author: DUNAGAN, Chief Justice.

text:
    HOUSTON COUNTY, Texas, Appellant, v. LEO L. LANDAUER & ASSOCIATES, INC., Appellee.
    No. 322.
    Court of Civil Appeals of Texas. Tyler.
    Feb. 8, 1968.
    Rehearing Denied Feb. 29, 1968.

      J. B. Sallas, Nat Patton, Jr., County Atty., Crockett, for appellant.
    Adams, Granberry & Hines, F. P. Gran-berry, Crockett, for appellee.
   DUNAGAN, Chief Justice.

This is a proceeding brought originally by appellee, Leo L. Landauer & Associates, Inc., against Houston County, Texas.

On October 9, 1959, the appellee, an architectural firm with offices located in the City of Dallas, Texas, entered into and executed a written contract with the County Judge and Commissioners’ Court of Houston County, Texas, who were acting for and on behalf of the county. The written agreement was prepared by the appellee which contained certain agreements previously discussed and agreed upon orally by appellee and appellant. The entire contract is as follows:

Gentlemen:
In accordance with our discussion and agreement of September 28, 1959, regarding the proposed air conditioning system for the Houston County Courthouse at Crockett, Texas, we will survey the courthouse, prepare the necessary studies, calculations, plans and specifications for competitive bidding; advertise and submit the bidding documents to recognized contractors; analyze the bids and assist in the preparation of the necessary contracts; check shop drawings and supervise the work of installation for a fee of ten (10) percent of the lowest acceptable bid.
Seventy-five (75) percent of the total fee is attributable to the design stage and is due and payable upon delivery of the final plans and specifications. The remaining is chargeable to supervision and is payable upon completion of the work of installation.
In the event that construction funds have not been appropriated at the time that the plans and specifications are complete and delivered to you, and you elect to not take bids at that time; or in the event of abandonment or indefinite postponement for any other reason, then the payment of our fee shall be based on construction costs as determined by a qualified estimator.

The appellee by this suit is seeking to recover architectural fees under the terms of the above contract. Appellee by its first amended original petition, the pleading upon which the case proceeded to trial, plead its full and complete performance of the contract.

The appellant answered and pleaded that the plans and specifications were not delivered until sometime during the year 1963 and that such lapse of time constituted an unreasonable delay and non-performance on the part of the appellee. The appellant further answered and denied liability under the terms of the agreement because of ap-pellee’s failure to submit the plans and specifications and other bidding documents to recognized contractors as provided in the writtten agreement and that such breach relieved the appellant (Houston County) of any liability by virtue of the written contract.

The record shows that the parties, before announcing for trial, in open court stipulated and agreed to submit to the court, without intervention of the jury, the issues as to: (1) whether or not plaintiff-appellee was entitled to recover from defendant-appellant an attorney’s fee, and (2) if entitled to recover same, the amount of such reasonable attorney’s fee.

This case was submitted to a jury on six Special Issues. The jury’s answers thereto were returned to and accepted by the court.

Thereafter, appellee filed its motion for judgment based upon the jury’s answers to the Special Issues submitted, and therein requested the court to make such findings as were appropriate pertaining to the allowance and amount of the attorney’s fee. Appellant timely filed its motion for judgment and in this motion appellant asserted that the jury’s answer to Special Issue No. 4 should be disregarded because, as a matter of law, the admitted lapse of time between October 5, 1959, the date of the written agreement, and June 14, 1962, the date the plans and specifications were deposited with the Houston County Clerk, was an unreasonable delay, and after so disregarding said Special Issue, rendered judgment for it. The motion further set out that a member of appellee’s firm admitted in his testimony that the appellee did not advertise or submit the bidding document to recognized contractors and that as a result of this admitted breach on the part of the appellee, bids were not received by the appellee and submitted to the Houston County Commissioners’ Court according to the provisions and terms of the written agreement, and therefore, in view of such admitted breach of the contract, there was no liability on the part of the Houston County Commissioners’ Court as a matter of law. The court overruled appellant’s motion and then rendered judgment for appellee on the jury’s verdict in the sum of $3,450.00 but denied its claim for attorney’s fee.

Appellant did not file a motion for new trial. Therefore, it is confined to the grounds raised in its motion for judgment, which was duly overruled by the court. Abbott v. Earl Hayes Chevrolet Company, 384 S.W.2d 782, (Tex.Civ.App., Tyler, 1964, n. w. h.).

Appellant has based its appeal upon two Points of Error. It first contends that the court erred in not disregarding the jury’s answer to Special Issue No. 4 because, as a matter of law, the lapse between the time appellee was authorized to prepare the plans and specifications and the time such plans and specifications were actually deposited with the County Clerk of Houston County, Texas, was an unreasonable delay. This contention is overruled.

The evidence shows that on October 5, 1959, appellee made a written contract with appellant obligating appellee to survey the courthouse, prepare the necessary studies, calculations, plans and specifications for competitive bidding; advertise and submit the bidding documents to recognized contractors; analyze the bids and assist in the preparation of the necessary contracts; and check shop drawings and supervise the work of installation of an air conditioning system in the Houston County Courthouse. On October 9, 1959, the County Judge mailed the executed contract to appellee and in the letter of transmittal called appellee’s attention to the fact that funds would not be available for the job, including appellee’s fee (which is the subject matter of this lawsuit) before January 1, 1960, and stated “So you may plan your work accordingly.” Appellee met with the Commissioners’ Court February 2, 1960, and reviewed the plans and specifications and answered the Court’s questions. On March 7, 1960, ap-pellee, in writing, notified appellant that plans and specifications were ready for bidders and that advertising should be done. On March 9, 1960, the County Judge wrote appellee stating that the court “yesterday refused to advertise the air conditioning job for bids” and, among other things, stated “I certainly think you are entitled to your adjusted 10% engineering fee, * ⅝ sji >*

On March 11, 1960, appellee wrote appellant urging it to prosecute the project to completion and thereafter, on March 14, 1960, the County Judge by letter informed appellee that the court wanted ap-pellee to prepare, at no cost to appellant, plans and specifications for a natural gas powered system instead of an electric system as originally planned, and stated that the court had indicated that they would accept any hid that did not exceed $40,000.00. On March 24, 1960, appellee by telegram advised appellant “ELECTRIC-GAS AIR CONDITIONING PLANS COMPLETE. ADVISE US WHEN AND HOW ADVERTISED.” On March 28, 1960, the County Clerk wrote appellee: “The Commissioners asked me to inform you that our County Judge is seriously sick in a hospital, and the Court feels that they should wait until he either gets back to the office, or another Judge is appointed. As soon as this problem is solved, we will inform you what to do.”

The court never did authorize appellee tc proceed after the dual (electric-gas) plans were completed. An officer of Leo L. Landauer & Associates, Inc., appellee, testified, that appellee never did advertise for bids because “The court told us they would advertise.” The court again agreed to advertise for bids on June 11, 1962, but this was never done. Appellee’s witness and one of its officers, McCormick, testified that appellant had never indicated any dissatisfaction on account of any delay by appellee prior to the trial of this case. It appears that appellee was ready and willing at all times to perform the obligations imposed upon it under the terms of the contract. A copy of the plans and specifications was physically delivered on or about June 14, 1962, and the jury found this to be the date of delivery. The jury also found that the appellee prepared and completed the plans and specifications in accordance with the written agreement dated October 5, 1959. The jury’s finding on this issue is not attacked.

In the contract here under consideration, no time was fixed therein for performance. It is the settled law of this state that where the contract does not fix a time for performance, the law allows reasonable time for its performance. Texas Farm Bureau Cotton Ass’n. v. Stovall, 113 Tex. 273, 253 S.W. 1101, 1106, (1923); Cheek v. Metzer, 116 Tex. 356, 291 S.W. 860, 863, (1927, judg. adopt.). A reasonable time has been defined to be such time as is necessary, conveniently, to do what the contract requires to be done, and as soon as circumstances will permit. Reasonable time depends on the circumstances in each case, including the nature and character of the thing to be done and the difficulties surrounding and attending its accomplishment and is generally for the jury. Hamilton v. Shirley-Self Motor Co., 202 S.W.2d 952, (Tex.Civ.App. Fort Worth, 1947, writ ref., n. r. e.) ; Hart v. Bullion, 48 Tex. 278, 289; Cheek v. Metzer, supra; Ridglea Interests, Inc. v. General Lumber Company, 343 S.W.2d 490, 493, (Tex.Civ.App., Fort Worth, 1961, writ ref., n. r. e.); Fisher v. L. E. Whitham & Co., 120 Tex. 516, 39 S.W.2d 869, 79 A.L.R. 1095, (1931, judg. adopt.). The difficulty of the performance may be a circumstance to postpone the time. Bush v. Merrill, 156 S.W. 606, 610, (Tex.Civ.App., Amarillo, 1913, aff., Tex.Com.App., 206 S.W. 834).

It has been said “That which constitutes a reasonable time is a question of fact or, at least, a mixed question of law and fact and depends upon the circumstances surrounding the case to which the principle is sought to be applied. What would be a reasonable time in one case might be wholly inadequate to shut off the rights of parties in a different case or under different circumstances.” Meers v. Frick-Reid Supply Corporation, 127 S.W.2d 493, 497, (Tex.Civ.App., Amarillo, 1939, writ dism., judg. cor.); Lewis v. Clark, 149 S.W.2d 244, (Tex.Civ.App., San Antonio, 1941, writ dism., judg. cor.). When the evidence is such that reasonable minds cannot differ as to its verity and inference, a question of law is presented. Lewis v. Clark, supra; Kirby Lumber Co. v. Temple Lumber Co., 125 Tex. 284, 83 S.W.2d 638, 642, (1935).

Also, it has been held in this state that it is a question of fact for the jury when it depends upon facts extrinsic to the contract and which are matters in dispute. McGary v. Campbell, 245 S.W. 106, 115, (Tex.Civ.App., Beaumont 1922, writ dism.).

Rule 301, Texas Rules of Civil Procedure, authorizes motions for judgment notwithstanding the verdict and motions to disregard the jury’s answers to certain issues and after disregarding such answers to render judgment for the movant on the remaining portion of the judgment. Where a motion is one to disregard certain jury findings (as distinguished from a motion to disregard the whole verdict), the test as to whether such answers should be disregarded is whether there is any evidence to support the answers. Collier v. Hill & Hill Exterminators, 322 S.W.2d 329, 73 A.L.R.2d 1141, (Tex.Civ.App., Houston, 1959, n. w. h.).

If there is any evidence of probative force, from which reasonable minds might come to the conclusion that the jury came to, then there is “some evidence” to support the finding of the jury, and it then becomes the duty of the court to enter judgment in keeping with such finding. The fact that there may be evidence to the contrary is immaterial. Biggers v. Continental Bus System, 157 Tex. 351, 298 S.W.2d 79, 303 S.W.2d 359; Martinez v. Welcome, 335 S.W.2d 254, (Tex.Civ.App., San Antonio, 1960, ref. n. r. e.)

After reviewing all the testimony in its most favorable light in support of the verdict as we are required to do, Texas & Pacific Railway Company v. McCleery, 418 S.W.2d 494, (Tex.Sup., 1967), it appears to us that there was at least some evidence of probative force to raise an issue of fact upon the question of whether or not such delay by appellee in delivering such plans and specifications constituted an unreasonable delay. See Longinotti v. McShane, 184 S.W. 598, (Tex.Civ.App., Texarkana, 1916, writ. ref.).

Appellee admits it did not advertise or submit the bidding documents to recognized contractors as provided for by the terms of the written contract. Appellant contends that this is an admission of a breach of the written contract on the part of the appellee and consequently as a matter of law it cannot recover its fees for services rendered as provided for in said contract. This contention is overruled. In support of its position, it relies upon the rule of law “that a party to a contract who is himself in default cannot maintain a suit for its breach.” We recognize this well established rule of law. However, under the evidence as reflected in this record, we are of the opinion that this case falls within the equally well established rule of law that “where the obligation of a party depends upon a certain condition being performed, and the fulfillment of that condition is prevented by the act of the other party, the condition is considered as fulfilled.” Miller v. Hodges, 260 S.W. 168, 172, (Tex.Com.App., 1924, judg. adopt.); Sanderson v. Sanderson, 130 Tex. 264; 109 S.W.2d 744, 749, (1937, judg. adopt.); Dodds & Wedegartner, Inc. v. Reed, 69 S.W.2d 165, (Tex.Civ.App., Dallas, 1934, writ dism.); Cox v. KTM Drilling, Inc., 395 S.W.2d 851, (Tex.Civ.App., Amarillo, 1965, writ ref., n. r. e.); Hutson v. Chambless, 157 Tex. 193, 300 S.W.2d 943, (1957); Atomic Fuel Extraction Corporation v. Slick’s Estate, 386 S.W.2d 180, (Tex.Civ.App., San Antonio, 1964, writ ref., n. r. e., 403 S.W.2d 784).

Witness McCormick testified that at his meeting with the Commissioners’ Court on February 22, 1960, the Commissioners’ Court told him that they would take care of and do the advertising of these contracts for competitive bidding and that they were going to forego that part of the contract and that he and the Commissioners’ Court so agreed. Mr. McCormick further testified that at this meeting, it was pointed out to him that Houston County would take care of the official advertising in accordance with their normal practice. In view of this testimony, we cannot say that appellee’s admission that it did not advertise or submit the bidding documents to recognized contractors establishes, as a matter of law, a breach of the contract.

The appellee makes the following contention in support of the judgment: “This is an appeal from a judgment refusing to grant judgment notwithstanding the verdict (with no Motion for New Trial) and, since the record does not affirmatively disclose that Appellee was ever given notice of the filing of the Motion for Judgment notwithstanding the verdict, and does not disclose that Appellant waived such notice, the Appellant had no basis for this appeal and this Honorable Court cannot consider the matters set forth in such motion which constitute the two points contained in Appellant’s brief. There is nothing before the Court for review.”

Appellee considers appellant’s motion to be one for judgment non obstante veredicto. Appellant argues that it is a motion for judgment on the verdict. Appellant, we think, in effect, presented to the court two motions: one to disregard the jury’s finding in response to Special Issue No. 4 and the other for judgment notwithstanding the jury’s verdict, each of which comes within the provisions of Rule 301, T.R.C.P., requiring reasonable notice thereof. The former is “an entirely different thing” from the latter. Pelham Manufacturing Company v. Ridlehuber, 356 S.W.2d 502, (Tex.Civ.App., 1962, Waco, writ ref., n. r. e.); Collier v. Hill & Hill Exterminators, 322 S.W.2d 329, 332, (Tex.Civ.App., Houston, 1959, n. w. h.); Teston v. Miller, 349 S.W.2d 296, 299, (Tex.Civ.App.,. 1961, Beaumont, writ ref. n. r. e.).

Rule 301, Texas Rules of Civil Procedure, provides in part:

“ * * * Provided, that upon motion, and reasonable notice the court may render judgment non obstante veredicto if a directed verdict would have been proper, and provided further that the court may, upon like motion and notice, disregard any Special Issue Jury Finding that has no support in the evidence. * * ”

The motion nowhere therein nor the judgment show notice to appellee. Nothing appears in the record which shows that appellee waived notice. The only reference in the judgment to appellant’s motion is contained in the following paragraph:

“Thereafter, on the 27th day of May, 1966, Plaintiff filed its motion for judgment upon said verdict and that the Court render judgment on its findings for an attorney fee of $1,150.00 in behalf of Plaintiff against Defendant; and the Defendant, on the same day, filed its motion that the Court disregard the finding of the jury in response to Special Issue No. 4 and render judgment for Defendant, and the Court having considered both motions is of the opinion that Defendant’s motion for judgment should be and the same is refused and denied, and that the Plaintiff is entitled to the relief hereinafter granted: ” Otherwise, the record is silent as to this motion.

We think the law announced by the Waco Court of Civil Appeals in Bell-mead State Bank, Waco v. Anderson, 293 S.W.2d 834, is applicable to the facts in this case, wherein the Court stated: “ * * It is true, as contended by appellee, that there is no showing in the record of notice to appellee of appellant’s motion for judgment non obstante veredicto. No waiver was filed by the attorney for appellee, and the judgment entered by the trial court .is silent as to whether notice was given as provided by Rule 301 T.R.C.P. It is true that appellant’s motion for judgment non obstante veredicto prayed that notice of this motion be given, but the only reference to such notice is contained in the judgment that appellant submitted to the court, which instrument recited in part: that reasonable notice of such motion was given as required by law to the Defendant.’ But we think such statement is insufficient, since the judgment requested by appellant was not entered. The question that here arises is: since the court did not grant appellant’s motion for judgment non obstante veredicto, was the defendant prejudiced for such lack of notice on the motion? We think not. We have found no authority on this question, but we see no Injury to appellee by failure of appellant to give him notice of its motion. * * • * ”

In light of the last above cited authority, we have considered the matters set forth in appellant’s motion which have been brought forward by its two Points of Error.

It is undisputed that this record does not disclose that the provisions of Rule 301, Texas Rules of Civil Procedure, requiring notice of appellant’s motion, were complied with or waived by appellant. This rule not having been complied with, the trial court would have erred if the motion had been granted and judgment entered for appellant on said motion. Copeland v. Larnpton, 125 S.W.2d 1110, (Tex.Civ.App., Texarkana, 1939, n. w. h.); Babb v. Mil-Po Clothes, 117 S.W.2d 873, (Tex.Civ.App., Eastland, 1938, n. w. h.); Kaiser v. Newsom, 108 S.W.2d 755, (Tex.Civ.App., Fort Worth, 1937, writ dism.) ; Hines v. Parks, 128 Tex. 289, 96 S.W.2d 970, (1936, judg. adopt.).

Judgment affirmed.

      . Special Issue No. 4: Do you find from a preponderance of the evidence that such delay by Plaintiff in delivering, if it did, such plans and specifications, if any, to Defendant, constituted an unreasonable delay upon the part of the Plaintiff? ANSWER: “WE DO NOT.”


source: Caselaw Access Project

author: CLAUDE WILLIAMS, Justice.

license: Public Domain

text:
    TEXHOMA STORES, INC., Appellant, v. AMERICAN CENTRAL INSURANCE COMPANY, Appellee.
    No. 17005.
    Court of Civil Appeals of Texas. Dallas.
    Jan. 26, 1968.
    Rehearing Denied Feb. 23, 1968.

      Wm. Andress, Jr., of Andress, Wood-gate & Condos, Dallas, for appellant.

      Webber Beall, Jr., of Touchstone, Bernays & Johnston, Dallas, for appellee.
   CLAUDE WILLIAMS, Justice.

Appellant Texhoma Stores, Inc. appeals from an order of the district court dismissing its suit, such order based upon the refusal of appellant to obey a pretrial order, issued pursuant to Rule 167, Vernon’s Texas Rules of Civil Procedure, concerning the production of the original, or true copies, of federal income tax returns of the corporation.

This is the second appeal of this case. The first appeal, which was from an order dismissing appellant’s suit, with prejudice, was decided by the Tyler Court of Civil Appeals in Texhoma Stores, Inc. v. American Central Ins. Co., 398 S.W.2d 344 (Tex.Civ.App., Tyler 1966, writ ref’d, n. r. e., Tex., 401 S.W.2d 593). The essential antecedent facts relating to the nature of appellant’s cause of action and appellee’s defense thereto are found in the opinion of the court set forth above.

Following reversal and remand of the first order of dismissal the trial court set the case for trial. Thereafter, and prior to trial, appellee insurance company filed its written motion for discovery and production of documents pursuant to Rule 167, T.R. C.P. By its motion appellee moved the court to “order Texhoma Stores, Inc., to produce in court for inspection by attorneys for defendant, income tax returns of Tex-homa Stores, Inc. for the tax years 1959, 1960, 1961 and 1962; * * After alleging that one of its defenses to appellant’s cause of action was that of arson by James R. Melton, an employee of Texhoma Stores, Inc., appellee alleged:

“That neither American Central Insurance Company nor its attorneys or other agents have previously examined said income tax returns, and are therefore unable to state specifically what information is contained therein, but does have reason to believe that said returns contain information concerning the ownership and financial condition of Tex-homa Stores, Inc., list of merchandise inventories, purchases and sales, and other vital information, all of which is relevant and material to the issues on trial herein, so as to make said returns properly subject to discovery in their entirety.”

As a part of its prayer appellee asked the court to require Texhoma Stores, Inc. to produce in court for inspection by the attorneys for appellee the income tax returns for the tax years 1959, 1960, 1961 and 1962 of the corporation or “in the alternative, that this Honorable Court order that the said tax returns be produced in court for inspection by the Court and that the Court then, in its own discretion, after having duly inspected said returns, determine what portions thereof are material and relevant to issues on trial in this lawsuit, and that those portions of said tax returns material and relevant to issues on trial in this lawsuit be produced to attorneys for American Central Insurance Company for inspection and discovery.” (Emphasis supplied.)

Appellant filed its verified answer in which it attacked said motion for failing to state good cause for discovery and production. of privileged income tax returns of the corporation. It was also alleged that the insurance company had audited the books of the corporation through an auditor of its choice and had secured whatever it desired from the records and had in its possession information concerning the ownership and financial condition of the corporation, list of merchandise inventories, purchases and sales, and all other information which it sought to elicit from the tax returns. It was also alleged that at the prior* hearing all information requested or desired by counsel for the insurance company was furnished in open court and was in possession of the appellee. Appellant protested that the motion for production was for the purpose of harassing it and delaying disposition of the cause or because the judge of the court had expressed himself that he would not try the case until the income tax returns had been produced and delivered and had refused to transfer the cause to any other court for trial.

In the affidavit attached to the answer appellant’s attorney stated upon his oath that “he does not and never has had in his possession the 1959 income tax returns for the plaintiff, hut that he does have copies of the 1960, 1961, and 1962 returns, which he has been advised are not true and correct, but which are the ones which were submitted to the inspection of the Court on 16 March 1965 as hereinabove set forth.” (Emphasis supplied.)

Prior to hearing of the motion subpoenas duces tecum were served upon Mr. and Mrs. Melton and attorney William Andress directing that they produce in court “true and correct copies of the Income Tax returns,” of Texhoma Stores, Inc., for the years 1959, 1960, 1961 and 1962.

Upon the hearing of the motion Mrs. Lucille Melton testified that she was president of Texhoma Stores, Inc., and was such officer during the times material to the hearing. She was asked if she had produced the tax returns of the corporation for the years 1959 through 1962, to which she responded that she had not done so but that they were in the possession of her attorney, Mr. Andress.

Mr. Melton was placed on the witness stand and testified that he did not remember whether he had ever been an officer of the corporation and did not know at the present time whether he was such an officer. He testified that he had made no effort to secure the copies of the income tax returns because he assumed that Mr. Andress had them in his possession. He further testified that after the fire occurred all of the Texhoma books and records were made available to the auditor on behalf of American Central Insurance Company; that such auditor spent two or three months going over the books and records of the company and that he was never refused any information asked for concerning the loss made the basis of the lawsuit. That said auditor was furnished all of the information pertaining to merchandise inventories, purchases, sales, ownership and financial condition of the corporation.

Mr. William Andress, Jr., attorney for the appellant, was placed on the witness stand and testified that he had in his possession office copies of 1960, 1961 and 1962 tax returns but that he had never had in his possession the 1959 tax return. Over his protest, and by express order of the court, he delivered the office copies of the I960, 1961 and 1962 tax returns to the court, receiving the court’s receipt therefor. He testified that the copies delivered were the same returns that were involved in the first hearing. He testified that he did not personally prepare the income tax returns nor did he file them for the corporation. As to the correctness of the returns he said:

“Q Do you know of your own knowledge whether or not these are true and correct copies of the income tax returns filed by the corporation?
“A I do not.”

Mrs. Melton was recalled as a witness and was asked to examine the copies which had been delivered to the trial judge. She testified that her signature, as president of the corporation, was on the 1960 and 1961 copies but that the 1962 copy was not signed.

Her testimony concerning the correctness of the copies was as follows:

“Q Mrs. Melton, would you state whether or not you can state under oath that these are true and correct copies of any income tax returns that was prepared? Of your own knowledge, do you know if all the information contained on there is true and accurate and represents those matters that are filed at that time?
“A No, sir, I don’t.
“Q Did you personally prepare the income tax returns?
“A No, sir.
“Q Did you have any supervision in the preparation of the income tax returns ?
“THE COURT: Did you personally have personal supervision of it?
“A Well, I wasn’t present when they were prepared. Is that what you mean?
“Q Were these returns prepared from the books, ledgers and instruments which were submitted to a third party?
“A Yes, sir.
“Q And were you present at any time that the information was transferred or transposed from these books, ledgers and instruments to what are purported to be the returns here?
“A I don’t know.”

She testified that after the fire the corporation made available all of its books and records from which the income tax returns were derived to the auditor that was sent out on behalf of American Central Insurance Company and that he spent considerable time going over the records with the auditor for the company. She stated she never refused to furnish to the auditor for the appellee company any of the information which they requested from the books and records.

Following this testimony a colloquy occurred between the court and counsel for the parties concerning production of the original tax returns, or true copies, and the court suggested that such might be obtained from the Internal Revenue Department by appellant. The attorney for the appellee stated: “All we asked for and all I want is a correct copy of those income tax returns.” Appellee’s counsel also stated to the court that if the true returns were secured his client would defray the necessary cost for copying, etc.

The court then made the following order:

“THE COURT: * * * This is the order. Plaintiff, Texhoma Stores, Incorporated and its president, Mrs. Melton, are ordered to deliver to this Court for examination true copies of the 1959, 1960, 1961 and 1962 income tax report. Do you think you need more than thirty days ? ” (Emphasis supplied.)

Thereafter a written order was prepared, the essential parts being as follows:

“It is a further ORDER of this Court that defendant’s Motion for Discovery and Production of Income Tax Returns should be and is in all things sustained; that Texhoma Stores, Inc. deliver to this Court within thirty (30) days from the date of this Order, the originals or correct copies of the originals, of the income tax returns of Texhoma Stores, Inc., for tax years 1959, 1960, 1961 and 1962; that upon receipt thereof by this Court the income tax returns for tax years 1960, 1961 and 1962 shall be delivered to the attorneys of American Central Insurance Company for examination and discovery pursuant to the opinion of this Court that said returns are in their entirety, relevant and material to issues on trial herein.
“It is a further ORDER of this Court that upon receipt of the original or correct copy of the original of the income tax returns of Texhoma Stores, Inc. for the tax year 1959, this Court shall examine the same to determine whether said return is material or relevant in part or in whole to issues on trial in this case, and if it be the opinion of this Court that said income tax return for the year 1959 is material and relevant to issues on trial in this case, then the same shall be delivered to the attorneys of record for American Central Insurance Company for examination and discovery, in whole or in part, as determined by this Court.” (Emphasis supplied.)

Thereafter, upon failure of appellant to comply with the order, the trial court rendered its judgment in which it was stated that the court was of the opinion that “Plaintiff, through its officers and attorneys, has willfully refused, does willfully refuse, and intends further to willfully refuse to obey said pre-trial order without any legal or factual justification for such refusal; and the Court is further of the opinion that no useful purpose could be served by holding the Plaintiff, its officers or its attorneys, in contempt of court; * * * The court then ordered that the cause of action be dismissed, without prejudice. It is from this order that appellant appeals contending primarily that the trial judge abused his discretion under the circumstances presented by applying the strict and harsh sanction of dismissal as provided by Rule 170, T.R.C.P. We agree with appellant and reverse the judgment.

The facts in this case are undisputed. Appellee, attempting to implement Rule 167, T.R.C.P., made demand upon appellant for the production of certain corporate income tax returns. At the hearing on such motion the only evidence produced revealed nothing more than that the retained office copies of the requested tax returns could not be verified. No testimony was adduced to establish the fact that the copies of the tax returns were true and correct copies of those filed with the Internal Revenue Service of the United States Government. In the light of this situation the trial judge then, for the first time, ordered appellant corporation to produce the original or true copies of the desired tax returns for inspection by the court to determine their materiality to the issues involved. However, the written order of the court directed the appellant to produce the original or true copies of the tax returns for all years except 1959 and directed same to be delivered directly to attorneys for appellee without inspection by the court. As to the 1959 return it was specifically ordered that such return be secured and delivered to the court for his inspection to determine materiality prior to delivery to appellee’s attorneys. Appellant refused to obey this order whereupon the court elected to apply that part of Rule 170, T.R.C.P., to dismiss the appellant’s cause of action for failure to obey the pretrial order. In the light of these undisputed facts the propriety of the court’s action must be weighed.

Associate Justice Moore, of the Tyler Court of Civil Appeals, correctly and succinctly stated the basic law of the case when he, as a part of his opinion in the prior appeal of this /case, said:

“A district judge has and should have broad and ample powers to enforce his orders. However, the power to close the doors of the courthouse and refuse to proceed with a judicial hearing is a highly drastic sanction capable of abuse and resulting injustices. The penalty provided in the Rule is a harsh one and should be imposed only when clearly authorized. Sears, Roebuck & Co. v. Hollingsworth, 156 Tex. 176, 293 S.W.2d 639.”

Accordingly, a correct resolution of the questions presented on this second appeal depends upon whether the penalty provided was clearly authorized by existing law.

Appellant, in several points of error, asserts that appellee failed to either allege or to prove facts which would constitute “good cause”, as required by Rule 167, T.R.C.P., for the production of the income tax returns. Appellant contends that having failed to comply with the basic requirements of the rule itself, the trial court abused its discretion in ordering the production of the instruments and dismissing appellant’s cause of action for failure to do* so.

Rule 167, T.R.C.P., being substantially the same as Rule 34, Federal Rules of Civil Procedure (Title 28 U.S.CA.) provides that:

“Upon motion of any party showing' good cause therefor * * * the court in which an action is pending may order any party to produce and permit the inspection and copying or photographing by or on behalf of the moving party, of any designated documents, papers * * * which constitute or contain evidence material to any matter involved in the action and which are in his possession, custody, or control * *

Both federal and state decisions construing Rule 167, T.R.C.P., and Rule 34, Federal Rules of Civil Procedure, state that while the spirit of these rules requires liberal construction it was never intended to revolutionize practice by allowing “fishing excursions”. Thomas French & Sons v. Carleton Venetian Blind Co., 30 F.Supp. 903 (D.C.N.Y.1939); Marzo v. Moore-McCormack Lines, Inc., 7 F.R.D. 378 (D.C.N.Y.1945). The cases are also uniform in holding that the burden is upon the moving party to both allege and prove a good cause for the production of the instruments requested. An excellent statement of the rule is found in the article by Franki, Discovery, 13 Texas Bar Journal 447 (1950), wherein he says:

“It should be kept in mind that a discovery order will not be granted simply because it is asked for. A discovery order is to be granted only upon a showing of good cause. There should be a showing that the documents or things sought to be inspected will in some way aid the movant in the preparation or defense of his case. A mere conclusion in the motion that the documents or things ‘contain or constitute material and relevant evidence’ is not enough; in addition, sufficient facts should be set out to enable the court to see the materiality of what is sought.”

Many federal decisions, construing Federal Rule 34, support the proposition that under this rule authorizing the district court to order production of documents, etc., on motion of a party showing good cause, the court’s judgment is not authorized in the absence of both allegation and proof of facts, and not mere conclusions, why the requested information is material to issues involved. The rule contemplates an exercise of judgment by the court, and not a mere automatic granting of such motion upon request of the moving party. The court’s judgment must be supported by demonstration by the moving party of its need and materiality. Moreover, if the moving party can get the information without resorting to the discovery process, good cause does not exist. The “good cause” requirement is not a mere formality, but is a plainly expressed limitation on the use of that rule. Schlagenhauf v. Holder, 379 U.S. 104, 85 S.Ct. 234, 13 L.Ed.2d 152; Guilford Nat. Bank v. Southern Ry. Co., 297 F.2d 921 (4th Cir.1962); Hauger v. Chicago, R. I. & P. R. Co., 216 F.2d 501 (7th Cir.1954); United States v. National Steel Corp., 26 F.R.D. 603 (S.D.Texas (1960); Uncle Ben’s Inc. v. Uncle Ben’s Pancake Houses, Inc., 30 F.R.D. 506 (S.D.Texas 1962); Sonken-Galamba Corp. v. Atchison, T. & S. F. Ry. Co., 30 F.Supp. 936 (D.C.Mo.1939); Panamusica Venezuela C. A. v. American Steel Export Co., 16 F.R.D. 280 (D.C.N.Y.1954); Bentz v. Cities Service Tankers Corp., 41 F.R.D. 294 (D.C.N.Y.1966).

Our Texas courts, construing Rule 167, T.R.C.P., have also plainly followed this rule. Crane v. Tunks, 160 Tex. 182, 328 S.W.2d 434 (1959); Maresca v. Marks, 362 S.W.2d 299 (Tex.Sup.1962).

For obvious reasons when the moving party seeks to require the production of federal income tax returns it is all the more important that the requirements of the rule be scrupulously enforced before requiring production of such sensitive instruments. While it is true that income tax returns have been held not to be wholly privileged documents, and are subject to discovery to the extent of relevancy and materiality which must be shown, yet great care should be exercised in applying the rule as to such documents. As Justice Steakley of the Supreme Court of Texas said in Maresca v. Marks, supra:

“Subjecting federal income tax returns of our citizens to discovery is sustainable only because the pursuit of justice between litigants outweighs protection of their privacy. But sacrifice of the latter should be kept to the minimum, and this requires scrupulous limitation of discovery to information furthering justice between the parties which, in turn, can only be information of relevancy and materiality to the matters in controversy.
“It is self-evident that the maximum protection of privacy is unattainable if trial courts do not exercise their discretion to safeguard from discovery those portions of income tax returns which are irrelevant and immaterial, and it is our view that failure to exercise such discretion is arbitrary action.”

When we examine appellee’s motion for discovery in the light of these rules it is our judgment that such motion does not comply with the “good cause” requirement. The motion states that the appellee has not previously examined the tax returns and does not know what is in them but that it “does have reason to believe that said returns contain information” material to issues involved in the case. No allegation is made that the information sought could not be obtained from other sources. Moreover, on the hearing of this motion appellee introduced no evidence to support the “good cause” requirement of the rule. All of the testimony introduced merely demonstrated that the copies of the tax returns produced by appellant and its attorney were nothing more than unverified office copies. There is no testimony introduced that the copies produced were true copies of those filed with the United States Government and which were desired by appellee.

We hold, therefore, that, appellee having failed to meet the requirements of the law with reference to allegations and proof of “good cause” for production of the instruments in question, the order of the court complained of amounted to abuse of discretion and must be set aside.

Another and patent reason is quite clearly apparent why the order must be reversed. As stated by our Supreme Court in both the Crane and Maresca cases, supra, the sole basis for allowing the trial court to withdraw the veil of secrecy from income tax returns is the demonstration of materiality. A clear and distinct rule was laid down by the Supreme Court directing trial judges in the manner of determining this issue. The Supreme Court stated that it was the burden upon the trial judge to privately examine the income tax return and determine what parts thereof were material to the issues involved. Only those portions found to be material should be admitted. In this case the evidence is uncontroverted that the office copies of the 1960 to 1962 returns of appellant corporation could not be verified as being true and correct copies of those filed with the Government. Accordingly, it would be impossible for the trial judge in this case to determine the materiality of the 1960, 1961 and 1962 returns filed by the corporation until said true copies had been obtained from the Government and examined. This was obviously the intent of the court when he made his order from the bench directing appellant to secure said original copies and deliver same to him “for examination.” However, the written order itself directs that the original copies be obtained and delivered directly to attorneys for appellee with no mention of inspection by the trial court to determine the materiality thereof. Such procedure falls directly within the prohibition of the plain mandate of the Supreme Court and cannot be allowed to stand.

The remaining points of error advanced by appellant, which we have not discussed, have been carefully examined and are overruled.

For the reasons assigned the judgment of the trial court is reversed and remanded.


author: HUGHES, Justice.

text:
    RAILROAD COMMISSION OF TEXAS et al., Appellants, v. HUMBLE OIL AND REFINING COMPANY et al., Appellees.
    No. 11575.
    Court of Civil Appeals of Texas. Austin.
    Jan. 3, 1968.
    Rehearing Denied Jan. 31, 1968.
    Second Motion for Rehearing Denied Feb. 21, 1968.
    Crawford C. Martin, Atty. Gen., George M. Cowden, First Asst. Atty. Gen., A. J. Carubbi, Jr., Staff Legal Asst. Atty. Gen., Houghton Brownlee, Jr., Rex. H. White, Jr., Linward Shivers, Asst. Attys. Gen., for appellants.
    Rogers & Sayers, Johnnie B. Rogers, Austin, for intervenors.
    William H. Tabb, Dallas, James T. Nes-bitt, Shreveport, La., McGinnis, Lochridge, Kilgore, Byfield, Hunter & Wilson, B. D. St. Clair, Austin, for appellees.
   HUGHES, Justice.

This is a Rule 37 case in which the Railroad Commission of Texas on August 29, 1966, issued a permit to Wiley Richard Lee to drill a first well for oil and gas on a .107 acre tract of land in the East Texas Oil Field in Gregg County “to prevent confiscation and/or to prevent physical waste.”

The validity of this permit was attacked by appellees Humble Oil and Refining Company by suit filed in the court below against the Railroad Commission and Wiley Richard Lee. Wiley Page intervened in the suit and is aligned with the defendants. Mobil Oil Corporation intervened and is aligned with Humble.

Humble and Mobil filed motion for summary judgment as did the Railroad Commission. The trial court granted the motion of Humble and Mobil and denied the motion of the Commission.

The facts with reference to the issue of confiscation are undisputed. They are:

A tract of land containing 22.5 acres in Gregg County was owned in fee by Mrs. Sallie Clary, Aimer Lee Clary, and Mrs. Sallie Clary as guardian for Devotie Clary, a minor, in January, 1931, when it was leased by the owners to T. O. Ramsland for oil and gas purposes.

This 22.5 acre tract was subdivided into lots and a dedication of streets and alleys to the public was made by the owners on March 27, 1931, as shown by a map and plat filed for record in Gregg County on May 2, 1931.

The .107 acre tract, in suit, was conveyed by the owners to C. E. Schneider in fee by general warranty deed dated May 18, 1931, no mention of minerals or outstanding oil and gas lease being made in such deed. Schneider conveyed the fee to Stella Gray in 1935 and she conveyed the minerals thereunder to J. R. Ostrom later in 1935. Wiley Page holds under oil and gas leases executed in 1965 and 1966 by the successors in title of J. R. Ostrom.

Wiley Richard Lee is the agent for Wiley Page.

The East Texas Oil Field was discovered in October, 1930.

The Railroad Commission has but one point of error which is that the drilling permit was valid for the reason that the .107 acre tract was a legally subdivided tract. The basis for this conclusion is stated by the Commission in this language:

“Appellant Commission granted the subject permit under its long established policy governing subdivision of tracts in the East Texas Field created prior to the Commission’s order of May 29, 1934. The Commission has always used the May, 1934, date as the date to be used to determine when an illegal subdivision occurred in the East Texas Field and the undisputed evidence in this case shows that the tract was created prior to May 29, 1934.”

Whatever the Commission may have done in this respect is of no weight for the reason that the Supreme Court in Gulf Land Co. v. Atlantic Refining Company, 134 Tex. 59, 131 S.W.2d 73 (1939) held that a subdivision made in 1932 by which a 6.88 acre tract capable of development as a whole under Rule 37 as originally promulgated in 1919 was divided into six smaller tracts, one of which contained 2.35 acres on which a permit to drill a second well was sought was illegal as to such 2.35 acre tract since such tract was at such time subject to the spacing rule of the Commission, Rule 37, and an exception to this rule was required in order to drill to prevent confiscation. We quote from that opinion:

“When such 6.88-acre tract was subdivided, exceptions first became necessary to develop such subdivisions. Under such a record, there is no possible escape from the conclusion that, as a matter of law, the Commission violated its Rule of May 29th in granting this well permit to prevent the confiscation of property. As already shown, this permit is on a tract of 2.3S acres of land. This 2.35 acre tract was constituted a subdivision after Rule 37 became effective in this oil field, and as to this land. This 2.35-acre tract already has one well thereon. Also, such tract is a subdivision within the meaning of the Rule of May 29th. When the 6.88-acre tract out of which this 2.35-acre tract was subdivided is considered as a unit, no well is needed thereon to prevent confiscation. Under the plain and unambiguous language of the Rule of May 29th, the 2.35-acre tract, considered apart from the 6.88-acre tract, can have no rights to a well to prevent confiscation. Railroad Commission of Tex. v. Magnolia Petroleum Co., 130 Tex. 484, 109 S.W.2d 967, 970. In the case just cited we clearly announced it as the law that under Rule 37, and the Rule of May 29th, subdivisions of property made subsequent to the promulgation of the original spacing rule should not be considered on the issue of confiscation. The Rule of May 29th so states in language too plain to admit of construction. We quote the following approved quotation from the opinion under discussion: ‘It is manifest, therefore, that, where a situation which would circumvent the rule is created by voluntary act, acquiescence, or connivance of the parties after the rule has attached to the property, such situation cannot be asserted as a valid ground for exception to the rule. The parties, in that event, are relegated to their rights as they existed prior to the creation of such situation. [Humble Oil & Refining Co. v. Railroad Commission et al. [Tex.Civ.App.], 68 S.W.2d 625].’
Under the rule as stated in the above quotation, it is too plain to admit of debate that any right that this 2.35-acre tract can have to this well to prevent confiscation must be relegated to the rights of the 6.88-acre tract out of which it was subdivided subsequent to the spacing rule.”

The Court also stated in such opinion that “subdivisions of land, as such, which have or hereafter may come into existence after Rule 37 became effective are not protected at all against confiscation.”

Rule 37 became operative as to the parent 22.5 acre tract when it was leased for oil and gas purposes in 1931. Railroad Commission v. Richards, 336 S.W.2d 449, Tex.Civ.App., Austin, n. w. h., and the authority therein cited.

The Commission does not cite one case to sustain its position that the rule against voluntary subdivisions requiring exceptions to Rule 37 in areas where Rule 37 is applicable does not antedate the May 29, 1934 amendment of the Rule.

Strangely, it attempts to draw comfort from the decision in Brown v. Humble Oil and Refining Company, 126 Tex. 296, 83 S.W.2d 935, wherein the Court invalidated a permit to drill granted as an exception to prevent confiscation in 1933 on a three acre tract created in 1932, the Court saying:

“Where rule 37 is in force in a certain territory, a voluntary subdivision of a tract of land subject to development for oil and gas as a whole would not entitle the owner of said divided tract, or tracts, as a matter of right, to an exception of rule 37 on the ground of vested rights, because such act would destroy the rule and render the conservation laws a nullity.”

Other cases in which this Court has held that Rule 37 prevented small tract owners from obtaining permits to drill as an exception to prevent confiscation in areas where the Rule was effective are: Smith v. Stewart, Tex.Civ.App., 68 S.W.2d 627, Aff. 83 S.W.2d 945, Sun Oil Company v. Railroad Commission, 68 S.W.2d 609, Aff. Bennett v. Sun Oil Co., 84 S.W.2d 693, and Humble Oil and Refining Company v. Railroad Commission, Tex.Civ.App., 68 S.W.2d 625, writ dismissed.

These cases established the principle that voluntary subdivisions of land in areas where Rule 37 was in force into tracts requiring exceptions to the Rule were prohibited and illegal as a necessary corollary to Rule 37 and in order to prevent its destruction.

The order of May 29, 1934, merely put into words and made formal the rule prohibiting voluntary subdivisions which had been decreed by the courts.

This order of May 29, 1934, has been consistently applied to subdivisions created prior to its formal promulgation by the Commission. Gulf Land Co. v. Atlantic Refining Co., 134 Tex. 59, 131 S.W.2d 73, Tex.Sup.Ct, Shell Petroleum Company v. Railroad Commission, 133 S.W.2d 194, Tex.Civ.App., Austin, writ ref., Humble Oil and Refining Co. v. Railroad Commission, 99 S.W.2d 1052, Tex.Civ.App., Austin, writ ref.

The position of the Commission is insupportable in law or logic. Its claimed violation of Rule 37 as long interpreted by the courts cannot justify our acquiescence in or approval of such violation. The Commission cannot validly build a departmental construction based on repeated violation of decisions of our courts.

We hold that the Commission erroneously granted the permit in suit as an exception to prevent confiscation of vested rights.

Appellant Wiley Richard Lee pointing out that the Commission granted the permit herein to prevent waste as well as to prevent confiscation frankly states the permit must have been granted to prevent waste only because “The Commissions’ only alternative (an exception to prevent confiscation) is clearly prohibited by Rule 37 and all the law construing such rule.”

Appellant Lee states that he is convinced he was entitled to summary judgment. This is untenable for two reasons, Lee filed no motion for summary judgment and he filed an answer to appellees’ motion for summary judgment in which he contended that fact issues were made sufficient to defeat such motion. An examination of this answer discloses that the fact issues sought to be raised pertain only to the question of whether Rule 37 was in effect in the area when this subdivision occurred, the contention being that such area was not then considered to be oil producing or having oil producing potential. Affidavits to this effect were attached.

It is our opinion that this answer did not raise an issue of material fact. We have held above that the execution of the oil and gas lease on the parent tract, as a matter of law, invoked Rule 37 as to such tract.

The record does not disclose that the issue of waste, as distinguished from confiscation, was considered by the Commission when this matter was before it or by the court below. Such question cannot be raised in this Court under these circumstances. State of California Dept. of M. Hyg. v. Bank of S. W. Nat. Association, 163 Tex. 314, 354 S.W.2d 576, Tex.Sup., Gulf Land Co. v. Atlantic Refining Co., supra.

Since it appears that this issue of waste has not been, heard by the Commission, we, in affirming the judgment of the trial court, do so without prejudice to the right of Page to reapply to the Commission for a permit on the ground of physical waste.

The judgment of the trial court is affirmed as indicated.

Affirmed.

ON MOTION FOR REHEARING

Although the Commission, in its brief, states that it granted the permit in suit to prevent confiscation, Appellant Lee is correct in his statement that this record does not show that the issue of waste was not heard by the Commission. We grant the motion for rehearing by Appellant Lee to the extent that as to him this cause is reversed and remanded. If, however, it develops that the Commission did not consider the question of waste, then Lee’s appeal to the Court should be dismissed without prejudice to the right of Lee to present this matter to the Commission. See Gulf Land Co. v. Atlantic Refining Co., 134 Tex. 59, 131 S.W.2d 73, at p. 84.

This cause, as to appellant Lee is reversed and remanded.

Motion granted, cause reversed and remanded as to appellant Lee.

      . We copy the following from the brief of the Commission to show the substance of this rule, its amendments and history and such other matters as the Commission deems important to its case:
      “On November 26, 1919, the Railroad Commission adopted the first state-wide well spacing rule known as Rule 37. This rule provided that no well could be drilled nearer than 300 feet to any other drilling or completed well, nor nearer than 150 feet to any property line. Further, the rule states that ‘Rule 87 shall not, for the present, be enforced within the developed and defined oil fields known as the Gulf Coast Fields.’
      One of the earliest Special Orders relating to the East Texas Field made no mention of well spacing. The order of July 2, 1931, superseding a like order of April 29, 1931, provided for the division of producing leases or properties in the East Texas Field into twenty (20) acre units and fractional parts thereof, called fractional units, and further provided for the allocation of production on a unit basis. The order contained no prohibition of development on the basis of subdivision of property but did provide that no division of tracts or leases after April 29, 1931, shall be allowed to increase the number of units and fractional units in the field. Additional provisions contained within this order definitive of the Commission’s policy towards the East Texas Field at this time are Sections 14 and 15. They are as follows:
      ‘14. * * * Irrespective of the number of wells on a unit or fractional unit, the daily allowable thereon shall not be more than 750 barrels, and such additional allowable as may be permitted hereunder shall be taken from wells upon such unit or fractional unit so as to avoid unequal withdrawals against offset wells.
      15. The General Order of April 4, 1931, applying to the entire State, as modified by order of April 29, 1931, is hereby modified, as far as it relates to the East Texas field, and any conflicting provisions in said General Order shall yield to the provisions of this order with reference to the said East Texas field.’
      The next Special Order of the Commission relating exclusively to the East Texas Field was issued September 2, 1931, becoming effective September 5, 1931. Section 2 of said order provides that spacing between wells should be no nearer than six hundred sixty (660) feet to any other completed or drilling well on the same or adjoining tract of land and no well shall be drilled nearer than three hundred thirty (330) feet to any property line; provided that the Commission, in order to prevent waste and to protect vested rights, shall and will grant exceptions permitting drilling within shorter distances. The Commission’s policy towards the East Texas Field is further illustrated by this quote from the same provision of Section 2 of the September 5, 1931, order which provided:
      < * * * ¾ is not the intention of the Railroad Commission to repeal Rule 37 by this order, but only to provide a special rule applicable only in said East Texas field.’
      Numerous other Special Orders amending Rule 37 as it applied to the East Texas Field were issued prior to the decision in the Sun case, supra, and the Commission’s order of May 29, 1934. They are the orders of February 25, 1932, and January 31, 1933. These orders, with the exception of certain modifications deemed unimportant here, are substantially similar to the order of September 2, 1931.
      On December 22,1933, the Austin Court of Civil Appeals handed down its decision in Sun Oil Company v. Railroad Commission et al. [Tex.Civ.App.], 68 S.W.2d 609, affmd. [Bennett v. Sun Oil Co., Tex.], 84 S.W.2d 693, which stated in effect that after the original promulgation of Rule 37 by the Commission in 1919, property owners could not subdivide their property in such a way as to secure more wells than a tract would otherwise be entitled to. In effect, the Court held that Rule 37 attached state-wide and there could be no permits issued for tracts subdivided after November 26, 1919, anywhere in the State unless the tract complied with the Rule 37 spacing requirements. In response to this decision, the Commission promulgated its first rule pertaining to illegal subdivisions, commonly known as the ‘Rule of May 29, 1934.’ This order provides:
      ‘IT IS ORDERED by the Railroad Commission of Texas that in applying Rule 37 (Spacing Rule) of state-wide application and in applying every special rule with relation to spacing in every field in this State no subdivision of property made subsequent to the adoption of the original spacing rule will be considered in determining whether or not any property is being confiscated within the terms of such spacing rule, and no sub-division of property will be regarded in applying such spacing rule or in determining the matter of confiscation if such sub-division took place subsequent to the promulgation and adoption of the original spacing rule * * ⅜ ’
      It must be kept in mind that the tract here in question was created in May, 1931, prior to the first special field rule adopted in East Texas which contained individual well spacing requirements (Order of September 2,- 1931) and prior to the Railroad Commission’s adoption of its illegal subdivision rule (May 29, 1934).”


author: MOORE, Justice.

text:
    Joe Melvin GREEN, Appellant, v. Laura GREEN, Appellee.
    No. 324.
    Court of Civil Appeals of Texas. Tyler.
    Feb. 8, 1968.

      Colley & Lloyd, Paul S. Colley, Henderson, for appellant.
    R. E. Peppy Blount, Longview, for ap-pellee.
   MOORE, Justice.

This is an appeal from a judgment of the District Court of Rusk County sustaining appellee’s plea of privilege to be sued in Harris County, the county of her residence. The only issue on this appeal is whether or not appellee, Laura Green, expressly or impliedly waived her right to assert her plea of privilege.

The material facts are substantially as follows: The parties were formerly husband and wife, and were subsequently divorced by a judgment dated September 21, 1966, in the District Court of Rusk County. Although the judgment is not before us, the transcript, together with the uncontra-dicted statement in the brief, shows that appellee, Laura Green, was awarded the care, custody and control of the two children of the parties, but appellant, Joe Melvin Green, was granted the right to have the children in his custody six months out of each year, and further provided visitation privileges for each parent while the children were in actual custody of the other. On March 3, 1967, appellant filed suit in the District Court of Rusk County seeking a change of custody, alleging a change of circumstances since the divorce decree. He further alleged that because of the existing circumstances, appellee’s visiting privileges should be cancelled, and prayed for temporary custody of the children pending final hearing upon the main suit. The petition was presented to the judge of the District Court of Rusk County on March 24, 1967, and on the same day, the court entered an order, without notice to appellee, suspending and cancelling her visitation privileges, and issued a show cause order requiring appellee to appear before the Court at 9 A. M. on March 31, 1967, to show cause why appellant should not be awarded the temporary custody of the children pending final hearing in the main suit. Appellee was duly served with process in both the main suit and the show cause order on March 25, 1967. On said date, appellee, together with her attorney, duly appeared before the court at the appointed time, but filed no pleadings in the cause. After a discussion between the attorneys and the trial judge, the court entered the following order, to-wit:

“This the 31st day of March, 1967, in the above numbered and entitled cause came on to be considered by the Court Plaintiff’s verified Petition as the same relates to Plaintiff’s application for temporary custody of the minor children, Angelo Jo Green and Sonya Dee Green, pending final hearing hereof, and came the parties in person and by and through their respective attorneys of record, and made known to the Court that Defendant had just employed counsel within a few hours of the hearing, and that the parties have agreed to continue the hearing on Plaintiff’s said application for temporary custody until a later date to be agreed upon by the parties at the convenience of the Court; and that the care, custody and control of said minor children shall be awarded to the Plaintiff, Joe Melvin Green pending such hearing, without prejudice however, to Defendant and her rights herein, but that pending further hearing herein no visitation rights and privileges are to be allowed the Defendant ;
“It is accordingly therefore, ORDERED, ADJUDGED AND DECREED BY THE COURT, that the hearing on Plaintiff’s said application for temporary custody of said minor children is hereby continued, subject to being re-set by agreement of the parties at the convenience of the Court; and it is further ORDERED that the care, custody and control of the minor children, Angelo Jo Green, and Sonya Dee Green is awarded to Joe Melvin Green without visitation rights and privileges on Defendant’s part, but without prejudice to the rights of the Defendant herein, pending further hearing hereof.”

Thereafter, on April 26, 1967, appellee filed her plea of privilege, seeking to have the cause transferred to Harris County, the county of her residence. Subject to her plea of privilege, she filed an answer denying the allegations of the appellant’s petition. The appellee’s plea of privilege was duly controverted by the appellant. After a hearing on May 18, 1967, the court sustained the appellee’s plea of privilege and ordered that the cause be transferred to the District Court of Harris County.

Appellant duly perfected his appeal from the judgment and contends by a single point of error that the trial court erred in sustaining the plea of privilege because appel-lee waived her right to assert her plea. Appellant contends that appellee, by her acts and conduct, waived her right to file and urge her plea of privilege because (1) she invoked the jurisdiction of the court by requesting and securing a continuance, prior to the time she filed her plea, and (2) because she submitted the jurisdiction of the court by agreeing to allow the court to enter an order awarding appellant temporary custody pendente lite. We are not in accord with such contention.

It has long been the law of Texas that any party to a suit may expressly or impliedly waive rights conferred upon him by a venue statute. The matter of venue is a personal privilege which may be waived. McDonald, Texas Civil Practice, Vol. 1, Sec. 440; Texas & P. Ry. Co. v. Wood, 145 Tex. 534, 199 S.W.2d 652; Mooney Aircraft, Inc. v. Adams (Tex.Civ.App.), 377 S.W.2d 123.

In Section 4.40, McDonald, Texas Civil Practice, Vol. 1, page 566, it is stated that: “Either party may waive rights conferred by a venue, as distinguished from a jurisdictional, statute. An express waiver normally will be by overt acts evidencing such an intent. An implied waiver occurs when a party — often inadvertently — takes some action inconsistent with his position upon the venue issue and is held thereby to waive his venue rights.”

But this rule applies only when the judicial power is invoked on a matter and in a manner which negatives a continuing intent to insist upon the plea. Hence, acts which do not invoke the court’s power do not waive the plea. McDonald, Texas Civil Practice, Vol. 1, Sec. 4.40 p. 573.

In 6 C.J.S. Appearances § 14b, page 44, it is stated:

“ * * * an appearance, required by the terms of an order to show cause, to contest an interlocutory motion is an appearance to the motion only and is not a general appearance subjecting defendant to the court’s jurisdiction generally. * * ⅜»

The use of a show cause order is usually effective only to the extent that it requires the defendant, if he so desires, to contest the necessity of the ad interim order, without the necessity of having to appear generally or answer. It does not have the effect insofar as the res or the issues in the main case are concerned of compelling him to answer or voluntarily putting himself in court. Likewise, if a defendant appears on return of the order to show cause, answers and argues the merits of the interlocutory order, such appearance has only a limited effect and is not such as to invoke -the general jurisdiction of the court in the main suit. Gibson v. State (Tex.Civ.App.), 288 S.W.2d 577; Armour v. Armour, 142 N.J.Eq. 337, 59 A.2d 410; Henderson v. Henderson, 10 N.J. 390, 91 A.2d 747.

Venue relates to a trial upon its merits, and not merely to interlocutory orders that have no relation to an issue of law or fact, going to the merits of the case. Powell v. Goldsmith (Tex.Civ.App.), 164 S.W.2d 45; McKinney v. Texas Life Ins. Co. (Tex.Civ.App.), 143 S.W.2d 789, 790; Thacher Medicine Co. v. Trammell (Tex.Civ.App.), 279 S.W. 307; City of Fort Worth v. Fort Worth Acid Works (Tex.Com.App.), 259 S.W. 919. For this reason, the conduct of the appellee in appearing before the court and agreeing for continuance and further agreeing for the court to continue the previous order into effect was not such as to invoke the general jurisdiction of the court in the main suit and thereby establish, as a matter of law, that ap-pellee waived her plea of privilege.

While special appearances are not recognized in this state, except for the purpose of contesting the jurisdiction of the court as provided for in Rule 120a, Texas Rules of Civil Procedure, we think a defendant may still appear for the purpose of contesting the necessity of an ad interim order and in so doing does not submit himself to the general jurisdiction of the court for the purpose of litigating the issues upon which the decision of the final judgment must rest. National Bankers Life Insurance Company v. Adler (Tex.Civ.App.) 324 S.W.2d 35; Henderson v. Henderson, supra.

The appellant commenced the proceeding by asking for a preliminary hearing on his motion for an ad interim order. The hearing was forced upon appellee by the appellant. Appellee’s participation in a preliminary hearing from which she could not escape would not, in our opinion, amount to a waiver of her plea of privilege. National Bankers Life Insurance Company v. Adler, supra.

The judgment of the trial court is accordingly affirmed.


text:
    BENEFICIAL FINANCE COMPANY OF MIDLAND, Appellant, v. Francis A. MISKELL, Regulatory Loan Commissioner of the State of Texas, Appellee.
    No. 11573.
    Court of Civil Appeals of Texas. Austin.
    Feb. 7, 1968.
    Rehearing Denied Feb. 28, 1968.

      Clark, West, Keller, Clark & Ginsberg, W. B. West, III, Allen Butler, Dallas, for appellant.
    Crawford C. Martin, Atty. Gen., George M. Cowden, 1st Asst. Atty. Gen., A. J. Ca-rubbi, Jr., Staff Legal Asst. Atty. Gen., Sam Kelley, Charles T. Rose, Robert C. Flowers, Asst. Attys. Gen., Austin, for appellee.
   HUGHES, Justice.

Beneficial Finance Company of Midland, appellant, is a corporation with its home office in Midland, Texas. The stock of this corporation is wholly owned by Beneficial Finance Company of Delaware, a corporation which also owns all the stock in sixty Texas corporations each of which holds a Regulatory Loan License issued under the provisions of Art. 6165b, Vernon’s Ann.Tex.Civ.St., the Texas Regulatory Loan Act of 1963.

On June 5, 1966, Beneficial of Midland filed an application with the appellee. Francis A. Miskell, Regulatory Loan Commissioner, for a license to engage in the loan business under the provisions of Art. 6165b. This application was denied on the sole ground that Beneficial of Delaware “holds either directly or through subsidiaries sixty Texas Regulatory Loan Licenses” previously issued under the provisions of such Article.

Sec. 10(c) of Art. 6165b provided in part:

“(c) The commissioner may issue more than one (1) license but not more than sixty (60) licenses to any one (1) person on compliance with this Act as to each license. And it shall be unlawful for any person, after the effective date of this Act, directly or indirectly, or through subsidiaries or holding companies, to hold or have an interest in more than sixty (60) licenses, the business thereof, or any interest in such license.”

Appellant’s first point is that this portion of Sec. 10(c) is void since it denies it equal protection of the laws as guaranteed by Sec. 1 of the 14th Amendment to the United States Constitution and Art. 1, Sec. 3 of the Constitution of Texas, Vernon’s Ann.St., for the reason that it arbitrarily limits the number of loan offices which it and others similarly situated may have an interest in while not so limiting competitors of appellant and others similarly situated.

The competitors of appellant which would be given an advantage over it by not being subject to this sixty office limitation, according to appellant, are banks, savings and loan associations, credit unions, loan brokers, loan companies, finance companies, mercantile stores which sell on credit, and perhaps others.

Appellant’s second point, which we will consider along with its first point, is that Section 10(c) of Art. 6165b is unconstitutional because it denies appellant due process of law in violation of Sec. 1 of the 14th Amendment to the United States Constitution and Art. 1, Sec. 19 of the Texas Constitution in that there is no real and substantial relationship between the sixty office limitation prescribed by such Sec. 10(c) and the purposes to be accomplished or the evils to be prevented by the Regulatory Loan Act.

For the purpose of this opinion we disregard the corporate fiction separating the parent, Delaware Corporation, and its subsidiaries, the sixty-one Texas corporations, the stock of which is wholly owned by the parent corporation. We believe Sec. 10(c), in effect, directs that this be done. Furthermore, a court is authorized to take this course when a corporation is organized and operated as a mere tool or business conduit of another corporation and where the corporate fiction is used to circumvent a statute. Bell Oil and Gas Company v. Allied Chemical Corp., 420 S.W.2d 779, Tex.Civ.App. Houston (1st Dist.).

In referring to “appellant” herein we mean Beneficial of Delaware unless otherwise indicated.

We are of the opinion that appellant is in no position to question the constitutionality of the Regulatory Loan Act for the reason that it has received substantial benefits thereunder which it was not entitled to receive but for the provisions of this Act which appellant has voluntarily invoked in its behalf sixty times. These benefits are the privilege of making loans at rates of interest which would be and are usurious and illegal to lenders not licensed under the provisions of the Act. Secs. 5 and 17 of the Act. See Shakour v. State, 400 S.W.2d 916, Tex.Ct. of Cr.App.

The principle which we apply here is stated in Fahey v. Mallonee, 332 U.S. 245, 67 S.Ct. 1552, 91 L.Ed. 2030, as follows:

“It is an elementary rule of constitutional law that one may not ‘retain the benefits of the Act while attacking the constitutionality of one of its important conditions.’ United States v. City and County of San Francisco, 310 U.S. 16, 29, 60 S.Ct. 749, 756, 84 L.Ed. 1050, 1059. As formulated by Mr. Justice Brandéis, concurring in Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 348, 56 S.Ct. (466, 483, 80 L.Ed. 688, 711. ‘The Court will not pass upon the constitutionality of a statute at the instance of one who has availed himself of its benefits.’ ”

This is the law generally and in Texas. 16 Am.Jur.2d, Constitutional Law, Sec. 135; 16 C.J.S. Constitutional Law § 89 b; 12 Tex. Jur.2d, Constitutional Law Sec. 35; Neel v. Texas Liquor Control Board, 259 S.W.2d 312, Tex.Civ.App., Austin, writ ref. n. r. e.

It is our opinion that appellant, by accepting sixty licenses, through wholly owned subsidiaries, under this Act, has, in effect, agreed to be bound by the sixty license limitation provision. Points one and two are overruled.

Appellant’s third point is that Sec. 10 (c) is unconstitutionally vague, under the constitutional provisions above cited, because it does not define the words “any interest.”

Notwithstanding our disposition of points one and two, we consider this point for the reason that it calls for a construction of Sec. 10(c).

We will limit our construction of this Section to the facts presented by this record.

Since appellant owns all the stock in the sixty Texas corporations holding licenses under the Act and they are in fact wholly owned subsidiaries of the parent corporation and since, under our holding that the corporate fiction is to be disregarded, Beneficial of Delaware “holds” the licenses in all sixty subsidiary corporations. A person may “hold” only sixty licenses under the Act and since appellant “holds” sixty licenses it is not entitled to a sixty-first license for Beneficial of Midland.

Appellant’s fourth and last point is that there is no evidence that it owns any interest in the sixty licenses issued to its subsidiaries. This is on the theory that ownership of stock in a corporation is not ownership of an interest in its assets, in this case a Regulatory Loan License.

Since we have held that appellant holds all sixty licenses issued to its subsidiaries, this point is moot.

We have not discussed or considered any changes made by the revision of the Regulatory Loan Act of 1963 by the Legislature in 1967. These changes cannot affect this case.

The judgment of the trial court is affirmed.

Affirmed.

        . Acts 58th Leg., Reg.Sess. ch. 205, p. 550. This Act was repealed by Acts 1967, 60th Leg., p. 659, ch. 274, effective Oct. 1, 1967, but was amended, revised and reenacted by said Chapter 274 and is codified as Art. 5069 V.A.T.S.


author: HIGHTOWER, Chief Justice.

text:
    CITY OF PINEHURST, Texas, Appellant, v. SPOONER ADDITION WATER COMPANY et al., Appellees.
    No. 6879.
    Court of Civil Appeals of Texas. Beaumont.
    Feb. 15, 1968.
    Rehearing Denied Feb. 28, 1968.

      Keith, Mehaffy & Weber, Beaumont, for appellant.
    Sexton & Owens, Orange, for appellees.
   HIGHTOWER, Chief Justice.

On October 10, 1957, the City of Pine-hurst adopted a franchise granting to Spooner Addition Water Company the right to distribute water in a portion of said City at a time when the City had no municipally owned facilities. On September 29, 1964, suit was instituted by the City to procure a declaratory judgment that the offer of the franchise to the water company had never been accepted by said company and that the City had no obligations to it under the provisions thereof. The water company filed a cross-action wherein it sought the recovery of the market value of its old water distribution system. Upon the basis of favorable-jury findings for the water company, judgment was rendered against the City for $29,000.00 as the “market value” for the old system. From said judgment, the City has duly perfected its appeal. The City of Pine-hurst will be referred to as “the City” hereinafter, and the Spooner Addition Water Company will be referred to as “the water company” or other appropriate designation.

By its first point of error, the City contends that the offer of a franchise never ripened into a contract; hence, there was no obligation on the part of the City to purchase the old water distribution system. Under this point of error, the City correctly points out that the company failed to post bond as required under the contract; it did not give notice to the State Health Department of the water system and main, nor were said plans approved as required by Article 4477-1, Sec. 12(a) and Sec. 12(b), Vernon’s Ann.Rev.Civ.St.; it engaged in the furnishing to the public of drinking water, for which a charge was made without having the same done under the supervision of a competent water works operator in violation of Article 4477-1, Sec. 11(a), R.C.S.T.; it knowingly furnished the public with drinking water which had been contaminated by rust and other foreign materials in the pipes; it failed to comply with the terms and provisions of said ordinance in that it did not maintain said water distribution system in accordance with the rules and regulations of the State Health Department and particularly Rule E 1.00, Sec. (c) and Sec. (i).

The City simply argues, that by reason of the established aforesaid acts and omissions by the water company, that said company never complied with the terms and provisions of the offer of the franchise and, therefore, a contract never came into existence. That it cannot be contended that there was any acceptance of the offer so as to ripen into a contract. It urges, that by reason of the aforesaid acts and omissions, there was no lawful performance 'by the water company, that the attempted performance by said company was in violation of State law enacted for the protection of the public health. Its purported performance was no performance at all. In substance, the City contends that because illegal actions were committed by the company in its performance of the contract, that there was no performance, and that no contract came into existence. We do not agree.

The contract itself was clearly a legal one. The fact that all elements of it were not legally performed by the company does not detract from its legality when first entered into by the parties. The law is well established, as stated by our Supreme Court in Lewis v. Davis, 145 Tex. 468, 199 S.W.2d 146:

“A contract that could have been performed in a legal manner will not be declared void because it may have been performed in an illegal manner. Labbe v. Corbett, 69 Tex. 503, 6 S.W. 808; 12 Am.Jur., p. 647, Sec. 153. According to the foregoing settled rules, the contract by which the parties associated themselves together, as alleged in the petition, must be held valid and not illegal.”
“A contract is not rendered illegal simply because in carrying it out illegal acts are committed. Erminger v. Daniel, Tex.Civ.App., 185 S.W.2d 148.”

By its second point of error, the City contends that the water company, having breached the terms of the franchise by its aforesaid illegal actions and omissions, the City was relieved of any obligation to purchase the old water distribution system.

We find no merit in such contention. In answer to Special Issue No. 2, the jury found that substantial compliance of the contract by the water company was waived by the City by acts or conduct evidencing an intent on the part of said City not to insist upon performance. This finding by the jury has not been attacked by the City in its brief, hence, we overrule such point of error.

Moreover, the record reflects that as a matter of law the City waived such contentions. There is no evidence of a single act on the part of the City from October 10, 1957 until September 26, 1964 that was in any way inconsistent with a belief that they considered the contract to be subsisting, nor did they, by any act or conduct, indicate any dissatisfaction with the performance of the company or any intention to rescind or repudiate the contract. To the contrary, every expression of the City was to the effect that they regarded the contract as valid, and that^ they intended to perform their obligation to buy the water works at the appointed time. Thus, the record shows that the offer of contract by the City was not an offer of an illegal contract; that the water company accepted the offer by beginning and continuing to distribute water to the City; that the City accepted performance on the part of the water company for a period of seven years without complaint, and with knowledge of the alleged breaches of the contract by the water company; that every act of the City was consistent with their belief in the validity and subsistence of the contract, and no act of the City was inconsistent therewith; that both the City and the company construed the contract to be valid and binding upon both parties, and by their acts and conduct expressed their intentions and their construction of the contract; that the City has waived its right to insist upon performance, to rescind or repudiate the contract, to deny the validity of the contract, or to seek a forfeiture of the company’s contractual rights. Cozby v. Edwards, Tex.Civ.App., 203 S.W.2d 569; Sinclair Refining Company v. Costin, Tex.Civ.App., 116 S.W.2d 894; 17A C.J.S. 700-701.

By its third point of error, appellant urges that the court misconstrued the contract, if any, between the parties with reference to the determination of the market value of the old water distribution system. In such connection, it refers to the following portion of the franchise:

“The City of Pinehurst, Texas, agrees that if it becomes engaged in the distribution of water through its own system of pipes * * * then and in that event only said City of Pinehurst, Texas agrees that it will then purchase from J. H. Spector said Spooner Addition Water Co. at the then market value of said Co. * * * ” (Emphasis ours)

The issue submitted to the jury by the court, and upon which the judgment was based, inquired of the market value of the system and contained a generally approved definition of market value, but contained this language which represented the interpretation of the court thereon:

“You are further instructed that in arriving at such figure [market value] if any, that you are not to consider in any manner the construction or operation of a water works by the City of Pine-hurst.”

It is urged by the City that the final “then” in the portion of the franchise just above quoted can mean only one thing: the market value will be that which may be determined to exist after the happening of the contingency giving rise to the purchase, viz., the operation of its own system. It can have no other meaning under the clear language chosen by the parties. There is no obligation to purchase until the City’s own system is in operation and the obligation after the operation of its own system is to purchase as the then market value.

We do not agree with the City’s contentions on this point, and we hold that the trial court properly restricted the jury in arriving at the question of market value by the foregoing instruction. It is agreed by all parties, and the record so reflects, that if the contract is to be construed as the City urges, that the water works system would have no value at all. In our opinion, the “then market value” relates to the time and not to the occurrence of an event. It means, the City will pay the water company the market value of such water company, “then” or, at the time it is engaged in the distribution of water. It does not mean that the market value itself will be determined for the purpose of such franchise by considering the fact that the city is “then” engaged in the water business itself.

If the City of Pinehurst had intended for this provision of the franchise to have the meaning it now contends, it would have been a simple matter to provide that it should pay the “salvage value”, for in reality, that is the effect of what it contends. There could be no willing buyer of a water system with the City of Pinehurst in competition, and with the right to buy at salvage value.

A written instrument, not alleged to be ambiguous, must be construed so as to carry out the primary intentions of the parties. It must be considered as a whole and given its reasonable, natural and probable meaning. Brown v. Brown, Tex.Civ.App., 245 S.W.2d 995, 997. The City’s third point of error is overruled.

By its fourth and fifth points of error, appellant contends that there was no evidence or that the evidence was insufficient to support the jury finding of market value of the old water distribution system. These points are overruled.

Under these points of error, the City primarily objects to the fact that the court permitted Mr. Kohler, a witness for the water company, to give his opinion of market value before the jury by testifying to the replacement cost of the system and then giving his opinion of its depreciated value. We think the court properly allowed the testimony and that it was sufficient to support the finding of the jury. A proper predicate was layed for the introduction of such evidence by proof that the old water system had no market value as that term is commonly known. Mrs. Jim-merson testified as to the gross receipts, the expenses and the net profit of the water works for the years 1961, 1962 and 1963, the gross sales totaling $19,356.96, the total expenses $4,077.32, making the net profit for the three year period $15,279.64, or roughly, the net income during that period of time of $5,000.00 per year.

Mr. Kohler testified that the cost of replacement of the system as of 1964 was $42,604.75, and that its depreciated value as of 1964 was $28,943.59. He was experienced in the buying and selling of water systems. He testified that if a water system were netting $5,000.00 per year that the value of the investment would be twenty times the annual return, or $100,000.00. He then testified that based upon the information submitted to him for consideration that his opinion of the fair market value of the Spooner Addition Water Company in September, 1964, was $28,943.59. Mr. Kohler further testified that he was familiar with how to determine market value, that one of the recognized methods that he had used for such was by determining the cost of replacement less depreciation.

Judgment affirmed.


author: BARROW, Chief Justice.

text:
    BULL AND BEAR CLUB, INC., Appellant, v. SAN ANTONIO BULL AND BEAR CLUB, Appellee.
    No. 14657.
    Court of Civil Appeals of Texas. San Antonio.
    Jan. 31, 1968.

      Tom H. King, San Antonio, for appellant.
    W. Pat Camp, John M. Gilliland, Joe C. Lockhart, San Antonio, for appellee.
   BARROW, Chief Justice.

Appellant, a non-profit Texas corporation, filed this suit seeking permanent in-junctive relief enjoining appellee, a nonprofit Texas corporation, from utilizing the name “Bull and Bear Club,” with or without geographical suffix or prefix. The trial court denied all relief after a non-jury trial.

Appellant asserts four points, but all relate to the basic question of whether the trial court abused its discretion in denying injunctive relief. Repka v. American Nat. Ins. Co., 143 Tex. 542, 186 S.W.2d 977, 981 (1945) ; Lee v. Bowles, 397 S.W.2d 923, 926 (Tex.Civ.App.—San Antonio 1965, no writ). The Secretary of State is not involved in this action. Cf. Steakley v. Braden, 322 S.W.2d 363 (Tex.Civ.App.—Austin 1959, writ ref’d n. r. e.).

The evidence is largely undisputed and is based on stipulations of the parties, together with the depositions of Vernon Daniel and Charles H. Heidingsfelder, Jr., and exhibits attached to same. Appellant was incorporated in 1957. Its registered office is 1222 Bank of the Southwest Bldg., Houston, which is the law office of Mr. Heidingsfelder. This corporation was organized at the instance and expense of Mr. Heidingsfelder and he, his sister and a close friend are the incorporators and have been the only officers since its creation. This corporation has a bare charter with no by-laws; a social club, as authorized by the purpose charter has never been formed, and such authorized club has no emblem or insignia and no assets, although the corporation has filed franchise tax returns in due time each year.

On July 29, 1966, a charter, as a nonprofit corporation, was issued appellee upon the application of seventeen incor-porators. The registered office is 205 East Houston Street, San Antonio, which is the address of the Gunter Hotel, where the corporation has leased space for operation of a private social club. It has a club room and provides food, drink and entertainment for its members and their guests. It uses the name “San Antonio Bull and Bear Club” in many ways, in that an emblem or crest was designed featuring this name, and this crest, with or without the geographical prefix, is on the door, dishes, glasses, napkins and other advertising materials used by this club.

Mr. Daniel is the manager of the Gunter Hotel and one of the original incorporators of appellee. He testified that the corporation was originally to be named “Bull and Bear Club” because there are various stock exchanges in the Gunter Hotel area, and he liked this name when he saw it on a club room at the Waldorf-Astoria Hotel in New York City.

After preliminary plans were made and some items ordered which were marked “Bull and Bear Club,” it was learned from the Secretary of State of Texas that such name was not available. Daniel made inquiry, through a mutual friend of his and Mr. Heidingsfelder, in an effort to obtain consent of appellant to the use of such name. Mr. Daniel gained the impression that appellant wanted a large cash payment for use of the name and made no direct effort to obtain consent. Rather, the in-corporators decided to change the proposed name to “San Antonio Bull and Bear Club,” which name was approved by the Secretary of State and the charter was obtained. See Art. 1396-2.04 Vernon’s Ann. Civ.St. At the time of the trial there were 165 members of appellee, most of whom are connected with the stock brokerage business.

Formal findings of fact and conclusions of law were filed by the trial court. It found in part: that appellee adopted its name in good faith; that there has been no confusion between the two names, specifically not by those applying for membership in appellee; that appellee does not hold itself out to be the same as the appellant corporation; that San Antonio and Houston are more than 200 miles apart, and in different trade territories; that the two names are not deceptively similar and are not confusing; and that appellant has suffered no injury or damage of any kind. The court Concluded: that appellant is not entitled to exclusive use of the name “Bull and Bear Club” in San Antonio or Bexar County; that appellee has not been guilty of unfair competition; that the public will not be confused or misled to believe that appellee is the same corporation as appellant; that the Secretary of State by issuing appellee’s charter conclusively found that all required conditions precedent had been performed by the incorporators of appellee and that the names were not similar; and that appellant is not entitled to injunctive relief.

Appellant relies primarily upon Grand Temple and Tabernacle in State of Texas of Knights and Daughters of Tabor, etc. v. Independent Order, K. & D. of Tabor of America et al., 44 S.W.2d 973 (Tex.Com.App.1932), wherein the following rule is set forth: “A corporation cannot lawfully adopt either the same name as that of an existing corporation created by or under the laws of the state, or of an unincorporated association or partnership therein, or a name so similar to that of an existing corporation created by or under the laws of the state, or of an unincorporated association or partnership therein, or a name so similar to that of an existing corporation or association that its use is calculated to deceive the public and result in confusion or unfair and fraudulent competition (14 C.J. p. 312), and may be enjoined from such use, whatever may be the character of the corporations, and whether or not they are formed for profit, to the same extent and upon the same principles that individuals are protected in the use of trade-marks and trade-names (14 C.J. p. 326).” (Emphasis added.)

The test of whether a corporation is entitled to an injunction against use by another corporation of a similar trade-name is whether the similarity of names, trademarks, etc., used by the parties are such as to mislead the public. Such question is ordinarily for the trier of facts. Gracia v. Beck, 286 S.W.2d 234 (Tex.Civ.App.—Austin 1955, no writ); Rogers v. Broughton, 250 S.W.2d 606 (Tex.Civ.App.—Austin 1952, writ ref’d n. r. e.); Suniland Furniture Co. v. Sunnyland Wholesale Furniture Co., 235 S.W.2d 674 (Tex.Civ.App.—Dallas 1950, writ ref’d); Plaza Co. v. White, 160 S.W.2d 312 (Tex.Civ.App.—San Antonio 1942, writ ref’d); Lowe & Archer, Texas Practice, Injunctions, § 289.

Appellant urges that as a matter of law the names are deceptively similar and confusing and that since it did not consent to the use of this name, the injunction should lie. In determining these points, we are required to examine the record under the no-evidence test. Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 Tex.Law Rev. 361. We conclude from such examination that there is more than a scintilla of evidence to support the findings of the trial court that the public will not be confused or misled by the names of these two corporations and that appellee has not been guilty of unfair competition.

There is no evidence that appellant’s existence is even known to anyone other than the three incorporators. Mr. Heidings-felder testified that his purpose in forming appellant was to open a private club in Houston when he organized the Houston Stock Exchange. Such a corporation has been in existence since he formed this corporation in 1933, but it has never done anything other than elect officers and pay its franchise tax. Appellee is a private club operating only in San Antonio and a membership application is required to join. Only members and their guests may visit this club. Mr. Heidingsfelder admitted that he did not know of any confusion over the two corporations and that appellant had suffered no damage up to the time of the trial, from the use of the name “Bull and Bear Club” by appellee.

The trial court did not abuse its discretion in concluding that appellant was not entitled to injunctive relief under its findings of fact. The judgment is affirmed.