner and amount of the remainder of Davis’ fee was a factual dispute within the province of the jury to resolve. Appellant’s first point is overruled.

In his next two points, appellant contends the evidence does not support 1) the jury’s answer to question 1 that the parties did not have an agreement as to attorney’s fees, and 2) that appellant was not to pay Davis an attorney’s fee of $150 per hour plus expenses with a minimum fee charge of $5,000. Our discussion and disposition of appellant’s first point foreshadows our disposition of these two points. We have discussed in considerable detail above both the factual evidence and the law pertaining to measuring the factual sufficiency to sustain the jury’s answers to questions submitted to them. Suffice it to say that we find the evidence sufficient to sustain the jury’s answer to both questions. Appellant’s second and third points are overruled.

In his fourth point, appellant argues that the evidence is not sufficient to support the jury’s answer to jury question 3 which inquired if the parties agreed to an unspecified fee following the application of the original $5,000 paid by appellant. Under the evidence we have set out above, in particular that of Davis, the jury acted within its province in resolving any factual conflicts in favor of Davis and in finding there was such an agreement. Appellant’s fourth point is overruled.

In jury question 4, the trial court inquired if Davis performed compen-sable work for appellant. In his fifth point, appellant contends as a matter of law that the jury’s affirmative answer to that question cannot be used to support a quantum meruit judgment. Quantum meruit is an equitable theory of recovery which is based upon an implied agreement to pay for benefits received. Vortt Exploration Co., Inc. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex.1990). To recover under that doctrine, a plaintiff must establish that: 1) valuable services and/or materials were furnished 2) to the party sought to be charged 3) which were accepted by the party sought to be charged and 4) under such circumstances as reasonably notified the recipient that the plaintiff in performing expected to be paid. Id. The right to recover in quantum meru-it does not grow out of the contract, but is independent of it. The right is based upon a promise implied by law to pay for beneficial services rendered and knowingly accepted. Campbell v. Northwestern National Life Ins. Co., 573 S.W.2d 496, 498 (Tex.1978). Thus, the doctrine could be applicable in instances such as this one. See Enochs v. Brown, 872 S.W.2d 312, 320 (Tex.App.-Austin 1994, no writ), overruled on other grounds by Roberts v. Williamson, 111 S.W.3d 113 (Tex.2003). Appellant’s fifth point is overruled.

In his sixth point, appellant contends the evidence does not support the jury’s finding that Davis performed compensable work for appellant. Our disposition of appellant’s preceding points foreshadows our disposition of this point. Suffice it to say, we hold the evidence, if accepted by the jury, which it obviously was, is sufficient to sustain that jury finding.

In his seventh point, appellant argues the evidence is not sufficient to support the jury’s finding in response to question 5 that $40,000 would be a reasonable fee for an appeal to the Court of Appeals. In addition to the evidence we have discussed above, appellant introduced into evidence Davis’ letter to appellant dated July 27,1999. In that letter, Davis refers to his opinion that the parties had never actually agreed to a total fee arrangement and, based upon some factors he fists, suggests that a fee of $45,000 “would not be unrea-sonale [sic].” He then suggests that the $5,000 retainer previously paid be credited on that fee, leaving a balance due of $40,000. In Prati v. New Prime, Inc., 949 S.W.2d 552 (TexApp.—Amarillo 1997, pet. denied), we had occasion to discuss a point challenging a jury award of damages. Because of the similarity of the awards, that discussion is applicable here. We pointed out that because the jury is the sole judge of the credibility of the witnesses and the weight to be given their testimony, the jury has considerable discretion, and the mental processes by which a jury determines the amount of damages is ordinarily not cognizable by an appellate court and where the law does not provide a precise legal measure of damages, the amount is generally within the discretion of the jury. Id. at 555. The evidence in this case is sufficient to sustain the jury’s finding that $40,000 was a reasonable fee. Appellant’s seventh point is overruled.

In summary, all of appellant’s points are overruled and the judgment of the trial court is affirmed.

      . Bill A. Davis was afflicted with throat cancer at the time of the deposition and died prior to the trial of this underlying suit.


author: FELIPE REYNA, Justice. TOM GRAY, J.,

text:
    DRUG TEST USA, Quick Results, L.L.C., Appellant, v. BUYERS SHOPPING NETWORK, INC., Appellee.
    No. 10-03-00130-CV.
    Court of Appeals of Texas, Waco.
    Dec. 8, 2004.

      Richard L. Coffman, Richard L. Coff-man, P.C., Scot E.d Sheldon, Sheldon, Jordan & Dunham, L.L.P., Beaumont, for appellant.
    Patricia Klein, Griffin & Matthews, Beaumont, for appellee.
    Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.
   OPINION

FELIPE REYNA, Justice.

Drag Test USA, a Texas company, filed suit against Buyers Shopping Network, a Florida company, (“BSN”) for breach of contract. The trial court sustained BSN’s special appearance, premised on a choice-of-venue provision fixing venue for disputes over the parties’ contract in Florida. Drag Test contends in its sole issue that the choice-of-venue provision is voidable because it does not satisfy the conspicuousness requirements of section 35.53(b) of the Business and Commerce Code. Because we agree, we will reverse and remand.

Drag Test signed a Vendor Participation Agreement with BSN which provided that BSN would market a certain product marketed and sold by Drag Test. This appeal concerns paragraph 10 of the parties’ contract, which states:

The parties agree that Florida law applies and the jurisdiction and venue for any action regarding this agreement shall lie exclusively in the courts of Bro-ward County, Florida.

Drag Test contends in its sole issue that paragraph 10 is voidable because it does not comply with section 35.53(b) of the Business and Commerce Code, which provides:

(b) If a contract to which this section applies contains a provision making the contract or any conflict arising under the contract subject to the laws of another state, to litigation in the courts of another state, or to arbitration in another state, the provisions must be set out conspicuously in print, type, or other form of writing that is bold-faced, capitalized, underlined, or otherwise set out in such a manner that a reasonable person against whom the provision may operate would notice. If the provision is not set out as provided by this subsection, the provision is voidable by a party against whom it is sought to be enforced.

Tex. Bus. & Com.Code Ann. § 35.53(b) (Vernon 2002).

Section 35.53 applies to any contract which meets the following criteria:

(1) the contract is for the sale, lease, exchange, or other disposition for value of goods for the price, rental, or other consideration of $50,000 or less;
(2) any element of the execution of the contract occurred in this state and a party to the contract is:
(A) an individual resident of this state; or
(B) an association or corporation created under the laws of this state or having its principal place of business in this state; and
(3) Section 1.105 of this code does not apply to the contract.

Id. § 35.53(a) (Vernon 2002).

According to section 35.53(a)(3), if former section 1.105 applies to the parties’ contract, then section 35.53 does not. See id. § 35.53(a)(3); My Cafe-CCC, Ltd. v. Lunchstop, Inc., 107 S.W.3d 860, 865 (Tex.App.-Dallas 2003, no pet.). Section 1.105(a) provides in pertinent part, “[W]hen a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties.” Act of May 24, 1973, 63d Leg., R.S., ch. 400, § 1, 1973 Tex. Gen. Laws 997, 997 (amended 2003) (current version at Tex. Bus. & Com.Code Ann. § 1.301(a) (Vernon Supp.2004-2005)).

Here, section 1.105 applies to the parties’ contract because the contract transaction “bears a reasonable relation” to both Texas and Florida due to the parties’ respective principal places of business. My Cafe-CCC, 107 S.W.3d at 865; Salazar v. Coastal Corp., 928 S.W.2d 162, 167 (Tex.App.-Houston [14th Dist.] 1996, no writ). Because section 1.105 applies, section 35.53 does not apply, according to the plain language of the statute. Tex. Bus. & Com.Code Ann. § 35.53(a)(3); My Cafe-CCC, 107 S.W.3d at 865.

However, Drug Test contends that applying the plain language of subsection (a)(3) (the section 1.105 exclusion) leads to an absurd result, namely, that section 35.53 “would never apply to any contract anywhere at any time in Texas.” We must resolve this contention by referring to the settled rules for statutory construction.

“We begin with the words used. We may also consider the object to be attained by the statutes, the circumstances surrounding the statutes’ enactment, legislative history, former statutory and common law, and the consequences of a particular construction.” City of Austin v. Sw. Bell Tel. Co., 92 S.W.3d 434, 442 (Tex.2002); see also Tex. Gov’t Code Ann. § 311.023 (Vernon 1998). We should “avoid construing a statutory provision in isolation from the rest of the statute; we should consider the act as a whole, and not just single phrases, clauses, or sentences.” City of Austin, 92 S.W.3d at 442.

The Plain Language Of The Section 1.105 Exclusion Appears To Conflict With The Plain Language Of The Remainder Of Section 35.53

Section 35.53 applies to multi-state contracts “for the sale, lease, exchange, or other disposition for value of goods for the price, rental, or other consideration of $50,000 or less.” Tex. Bus & Com.Code Ann. § 35.53(a)(1). Section 1.105 applies to any transaction which “bears a reasonable relation to this state and also to another state or nation,” with some exclusions. Act of May 24, 1973, 63d Leg., R.S., ch. 400, § 1, 1973 Tex. Gen. Laws at 997 (amended 2003).

Aside from the section 1.105 exclusion, section 35.53 does not apply to contracts involving goods worth more than $50,000 or not involving a Texas resident or business. See Tex. Bus. & Com.Code Ann. § 35.53(a)(1), (2). Conversely, section 1.105 does not apply to certain specified commercial transactions which have their own choice-of-law rules and does not apply to transactions involving a consideration of $1,000,000 or more. See Act of May 17, 2001, 77th Leg., R.S., ch. 705, § 24, 2001 Tex. Gen. Laws 1403, 1413-14 (amended 2003) (current version at Tex. Bus. & Com. Code Ann. § 1.301(b) (Vernon Supp.2004-2005)); Act of May 30, 1993, 73d Leg., R.S., ch. 570, § 2, 1993 Tex. Gen. Laws 2098, 2124, (amended 2003) (current version at Tex. Bus. & Com.Code Ann. § 1.301(c) (Vernon Supp.2004-2005)); Tex. Bus. & Com.Code Ann. § 35.51 (Vernon 2002).

BSN contends that the section 1.105 exclusion does not conflict with the remainder of section 35.53 because section 1.105 applies only to a contract which has a reasonable relationship with Texas and with another state. Thus, under BSN’s construction, section 35.53 would apply only when two parties in Texas negotiate a contract which provides that the law of another state applies, even though the other state does not have a reasonable relationship with the transaction. Cf. My Cafe-CCC, 107 S.W.3d at 865; Salazar, 928 S.W.2d at 167 (both holding that transaction bears reasonable relationship to state in which a party maintains its principal place of business). This is not a reasonable construction because it renders section 35.53 virtually superfluous. See Bd. of Adjustment of City of San Antonio v. Wende, 92 S.W.3d 424, 432 (Tex.2002) (statutes should be construed “to avoid conflict and superfluities if possible”).

Another possible point of differentiation would be that section 1.105 is limited to contracts covered by the Uniform Commercial Code while section 35.53 applies to contracts not covered by the UCC. However, section 35.53 applies to contracts “for the sale, lease, exchange, or other disposition for value of goods for the price, rental, or other consideration of $50,000 or less.” Tex. Bus & Com.Code Ann. § 35.53(a)(1). It would be difficult to fathom a contract which fits within this definition but is not covered by the UCC. Thus, a UCC/non-UCC differentiation does not appear to be a viable construction either.

The Legislative History Of Section 35.53 Suggests That The Section 1.105 Exclusion Is Limited To Those Commercial Transactions Listed In Section 1.105(b)

Section 35.53 was enacted in 1987. See Act of May 25, 1987, 70th Leg., R.S., ch. 812, § 1, 1987 Tex. Gen. Laws 2815, 2815 (amended 1989). Its primary purpose of protection for Texas residents and businesses entering multi-state contracts is apparent on its face. It co-existed with section 1.105, neither referring to the other, for six years. In 1989, the Legislature amended the statute to limit its reach to contracts involving goods worth $50,000 or less and to revise the conspicuousness requirements of subsection (b). See Act of May 29, 1989, 71st Leg., R.S., ch. 622, § 2, 1989 Tex. Gen. Laws 2052, 2052 (amended 1991).

The next Legislature amended section 35.53 to add subsection (c), governing choice-of-law and choice-of-venue provisions in construction contracts. See Act of May 27, 1991, 72d Leg., R.S., ch. 840, § 1, 1991 Tex. Gen. Laws 2903, 2903 (amended 1993) (current version at Tex. Bus. & Com. Code Ann. § 35.52 (Vernon 2002)). Subsection (c) made voidable any choice-of-law or choice-of-venue provision in a construction contract which made the contract or disputes thereunder subject to the laws of another state, to litigation in another state, or to arbitration in another state. Id.

The last amendments to section 35.53 were made by the 73rd Legislature. That Legislature deleted the provisions of the statute referring to construction contracts and recodified those provisions with further refinements as section 35.52. See Act of May 30, 1993, 73d Leg., R.S., ch. 570, §§ 13-15,1993 Tex. Gen. Laws at 2144-46. The 73rd Legislature also added the section 1.105 exclusion. Id. § 14, 1993 Tex. Gen. Laws at 2145.

Section 1.105 was also amended by the 73rd Legislature to add exclusionary language with respect to transactions governed by the newly-enacted section 35.51 and to revise the list of transactions excluded by subsection (b) of the statute. Id. § 2, 1993 Tex. Gen. Laws at 2124 (amended 2001).

From the statutory history, it appears that the section 1.105 exclusion was added as part of a broader collection of modifications to the statutory scheme relevant to choice-of-law and choice-of-venue provisions in multi-state contracts. These modifications indicate a legislative intent to maintain the various components of this statutory scheme, including the conspicuousness requirement of section 35.53(b). To effectuate this intent, we believe that the Legislature intended the section 1.105 exclusion of section 35.53(a)(3) to refer to one of the exclusionary provisions contained within section 1.105: subsection (b) or subsection (c).

A reference to subsection (c) would make little sense in this regard because transactions referred to in subsection (c) (those involving $1,000,000 or more) can never come within those transactions potentially included within section 35.53 (those involving $50,000 or less). Therefore, we construe the section 1.105 exclusion to be a reference to those commercial transactions expressly excluded by subsection (b).

The contract between Drug Test and BSN is not one of those transactions specifically enumerated in section 1.10503). See Act of May 17, 2001, 77th Leg., R.S., ch. 705, § 24, 2001 Tex. Gen. Laws at 1413-14. BSN does not dispute that the contract involves goods valued at $50,000 or less, that. Drug Test maintains its principle place of business in Texas, or that paragraph 10 of the contract does not comply with section 35.53(b). See Tex. Bus. & Com.Code Ann. § 35.53. Accordingly, we sustain Drug Test’s sole issue.

We reverse the judgment and remand this cause to the trial court for further proceedings consistent with this opinion.

Chief Justice GRAY, dissenting.

TOM GRAY, J.,

dissenting.

I fail to see why we should undermine the legislature and the agreement of the parties. We only interpret a statute when it is ambiguous. Section 35.53(a)(3) expressly and unequivocally states that section 35.53 does not apply to a contract if former section 1.105 of the Code applies. Tex. Bus. & Com. Code Ann. § 35.53(a)(3) (Vernon 2002).

There is no dispute that this agreement meets the requirements to make former section 1.105 applicable. See Tex. Bus. & Com. Code Ann. § 1.301 (Vernon Supp. 2004-2005). Drug Test simply wants us to construe that it does not apply.

The purpose of the statutes and their interaction seems very practical to me. A forum-selection clause dispels any confusion about where suits arising from the contract must by brought and defended, which spares litigants the time and expense of pretrial motions to determine the correct forum and conserves judicial resources. In re AIU Ins. Co., 148 S.W.3d 109, 113 (Tex.2004). If both states have a reasonable relationship to the transaction, the parties can agree to resolve their disputes under the contract in either forum, and that part of the agreement need not draw any particular attention to itself by type style or size of print. Tex. Bus. & Com. Code Ann. § 1.301 (Vernon Supp. 2004-2005).

But if the parties to an agreement want the law of some other state to apply to the transaction, the law of a state that does not otherwise bear a reasonable relationship to the transaction, then that provision must be conspicuously set out in the agreement. - Tex. Bus. & Com. Code Ann. § 35.53(b) (Vernon 2002). This makes a lot of sense to me. Only when the parties are choosing the law of a state unrelated to the transaction, an agreement the parties can make, must that provision by its type style or size of print, draw attention to itself.

These parties agreed that the law of a state that was reasonably related to their transaction applied. Because former section 1.105 of the Code applies to this contract, section 35.53 does not. I do not know how the legislature could have made it any clearer. I would affirm the trial court’s decision. Because the Court does not, I respectfully dissent.

      . In 2003, the Legislature renumbered section 1.105 without substantive change as section 1.301. See Act of May 22, 2003, 78th Leg., R.S., ch. 542, § 1, 2003 Tex. Gen. Laws 1840, 1841-49. Because the amendment is not expressly retroactive, the former statute applies in this case. See Tex. Gov’t Code Ann. § 311.022 (Vernon 1998). We refer to the statute hereinafter as "section 1.105.”

        . At the time the parties executed the contract in this case, section 1.105(b) provided:
      (b) Where one of the following provisions of this title specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law (including the conflict of laws rules) so specified:
      Rights of creditors against sold goods. Section 2.402.
      Applicability of the chapter on Leases. Sections 2A.105 and 2A.106.
      Applicability of the chapter on Bank Deposits and Collections. Section 4.102.
      Governing law in the chapter on Funds Transfers. Section 4A.507.
      Letters of Credit. Section 5.116.
      Applicability of the chapter on Investment Securities. Section 8.110.
      Law governing perfection, the effect of perfection or nonperfection, and the priority of security interests and agricultural liens.
      Sections 9.301-9.307.
      Act of May 17, 2001, 77th Leg., R.S., ch. 705, § 24, 2001 Tex. Gen. Laws 1403, 1413-14 (amended 2003) (current version at Tex. Bus. & Com.Code Ann. § 1.301(b)) (Vernon Supp. 2004-2005).

      . As originally enacted, section 35.53 applied to virtually all multi-state contracts involving Texas residents or businesses, regardless of the stated consideration. See Act of May 25, 1987, 70th Leg., R.S., ch. 812, § 1, 1987 Tex. Gen. Laws 2815, 2815 (amended 1989).

      . The 71st Legislature actually amended the statute twice in 1989. In chapter 622, referenced above, the Legislature made uniform amendments to several statutes requiring that certain contract provisions be set out in a conspicuous manner, amending the statutes in each instance to read that such provisions be "boldfaced, capitalized, underlined, or otherwise set out [in a conspicuous manner].” See Act of May 29, 1989, 71st Leg., R.S., ch. 622, §§ 1-9, 1989 Tex. Gen. Laws 2052, 2052-55. This amendment also included the $50,000 limitation referenced above. Id. § 2, 1989 Tex. Gen. Laws at 2052 (amended 1991). In chapter 772, the 71st Legislature enacted the same amendments solely with reference to section 35.53 and not with reference to the other statutes amended by chapter 622. See Act of May 20, 1989, 71st Leg., ch. 772, § 1, 1989 Tex. Gen. Laws 3379, 3379-80.

      . See note 2, supra.