text:
    REPUBLIC INS. CO. v. HUNTLEY et al.
    No. 4011.
    Court of Civil Appeals of Texas. Texarkana.
    May 22, 1931.
    Rehearing Denied June 4, 1931.

      Smithdeal, Shook, Spence & Bowyer, of Dallas, for appellant.
    Wynne & Wynne and A. L. Tisdale, all of Wills Point, for appellees.
   SELLERS, J.

The suit was instituted in the district court of Van Zandt county, Tex., by the appellant, Republic Insurance Company, against S. C. Huntley, J. Mike Brown, J. G. Pitts, and W. W. Gibbard upon a vendor’s lien note executed by J. Mike Brown in part payment for a certain 80-acre tract of land purchased by J. Mike Brown from S. C. Huntloy. The note;' however, was made payable to John E. Owens and W. R. Howell, they having furnished Brown $3,500 to apply on the purchase price of said land. On the same date the note was executed, J. Mike Brown also executed to John E. Owens and W. R. Howell a deed of trust securing the same note. Aboitt two years after the note had been ex- / ocuted, John E. Owens and W. R. Howell I sold said note and both of the liens securing \ the same to the appellant. W. W. Gibbard negotiated the sale of this note between Owens and Howell to appellant, and appellant agreed to-pay Owens one-tenth of the annual interest accruing on the note for his services. Appellant owned the note and the lien securing the same at all times after the purchase of the same until this suit was instituted. Some time after appellant purchased \this note, W. W. Gibbard, without any au- ' jthority from the appellant, caused a substitute trustee to be appointed on the deed of trust securing the note, and said substitute trustee so appointed, without the authority of appellant and without the request of api-pellant or any one authorized to act for it, sold the land securing the note owned by appellant under a .trustee’s sale to W. W. Gibbard, and thereafter W. W. Gibbard conveyed the land to J. G. Pitts and, as a part of the consideration, J. G. Pitts assumed the payment of the $3,500 vendor’s lien note owned by appellant and here sued upon.

The appellant, after pleading a cause of action upon the note and for the foreclosure of its vendor’s lien securing the same, further pleaded with reference to the appointment of a substitute trustee by W. W. Gib-bard, who was doing business under the iirm name of Gibbard Investment Company, and the sale by W. W. Gibbard to J. G. Pitts, as follows:

“That on ,or about April 9, 1923, the defendant Gibbard Investment Company, by its instrument in writing recorded in Vol. 157, page 64, of the Deed Records of Van Zandt Oounty, Texas, without authority from this plaintiff, appointed defendant Ernest Gibbard substitute trustee to act under said deed of trust owned by this plaintiff, and that on or about May 1, 1923, defendant Ernest Gibbard, the substitute trustee appointed in the manner aforesaid, proceeded to sell said premises at trustee’s sale, and purported to sell same to the defendant Gibbard Investment Company for the sum of $379.60 cash, as shown by trustee’s deed executed by Ernest Gibbard and recorded in Vol. 157, pp. 65, 66 of the Deed Records of Van Zandt County, Texas, but that this sale was void and of no effect.
“Plaintiff would show that on or about the 18th day of November 1927, the Gibbard Investment Company, by its deed, recorded in Vol. 177, p. 264 of the Deed Records of Van Zandt County, Texas, purported to convey the said premises to the defendant J. G. Pitts; that the consideration for said conveyance was $909.00 cash, the assumption of the said $3500.00 note held by this plaintiff, and the execution and delivery of a promissory vendor’s lien note for $400.00 made by J. G. Pitts and payable to the defendant Gibbard Investment Company or order; that said note is more particularly described in the Deed of Trust securing same delivered to the defendant Gibbard Investment Company by said defendant J. G. Pitts and recorded in Vol. 44, p. 431 of the Deed of Trust records of Van Zandt County, Texas, and that the purported sale above described was void and of no effect but if it should be held a valid sale, the said vendor’s lien note and deed of trust lien securing same are secondary and inferior to plaintiff’s note and lien, and that by the terms of said conveyance from the defendant Gibbard Investment Company to the defendant J. G. Pitts the said J. G. Pitts assumed and promised to pay to plaintiff said $3500.00 note according to the terms thereof.”

The only pleadings of the defendant J. G. Pitts was a general demurrer and a general denial. The court, after hearing the evidence, entered judgment for the appellant, foreclosing his vendor’s lien note against all of defendants, but denying appellant a personal judgment against any of the defendants, and the only complaint on this appeal is the refusal of the court under the facts above set out and the pleadings of appellant to grant it a personal judgment against the defendant J. G. Pitts.

The liability of J. G. Pitts for the payment of the note sued upon is predicated upon his assuming to pay the note of appellant in the deed from W. W. Gibbard to himself. The evidence offered was uncontradieted and showed beyond any question that the trustee’s sale to Gibbard was void for the reason that the appellant at the time of the sale was the owner of both the note and of the deed of trust securing the same, which the trustee, without any authority from appellant, but acting uprn instructions from W. W. Gibbard, underfoot to foreclose. This being true, W. W. Gibbard got no title by virtue of the trustee’s sale, and, therefore, could not convey any title to J. G. Pitts. If, then, Pitts received-nothing by virtue of the deed to him by W. W. Gibbard, certainly his assumption of appellant’s note was without consideration and no recovery could be had against him by appellant upon such assumption; but appellant insists appellee’s having failed to plead the failure of consideration, the court should have entered a personal judgment for the appellant. This would be true but for the pleadings of appellant above set out, and in determining the correctness of the trial court’s judgment, we are required to look to all of the pleadings, and in doing so we have concluded that the trial court’s refusal to enter personal judgment against the defendant J. G.’ Pitts was supported by the pleadings of the appellant and the uncontradicted evidence offered upon the trial of the case.

The judgment of the trial court is affirmed.


source: Caselaw Access Project

author: WILLSON, C. J.

license: Public Domain

text:
    SMITH et al. v. WOFFORD et al.
    No. 4022.
    Court of Civil Appeals of Texas. Texarkana.
    June 11, 1931.
    Rehearing Denied June 18, 1931.

      Allen Reed, of Bonham, for appellants.
    Cunningham & Lipscomb, of Bonham, for appellees.
   WILLSON, C. J.

(after stating the case as above).

The effect, as between the parties thereto, of the judgment in cause No. 10225, referred to in the statement above, was to divest Mrs. M. J. Whisenhunt of any title she had in the •land in controversy and to vest same in ap-pellees. That being true, the judgment here appealed from is not erroneous if appellants were bound by the judgment in said cause No. 10225. Appellants insist that judgment was not binding upon them and that the trial court erred when, over their objection, he admitted same as evidence of title in appellees. The ground of the objection was that it appeared the judgment had not been recorded in the office of the county clerk of Fannin county as provided in article 6638, R. S. 1925, and therefore was within the inhibition in said statute that such a judgment not recorded in the county in which land in question was situated should “not be received in evidence in support of any right claimed by virtue thereof.” It is held that the statute invoked was only intended for the protection of creditors and innocent purchasers, ■ and that such 'a judgment is admissible as evidence where, as here, as determined by the jury on sufficient evidence, the objecting party knew or was chargeable with knowledge of the pendency of the suit resulting in the judgment. Russell v. Farquhar, 55 Tex. 355; Baylor v. Tillebach, 20 Tex. Civ. App. 490, 49 S. W. 720; Crow v. Van Ness (Tex. Civ. App.) 232 S. W. 539; Henderson v. Lindley, 75 Tex. 185, 12 S. W. 979; Rodriguez v. Haynes, 76 Tex. 225, 13 S. W. 296; Haines v. West, 101 Tex. 226, 105 S. W. 1118, 130 Am. St. Rep. 839. In their brief appellants say: “The only question involved in the cause after the close of the testimony was a question of law, and not of fact, to-wit, whether or not the failure of the defendants to record their judgment in cause No. 10225'in the records of the County Clerk of Fannin County, Texas,.as required by article 6638 of the Revised Statutes precluded them from offering the same in evidence as their defense and claim to the land in controversy.” Agreeing with appellants in the statement quoted and having determined the judgment in said cause No. 10225 was admissible as evidence in the instant cause, it follows we think the judgment here appealed from should be affirmed.


author: GALLAGHER, C. J.

text:
    KAY et al. v. THOMPSON et al.

    No. 1070.
    Court of Civil Appeals of Texas. Waco.
    June 4, 1931.
    Rehearing Denied July 9, 1931.
    P. O. French, of Fairfield, for appellants.
    L. W. Shepperd, of Groesbeck, and Frank Fitzpatrick, of Waco, for appellees.
   GALLAGHER, C. J.

Appellants, Mrs. Emma Kay and husband, instituted this suit in the district court against T. J. Thompson, B. P. Thompson, Mit-tie Watkins and husband, F. M. Watkins, and M. E. Bloom and husband, S. L. Bloom, to partition a tract of 82½ acres of land. Appellants alleged that said tract of land constituted the entire estate of Mrs. M. A. Thompson, deceased; that the same was her separate property; that she was a widow at the time of her death, and occupied the same as her homestead, but that she left surviving her no one entitled to occupy tlie same as a homestead at and after her death. Appellants further alleged that Mrs. Thompson died intestate, that said Mrs. Kay, Mrs. Watkins, Mrs. Bloom, T. J. Thompson, and B. P. Thompson were her children and her only heirs, and that they inherited title thereto from her in equal portions. They further alleged that there had never been any administration on the estate of the deceased; that there was no necessity therefor; that the only debt against said estate was for the expense of the burial of the deceased, amounting to the sum of $211.50; that appellant Mrs. Kay had paid $154, Mrs. Bloom $42.50, and T. J. Thompson $15 thereof, and that said expense was a valid charge and lien against said land. They sought as an incident of the partition to establish said debt and have the same satisfied out of said property in equitable proportions.

The trial was by the court. Appellees excepted to all of appellants’ petition, setting up the existence of said debt, asserting a lien therefor upon said tract of land, and asking that the same be satisfied out of the same. The court sustained said exception, and ordered said property partitioned in kind among said heirs of the deceased in equal portions.

Opinion.

Appellants assign as error the action of the court in sustaining said exception. They contend in a proposition presented thereunder that, since the deceased, Mrs. Thompson, was a widow at the time of her death, and left surviving her neither a minor child nor an unmarried daughter, and since the land sought to be partitioned was her separate property, the same, though occupied by her as a homestead at the time of her death, passed to her heirs charged with the debt incurred for her burial. Appellees, in a counter proposition presented under said assignment, contend that, since said property was the homestead of the deceased, the same cannot be charged in the hands of her heirs with any indebtedness, except for purchase money, taxes due thereon, or for work and material used in constructing improvements thereon, as provided in article 3499 of the Revised Statutes, which article reiterates constitutional provisions of similar import, and that, since the expense incurred in .burying the deceased is not an indebtedness of such character, it cannot be enforced against said tract of land.

Article 3314 of our Revised Statutes provides, in substance, that, when a person dies intestate, all his estate shall vest immediately in his heirs at law, and that such estate, except such part thereof as may be exempted by law, shall still .be liable and subject in their hands to the payment of his debts. Unless said property was, by virtue of the fact that, it was occupied by the deceased as a homestead at the time of her death, exempt from appropriation to the payment of the expense of her burial, such expense constituted a lien thereon. Moore v. Moore, 89 Tex. 29, 33, 33 S. W. 217; Gibson v. Oppenheimer (Tex. Civ. App.) 154 S. W. 694, 699, pars. 9 and 10; Albert v. Bascom (D. C.) 245 F. 149, 153, par. 7. There being no administration on Mrs. Thompson’s estate and no necessity therefor, and the expense of her burial being the only debt or charge against the same, a suit in the district court to partition such estate, to establish such charge against the same, and provide for its payment in equitable proportions, was proper. Moore v. Moore, supra; Zwernerman v. Rosenberg (Tex. Sup.) 11 S. W. 150.

The determination of the issue under consideration depends upon whether the homestead exemption of said tract of land terminated at the death of Mrs. Thompson, or whether it continued for the protection of the same after it passed by inheritance to the parties to this suit. The test prespribed by our Supreme Court for'determining whether the homestead exemption of property continues after the death of the owner is whether such owner left surviving a husband or wife, a minor child, or an unmarried daughter residing with the family. If any such constituent of the family survives, the exemption con-, ■tinues, and the heirs of such deceased owner take title to the homestead property, subject to the right of occupancy of such surviving constituent, but subject only to such debts as are described in article 3499 of the statutes, above cited. The most recent case in which the Supreme Court applied such test and held that the exemption continued was Milner v. McDaniel (Tex. Com. App.) 36 S.W.(2d) 992, 993, par. 1. Bor other instances of such application and holding see Childers v. Henderson, 76 Tex. 664, 13 S. W. 481; Zwernemann v. Von Rosenberg, 76 Tex. 522, 13 S. W. 485; Cameron v. Morris, 83 Tex. 14, 18 S. W. 422; Lacy v. Lockett, 82 Tex. 190, 17 S. W. 916; Roots v. Robertson, 93 Tex. 366, 55 S. W. 308; Cline v. Niblo, 117 Tex. 474, 8 S.W.(2d) 633, 66 A. L. R. 916; Ward v. Hinkle, 117 Tex. 566, 8 S.W.(2d) 641. Our Supreme Court, in further application of such test, has from an early day held that, where no constituent member of the family survives the owner, the homestead exemption ceases to exist, notwithstanding such owner left children or other descendants who were not members of his family at his death. Bor instances of such application and holding see Burns v. Jones, 37 Tex. 50; Givens v. Hudson, 64 Tex. 472; Roots v. Robertson, 93 Tex. 365, 55 S. W. 308; Holland v. Swilley (Tex. Civ. App.) 268 S. W. 758 (writ refused); Wilkins v. Briggs, 48 Tex. Civ. App. 596, 107 S. W. 135. The Supreme Court in Roots v. Robertson, supra, held that the exemption of property as a homestead to a single man as the head of a family consisting of himself and his dependent mother ceased at his death, because she was not within the terms of the statute authorizing the homestead to be set apart for the use of the widow, minor child, or unmarried daughter of the owner. The court further held that, though she might take the property at his death by inheritance or devise, the exemption thereof from appropriation to the payment of his debts could not be so transmitted.

Applying the test so prescribed by our Supreme Court, we are constrained to hold that the homestead character and exemption of said tract of land ceased at Mrs. Thompson’s death, and that it was subject in the hands of the parties to this suit to the indebtedness incurred by appellants in giving her 'decent burial. It follows that the court erred in sustaining the exception to so much-of appellants’ petition as set üp a claim for money expended by them in providing such burial, and sought to charge the same upon the land to be partitioned.

The judgment of the trial court is reversed, and the cause remanded.


author: JACKSON, J.

text:
    GREAT SOUTHERN LIFE INS. CO. v. WALTERS et ux.
    No. 3522.
    Court of Civil Appeals of Texas. Amarillo.
    Jan. 7, 1931.
    Rehearing Denied Feb. 11, 1931.
    ATnson, Elkins, Sweeton & Weems, of Houston (C. M. Hightower, of Houston, of counsel), for appellant.
    Harney & Buckley, of Borger, for appel-lees.
   JACKSON, J.

This suit, instituted in the district court of Hutchinson county, Tex., by the plaintiffs J. H. and Hattie Walters, husband and wife, against the defendant Great Southern Life Insurance Company, to recover the sum of $2,000, with the statutory penalty and attorneys fees, is predicated on an insurance policy alleged to have been issued on the life of Jim Walters, the son of the plaintiffs, and in which policy Hattie Walters, was named as beneficiary.

The plaintiffs allege that the insurance policy was issued and delivered to their son January 24, 1929, and that he was accidentally killed in the month of April, thereafter. That at the time their son was killed, the policy was in full force and effect, and a valid and subsisting obligation against the defendant. That the, policy was in the possession of the agent of the deceased until about March 14, 1929, when possession thereof was fraudulently obtained by the defendant, and that it still had and retained possession thereof.

The plaintiffs also allege that proper demand for the payment of the policy had been made on the defendant, which was refused, and that it was necessary to obtain the services of attorneys to prosecute the claim, and that reasonable attorneys fees for such services was the sum of $500.

The defendant answered by general demurrer and general denial, and specially denied that the policy was in force and effect at the time of the death of Jim Walters, or that it had fraudulently obtained possession of said policy. ,

The defendant alleged that the deceased as an inducement to the defendant to issue the policy, on January 8,1929, made a written application to it, which, among other things, provided: “That the insurance hereby applied for shall not take effect until a written or printed policy shall have been actually delivered to and accepted by me while I am in good health and the first premium shall have been actually paid during my life and while I am in good health.”

That thereafter, acting upon such written application,- the defendant issued a life insurance policy to the deceased for $1,000, with a double indemnity clause, and forwarded such policy to its agent at Borger, Tex., to be delivered upon the payment of the first year’s premium of $17.06, and that said written application constituted a part of said policy.

That such policy, among other things, stipulated that: “This policy, with the application, consisting of- parts one and two, a copy of which is attached hereto and made a part hereof, constitutes the entire contract between the parties, and is free from conditions as to residence, travel or occupation. Only the president, vice-president, secretary, actuary, assistant secretary, or assistant actuary, has power on behalf of the company to make, waive or modify this or any contract of insurance or to extend, or change the time for paying a premium. The company shall not be bound by any promises or representations heretofore or hereafter made by any person other than the above. All statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties.”

That the defendant’s agent took the policy to the deceased to be delivered upon the payment of the first year’s premium, and was informed that the deceased could not pay the premium thereon; that the agent left the policy with the deceased for inspection only, after which it was to be returned for cancellation, if such premium was not paid. That a few days thereafter, the agent was requested by the deceased to get the policy and hold it fifteen days, at which time the premium would be paid. That the agent obtained the policy but the deceased, notwithstanding notice was given him, failed and refused to pay such premium. That about March 26, 1929, the policy was returned to the defendant at Houston, Tex., and canceled because of the failure of the deceased to pay the first year’s premium on said policy.

Plaintiffs, in a supplemental petition, allege that the defendant waived the provision of its policy stipulating that payment of the first year’s premium should be made in advance, and issued and delivered the policy for credit. That it was the custom of the defendant to extend credit to its policyholders in Hutchinson county through its duly authorized agent, who, at the time of the delivery of the policy, agreed with the deceased that the policy was issued for credit, and that the premium could be paid in the future.

In a supplemental answer, the defendant denied the delivery of the policy on credit; the authority of its agent to extend the time of payment of the premium; and again, in effect, pleaded the provisions of the application and policy heretofore quoted, urging that the first premium must be actually paid for the policy to be in effect.

In response to special issues submitted by the court in his main charge, the jury found, in effect, that the defendant extended credit to its agent O. S. Vinyard for the premium on the policy issued to the deceased; that the defendant’s agent, on receipt of the policy, delivered it to the deceased for credit; that the policy was canceled by the defendant without the consent of the deceased; that a reasonable attorneys fee was the sum of $350. In response to special issues requested by the defendant and submitted by the court, the jury found that O. S. Vinyard, the agent of the defendant, agreed with the deceased to extend him fifteen days’ credit in which to pay for the policy, but'that the agent was not authorized by the defendant to extend such credit to the deceased. On these findings, the court rendered judgment for- the plaintiffs for the sum of $2,000, a penalty of 12 per cent., and $350 attorneys fees, from which judgment this appeal is prosecuted.

The appellant presents numerous assignments challenging as error the action of the trial court in admitting certain testimony; refusing to direct a verdict in its behalf; overruling its objections and exceptions to the issues submitted by the court in his main charge; and the insufficiency of the evidence to warrant the findings of the jury thereon; all of which, under our view of the case, it is unnecessary to determine.

The appellant assails as error the action of the court in rendering judgment against it, as the insurance contract provides, in effect, that, if any premium or note or other obligation shall not be paid when due, the policy shall thereupon cease, and the jury having found that the agreement of the agent of the appellant was to extend the deceased credit for fifteen days for the payment of the first premium, and the record showing without contradiction that the premium was never paid to either appellant or its agent, the insurance provided for in the policy terminated, and all liability of appellant ceased.

The jury found that O. S. Vinyard, the agent of appellant, agreed with the deceased to extend him fifteen days’ credit in which to pay the premium. The policy provides that: “If any premium or any note or other obliga-tion given therefor shall not be paid when due, this policy shall thereupon cease, except as herein provided.”

The exception, as disclosed by the provisions of the policy following, refers clearly to the period of grace and the reinstatement clause, making the exceptions immaterial to the question under consideration.

The testimony is uneontroverted that the agreement between appellant’s agent and the deceased was, in substance, that credit for the payment of the first premium would be extended for a period of fifteen days, at the end of which time, if the premium was not paid, the policy would be returned to tbe office of appellant in Houston for cancellation.

Construing tbe record most favorably to appellees, tbe policy was delivered about January 24, 1929. Some seven or eight days thereafter this agreement as to tbe extension of a credit for fifteen days was made. Tbe premium was not paid in accordance with tbe agreement; in fact, it was never paid; tbe policy was returned to tbe insurance company and canceled about March 26th, and the deceased, Jim Walters, was accidentally killed April 11th, thereafter. Tbe appellees, by neither pleading, nor proof, claimed that this provision of the policy was waived, and it is conclusive that said provision of tbe policy, which provides that tbe insurance cease on failure to pay any note or other obligation given for the premium when due, was not complied with.

“The extension agreement represented by tbe note was binding upon the insurance company, regardless of whether it violated either or both the statutory articles invoked. Insurance Co. v. Tabor, 111 Tex. 155, 230 S. W. 397. And if the insurance company was bound, then clearly the insured was bound also. If tbe latter, is permitted to invoke tbe extension agreement, and avoid the consequences of lapse by virtue of failure to pay the premium in accordance with tbe terms of tbe policy, the insured must take tbe extension agreement charged with its burdens as well as clothed with its benefits. If held valid for one purpose, it must be held valid for all., purposes. If void as to the obligations im-' posed on tbe insured, it is void as to the benefits accruing to tbe insured.” Southland Life Insurance Co. v. Hopkins (Tex. Com. App.) 244 S. W. 989, 992.

See, also, Hatton et al. v. Mutual Health & Accident Association (Tex. Civ. App.) 10 S.W.(2d) 239, and authorities cited.

In this case tbe appellees base their right to recover on tbe contract evidenced by tbe insurance policy, and they are bound by all tbe terms and provisions thereof, except such as may have been waived by tbe appellant. • ,

There -is no contention that tbe deceased, or any one for him, paid tbe premium when due (or at any time thereafter), under tbe oral contract for tbe extension of time for such payment, and there is no contention that the provision of tbe policy requiring that such obligation be paid when due was waived by tbe appellant.

Under this record, tbe court erred in not rendering judgment for appellant. Therefore, tbe judgment of tbe trial court is reversed, and is here rendered that appellees take nothing by their suit, and the appellant go hence with its costs.


author: SMITH, J.

text:
    CITY OF RAYMONDVILLE v. HARDING et al.
    No. 8620.
    Court of Civil Appeals of Texas. San Antonio.
    May 27, 1931.
    Rehearing Denied July 8, 1931.
    A. B. Crane, of Raymondville, for plaintiff in error.
    Jesse G. Foster, of Raymondville, for defendants in error.
   SMITH, J.

As a matter of convenience, the plaintiff in error, the city of Raymondville, will be designated herein as plaintiff, as in the court below, and defendant in error W. A. Harding will be designated as defendant.

Plaintiff, an incorporated city of presumably less than 5,000 population, brought this action against defendant to recover city taxes levied against his real property for the years 1925,1926, 1927, 1928, and 1929. Upon a trial without a jury the court below rendered judgment that the city recover nothing, and it has appealed.

Upon the trial the plaintiff offered in evidence the delinquent tax rolls or lists for the years in question, which purported to show the lands belonging to defendant within the corporate limits of plaintiff corporation, together with the amounts of taxes reported delinquent upon said lands in said years, respectively. The trial cc„rt excluded said evidence upon defendant’s objection that no valid levy had been shown to have been made by plaintiff with reference to said property. Upon the same objection all -other evidence offered by plaintiff to prove up its case was rejected by the trial judge, who thereupon rendered judgment denying any recovery to plaintiff. In this we conclude the court erred.

It is provided in chapter 10, tit. 122 (article 7321), R. S. 1925, relating to the levy and collection of state and county taxes, that such lists “shall be prima facie evidence that all the requirements of the law have been complied with by the officers charged with any duty thereunder, as to the regularity of listing, assessing, levying of all taxes therein mentioned, and reporting as delinquent ⅜ ⅜ ⅝ any real estate whatsoever, and that the amount alleged against said real estate is a true and correct charge.” So is it provided in article 7326, that, where suit is brought by the county to collect such taxes, “all delinquent tax records of said county in any county where such suit is brought shall be prima facie evidence of the true and correct amount of taxes and costs due by the defendant or defendants in such suit, and the same or certified copies thereof shall be admissible in the trial of such suit as evidence thereof.” It is expressly provided in article 7337 that “any incorporated city or town or school district shall have the right to enforce the collection of delinquent taxes due it under the provisions of this chapter.” We are of the opinion that the provisions of chapter 10, above referred to, are made applicable to this case -by article 7337, -that the tax rolls and lists offered by the plaintiff were admissible for the purpose of making a prima facie case, and that the court erred in excluding them from evidence.

This conclusion settles -the appeal, and the judgment must be reversed, and the cause remanded.

On Motion for Rehearing.

In his motion for rehearing, defendant in error contends that the error upon which this court has reversed the judgment of the court below was not briefed by plaintiff in error, and was thereby abandoned. We overrule -this contention. That error was definitely assigned and briefed by plaintiff in error under the ninth and tenth propositions embraced in its brief on the main case.

It is urged by defendant in error that the ordinances under which the taxes sued for were levied by plaintiff in error are insufficient to constitute such levy, for various reasons assigned- by defendant in error. We have some doubt, which we will not now resolve into a holding, that the ordinance levying taxes for the year 1925 was sufficient for that purpose, but the ordinances making the levy for subsequent years were in our opinion sufficient. We do not know what a more fully developed record may disclose upon (this phase of the case as to the year 1925, but the action of the trial court in excluding the ordinances and assessment rolls for other years was clearly erroneous, upon the record disclosed, and requires reversal.

Some of those ordinances were not enacted by the governing body until in December of the years for which the levy was made. It is contended by defendant in error that they were void because not enacted at an earlier date. We overrule this contention. The time of the passage of the levying ordinances is not fixed by law, and the fact that those in question were not passed until in December does not affect their validity. Nor is their validity affected by the fixing of an unreasonable or impossible date for the payment of the taxes so levied. The time fixed may be unreasonable or impossible, and under some circumstances it may be that the unreasonableness and impossibility of it would affec-t the taxpayer’s liability for penalties, but it would not have the effect of voiding the levy.

Defendant in error’s -motion for rehearing is overruled.


author: WALTHALL, J.

text:
    TINNIN v. WILKIRSON et al.
    No. 2557.
    Court of Civil Appeals of Texas. El Paso.
    July 2, 1931.
    Rehearing Denied July 9, 1931.

      Paul Moss, of Odessa, for appellant.
    Erazier & Averitte, of Hillsboro, D. Vance Swann and C. W. Tate, both of Odessa, and Jno. F. Weeks, of El Paso, for appellees.
   WALTHALL, J.

Appellees, O. L. and Cad T. Wilkirson, a partnership, doing business under the firm name of O. L. Wilkirson Lumber Company, brought this suit against the Odessa Building & Finance Company, a domestic corporation. The suit was filed October 8, 1928, and is based upon an itemized verified open account for materials, sold and delivered, attached to the petition as an exhibit, and in value aggregating the sum of $2,978.15.

Defendant corporation answered to the November term, 1928, by general demurrer and general denial.

Plaintiffs had a writ of attachment issued, and on March 23, 1929, levied on a number of town lots in the town of Odessa, including the lots in controversy here.

On December 11, 1930, E. L. Tinnin intervened in the suit, and alleged in substance that on January 28, 1928, Florence Williams, a feme sole, was the owner of the real estate upon which plaintiff’s attachment was levied; that she had possession and dealt with and managed said property as her own; states the incorporation of the Odessa Building & Finance Company; that, after such incorporation, Florence Williams conveyed the said real estate to said corporation, but that, in truth and in fact, she is the sole owner of the stock of said corporation and the owner of said real estate; that on January 2, 1928, and ever since,' Florence Williams was and is indebted to him on an unsatisfied judgment in the sum of $1,595, interest and $66.20 court costs, and that the conveyance of said real estate to said .corporation was to hinder in-tervener in the collection of said debt; that on September 25, 1928, intervener recovered judgment in the district court of Ector county against Florence Williams, for the amount above stated, and on October 2, 1928, an abstract of said judgment was duly filed and recorded in the judgment records of said county ; that on May 21, 1929, intervener recovered judgment against Odessa Building &l Finance Company for the same indebtedness, and on June 6,1929, an abstract of said judgment was duly filed and recorded in the judgment records of said county, and that by reason of which intervener has a lien upon, said real estate, which is superior to all other rights and liens asserted in this cause.

Henry Pegues intervened; alleged that he is the owner of lot No. 7, block No. 101, and lot No. 11, block No. 104, involved in this suit, and that his title and ownership is superior and prior to plaintiff’s claim, and that of intervener Tinnin; that on March 19, 1929, the Odessa Building & Finance Company executed and delivered to O. W. Tate and John F. Weeks a promissory note in the sum of $2,000, due and payable in sixty days, and secured said note by a deed of trust on said lots; that said deed of trust was on same day duly recorded; that said note was not paid at maturity; the lots were sold at foreclosure sale under said deed of trust, and in-tervener was the purchaser ; that Karl Crowley owned an undivided one-half interest in said lots, and intervener purchased Crowley’s interest; that, when plaintiff’s attachment was levied on said property, as the property of the Odessa Building & Finance Company, that company had conveyed said property by deed of trust; that intervener Tinnin’s claim is against Florence Williams and not against the Odessa Building & Finance Company.

Motions were .made and overruled, which we will refer to later, if necessary to a proper disposition of the case.

The trial court instructed a verdict in favor of Henry Pegues as to lot No. 7 in block No. 101, and lot No. 11 in block No. 104; the court instructed a verdict in favor of plaintiffs against the Odessa Building & Finance Company in the sum of its claim of $2,978, with foreclosure of its attachment lien on all property levied upon, except as to lot No. 7 in block No. 101 and lot No. 11 in block No. 104. Subject to plaintiff’s lien and debt, as above, the court instructed a foreclosure in favor of intervener Tinnin of his judgment lien on all the real estate described in his intervention, except lot 7 in block 101 and lot 11 in block 104. The court entered judgment in favor of the parties, respectively, for the sums sued for, and the foreclosure of the liens as above.

Intervener Tinnin prosecutes this appeal.

Opinion.

We will designate the parties as plaintiffs and intervener as in the trial court. Inter-vener Tinnin and plaintiffs file briefs.

The contention of Tinnin is substantially as follows: His judgment liens are superior to the title of Pegues and plaintiffs’ attachment lien, because prior in time to the deed of trust in favor of Weeks and Tate and Crowley’s judgment and plaintiffs’ attachment; that the conveyance of the property by Florence Williams to the Odessa Building & Finance Company did not have the effect to pass the title, for the reason that she was the owner and subscriber of all of the capital stock except two shares owned, one share each by Abner Davis and T. O, Davis, and that she continued to remain in control and management of said property after said conveyance, unquestioned by tbe other stockholders as such or as directors of the corporation ; that the purpose of the conveyance from Florence Williams to said corporation, Odessa Building & Finance Company, was to hinder and delay intervener in the collection of his debt against her. Intervener also submits that the judgment is wrong because plaintiffs’ attachment lien is subordinate and “subject to the equity which existed in favor of Tinnin against the Odessa Building & Finance Company to have his judgment satisfied out of the property attached”; that the evidence to the effect that Weeks and Tate, attorneys for Florence Williams and the Odessa Building & Finance Company, took the deed of trust, under which intervener Pegues claims title, with knowledge of the fact that said company was Florence Williams’ alter ego; that she was financially embarrassed, and of knowledge of Tinnin’s lien by reason of his prior judgment lien; that the judgment in favor of plaintiff and Pegues is wrong, because the evidence tends to show that the Odessa Building & Finance Company merely held title to the property in question as trustee for Florence Williams which all parties at all times knew.

Before beginning a discussion of the several liens and the priority of the one over the other, we note that none of the sfeveral claims, as to their validity, or the items or amounts, is questioned by any .of the parties to the suit; so that the judgment rendered is involved only as to the priority of the liens asserted. Again, Florence Williams, individually, is not a party to this suit. Plaintiffs’ suit is against the corporation, Odessa Building & Finance Company, and its lien is created by its attachment lien on the property in question, and is not predicated on the deed of trust, given by Florence Williams to plaintiff, as evidenced by the judgment. While plaintiffs had pleaded the deed of trust, the court foreclosed only as to the attachment lien, the reason therefor, probably being as suggested by Tinnin that plaintiffs had pleaded the deed of trust by their amended petition which was abandoned. If the correct result was reached, the judgment rendered would not be error, regardless of whether based upon the deed of trust or the attachment. 3 Tex. Juris, p. 1129, § 792, and cases.

Plaintiffs make no complaint that the trial court gave preference to intervener Pegues’ claim, on the two lots involved, and we need make no comment as between them.

The only question presented is: Does the record show that intervener Tinnin has a preference claim over the claims of plaintiffs and Pegues?

On January 7, 1928, the Odessa Building & Finance Company was incorporated, and at that time Florence Williams transferred to the corporation the property involved here. Later • Tinnin’s judgment was rendered against Florence Williams and was abstracted in Ector county on October 2, 1928; execution was issued to Ector county, and a nulla bona return made thereon.

On May 21, 1929, Tinnin recovered a judgment against the Odessa Building & Finance Company as garnishee on and for the amount of his judgment against Florence Williams. That judgment was abstracted in Ector county on June 6, 1929; execution was issued on the judgment against the garnishee, and a nulla bona return made thereon.

On April 8, 1927, Mrs. Florence Williams conveyed an undivided one-half interest in and to the property in controversy to Karl A. Crowley, and in a suit thereafter had between Florence Williams and Karl A. Crowley the court, by judgment of date October 8, 1928, decreed the title to said undivided interest in Crowley as of the date of the deed and not of the date of the judgment, and divested all right, title, and interest to said undivided one-half interest out of Florence Williams and the Odessa Building & Finance Company, and vested same in Karl A. Crowley.

The record does not show an appeal from that judgment.

It seems to us that -under that litigation the title to at least one-half interest in the property involved here passed out of Florence Williams and Odessa Building &■ Finance Company, and the remaining one-half interest was then in the Odessa Building & Finance Company.

Pegues’ title comes-to him by deed from Crowley, of Crowley’s one-half interest, and the other half from the foreclosure of a deed of trust executed by the Odessa Building & Finance Company at which foreclosure sale Pegues became -the purchaser. We think under the facts disclosed by the record Pegues’ title is free of any judgment lien against Florence Williams abstracted subsequent to her deed to Crowley, and subsequent to her deed to Odessa Building & Finance Company. The record shows no effort on the part of Tinnin or any one else to set aside the deed of trust executed by Florence Williams to plaintiffs or plaintiffs’ attachment lien except incidentally in this case, and then apparently only to show that Florence Williams, by the deed of trust of May 15, 1928, was asserting ownership in herself to the property.

Tinnin’s judgment against Florence Williams was abstracted on October 2, 1928, while Florence Williams’ conveyance to the defendant Odessa Building & Finance Company was made on November 7, 1927. No question is made as to the sufficiency of the several conveyánces and foreclosure sales to convey title. We think that under the record Tinnin is not in a position here as intervener and lienholder against the property of Elorenee Williams to question the validity of the deed of trust or the attachment by plaintiff of the record title to property in the name of Odessa Building & Finance Company, or to assert any equities he might have by reason of his judgment lien against Florence Williams.

We have concluded that the court was not in error in instructing the verdict and entering judgment based thereon.

The case is affirmed.


author: FLY, C, J.

text:
    LA SALLE COUNTY WATER IMPROVEMENT DIST. NO. 1 et al. v. GUINN et al.
    No. 8667.
    Court of Civil Appeals of Texas. San Antonio.
    June 10, 1931.
    Rehearing Denied June 17, 1931.
    ' Gaines, Gaines & Roberts, of San Antonio, for appellants.
    Templeton, Brooks, Napier & Brown, of San Antonio, for appellees.
   FLY, C, J.

This is a suit instituted by appellees, a number of citizens and taxpayers, against the La Salle County Water Improvement District No. 1 and its board of directors, to obtain an injunction restraining them from “taking any further steps toward the collection of said tax as assessed and levied, and from incurring any further expense in connection therewith, or employing any attorneys for said purpose, and they further pray for citation that on final hearing they have judgment cancelling said attempted tax levy and declaring the same invalid, and perpetually enjoining the defendants from enforcing said taxes hereinabove referred to against any of the land or property in said district, and particularly the lands and property of these plaintiffs, and declaring said attempted levy and assessment invalid and void.”

The following order was issued by the court, from which this appeal is being prosecuted:

“On this, the 7th, day of April, 1931, came on to be heard the application of the plaintiffs for temporary injunction herein, and both the plaintiffs and defendants appeared by their respective attorneys and announced ready for hearing on said application, and thereupon the court, having heard the pleadings and the evidence and the argument of counsel, and being of the opinion: (1) That the preliminary notes issued by said bistrict, together with the interest thereon, are a charge against the District, as originally organized, and as was constituted when said preliminary notes were voted and should not be collected entirely from the property in the redefined and reduced District; and (2) that the assessments on which the tax sought to be enjoined are discriminatory and grossly excessive and invalid and void, is therefore of the opinion that the said temporary injunction should be granted; "
“It is therefore ordered; adjudged and decreed by the court that said application for temporary injunction be and it is hereby granted, and the defendants and each of them are restrained and enjoined from collecting any tax based on the assessments made in and for the year 1929, and on which the taxi rolls carrying the tax sought to be enjoined have been made up, and from levying and collecting against the redefined and reduced District the entire amount of said Seventy-five Thousand Dollars ($75,000.00) preliminary notes, together with the interest thereon, but this injunction shall not be construed as restraining or enjoining the defendants from collecting the amount due on said preliminary notes with interest, when the tax therefor shall be levied against the entire District, as originally constituted when said preliminary notes were voted, and when based upon a proper and legal assessment.
“The writ of injunction herein granted shall be issued by the Clerk on plaintiffs entering into bond in the sum of Two Thousand Five Hundred Dollars ($2,500.00), conditioned and payable as required by law, and said injunction shall remain in force pending the final trial of tills cause or until otherwise ordered by the court.”

We arrive at our conclusions of fact from facts agreed to and not controverted by the parties. In reality there is no controverted question of fact presented; our decision being sought on matters of law growing out of established facts.

The facts are as follows: In December, 1924, a water improvement district containing more than 200,000 acres of land was organized in La Salle county, the town of Co-tulla being included therein. As authorized by law, notes amounting in the aggregate to $75,000 were executed and sold to purchasers. The notes were issued by the district as originally bounded and afterwards the boundaries were contracted and the district reduced to S5,000 acres of land. The district as cut down and contracted from its original dimensions and acreage, issued bonds in the sum of .$7,300,000, and placed the samé on the market, but they have not been sold because purchasers were not found for them. The district, as restricted, assumed the payment of the $75,000 notes. Holders of a portion of the notes obtained judgment thereon in the federal court of the Western district of Texas, and are seeking to collect the same by a levy of taxes through the board of directors. The larger, original district was established by a vote of the inhabitants thereof, and that district, as stated, issued the notes for $75,000. Afterwards, on February -, 1926, the district court of Travis county validated the contracted or restricted district and the bonds issued by it. The district was reduced to 85,000 acres on October 28,1925.

Articles 7622 to 7634a, Revised Statutes, provide for the establishment of water districts, and it may be assumed that all matters required by law were complied with in the formation and establishment of the original 200,000-acre district, and that the notes issued by that district are binding obligations. In article 7801, provision is made for the elimination of land in a district incapable of irrigation by gravity. It is clear that portions of a' district may be cut off! the district by a compliance with the terms of the law, but it is the contention of appellees that the law was not followed in the elimination of some 125,000 or 129,000 acres from the original district. It is agreed that the board of directors cut oft 104,000 acres of the original district because it could not be watered by gravity irrigation and that afterwards 25,000 acres were taken from the contracted district on petition of the owners. The validating act of the Legislature was dated March 2, 1929; the validation, of course, being of the district as cut down by the board of directors.

The validating act ratified all the acts and orders of the directors in connection with the execution of the notes and the issuance of the bonds; in fact, every act done in connection with the formation and establishment of the smaller district was in terms validated and approved. Acts of 1929, 41st Legislature, chapter 66, pp. 134 to 137, inclusive. The Legislature declared, in section 2 of the act: “Sec. 2. That organization and establishment of said La Salle County Water Improvement District Number 1, situated wholly within La Salle County, Texas, as created by the orders of the Commissioners’ Court of La Salle County, Texas, and as modified and redefined by the orders of the Board of Directors of said district, is hereby approved, ratified and confirmed, and the power and authority of said Commissioners’ Court to make and enter all orders in connection with -the organization and establishment of said district .and the orders of the Board of Directors of said district made in connection with the survey, establishment and redefining of territory constituting said district for the purpose of making improvements or purchasing improvements already existing or purchasing improvements and making additions thereto, and the issuance of bonds in payment therefor, as provided in said Chapter 2, Title 128, Revised Statutes of the State of Texas, 1925, and authorizing such district to provide for irrigation of lands included therein, furnish water for domestic, power and commercial purposes, and for all other purposes authorized by said Chapter 2, Title 128, and to levy and collect annually a direct General Ad Valorem tax upon the taxable property therein appearing upon the assessment rolls of said district in payment of such bonds be and the same is hereby declared ratified, ■approved and confirmed.”

It will be seen that the act is so comprehensive as to cover the formation of the original and the smaller district, which validated the cutting off of all the land, including the 25,-000 acres, which might have been irrigable. It has validated the district as completely as language is capable of creating a validation. Unless it was impossible to validate the formation of the district and the actions of the board of directors, the 85,000-acre district became a legal water improvement district, which was bound on the notes for $75,000. The Legislature claimed to be acting under the provisions of article 16, § 59, of the Constitution of Texas.

Appellees state that they are not attacking the validity of the formation of the district or the validity of the notes, but seem to contend that the whole 200,000 acres are liable on the notes and should be taxed to aid in paying off said notes. The district court of Travis county has decreed otherwise and decreed that the 85,000-acre district was formally created, and that all the acts of that district, including the assumption of the debt of $75,000, and the issuance of the bonds, were valid and binding upon it. The Legislature further validates all acts in forming the dis-triet, assuming the prior debts, and issuing the bonds. There is no escape from the effects of the judgment and the act of the Legislature. The smaller district became and is liable for the debt evidenced by the notes, and it was the duty of the board of directors to levy taxes on the smaller district to pay oft and discharge any and all of the said debt that was due, whether the same had been sued on and merged into a judgment in the Federal District Court or not.

There is no authority resting in the board of directors to levy a tax on lands no longer a part of the water improvement district. The segregation of over 100,000 acres of land from the district has been ratified and validated by a court of competent jurisdiction and the Legislature of Texas. The circumstances seem to indicate a willingness .to let the released land go and assume all indebtedness when it was thought that the tremendous bond issue would be sold and the proceeds used to increase the value of the lands remaining in the district to such an extent as would make it a fine speculation. But the bonds have not been sold, although they were issued at a time when speculation and extravagance were at their highest peak all over America. Even with reckless extravagance rampant throughout the land $7,300,-000 could not be held to be well secured by 85,000 acres of land in a sparsely settled part of Texas. The bonds could not be floated, the water speculation was balked and halted, and then the day for evading responsibility was ushered in. There Is a just debt of about $1 an acre outstanding against the land, and its payment cannot be held contingent on the sale of bonds that probably can never be sold. The portion of the district'which was segregated cannot, on any equitable ground, be held liable for the debt, and to hold that the reorganized district, which assumed the debts of the old one, is not liable would be upholding repudiation of a debt honestly and justly due. Texas courts will not sustain such repudiation.

There will be no conflict between the Federal District Court and Texas courts in levying taxes on the reorganized district’s lands sufficient to pay off the debts that have been embodied in a judgment in the federal court.

While disclaiming any desire or intention to assail the formation of the district, appellees base their prayer for an injunction on the ground that the district of 85,000 acres is illegally organized and that the board of directors has no authority to levy taxes in the contracted district. It is clearly an indirect, if not direct, attack on the very existence ■of the only water improvement district of La Salle county. Disclaimers are 'of no avail when the dagger of destruction is being driven into the vitals of the district. The original district has been abandoned, and we know of no way to disentangle its dissolution and again make it a going concern. Whether legally or illegally, it has been destroyed; and whether its “taking off” was done according to law ox not, it is gone. Appellees are not authorized, save and except through a writ of quo warranto, to attack the legality and vitality of the 85,000-acre district. Estate of Henrietta M. King, Deceased, v. County School Trustees of Willacy County et al. (Tex. Civ. App.) 33 S.W.(2d) 783.

The judgment of the trial court will be reversed, the injunction set aside, and the cause dismissed.


author: LEVY, J.

text:
    TATUM v. CALDWELL et al.
    No. 4051.
    Court of Civil Appeals of Texas. Texarkana.
    June 23, 1931.

    Rehearing Denied June 25, 1931.
    W. R. Abernathy and Wallace Hughston, both of McKinney, for appellant.
    Clark, Harrell & Clark, Neyland & Neyland, Carpenter & Harris, and T. D. Starnes, all of Greenville, for appellees.
   LEVY, J.

The suit was brought by the appellant against the receiver of the Commercial Na-tioñal Bank of Greenville and the nine directors of the bank, seeking to recover the balance-unpaid, by the receiver on a certain interest-bearing certificate of deposit issued by the bank for $75,000, ^nd the payment thereof guaranteed in writing by the directors, together with interest on a certain collateral agreement to pay additional interest.

The defendants H. T. Weathers, J. F. Bick-ley, W. A. Beasley, and R. N. White, each denying having signed the certificate of renewal of date December 31, 1924, pleaded, in rescission of the guaranty, facts concerning the alleged transactions of both March and December, 1924, constituting fraud and fraudulent conduct, and pleaded estoppel to maintain the suit upon the alleged acts of fraud and fraudulent conduct. R. N. White also pleaded adjudication and discharge in bankruptcy. The defendants Thomas T. Herndon, T. D. Starnes, and J. E. Wilkins pleaded, the same as did their codefendants, except not' denying their signatures upon the certificate. J. E. Wilkins further pleaded his release upon a valuable consideration paid the plaintiff.

The trial court made findings of fact, which have evidence to support them, viz.:

“On the 17th day of March, 1924, W. H. Camp, Cashier of the Commercial National Bank of Greenville, Texas, issued to the plaintiff the following:
“ ‘Certificate of Deposit
“ ‘Not Subject to Check.
“ ‘Commercial National Bank ’
“ ‘No. ---
“ ‘Greenville, Texas, March 17, 1924. $75,000
“ ‘C. T. Tatum has deposited with this Bank $75,000 payable to the order of himself in current funds on return of this certificate properly endorsed with interest at the rate of 6% per annum if left until December 31, 1924.
“ ‘No interest after maturity.
“ ‘W. H. Camp, Cashier.’
“On the back of said certificate appears the following language:
“ ‘We hereby guarantee the payment of the within certificate of deposit at maturity thereof, and also waive notice of “Demand and protest” thereof of any dishonor thereof, making ourselves hereby original parties thereto the same as if the said certificate of deposit had' been originally issued by us in our individual capacity or capacities.’
“The guaranty endorsed on the back of the certificate was signed by defendants W. A. Beasley, Thomas T. Herndon, J. F. Bick-ley, R. N. White, J. B. Wilkins, W. H. Camp, T. D. Starnes, W. R. J. Camp, and H. T. Weathers. Each of said persons was a stockholder and a director in the Commercial National Bank and they constituted all of the directors of said Bank.
“On the 31st day of December, 1924, the said W. H. Camp as cashier of said bank issued the following certificate:
“ ‘Certificate of Deposit
“ ‘Not Subject to Check
“ ‘Commercial National Bank
“ ‘No. 699
“ ‘Greenville, Texas. December 31, 1924.
“ ‘C- T. Ta-tum has deposited with this Bank $75,000 payable to the order of himself in current funds on return of this certificate properly endorsed with interest at the rate of 4% per annum if left 12 months from date; - per cent per annum if left - months.
“ ‘No interest after maturity.
“ ‘W. H. Camp, Cashier.’
“The identical words constituting the guaranty endorsed on the certificate of March 17, 1924, appear on the back of the certificate last named, and the same persons who constituted the Board of Directors of the Commercial National Bank when the first certificate was issued also constituted its Board of Directors at the time the second certificate was issued and the name of each of said directors appears to the guaranty endorsed on the back of the second certificate; but I find as a fact that neither W. A. Beasley, J. F. Bickley nor H. T. Weathers signed his name thereon, and I further find that neither of said persons ever authorized or ratified the signing of his name to said guaranty.
“I find that W. H. Camp was the Cashier of the Commercial National Bank for many years prior to the time said first certificate was issued and up to the time that the bank failed in the month of April following the time the second certificate was issued; but I further find that said W. H. Camp’s authority as Cashier of said Bank was limited, that he was not authorized to make loans for said bank in excess of $500.00 without the approval of the Hoard of Directors and that he was not authorized to receive interest-bearing deposits and issue certificates therefor without first procuring the consent of the Board of Directors of said Bank, and that in no event he had authority to pay eight per cent interest upon a deposit.
“I find that when the first certificate was issued the plaintiff, C. T. Tatum, and the said W. H. Camp entered into a secret agreement under which said certificate would show on its face to bear only six per cent interest and no interest unless the deposit remained in the Bank until the maturity of the certificate, but that plaintiff would receive eight per cent interest from said bank -and that two per cent, being the difference between the interest appearing on the face of the certificate and the eight per cent interest agreed upon, was placed from the funds of said bank to the credit of the plaintiff at the time said first certificate was issued, and that the same was subject to the plaintiff’s check and thereafter checked out and withdrawn from said bank.
“I find that on, or just prior to, the 31st day of December, 1924, plaintiff and said W. H. Camp entered into a new agreement under which the second certificate above mentioned was issued to the plaintiff, appearing on its face to bear but four per cent interest and not any unless left in said bank until one year from its date, but that the plaintiff should be paid eight per cent interest by said bank on account of said dexoosit, and that in pursuance of said agreement said Camp took from the funds of said bank $3000.00, constituting the difference between four per cent and eight per cent interest on said certificate, and placed the same to the credit of plaintiff, and that the same was subject to his check at any time.
“I find that at the time each of said certificates were issued plaintiff knew that the payment by a bank of eight per cent interest on deposits was an extraordinary transaction, and that although he had made many large interest-bearing deposits in different banks before either of the transactions in question, he had never received near as much as eight per cent on said deposits.
“I find that at the time each of said certificates were issued W. H. Camp told the plaintiff not to inform any director of said bank of the actual contract made between them, and that if it was not an express agreement between them that the actual facts should be kept secret and withheld from the knowledge of the directors and other officials of the bank, it was at least a tacit understanding between them that this would be done, and that said Tatum faithfully obeyed tbe instructions of Camp and kept the agreement secret; and I further find that not a single director of the bank, except W. H. Camp, ever had any notice of either of the secret agreements between plaintiff and Camp until long after the bank failed in April, 1925.
“I find that the plaintiff had actual knowledge of the limitation of Camp’s authority, or that if he did not, he had actual notice of the facts which would put an ordinarily prudent person on inquiry, and which if made, would have disclosed the limitation of Camp’s authority to make the contracts in question and to pay him the excess amount of the bank’s money under the guise of interest.
“I find that not a single director, except W. H. Camp, would have signed his name to the guaranty endorsed on the back of either of the certificates had he known of the secret agreement between Camp and Tatum; and I further find that had-the directors known of the said agreement at any time before the maturity of the first certificate they would have required the bank to pay Tatum his money and would have thereby been relieved from any responsibility.
“I further- find that when the first certificate matured on the 31st day of December, 1924, said bank had ample funds with which to pay off and discharge the plaintiff’s deposit of $75,000.00, and that had the directors known of the fact that Camp was making the second, secret agreement with plaintiff they would have required the bank to pay plaintiff his money; and I further find that said directors would have required said bank to give Tatum his money at any time while it had funds on hand to do so prior to its failure, had they known of the secret agreement between Camp and Tatum.
“I find that immediately after the failure of said bank, J. F. Bickley, W. A. Beasley and H. T. Weathers each notified the plaintiff that he did not sign nor authorize his signature to the second instrument, and that with knowledge of these facts, the plaintiff presented his claim against the Commercial National Bank to the Receiver of said bank, based upon the second certificate, and demanded eight per cent interest thereon, and that he received dividends from the assets of said bank, based upon said certificate and eight per cent interest thereon up to the time the bank failed.
“In open court plaintiff dismissed the case as against W. R. J. Camp, who died since this suit was entered, and against R. B. Caldwell, Receiver of the Commercial National Bank of Greenville, and the evidence shows that R. N. White, one of the defendants and one of the directors, has been discharged in bankruptcy and is for that reason, if for no other, not liable in this case.
“Conclusions of Law.
“Under the facts of this case, I am of the opinion that the plaintiff is not entitled to recover anything against either of the defendants except W. H. Camp, and I, therefore, enter judgment accordingly.”

There is presented the simple question, as a matter of pure law, of whether or not the appellant in the circumstances was precluded, -as determined by the trial court, from recovery of the directors upon their undertaking of guaranty. The outstanding factual elements appear that: “I find that not a single director, except Wy H. Camp, would have signed his name to the guaranty endorsed on the back of either of the certificates had he known of the secret agreement between Camp and Tatum ; and I further find that had the directors known of the said agreement at any time before the maturity of the first certificate, they would have required the bank to pay Tatum his money and would have thereby been relieved from any responsibility.” In view of tbe facts, the ap-pellees would seemingly be entitled to repudiate the contract of guaranty because of •the acts of fraud and the loss of relief from their liability, and invoke the doctrine of estoppel. The directors had the right under the guaranty at any time to have the bank return to the appellant the money deposited, and they could have complained of the conduct and acts concerning the transaction as justly entitling them to exercise the right of returning the consideration. They were actually defeated of their right of relief through the concealment and acts and conduct. And, as viewed by the majority of the court, the trial court has correctly rested the decision of the case upon the ground that the fraudulent conduct and concealment and damage, coupled together, operated by way of es-toppel to preclude the appellant from' now seeking relief upon the undertaking of guaranty. 28 C. J. p. 925; 21 C. J. § 173, p. 1168; 1 Story, Eg. Jur. (14th Ed.) § 440 ; 2 Pomeroy, Eg. Jur. (4th Ed.) 808; 1 Brandt on Surety-ship (3d Ed.) § 106; Elliott on Con., Yol. 1 § 127, and Vol. 5, § 3938; Nat. Bank v. Donnellan, 170 Cal. 9, 148 P. 188, Ann. Cas. 1917C, 744; Damon v. Surety Co., 161 App. Div. 875, 146 N. Y. S. 996.

Chief Justice WILLSON differs from' the above conclusion. He is of the opinion that the directors who signed the certificate as guarantors did not by that act become parties to the fraudulent collateral agreement (as to the bank) between Camp and appellant, and that not only were they not bound by that agreement, but the bank itself was not bound by it. But, he thinks, the fact that the guarantors and the bank were not liable on the collateral agreement was not a reason why either it or they should be relieved from liability on the contract evidenced by the certificate in question.

In the view of the majority of the court, the judgment should be affirmed, and it is accordingly so ordered.


author: LOONEY, J.

text:
    LLOYDS OF TEXAS et al. v. BOBBITT, Atty. Gen.
    No. 11002.
    Court of Civil Appeals of Texas. Dallas.
    May 23, 1931.
    Rehearing Denied July 3, 1931.

      Alvin M. Owsley and Renfro, Ledbetter & McCombs, all of Dallas, and Phillips, Tram-mell, Chizum, Price & Estes, of Forth Worth, for appellants.
    James V. Allred, Atty. Gen., Everett L. Looney, Asst. Atty. Gen., and McBride, O’Donnell & Hamilton, of Dallas, for appellee.
   LOONEY, J.

The Attorney General of Texas instituted these proceedings against the Lloyds of Texas, an exchange organized to write insurance under the “Lloyds Plan,” the individual subscribers (53 in number), and their attorneys in fact. The suit was for the appointment of a receiver to wind up the affairs of the exchange under article 5022, R. S., as amended by an act adopted at the First Called Session of the Forty-First Legislature, e. 11, § 1 (Vernon’s Ann. Civ. St. art. 5022).

On an éx parte hearing, held May 16, 1930, without notice to defendants, the district judge appointed W. D. Prince receiver, with authority to take charge of the assets of the Lloyds of Texas, collect its past-due accounts, and, under orders of court from time to time, to do and perform other and further necessary and proper acts.

Defendants were cited to appear at the next regular (June) term of court, and show cause why the receivership should not be continued. The receiver qualified, took possession of all records, assets, and affairs of the association, and hegan the active administration of his office.

No appeal was prosecuted'from this interlocutory order, nor did appellants appear during the June term, but at the October term (on-December 9,1930) filed a motion to vacate the receivership and to remove the receiver. ’ On December 23, 1930, the motion was amended and, after hearing evidence, the court overruled both the motion to vacate, and to remove the receiver, from which appellants prosecute this appeal.

1. Appellants challenge the correctness of the action of the court in appointing the receiver, but, as that order was not appealed from, the matter is not before us for review.

2. They deny that the Attorney General was authorized to bring the suit, because not requested by the board of insurance commissioners to institute the proceedings, that such request, if any, was made by the chairman of the board.

This contention is based on a provision of article 5022, supra, to the effect that, under circumstances named, “the affairs of such underwriters at Bloyds shall be wound up through receivership proceedings instituted by the Attorney General at the request of the Board.”

There are several reasons why, in our opinion, this contention must be denied: (a) The Attorney General alleged “that as provided by said article (5022) the Board of Insurance Commissioners has requested your petitioner in his capacity as Attorney General of the State of Texas, to institute proceedings of receivership for the purpose of winding up the affairs of the underwriters at Lloyds of Texas, and brings this proceeding by reason of such request.” Neither the legal capacity of the Attorney General to sue, nor his right to recover in the capacity in which he sued, was challenged by sworn plea (article 2010, K. S. 1925, subds. 2 and 3); therefore, as the question was not raised by pleading, it is not properly before us for consideration. But, even if presented properly, in view of the evidence, we would be compelled to overrule the contention. The evidence shows satisfactorily that, in all official acts performed by Mr. Tarver, including the request to the Attorney General for the institution of these proceedings, he was acting for the board. After giving testimony in regard to an examination of the affairs of the Lloyds, made in the spring of 1930, and on receipt of the report of this examination, Mr. Tarver said:

We” (meaning the Board) communicated with the attorney in fact (of Lloyds), calling attention to the impairment of the guaranty fund, as disclosed by the report of the examiners, and called upon him to make good this impairment, which was not done; that the attorney in fact sent a lawyer to see “us” (the board) in regard to the matter, and in this connection he said: “There was some discussion and the result of the matter was the calling of the meeting of those subscribers at Dallas.”

The meeting referred to was held at the Baker Hotel on April 14, 1930. Subscribers present, representing 71 per cent, of the whole, decided unanimously to turn the exchange over to the “insurance commissioner” for liquidation, and also, canceled all outstanding powers of attorney. Thereupon Mr. Tarver, as chairman of the board, took over the affairs of the exchange, but, doubting authority to liquidate in this way, unless authorized by all subscribers, he made an effort to obtain unanimous consent, and in this connection said: “I did not proceed with the liquidation because of the terms of the statute. Our view was that any one subscriber could raise objections to our undertaking to liquidate out of court. I tried to familiarize myself with the statutes. ⅜ * * Feeling that it was necessary, under the statute, unless we Were able.to get the consent of all subscribers to this procedure of liquidation, that court action was the only step left for the department to take, we asked for the appointment of a receiver under the orders of the court. The Attorney General was requested to file a petition of that character, which he did, resulting in the appointment of a receiver.” This evidence, in our opinion, shows that Mr. Tarver was representing the board, and throughout expressed its will and executed its purposes. In the absence of evidence to the contrary, the presumption will be indulged in support of the validity of official conduct that neither the chairman of the board nor the Attorney General neglected any duty, but discharged same according to law. The contention that challenges the authority of the Attorney General to maintain the suit must be overruled.

3. Appellants make the further contention that the guaranty fund of Lloyds of Texas was not impaired, nor was the exchange insolvent within the meaning of the statute; hence the court erred in refusing to vacate the receivership.

The statute, article 5017b, enacted at the First Galled Session of the Forty-First Legislature, c. 11, § 1, furnishes the following test of solvency: “In determining the solvency and arriving at the amount of net assets on hand belonging to underwriters at a Lloyd’s for the purpose of this chapter, there shall be considered all the funds contributed to the Guaranty Fund by the Underwriters and the funds accumulated during the progress of the business and held for such underwriters by the attorney in fact, trustees or other officers. Underwriters at a Lloyd’s shall be deemed solvent when the net assets on hand shall meet the requirements of this Chapter (Aits. 5013 — 5023a) after deducting from its gross assets all outstanding liabilities, including reserve liabilities, and when the contributed guaranty fund at least to the minimum required herein shall be unimpaired.”

In determining the sufficiency of the guaranty fund required to be maintained by article 5017b, which, in its last anlysis, determines solvency whether or not of the exchange under the statutory rule quoted above, notes of underwriters are not to be estimated; funds contributed by underwriters and those accumulated from business operations only are to be considered, and, although the notes of underwriters are gross assets of the exchange, they constitute no part of the minimum required to be on hand at all times for the immediate payment of losses, but belong to the reserve that may ultimately be drawn upon, if and when needed.

The board caused the affairs of the Lloyds of Texas to be examined by Hutcheson-Smith-P-rince & Harris, public accountants of Dallas, of which Mr. W. D. Prince, who performed most of the worh of examination, is a member. The result of the examination was, on March 29,1930, reported to Hon. W. A. Tarver, chairman of the board, giving the status of the exchange as of December 31, 1929. As interpreted by the board, the report disclosed that the guaranty fund was exhausted, and that the exchange was insolvent. The testimony of Mr. Prince is to the effect that the guaranty fund was not only exhausted, but that liabilities exceeded the minimum prescribed by statute over $8,000. In these circumstances, Mr. Tarver brought this condition of the affairs of the exchange to the attention of the attorney in fact, requesting that the insolvency be made good, which, however, was not done. Dater, a call was issued to the underwriters for a meeting to be held at Dallas April 14,1930. On the date named the meeting was held at the Baker Hotel, Mr. Tarver presided, the report of the examiners was laid before and explained by Mr. Prince to the assembled subscribers, and, after due consideration, the underwriters, representing 71 per cent, of the entire body, unanimously adopted resolutions to the effect that the insurance commissioner should take over the exchange and appoint an agent to take charge of its affairs, re-insure such policies as could be re-insured, cancel all undesirable risk, and otherwise liquidate the exchange, as in his judgment was to the best interest of the underwriters ; they also canceled all outstanding powers of attorney, and concluded the meeting by extending a vote of thanks to the department of insurance for the manner in which the investigation had been handled, and for bringing the condition of the exchange to their attention. The attorney in fact was represented at the meeting, and acquiesced fully in this action of the underwriters. Thereupon Mr. Tarver took over the affairs of the exchange and appointed Mr. Prince liquidating agent, who made an earnest effort to effect re-insurance of outstanding risks, but, failing in this, canceled all outstanding policies.

As the Lloyds plan contains no provision for a liquidation of this kind, Mr. Tarver thought unanimous consent of underwriters would have to be secured, so on April 29, 1930, he addressed a communication to the subscribers not present or represented at the meeting above mentioned, calling their attention to the action taken at said meeting, told them the exchange was hopelessly insolvent, and suggested that, if they approved the action of the majority, they should so indicate by signing and returning the ratification sheét inclosed for that purpose, concluding the communication by saying that, unless he secured unanimous consent, “We shall be compelled to request the Attorney General to institute receivership proceedings, as provided by law.” In answer to this communication, all, except 5 per cent, of the whole, ratified the action taken at the Baker Hotel, but, as unanimous consent was not obtained, the board proceeded no further under the resolution. However, as the exchange was shown to be insolvent, within the meaning of the statute, and as reinsurance of its outstanding risks could not be effected, the board, acting through Mr. Tarver, requested the Attorney General to institute these proceedings for a receiver, in oi’der to wind up the affairs of the exchange. Mr. Prince was appointed receiver, and on Blay 19, 1930, made an audit, which revealed that the affairs of the 'exchange had not improved since December 31, 1929.

In view of the uncontradicted testimony of both Mr. Tarver and Mr. Prince, and the further fact that the insolvency of the exchange was to all intents and purposes admitted by 95 per cent, of the subscribers, we are of opinion, and so hold, that its insolvency was satisfactorily, in fact overwhelmingly, established.

4. Appellants contend that the court erred in admitting in evidence, over their objection, the report of the examiners and the explanatory testimony of Mr. Prince. Appellants based their objection on several grounds, but the crux of their contention is that, in order to show that the exchange was insolvent, the examiner arbitrarily eliminated $270,073.55 of its assets.

We cannot accept appellants’ view of this matter. The examiner eliminated $6,-741.21, the amount of premiums overdue more than 90 days. The testimony showed, without conflict, that in insurance circles throughout the .country the rule obtains that premiums, more than 90 days past due are not considered available assets for the payment of losses. We therefore think this amount was correctly eliminated. The sum of $5,125 was the amount of unsecured notes of different persons, deposited by subscribers in lieu of cash; these notes were unsecured other than by the personal worth of individual makers, and constituted neither cash nor “admissible securities,” within the meaning of the statute, and were, in our opinion, properly eliminated. An unsecured open account for $200 was condemned by the test just stated, and properly eliminated. The item of $800 is the amount of rent for office space prepaid, and is in no sense either cash or an admissible security. The item of $29,024 represents the excess book value of certain securities deposited by underwriters over the pledged value, and was, in our opinion, neither primarily nor secondarily an asset of the exchange, but constituted simply an excess in the amount of securities deposited by subscribers, over the amount acquired by statute, and to which the exchange had no claim. The largest item eliminated is $198,800, the amount of underwriters’ subscription notes. These notes constituted no part of the guaranty fund, were nonnegotiable, bore no interest, were payable only as demanded by the attorney in fact to meet future exigencies of business, and therefore properly eliminated from consideration. The two items — $540 and $28,843.34 — aggregating $29,383.34, represent the excess value of corporation stocks deposited in the guaranty fund as convertible or admissible securities over its real or ascertained value. Appellants object strenuously to the method pursued by the examiner in ascertaining the value of these stocks. The examiner testified that his personal knowledge of the stocks was very limited, but that the inquiries made to ascertain these values were not limited; that very few of the stocks were listed, most of them being in closed corporations ; that from his experience as an. auditor he knew the real value of stocks is determinable from the value of property owned by the corporation; that they inquired of brokers and others possessing knowledge of the stocks, and upon information gathered in this way estimated the actual market value of the stock; and the difference between the value' thus ascertained and the book values of these stocks is the amount of excess eliminated. Appellants’ main contention is that the method pursued in determining these values was improper, and that the testimony was inadmissible.

The burden of proof, on the motion to vacate, was upon appellants, but they offered no evidence whatever to combat the case made by the Attorney General. The report of the examiners-in evidence was obtained by the board in the discharge of official duty, and constituted sufficient basis, under the statute, for the proceedings that supervened. Mr. Prince^ was cross-examined fully by appellants, and the report was offered in evidence in connection with his testimony. We think the evidence admissible and that the amount of excess was properly eliminated.

, But, even if it be conceded that the eyi-dence as to the value of these corporation stocks was inadmissible, that the amount of the two items, to wit, $29,383.34, should have been considered a part of the guaranty fund, the result nevertheless would be the same, because the evidence, otherwise, showed conclusively that the minimum amount of assets ($60,000) required by statute (article 5017,. as amended by Acts 41st' Leg. [1929], 1st called Sess., c. 11, § 1 [Vernon’s Ann. Giv. St. art. 5017])‘had been exhausted, and further that liabilities of the exchange exceeded the minimum by $8,015.39; so, even if the amount of these items had been credited to the guaranty fund, it would nevertheless have been impaired to the extent of $38,632.05.

5. Appellants say that the amendments to the Lloyds plan, under which these receivership proceedings were begun, do not apply to or affect the business Of the Lloyds bf Texas, because it was organized under the law as it existed prior to the adoption of said amendments. The contention is to the effect that, when organized, the underwriters were required to maintain a guaranty fund of only '$40,000 in order to write two kinds of ihsurance, whereas under the amendment they are required to maintain a guaranty fund of $70;-000 to conduct the same character of business ; that this placed upon them a burden they had not assumed in the original organization ; that no provision of the former plan authorized a receivership proceedings by the Attorney General, at the request of the insurance board, and, as they did not obtain renewal of license under the amended statute, the same is not applicable to them, and, if enforced as to them, the effect will be to impair obligations of their contracts, and for these reasons appellants say that the receivership proceedings were not originally authorized, and should on motion have been vacated.

It is generally recognized that the business of insurance, being quasi public, is subject to regulation and control by the state. 14 R. G. L. 857, and authorities cited. This doctrine is also applicable to insurance business conducted under the Lloyds plan. 38 O. J. 160 § 12, and authorities cited. Insurance, under the Lloyds plan, is authorized in this state only under license issued by the insurance board (article 5016, as amended by Acts 41st Leg. [1929], 1st called Sess., c. 11, § 1 [Vernon’s Ann. Giv. St. art. 5016]), without which insurance contracts on behalf of underwriters is not authorized. The license is neither a contract nor a charter, but a mere privilege granted by the state, and as such may be withdrawn, modified, or limited at any time. In the instant case, the minimum guaranty fund required when the attorney in fact of Lloyds of Texas was licensed was $40,000; thereafter, by amendment effective August 21, 1929, the minimum was increased to $60,000, and the same act introduced a provision (article 5022) making ■it tlie duty of the Attorney General, on request of th» insurance board, to institute proceedings to wind up the affairs of an insolvent Lloyds.

We do not think it can be correctly said that these changes in the statute impaired any contractual obligation, because the license issued under the former plan was held in subordination to the right of the Legislature to prescribe other and different regulations at any time, or to withdraw altogether the privilege of conducting an insurance business under the plan. The doctrine applicable to the situation in hand is, in our opinion, correctly stated in 17 R. O. L. 476, 477, § 5, as follows: “ * * Following the general principle that a license is not a contract, it is clear that it does not in itself create any vested right, or permanent right, and that free latitude is reserved by the Legislature to impose new or additional burdens on the licensee, or to alter the license, or to revoke and annul it. And this is the general rule notwithstanding the expenditure of money by the licensee in reliance thereon, and regardless of whether the term for which the license was given has expired. * * * ” To the same effect see the following: 6 R. C. L. 199, § 195; Texas, etc., v. Gross, 60 Tex. Civ. App. 621, 128 S. W. 1173, 1175; State v. Bank of Mineral Wells (Tex. Civ. App.) 251 S. W. 1107, 1112; Jefferson, etc., Co. v. Tarver (Tex. Com. App.) 29 S.W.(2d) 316; German, etc., Co. v. Lewis, 233 U. S. 389, 34 S. Ct. 612, 58 L. Ed. 1011, L. R. A. 1915C, 1189, and authorities cited in note; Norfolk, etc., Co. v. Public Service Commission, 265 U. S. 70, 44 S. Ct. 439, 68 L. Ed. 904; City of Dayton v. City Railway Co. (C. C. A.) 16 F.(2d) 401; Knox v. Lee, Parker v. Davis (Legal Tender Cases) 12 Wall. 457, 20 L. Ed. 287, 311; Commonwealth v. Vrooman, 164 Pa. 306, 30 A. 217, 25 L. R. A. 250, 44 Am. St. Rep. 603; State ex rel. Attorney General v. Massillon, 110 Ohio St. 320, 143 N. E. 894. We therefore overrule the contention that appellants are not amenable to and controlled by the Lloyds plan, as amended.

Appellants also complain because the court refused to remove W. D. Prince, receiver, because of disqualification. Article 2294, R. S. 1925, provides that “⅜ ⅜ ⅜ no party, attorney, or any person interested in any way in an action for the appointment of a receiver shall be appointed receiver therein.”

The contention is that Prince was interested as a creditor; that his firm held a claim for services rendered the board in examining the affairs of the exchange, which, under the law, was chargeable against the underwriters. We do not think Prince was a creditor in a commercial sense, nor interested within the meaning of the statute. Crawford v. Crawford (Tex. Civ. App.) 163 S. W. 115. The examiner’s claim for compensation was primarily against the insurance board and per force of statute chargeable against the underwriters. However that may be, this question is out of the case, because Prince waived any claim he might have against the Lloyds, and stated specifically, both in pleading and testimony, that he had made no claim against appellants and would make no charge other than for services rendered as receiver.

We have given careful consideration to all assignments and propositions, and, finding no reversible error, the judgment of the court below is affirmed.

Affirmed.

On Motion for Rehearing.

' In paragraph 14 of their motion for rehearing, appellants contend that we erred in holding that the board (insurance commissioners) interpreted the report of W. D. Prince, examiner, made to W. A. Tarver, chairman, as disclosing that the guaranty fund of the exchange was exhausted, and showed a condition of insolvency. Appellants say: “Such holding and finding of fact by the Court of Civil Appeals is unsupported by and contrary to the evidence of the plaintiff, being the appellee herein.” We based this conclusion upon the testimony of Mr. Tarver, who said: “I remember having an examination made of the Lloyds of Texas in the spring of 1930 in the course of my official duties. The firm of Hutehinson-Smith-Prince & Harris made the examination and the report of that firm was submitted to my office. Upon receipt of that report, we communicated with the attorney in fact, calling attention to the fact that the report disclosed an impairment of the guaranty fund, and calling upon him to make it good, but it was not made good.” In a letter written April 19, 1930, to certain underwriters who failed to attend the meeting at Dallas April 14, Mr. Tarver said: “This department’s audit reveals a hopelessly insolvent condition.” In' view of this and other evidence disclosed by the record, there can be no question but that the board proceeded on the idea that the report of the examiners revealed the insolvency of the exchange.

In paragraph 15 appellants say: “The court erred in holding that, the testimony of Mr. Prince was to the effect that the guaranty fund was exhausted, and that the liabilities exceeded the minimum prescribed by the statute by $8,000, for the reason that Mr. Prince did not so testify and there is not a scintilla of testimony in the records to support such a finding by the Court of Givil Appeals.”

A scintilla of evidence means a mere spark, a trifle; hence to charge that the court arrived at the conclusion in question “■without a scintilla of evidence” is tantamount to saying that, we acted without any evidence whatever. The conclusion to which appellants leveled the criticism is this, we said: “The testimony of Mr. Prince is to the effect that the guaranty fund was not only exhausted, but that liabilities exceeded the minimum prescribed by statute over $S,000.”' Appellants’ allegations that Prince did not testify as stated, and that our finding in this respect is “without a scintilla of evidence to sustain it,” are, in the light of Prince’s uncontradicted testimony, reckless and unwarranted, for Prince said: “My report, together with the anaylsis of the affairs of the Lloyds of Texas, disclosed the condition of the reserve fund, the guaranty fund. The assets of the company lacked $8,000 amounting to as much as the liabilities. The report shows that the guaranty fund, which should be $60,000, as required by law, instead of having the $60,000 it shows there was no guaranty fund, but that the liabilities exceed the assets by $8,015.39, as reflected by the records of the company.”

Ire several paragraphs, appellants insist that we erred in finding that the board of insurance commissioners, through Mr. Tar-ver, chairman, requested the Attorney General to institute these proceedings. They say the uncontradieted testimony shows that Mr. Tarver acted independently of the board, and that the plural form of pronouns appearing in his testimony — such as “we,” “us,” and “our” — related to the joint action of Tarver, and Mr. Dexter Hamilton, associate counsel, and did not refer to the joint action of Tarver and other members of the insurance board. We do not think Tarver’s testimony is susceptible of the construction contended for by appellants; on the contrary, as stated in the original opinion, we think the testimony shows that throughout Tarver acted in conjunction with other members of the board.

The contention is further made that we erred in holding that the notes of subscribers held by the exchange could not be taken into consideration in determining the question of its solvency. We probably used inapt language; what we meant is, that under the arbitrary rule adopted by the Legislature (article 5017b) a Lloyds Exchange becomes insolvent when its minimum assets ar.e either exhausted or fall below the prescribed level. While notes of underwriters are gross assets, they constitute no part of the guaranty fund, and cannot be considered in determining the sufficiency of the minimum assets required, at all times, for the payment of losses. The language of the original opinion will be corrected to conform to this idea.

After due consideration, .we find no merit in. appellants’ motion for rehearing, and the same is overruled.

Overruled.