author: PARKER, Justice. STEPHENSON, Justice

text:
    ALL PERSONS INTERESTED IN OR AFFECTED BY the ISSUANCE OF the SECURITIES, ETC., Appellants, v. JEFFERSON COUNTY, Texas, Appellee.
    No. 6825.
    Court of Civil Appeals of Texas. Beaumont.
    Dec. 9, 1965.
    Rehearing Denied Dec. 29, 1965.

      Baker, Botts, Shepherd & Coates, Houston, George W. Brown, Jr., Beaumont, for appellants.
    Keith, Mehaffy & Weber, W. C. Lindsey, Dist. Atty., James M. Farris, Asst. Dist. Atty., Beaumont, Roy B. Johnson, Asst. Atty. Gen., Austin, for appellee.
   PARKER, Justice.

This is an appeal from the following judgment:

“NO. B-84,584
NO. B-84,791
No. B-84,584
George W. Brown, Jr.
vs.
Jefferson County, Texas, et al
As Consolidated with
No. B-84.791
Jefferson County, Texas
All Persons Interested in or Affected by the Issuance of the Securities, Etc.
In the District Court of Jefferson County, Texas 60th Judicial District

FINAL JUDGMENT

BE IT REMEMBERED that upon the 7th day of September, 1965,. came on to be considered the consolidated cause above captioned, pursuant to notice, and came the parties in person and by and through their respective attorneys of-record; and, at the conclusion of said hearing, the Court here and now enters this final judgment, making all necessary findings of fact and conclusions of law in support thereof, some of which are set out below:

I. The Consolidated Cause:

A. No. B-84,584, entitled ‘George W. Brown, Jr. v. Jefferson County, Texas/ is a suit brought by the Plaintiff in the nature of a taxpayer’s suit seeking a declaratory judgment, a temporary restraining order, temporary injunction, and a permanent injunction. The Plaintiff attacked two resolutions of Jefferson County, Texas, adopted by its Commissioners’ Court on April 3,1963 and July 16, 1965, respectively. He named not only Jefferson County, but the officials thereof as parties defendant.

B. No. B-84,791, entitled ‘Jefferson County, Texas v. All Persons Interested in or Affected by the Issuance of the Securities Described in Plaintiff’s Original Petition’ is a suit brought by the Plaintiff under the provisions of Article 717m, RS to validate a certain bond issue more particularly described in Plaintiff’s Petition, but designated as ‘Jefferson County Bridge Bonds, Series 1965.’

II. Prior Orders:

A. In Cause No. B-84,584, entitled as above, the Court has entered three prior orders, each of which is incorporated herein by reference, namely:

1. Order dated April 12, 1965, denominated ‘Agreed Order Maintaining Status Quo’;

2. Order dated April 29, 1965, but actually, entered on May 4, 1965, entitled ‘Order Denying Temporary Injunction’;

3. Order dated May 24, 1965, consolidating said cause with No. B-84,791.

B. Cause No. B-84,791, entitled as above, the Court has entered two prior orders:

1. Order dated May 17, 1965, setting a hearing upon said proceeding so filed by Jefferson County, providing for its publication, and fixing the date of hearing of the proceedings.

2. Interlocutory order bearing date of July 19, 1965. •

III.It appearing to the Court, and the Court here and finds that in Cause No. B-84,791, as aforesaid, that notice has been given, issued, published, and served in the time and manner required by law to give this Court jurisdiction hereof and to require the appearance of all parties hereto and interested herein or affected hereby, and the Plaintiff in Cause No. B-84,584, George W. Brown, Jr., and the Attorney General of Texas, were the only persons except the Plaintiff who appeared at the time and place noted for such hearing, and that the Court has jurisdiction of the subject-matter and of the parties in said validation proceeding brought under Cause No. B-84,791, and that the interlocutory judgment heretofore entered in said cause should be in all things ratified, confirmed, and merged into this judgment, the Court here and now enters this final judgment in said Cause No. B-84,791, styled ‘Jefferson County, Texas v. All Persons, etc.’ as follows:

Upon July 19, 1965, came on for consideration the above entitled and numbered cause No. B-84,791, wherein JEFFERSON COUNTY, TEXAS is Plaintiff, and ALL PERSONS INTERESTED IN OR AFFECTED BY THE ISSUANCE OF THE SECURITIES DESCRIBED IN PLAINTIFF’S ORIGINAL PETITION, are Defendants ; and, the Attorney General of the State of Texas, the Honorable Waggoner Carr, appearing by and through an Assistant Attorney General came on behalf of the State of Texas; and, the Court here and now finds that notice has been given, issued, published, and served in the time and manner required by law to give this Court jurisdiction hereof and to require the appearance of all parties hereto and interested herein or affected hereby at this time; and, it appearing to the Court that only George W. Brown, Jr., [the individual plaintiff in Cause No. B-84,584, previously consolidated with this Cause No. B-84,791], the Plaintiff, Jefferson County Texas, and the Attorney General of Texas appeared, and no other parties answered, announced, intervened, or appeared; and, the Court, after considering said proceeding, being brought under the provisions of Article 717m, Vernon’s Annotated Civil Statutes, as amended and the Court upon due hearing and after considering the pleadings, receiving the evidence, and the argument of counsel, and being fully advised in the premises is of the opinion and finds that the allegations in the Plaintiff’s Original Petition in said in rem proceeding filed by Jefferson County, Texas [which is incorporated herein by reference as fully as if set out herein in haec verba] are true and correct, that the law and the facts are with the said Plaintiff, and that said Plaintiff is entitled to all the orders and judgment prayed for by said Plaintiff in its Original Petition, the Court having found the facts to be as stated in said Plaintiff’s Original Petition, now makes the following Conclusions of Law:

(1) Plaintiff, JEFFERSON COUNTY, TEXAS, is fully authorized by law to issue, sell and deliver said bonds and the proceedings authorizing their issuance are valid and in full conformity with the requirements of the statutes and applicable laws of the State of Texas;

(2) Said bonds, when registered by the Comptroller of Public Accounts of the State of Texas, and sold for not less than par and accrued interest, will be valid and binding obligations of Jefferson County, Texas, according to their face, tenor, effect, and terms.

(3) After the sale of said bonds and the receipt of the proceeds thereof, the expenditure of said proceeds for the erection and construction of a bridge lying wholly within Jefferson County, Texas, will constitute a legal expenditure thereof; it is therefore,

ORDERED, ADJUDGED, and DECREED by the Court:

First:

The Commissioners’ Court of Jefferson County, Texas, has the authority to issue the ‘Jefferson County Bridge Bonds, Series 1965’ [more fully described in Plaintiff’s Original Petition which is here referred to for a more perfect description thereof] in the principal amount of ONE MILLION FIVE HUNDRED THOUSAND ($1,500,-000.00) DOLLARS, upon the terms, conditions, covenants, and agreements set forth in the bond resolution authorizing said bonds, which bond resolution, including a complete description of said bonds, is on file in this cause as an exhibit attached to Plaintiff’s Original Petition.

Second,'.

That said bonds in all proceedings taken or to be taken in connection therewith, including the levy of the tax, are valid and in all things have been authorized in accordance with law.

Fourth:

That said Bonds, when registered by the Comptroller of Public Accounts of the State of Texas, and sold for not less than par and accrued interest, will be valid, binding, and enforceable in accordance with their terms.

Fifth:

That the Jefferson County Bridge Bonds, Series 1965, more specifically described in Plaintiff’s Original Petition, be and they are hereby in all things validated and approved.

This Judgment, Order and Decree shall be forever binding and conclusive against all persons or entities interested in or affected by, the issuance of the aforesaid bonds, whether mentioned in and served with notice of these proceedings, or included in the description ‘all property owners, taxpayers, citizens and others having or claiming any rights, title or interest in any property or funds to be affected by the issuance of the securities or affected in any way thereby,’ and this Judgment shall constitute a permanent injunction against the institution by any person or entity (including George W. Brown, Jr.) of any action or proceeding contesting the validity of the aforesaid bonds, or the validity of any provision made for the security thereof or payment of same, the interest thereon, or the purpose and project for which the proceeds thereof are to be expended.

The prior interlocutory order heretofore noted, is here and now, to the extent herein recited, adopted by the Court in said Cause No. B-84,791, upon this the 7th day of September, 1965; and the Court, further orders that all costs of this proceeding to validate said bonds shall be taxed against Jefferson County, Texas, and the Clerk of this Court is directed to certify the said costs to the Commissioners’ Court of Jefferson County, Texas, for payment, but no execution shall ever issue thereon.

THEREUPON, and upon the 7th day of September, 1965, at the time and place previously noted, there came on for consideration all matters remaining at issue in the consolidated cause, and came the parties in person and by and through their respective attorneys of record and all parties announced ready for trial; and, the Defendants having presented to the Court their. Special Exception in the nature of a plea to the jurisdiction of the Court as contained in Paragraph 2 of their pleadings filed herein on August 23, 1965, and the Court, after considering said plea, the argument of counsel, and being fully advised in the premises, and being of the opinion that said plea to the jurisdiction was in all respects good and should be in all things sustained; the Court did, upon the 7th day of September 1965, sustain said plea to the jurisdiction; but the said George W. Brown, Jr., having sought leave to amend, such leave was granted.

And, thereafter, the said George W. Brown, Jr., having filed his amended pleadings pursuant to leave heretofore granted, and the Defendants having filed their Second Amended Original Answer in reply thereto, the matter care on for hearing upon the 9th day of September, 1965, pursuant to notice to all parties, and came the parties and their counsel of record; and, the Defendant having presented their exceptions in the nature of a plea to the jurisdiction as now contained in Paragraph One of said Second Amended Original Answer, and the Court, after considering said pleadings, the argument of counsel, and being fully advised in the premises, and still being of the opinion that the exception in the nature of a plea to the jurisdiction should be in all things sustained; and, it further appearing to the Court that said Original Plaintiff, George W. Brown, Jr., declined to further amend to meet said plea of the Defendants to the jurisdiction of this Court, this cause of action asserted by the said George W. Brown, Jr., considered independently and also as an answer in the validating action, should be and is hereby in all things, dismissed; it is further,

ORDERED, ADJUDGED, and DECREED by the Court that the suit of GEORGE W. BROWN, JR., against JEFFERSON COUNTY, TEXAS, and the individuals named as Defendants in said cause No. B-84,584, be and the same is hereby dismissed, and said Defendants, and each of them shall go hence without day and recover their costs. All costs incurred by any party in said Cause No. B-84,584 shall be and the same are hereby adjudged against the Plaintiff, George W. Brown, Jr. for which the parties and the officers of this Court may have their execution in such form and as often as may be necessary.

THEREUPON, it having been called to the attention of the Court that the City of Port Arthur has heretofore intervened in this cause with leave of the Court and that the Plaintiff, George W. Brown, Jr., did filed a motion to strike said intervention; and, it appearing to the Court, in view of the foregoing adjudication upon the issues in this cause that said intervention of the City of Port Arthur is moot and should be stricken; it is, therefore, further,

ORDERED, that the plea in intervention of the City of Port Arthur, Texas, be and the same is hereby stricken, at the cost of said intervener; and the Clerk is directed to certify such costs so incurred to the said City of Port Arthur for payment, but no execution shall issue hereon.

TO ALL OF WHICH, in open Court the said George W. Brown, Jr., then and there duly excepted and gave notice of appeal to the Court of Civil Appeals in and for the Ninth Supreme Judicial District of Texas, at Beaumont, which said notice is here and now entered of record.

RENDERED AND ENTERED upon this the 9th day of September, 1965.

/s/ Gordon Gary JUDGE PRESIDING”

For convenience, the judgment will be considered as two separate judgments, first disposing of appellant’s point of error directed at the judgment in the In Rem proceeding, Cause No. B-84,791. The sole appellant is George W. Brown, Jr.

The fifth paragraph of the judgment of the trial court in Cause No. B-84,791 provides :

“That the Jefferson County Bridge Bonds, Series 1965, more specifically described in Plaintiff’s Original Petition, be and they are hereby in all things validated and approved.
“This Judgment, Order and Decree shall be forever binding and conclusive against all persons or entities interested in or affected by, the issuance of the aforesaid bonds, whether mentioned in and served with notice of these proceedings, or included in the description 'all property owners, taxpayers, citizens and others having or claiming any rights, title or interest in any property or funds to be affected by the issuance of the securities or affected in any way thereby,’ and this Judgment shall constitute a permanent injunction against the institution by any person or entity (including George W. Brown, Jr.) of any action or proceeding contesting the validity of the aforesaid bonds, or the validity of any provision made for the security thereof or payment of same, the interest thereon, or the purpose and project for which the proceeds thereof are to he expended.
“The prior interlocutory order heretofore noted, is here and now, to the extent herein recited, adopted by the Court in said Cause No. B-84,791, upon this the 7th day of September, 1965; and the Court, further orders that all costs of this proceeding to validate said bonds shall be taxed against Jefferson County, Texas, and the Clerk of this Court is directed to certify the said costs to the Commissioners’ Court of Jefferson County, Texas, for payment, but no execution shall ever issue thereon.” (emphasis added)

Appellant contends that the clause “or the purpose and project for which the proceeds thereof are to be expended” would enjoin actions contesting illegal expenditures of the proceeds from the sale of such bonds.

In Conclusion of Law No. 3 contained in the judgment, the court said:

“After the sale of said bonds and the receipt of the proceeds thereof, the expenditure of said proceeds for the erection and construction of a bridge lying wholly within Jefferson County, Texas, will constitute a legal expenditure thereof

In order that there may be no question of clarity, paragraph fifth of the judgment is reformed so that in lieu of the clause “or the purpose and project for which the proceeds thereof are to be expended”, there is substituted the following: “or the legal expenditure in a lawful manner of the proceeds from said bonds for the erection and construction of said bridge.”

As so reformed, the entire judgment of the trial court in Cause No. B-84,791 is affirmed.

Hereinafter, we consider appellant’s points of error directed at the judgment of the trial court in Cause No. B-84,584.

Appellant’s first point of error is as follows :

“In sustaining the County’s special exception and dismissing Brown’s cause, both affirmatively and defensively, as premature, the trial court erred in that Brown sought a declaration of the invalidity of a present and existing obligation assumed by the County and to enjoin the performance of same, the expenditure of public funds and the incurrence of public indebtedness pursuant thereto.”

In his prayer, the appellant prays for declaration as to the validity of the resolutions of the Commissioners’ Court of Jefferson County, Texas, of April 1963 and July 1965, or, alternatively, Subdivisions (a) thereof as being null and void under the Constitution of the State of Texas and that any performance by appellees of the obligations assumed therein and thereunder is and will be unlawful, followed by a prayer for permanent injunction commanding appellees to desist and refrain from performing the obligations and agreements undertaken by Jefferson County pursuant to the said resolutions, etc. This point of error will be considered in connection with appellant’s second point of error, which is:

“The trial court erred in failing to hold null and void as a matter of law the County’s resolution and agreement obligating the County to hold and save the United States free from damages that may result from the construction of the Sabine-Neches Waterway Project.”

The resolution of the Commissioners’ Court of April 4, 1963, which was repealed and set aside on July 16, 1965, by such Commissioners’ Court, was void and admitted so to be because it violated Art. 11, § 7 of the Constitution of the State of Texas, Vernon’s Ann.St. The agreement and resolution of the Commissioners’ Court of Jefferson County, Texas, of July 16, 1965, is attacked by appellant. With the County Judge and all Commissioners present, together with the Clerk, the contents of same are as follows:

“Thereupon, upon motion of Commissioner Ellison and seconded by Commissioner Lawson, and unanimously adopted, the following resolution was passed:
WHEREAS, heretofore, and on or about the 4th day of April, 1963, the Commissioners Court of Jefferson County, Texas, did duly pass and adopt a certain resolution wherein and whereby Jefferson County, Texas, as a local interest, did agree to provide certain specified items of cooperation in order to assist the United States of America in the replacement of the Pleasure Island Bridge at Port Arthur as a part of the improvement of the Sabine-Neches Waterway, as authorized by the River and Harbor Act of 1962, Document No. 553, 87th Congress, Second Session, all as more fully appears from the face of said resolution now on file and of record in the minutes of the Commissioners Court of Jefferson County, Texas, in Volume 65 at Page 117, which said resolution is incorporated herein by reference for all intents and purposes as fully as if set out herein in haec verba; and,
WHEREAS, thereafter, George W. Brown, Jr., caused to be filed a certain Cause No. B-84,584, upon the docket of the 60th District Court of Jefferson County, Texas, entitled ‘George W. Brown, Jr. v. Jefferson County, Texas, et al’ wherein he sought a declaratory judgment that said resolution of April 4, 1963, heretofore mentioned, was invalid and void and also sought an injunction to restrain Jefferson County, Texas, from participating therein, all as more fully appears from the face of said original petition in said cause above referred to which is incorporated herein by reference for all intents and purposes as fully as if set out herein in haec verba; and,
WHEREAS, Jefferson County, Texas, and the other defendants did file a plea in abatement and an answer therein which said plea in abatement is set out herein in haec verba; and,
WHEREAS, the Commissioners Court of Jefferson County, Texas, is desirous of removing all question as to the validity of the action heretofore taken upon April 4, 1963, in the adoption of said resolution and in the undertakings therein mentioned by the repeal of said resolution; now, therefore, in consideration of the premises,
BE IT ORDERED BY THE COMMISSIONERS COURT OF JEFFERSON COUNTY, TEXAS:
FIRST:
Said resolution of the Commissioners Court of Jefferson County, Texas, dated April 4, 1963, wherein the said Commissioners Court bound and obligated Jefferson County, Texas, to certain specified items of ‘local cooperation’, as therein set forth, be and the same is hereby repealed, set aside, and henceforth the same shall stand for naught.
SECOND:
In lieu of the resolution of April 4, 1963, repealed by section one of this order, the following order is adopted:
WHEREAS, the United States of America has undertaken or is about to undertake the replacement of the Pleasure Island Bridge at Port Arthur as a part of the improvement of the Sabine-Neches Waterway, as authorized by the River and Harbor Act of 1962, House Document No. 553, 87th Congress, Second Session,
WHEREAS, said Act requires that prior to construction, local interests agree to provide certain specified items of local cooperation,
WHEREAS, Jefferson County is a duly organized and functioning political subdivision of the State of Texas, acting by and through the Commissioners Court of Jefferson County, Texas, and is a local interest empowered to comply with the local cooperation required by said Act,
WHEREAS, Jefferson County, Texas, desires to provide the required items of local cooperation,
NOW THEREFORE, in consideration of the premises, be it ORDERED by the Commissioners Court of Jefferson County, Texas, that the said Jefferson County, does hereby agree to:
a. Hold and save the United States free from damages that may result from construction of the project. During each year while there is any liability by reason of the agreement contained in this subsection of this resolution, including the calendar year 1965, the Commissioners’ Court of said County shall compute and ascertain the rate and amount of ad valorem tax, based on the latest approved tax rolls of said County, with full allowances being amade for tax delinquencies and costs of tax collection, which will be sufficient to raise and produce the money required to pay any sums which may be or become due during any such year, in no instance to be less than two (2%) per cent of such obligation, together with all interest thereon, because of the obligation herein assumed. Said rate and amount of ad valorem tax is hereby ordered to be levied and is hereby levied against all taxable property in said County for each year while any liability exists by reason of the obligation undertaken by this subsection of this resolution, and said ad valorem tax shall be assessed and collected each such year until all of the obligations herein incurred shall have been discharged and all liability hereunder discharged.
b. Accomplish, without cost to the United States, all alterations of pipelines, utility lines, cables, and highway facilities, when and as required for construction of the project;
c. Furnish without cost to the United States, all necessary rights-of-way and easements required for relocating the highway bridge at Port Arthur and contribute in cash, a share of the construction costs of the relocation computed in accordance with the principles of Section 6 of the Bridge Alteration Act of 21 June 1940, as amended by the Act of 16 July 1952, a sum presently estimated at $220,000 for the expired service life of the existing bridge. This estimate, however, does not include the costs for special benefits and better-ments attributable to highway use, which depend upon final design, and are not known at this time;
d. Assume all obligations of ownership, operation, and maintenance of the replacement highway bridge at Port Arthur upon its completion.
/s/ Chester C. Young County Judge, Jefferson County, Texas
/s/ Dick Scurlock Commissioner Precinct No. 1
/s/ T. B. Ellison Commissioner Precinct No. 2
/s/ Lamar Lawson Commissioner Precinct No. 3
/s/ Ted R. Walker Commissioner Precinct No. 4
ATTEST: Seal
/s/ Fred G. Hill County Clerk By R. L. Barnes Deputy”

In the foregoing agreement and resolution, Jefferson County agreed to: “hold and save the United States free from damages that may result from construction of the project.” At the same time, the Commissioners’ Court made provision for levying and collecting sufficient tax to pay the interest on such debt and provide at least two per cent (2%) as a sinking fund “during each year while there is any liability by reason of the agreement contained in this subsection of this resolution,” expressly providing for the method of ascertaining the rate and amount of such tax for each and every year until all of those obligations incurred by Jefferson County shall have been discharged. The project was a bridge across a navigable canal. Jefferson County had the legal authority to pay all cost and build the bridge over this navigable waterway with permission and approval by the United States of America.

Instead, the United States of America is paying approximately three-fourths of the cost of construction of the new bridge. Upon completion, it is to be owned, operated and maintained by Jefferson County. Attached to and made a part of Plaintiff’s First Amended Petition is House Document No. 553, upon which basis the United States of America authorized the Sabine-Neches Waterway Project, at a cost to it of over $20,000,000. The plan of improvement includes removal of the existing obstructive bascule bridge crossing the Sabine-Neches Canal at Port Arthur and construction of a new fixed span bridge with a minimum vertical clearance of 138 feet above mean low tide with a navigation span provided with minimum horizontal clearance of 400 feet. The present bascule span of the Port Arthur bridge on the west side of the canal has a horizontal clearance of 200 feet between fenders with view of approaching vessels obstructed, the east pier dividing the navigable channel. All reports concluded with the finding that the- existing bridge is an unreasonable obstruction to navigation on the present channel, as well as the channel as to be improved. The Federal share of the bridge relocation and construction cost was estimated at $4,-608,000, plus $235,000. Costs of rights-of-way and easements necessary for construetion of the new bridge were to be borne entirely by local interests (Jefferson County), plus $220,000 plus additional cost of improving design of bridge to carry heavy traffic, etc. Local interests prior to construction were to agree to assume the obligations set forth in the resolution and agreement of Jefferson County of 1965. All Federal agencies and State agencies approved this plan as being feasible and in the public interest. By passing the $1,-500,000 bond issue, the voters of Jefferson County approved the bridge project.

The attack of appellant under his second point of error is that the agreement and resolution of the Commissioners’ Court of Jefferson County dated July 16, 1965, is null and void under Art. 11, § 7 and Art. 8, § 9 of the Constitution of the State of Texas.

The applicable provision of Art. 11, § 7 (omitting the “seawall” portion in the first sentence) is as follows:

“ * * * But no debt for any purpose shall ever be incurred in any manner by any city or county unless provision is made, at the time of creating the same, for levying and collecting a sufficient tax to pay the interest thereon and provide at least two per cent (2%) as a sinking fund; * * *”

In Stevenson v. Blake, 131 Tex. 103, 113 S.W.2d 525 (Com.App., Sec. A, 1938, opin. adopted by S.Ct), the word “debt” is defined :

"The term ’debt’ as used in said clause of the Constitution ‘means any pecuniary obligation imposed by contract, except such as were, at the date of the contract, within the lawful and reasonable contemplation of the parties, to be satisfied out of the current revenues for the year, or out of some fund then within the immediate control of the corporation.’ ”

Without complying with this Constitutional requirement, a contract creating such a debt is void. Texas & N. O. R. R. Co. v. Galveston County, 141 Tex. 34, 169 S.W.2d 713 (Com.App.1943) holds that an indemnity contract by Galveston County was invalid solely because of its failure to make provision for the levy of a tax to provide for the payment of the obligation therein incurred. That is the only holding in such case. To quote therefrom, the last paragraph is:

“[5] We hold the clause under consideration is void because it violates Art. XI, § 7, of the Constitution of Texas. It is unnecessary for us to consider whether it violates other provisions thereof.”

The Supreme Court was passing upon an indemnity agreement by which Galveston County would indemnify and save harmless the railroad company from any liability by reason of injury to travelers upon the roadway portion of the drawbridge reserved for county use, caused by the drawbridge being raised. The basis for its holding is stated by the Supreme Court:

“Manifestly, the parties making the contract could not then determine either when the county would become obligated under the clause in controversy or the extent of any such obligation. So far as they could foresee, it might accrue in a few days or not until after the lapse of centuries; it might amount to a few dollars or to many thousands. * * * Therefore, the parties could not contemplate, from any reasonable standpoint, that the indemnity clause would not some time fix a debt on the county in violation of the Constitution. In this connection, another provision of the contract is significant. It is that any amount which may become due by one party to any other party shall bear interest at 6 per cent per annum until paid, if not paid within sixty days after written demand therefor. This clearly includes any demand that might arise against the county under the indemnity clause. In language as plain as can be used, it says that any such indemnity demand, unsatisfied for sixty days, shall become an interest-bearing debt, yet there is not even a suggestion of any provision to pay the accrued interest and two per cent of the principal each year.” (emphasis added)

The Supreme Court held that under Art. 11, § 7 that when a county is spending public money and cannot pay a debt out of current revenues or from funds within the immediate control of the county, that the only alternative method to pay that debt is that provision be made at the time it is incurred to pay interest and at least two per cent of the principal each year. “If this provision is not made, the 'debt’ is a nullity. This is the requirement of Art. 11, § 7, supra. Its language is unequivocal. It voices the public policy demand so clearly that no arm or agency of government should attempt to deny it.” (Emphasis ours) The Supreme Court affirmed the judgments of the courts below but did not affirm the holding of the Court of Civil Appeals and the trial court that the contract between Galveston County and the railroad was a lending of the credit of the county to a corporation in violation of Art. 3, § 52 of the Constitution of the State of Texas.

Appellant urges:

“The County’s agreement to hold and save the United States free from damages that may result from the construction of the project is null and void under the Constitution of Texas, Art. XI, Section 7, in that it creates an obligation on behalf of the County which cannot be funded for it is unlimited in amount and undeterminable as to time of accrual. Texas and N. O. R. R. Co. v. Galveston County [141 Tex. 34], 169 S.W.2d 713 (Texas 1943). There, in striking down such an indemnity agreement as beyond the constitutional powers of a Texas county, the Texas Supreme Court held such an obligation to be vicious from the standpoint of public policy and constitutionally null and void.”

Appellant refers to parts of such opinion. On pages 715 and 716, the court said:

“Thus, by the terms of the indemnity clause, there was attempted to be created for Galveston County for more than thirty generations a continuing hazard that its taxpayers might be confronted with an obligation growing out of the negligent operation of the drawbridge which they could not pay out of current funds or out of funds then within their immediate control. We think the indefiniteness of the clause as to what obligation may arise thereunder renders it more vicious, from the standpoint of public policy, than if it had named a sum of money to be paid at a given time but clearly beyond the power of the county to pay out of available funds. Surely the size of an obligation is a controlling factor to be considered in measuring ability to pay.”

Such language of the Supreme Court in connection with other parts of its opinion reiterates that when Galveston County created a debt without a provision at the time it was incurred to pay interest and at least two per cent (2%) of the principal each year that the debt was a “nullity”, for that sole reason, when it could not pay that debt out of current funds or out of funds then within its immediate control. Conversely, the Supreme Court held that when a county creates such a debt and provides at that time “for levying and collecting a sufficient tax to pay the interest thereon and provide at least two per cent (2%) as a sinking fund” that such debt is lawful.

In Subdivision (a) of the resolution and agreement of July 16, 1965, of Jefferson County, provision is made for the levy of a tax as required under Art. 11, § 7 of the Constitution. Appellants contend:

“It is the creation of a void debt or obligation that is attacked in Brown’s cause. That it is the creation, not merely the payment of such an unlimited obligation that renders the obligation invalid as clear from the facts and holdings of the Galveston County case.”

Indemnity agreements between private parties, unlimited as to amount of damages and with the time of accrual indeterminate are valid. For instance, in Houston & T. C. R. Co. v. Diamond Press Brick Co., 111 Tex. 18, 222 S.W. 204, 226 S.W. 140 (S.Ct.1920), it was held that the indemnity agreement of Diamond Press Brick Co. to save the railroad company “harmless from any and all claims for damages” arising, not only out of the construction and operation of a spur track, but out of its maintenance as well, was legal. Similar “hold harmless” agreements have been held valid by the Supreme Court of this State in Spence & Howe Construction Co. v. Gulf Oil Corp., 365 S.W.2d 631 (S.Ct.1963); Ohio Oil Company v. Smith, 365 S.W.2d 621 (S.Ct.1963); Mitchell’s, Inc. v. Friedman, 157 Tex. 424, 303 S.W.2d 775 (1957).

Such an agreement and resolution by Jefferson County to indemnify the United States of America is valid under the plain, clear and unambiguous language of the constitutional provision Art. 11, § 7, to which effect must be given. Texas & N. O. R. R. Co. v. Galveston County, supra. As said in Carpenter v. Sheppard, 135 Tex. 114, 145 S.W.2d 562 (Oct. 4, 1940) :

“ * * * The clear policy of this State with respect to that matter is plainly expressed therein. The people have the right to change that policy if they desire. That right does not rest either with the courts or with any other branch of the State Government. Courts should presume that the people intended to do precisely what they have done in adopting those amendments. This presumption should be indulged in willingly, and not grudgingly. The courts are not concerned with the wisdom of a constitutional amendment. Courts need not exert their ingenuity to find reasons to thwart the intention of the people clearly expressed in the Constitution, which is the supreme law of the land. When this policy so expressed is established, it ‘supplants all other laws and rules that are inconsistent with it.’ Gillespie v. Lightfoot, 103 Tex. 359, 125 S.W. 799, 801.”

Recurring to appellant’s argument that Jefferson County’s obligation incurred in such 1965 resolution is void because the obligations incurred could not be constitutionally funded as of the time of its creation, because the amount of the debt was unknown and the time of its accrual un-determinable : In Basset v. City of El Paso, 88 Tex. 168, 30 S.W. 893, 895 (1895), it was held that Art. 11, § 7 did not require in express terms the levy of a fixed rate or tax, to be collected each year during the life 'of a debt, without reference to the different sums that would be annually raised thereby, but such provision of the Constitution only requires that provision be made for the annual collection by taxation of (1) the interest, and (2) a certain fund as sinking fund. As stated in Mitchell County v. City Nat. Bank, 91 Tex. 361, 43 S.W. 880, 883 (1898):

“It was not the purpose of the convention in adopting the foregoing article to require that a city or county should, at the time of creating a debt, ascertain the rate per cent required to be levied upon the taxable values of the county in order to raise a sufficient sum to pay the interest and provide a sinking fund upon that debt, and to actually levy that rate of tax at the time * * *” [and, quoting from Basset, supra.]
“ ‘The language and purpose of these provisions [of the constitution] seem to be satisfied by an order providing for the annual collection by taxation of a sufficient sum to pay the interest thereon, and create a sinking fund, etc., though it does not fix the rate of per cent, of taxation for each year by which such sum is to be collected, but leaves the fixing of such rate for each successive year to the commissioners’ court or city council. * * * ’
“What the constitution requires is that provision shall be made at the time, or shall have been previously made, by which the rate of tax to be levied is so definitely fixed — as was done in the case last cited — that it becomes merely a ministerial act to determine the rate to be levied. * * * ”

See also: City of Aransas Pass v. Keeling, 112 Tex. 339, 247 S.W. 818, 821 (1923).

Appellant urges that it is undeterminable as to time of accrual of any damages under this hold harmless agreement. In the 1965 agreement and resolution the indemnity agreement is limited to damages that may result from construction of the project with the final provision that Jefferson County assume all obligations of ownership, operation and maintenance of the replacement highway bridge at Port Arthur upon its completion. Indemnity as to the United States is limited to the period of time when damages may result from the construction of the project. No exact number of days or years is stated for the construction of the project, but, from common knowledge and experience, certainly two years or so should be sufficient time to construct the bridge, with resulting damages determined in a comparatively short period of time. The obligation to the United States of America would not run for 999 years, as in the case of Texas & N. O. R. R. Co. v. Galveston County, supra.

In effect, appellant in this case is making the same argument that the appellants made in Anderson v. Parsley, 37 S.W.2d 358 (Tex.Civ.App.1931, wr. ref. by S.Ct.) in which case appellants in their motion for rehearing (page 366) urged:

“* * * We cannot conceive how your Honors can hold that the power to tax in the creation of a debt can come into existence until the amounts of the debt, its maturity, etc., have been determined.”

That authoritative decision held:

“The exact amount of a debt, including interest thereon and time of maturity, is rarely known at the time the debt is authorized. There is always an element of uncertainty as to the maintenance of subsisting taxable values throughout the life of either a bond or warrant debt. If values are increased, then a reduction in the tax rate is permissible and authorized, so long as it does not impair the obligation of a contract. This principle was recognized by the Supreme Court in City of Aransas Pass v. Keeling, 112 Tex. 339, 348, 247 S.W. 818, in an able opinion by Justice Greenwood.”

The resolution and agreement of 1965 by the Commissioners’ Court of Jefferson County is by its nature and terms an agreement or contract. The Texas Uniform Declaratory Judgments Act provides in pertinent part:

“Any person interested under a * * written contract, or other writings constituting a contract, or whose rights, status, of other legal relations are affected by a Statute, municipal ordinance, contract, or franchise, may have determined any question of construction or validity arising under the instrument, Statute, ordinance, contract, or franchise and obtain a declaration of rights, status, or other legal relations thereunder.”
“A contract may be construed either before or after there has been a breach thereof.” Texas Civil Statutes, Art. 2524-1, §§ 2 and 3.

Such July 1965 resolution creates a debt and an obligation against the taxable properties of Jefferson County supported by the levy of a tax as set forth in Art. 11, § 7 of the Constitution of the State of Texas. Brown, as a taxpayer, has a present and justiciable interest in the the validity of such resolution and agreement. Brown alleged:

“While this suit has been pending, Defendants have performed certain of the obligations assumed under their resolution of April 4, 1963. The Defendants intend to, and unless enjoined by this Court the Defendant will perform and discharge the obligations they have incurred under and by virtue of said resolution and agreement of July 16, 1965. In doing so they will fund the same, incur expenses, expend the public moneys of Jefferson County, and subject to indebtedness and taxation the properties of the County, all to the detriment of Plaintiff as a taxpayer of Jefferson County. As the result thereof, Plaintiff will suffer direct and irreparable injury, loss and damage, for which Plaintiff has no adequate remedy at law.”

The obligations created in and by virtue of the 1965 resolution, including the tax supported obligation to hold and save harmless the United States, have been created and now exist. If any damages are sustained, as a result of the construction of the project, the amount will be known in the future. Construction of the bridge has not begun, according to Brown’s pleadings and exhibits attached thereto and made a part thereof. Appellant has no allegation that the tax levy, which has not been made, would be illegal because of being in excess of the constitutional provision in Art. 8, § 9 of the Constitution of Texas or any statutory tax maximum placed upon counties, but does allege the amount of damages is unknown.

As hereinbefore stated, that part of the judgment of the trial court relating to original Cause No. B-84,791 entitled “Jefferson County, Texas v. All Persons Interested in or Affected by the Issuance of the Securities Described in Plaintiffs’ Original Petition” is reformed as hereinbefore stated and, as reformed, the judgment of the trial court is affirmed.

Appellant Brown is entitled to a declaratory judgment as hereinafter set forth:

As to the judgment of the trial court relating to the original Cause No. B-84,584, styled “George W. Brown, Jr. v. Jefferson County, Texas, et al”, the judgment of the trial court dismissing said cause is reversed and judgment here rendered as the court below should have rendered judgment, to-wit:

First, it is declared that the debts assumed by Jefferson County by Section (a) of the resolution of 1965 are valid and lawful and that Jefferson County may expend public funds in payment thereof by levying and collecting a tax each year necessary to pay the interest and set up the sinking fund each year as provided in Section (a) of the 1965 resolution with such ad valorem taxes being set and fixed wdthin the limit prescribed by law and Art. 8, § 9 of the Constitution of the State of Texas. This court construes such Section (a) providing for the levy of taxes and method of payment of any damages with the provision that “the Commissioners’ Court of said County shall compute and ascertain the rate and amount of ad valorem tax”, etc., means the Commissioners’ Court will act within limits prescribed by law and without violating the constitutional limit of taxation fixed by Art. 8, § 9 of the Constitution of the State of Texas.

Second, it is declared that the 1963 resolution and agreement of Jefferson County as to Section (a) thereof is void and if any damages have been sustained thereunder prior to the repeal of such 1963 resolution by the resolution and agreement of July 16, 1965, such debts are void.

Third, the judgment of the trial court dismissing the intervention of the City of Port Arthur is affirmed.

STEPHENSON, Justice

(dissenting in part).

255

I concur with the majority opinion in its determination that the declaratory judgment suit filed by George W. Brown, Jr., should not have been dismissed, and also in the portion of the opinion validating the bond issue. I do not concur with that portion of the opinion dealing with “hold harmless agreement” or “indemnity agreement” made by Jefferson County with the United States Government.

In my opinion the resolution adopted by the Commissioners’ Court of Jefferson County July 16, 1965, in which Jefferson County agreed to “hold and save the United States free from damages that may result from construction of the project” is void because it violates Art. 11, § 7 of the Constitution of the State of Texas and because it is against public policy.

This order is void under Art. 11, § 7, supra, because the amount of the debt assumed by Jefferson County is unlimited in amount. The amount having no limit, it is impossible for Jefferson County to provide for the collection of at least 2% of the debt each year as a sinking fund. The mere statement in the resolution that a tax was levied does not satisfy this requirement. The amount of the debt assumed by Jefferson County might well exceed the legal taxing limit placed upon the County.

The judgment rendered by the Honorable Joe J. Fisher, in Cause No. 4915, styled, “Levingston Shipbuilding Co. v. The Honorable Stephen Ailes, in the United States District Court for the Eastern District of Texas, Beaumont Division, made no determination that Levingston Shipbuilding Co. could not recover damages because of the construction of the proposed bridge. The only decision made in such cause was that Levingston Shipbuilding Co. was not entitled to enjoin the construction of the bridge. In fact, such judgment makes a specific finding that Levingston Shipbuilding Co. will be damaged by the construction of the bridge. Such finding being set forth as follows:

“This Court finds that since the Sabine-Neches Canal is the only feasible access that the Plaintiff has to the Gulf of Mexico, the minimum vertical clearance of 138 feet above mean low tide, is not adequate for the Plaintiff’s use in constructing and repairing mobile off-shore drilling rigs of a height in excess of 138 feet, and is therefore an obstruction to Plaintiff’s established and potential use of the waterway, and Plaintiff will suffer an injury special and peculiar in kind because of its use not being protected (emphasis added)

The requirement that Jefferson County enter into an indemnity agreement as a condition precedent to the construction of the bridge by the United States Government, indicates that there is danger of liability. The extent of such liability cannot be known at this time, and there is a possibility that this obligation could bankrupt Jefferson County. Should a final judgment be obtained by Levingston Shipbuilding Co., it would become an obligation due immediately and not one which could be extended over a long period of time.

I do not place the narrow construction of the Texas & N. O. R. R. Co. v. Galveston County case, 141 Tex. 34, 169 S.W.2d 713, as set forth in the majority opinion. The portion of the opinion quoted by the majority that the clause under consideration was void because it violated Art. 11, § 7, supra, does not indicate to me that the Commission of Appeals was holding such clause to be void only because of the failure to levy a tax. It is not so stated in such opinion, and my construction of such opinion is that the clause under consideration in such case was void under Art. 11, § 7, supra, for several reasons, one being because the amount was unlimited. These expressions are made by the Commission of Appeals in such opinion::

“Manifestly, the parties making the contract could not then determine either when the county would become obligated under the clause in controversy or the extent of any such obligation, So far as they could foresee, it might accrue in a few days or not until after the lapse of centuries; it might amount to a few dollars or to many thousands.” (emphasis added)

We are bound to follow this Commission of Appeals case, especially in view of the fact that we have been cited no cases holding that a county may enter into an indemnity agreement where the amount is unlimited. This is not the situation which existed in the case of Anderson v. Parsley, 37 S.W.2d 358, in which it was stated that the exact amount of the debt, including interest thereon and time of maturity, was rarely known at the time the debt was authorized. Such case involved the construction of a courthouse, and even though the “exact” amount might not be known at the time of the levy of the tax, such ultimate amount was to be determined by the Commissioners’ Court and was not for an unlimited amount. In the present case, the Commissioners’ Court of Jefferson County has no means of controlling the ultimate debt which the indemnity agreement created. Such debt depending only upon the amount of damages the Levingston Shipbuilding Co. or anyone else might be able to establish, the extent of which it- is impossible to foresee at this time.

It has been suggested that the liability'- of Jefferson County was limited in time to the construction period only. It is not so stated in the resolution, and no limitation as to time is prescribed. The provision “that may result from construction of the project” is not a limitation as to time, but is clearly defining only the nature of the damages being indemnified by Jefferson County.

The majority opinion, if upheld by the Supreme Court, would establish once and for all, the validity of the indemnity agreement, and in the event of future litigation this question would be foreclosed. If a judgment or judgments for damages because of the construction of the bridge is or are obtained, the legality of the indemnity agreement could not be questioned.


source: Caselaw Access Project

author: BELL, Chief Justice.

license: Public Domain

text:
    W. D. SCHOOLCRAFT, Appellant, v. CHANNEL CONSTRUCTION COMPANY, Appellee.
    No. 14668.
    Court of Civil Appeals of Texas. Houston.
    Dec. 2, 1965.
    Rehearing Denied Jan. 6, 1966.

      Whitener, Price, Lewis & Steinberg, John W. Price, Dallas, for appellant.
    Palmer, Green, Palmer & Gilmore, Jerry C. Gilmore, David J. Beck, Dallas, for ap-pellee.
   BELL, Chief Justice.

This is an appeal from a judgment rendered in favor of appellee sustaining its motion for summary judgment. The judgment was based on a promissory note executed by appellant, payable to appellee, and a later written agreement acknowledging the indebtedness and note evidencing it. Judgment was for $15,309.50, which represented the balance of the principal and interest due plus attorney’s fees.

Appellee filed its unsworn petition alleging the execution and delivery of the note on August 20, 1956, and attached an un-sworn copy of the note as Exhibit A. It alleged that on February 28, 1962, appellant executed and delivered to appellee an acknowledgment of the indebtedness and promised to pay the full amount together with accrued interest. An unsworn copy of the acknowledgment is attached to the petition. A certain payment is alleged to have been thereafter made and then the balance due is stated. Appellee alleged it was the legal holder of said note and the acknowledgment and that demand for payment had been made and there had been failure to pay. Then there is the allegation with respect to an attorney’s fee.

Appellant filed its unsworn answer, which consisted only of a general denial.

Thereafter, appellee, through its attorney filed a sworn motion for summary judgment. The motion states the filing of the petition and recites the substantive content of the petition. It also recites: “Copies of both said instruments were attached to Plaintiff’s Original Petition and made a part thereof for all purposes.” (In the motion the note and the renewal and extension of the note dated February 13, 1962, had been briefly described.) Appel-lee’s attorney, in the motion, swears that “the matters, facts and allegations” of the Motion for Summary Judgment “are within his personal knowledge true and correct.”

Appellant filed his unsworn reply to this motion and to his reply attached his affidavit. The tenor of his affidavit is that on August 20, 1956, the date of the note, he borrowed $13,000.00 from a Mr. Curtis, who at the time was a partner of appellee and with Marion L. Wheeler, who is president of appellee. Then follow purely hearsay statements, the ultimate effect of which is to state that Mr. Curtis told him (appellant) not to worry about payment of the note and that Mr. Curtis told him that in settlement of the partnership account between Curtis and Wheeler Curtis had been credited with payment of the note. In the affidavit he states he had such a conversation with Mr. Curtis on January 25, 1961. Then it is stated Mr. Wheeler continued to contact appellant about the note and on May 23, 1961, Curtis informed him of the settlement of the partnership account in which Curtis was credited with payment of the note. He then stated Curtis has made no demands for payment but has always “indicated” that he acquired Mr. Schoolcraft’s obligation from Mr. Wheeler.

It is of significance that the acknowledgment of the indebtedness and promise to pay, which is in fact a renewal and extension of the note and a modification in the amounts and time of payment, was dated February 13, 1962, and approved by appellant February 28, 1962. This was after the latest conversation stated by appellant and nowhere does appellant even notice this agreement, a copy of which is attached to appellee’s petition and supplemental motion for summary judgment and is a basis for this suit.

In reply to this answer of appellant to the motion for summary judgment, appel-lee filed what it denominated “Plaintiff’s Supplemental Motion for Summary Judgment.” Attached to it was the affidavit of Mr. Wheeler, the president of appellee. It contains recitals of facts, the effect of which is to establish that Mr. Wheeler is, and at all times material has been, president of appellee Company and is in charge of all the books and records of the Company and that the originals of the note and extension agreement are included in those books and records. There is also the factual recital that “no part of the debt has been forgiven by Channel Construction Company, the holder thereof.” Too, the balance owing on the note is established. It is stated that Mr. Curtis is and was merely a stockholder in appellee Company, which is a Wyoming corporation, and had no authority to compromise or forgive the debt. Appellant nowhere asserts authority in Curtis to forgive the debt. Too, it is stated there was never any settlement between appellee and Curtis of appellant’s indebtedness. Further, it is stated “that as shown by copies of correspondence attached” appellant previously asserted a forgiveness of the indebtedness by Curtis but he was advised that such claim was untrue and that after such advice appellant acknowledged and agreed to pay the debt and made subsequent payments thereon.

Attached to the motion and affidavits are various letters showing appellant’s claim that Curtis told him Curtis had settled the note and also showing appellee’s denial thereof. All such letters antedated the renewal and extension agreement. An un-sworn copy of the renewal and extension agreement is also attached to the affidavit.

Appellant says the trial court was in error in granting the motion for summary judgment for the following two reasons:

1. The affidavit of appellant raised a fact issue as to whether the note had been discharged through accord and satisfaction by reason of appellee’s settlement with Curtis.

2. Appellee offered no evidence sufficient to establish it was the owner and holder of the note and such issue was raised by appellant’s general denial.

Appellant’s affidavit raised no fact issue as to accord and satisfaction. There were no factual recitals within the knowledge of appellant which would evidence such. The affidavit shows affirmatively that the recitals are purely hearsay. This does not suffice. Rule 166-A (e), Texas Rules of Civil Procedure, provides, in part, that the opposing affidavits shall be made on personal knowledge, shall set forth facts as would be admissible in evidence, and shall show affirmatively that affiant is competent to testify to the matters stated therein. No facts of probative force are shown by appellant’s affidavit. Box v. Bates, 162 Tex. 184, 346 S.W.2d 317; Youngstown Sheet & Tube Co. v. Penn, 363 S.W.2d 230 (S.Ct.); Trinity Universal Insurance Co. v. Horton et ux., 363 S.W.2d 376 (CCA), no writ hist.

It is true, as asserted by appellant, that a general denial will raise the issue of whether appellee was holder of the note. He contends appellee made no such proof because the original was not produced; there was no sworn copy attached to the motion for summary judgment; and there was no other evidence that appellee was the holder. He relies on Gardner v. Martin, 162 Tex. 156, 345 S.W.2d 274; Southwestern Fire & Casualty Co. v. Larue, 367 S.W.2d 162 (S.Ct.); Stanford, Inc. v. Franklin, 312 S.W.2d 703 (CCA), no writ hist.; and Alexander v. Houston Oil Field Material Co., 386 S.W.2d 540 (CCA), no writ hist.

The Gardner case was one in which there was no copy at all of the material instrument. The Larue case does not hold that the original of the note need be produced on a motion for summary judgment if it is satisfactorily accounted for. In fact, an unsworn copy of the note was attached to the petition. The majority, even though the motion was based purely on the pleadings, held since the parties seemed not to be disturbed about this and assigned no point of error in the Court of Civil Appeals there was no reversible error. Even the dissent did not require that the original be produced on motion for summary judgment. It recognized that on motion for summary judgment, as distinguished from a trial on the merits, a sworn or certified copy of the note would suffice. The dissent was based on the fact that the motion for summary judgment was based purely on the pleadings and those who joined in the dissent were of the view that the general denial at least required production of the note and proof of the amount due and attorney’s fees. The Stanford case, too, was a motion based purely on the pleadings and it held this at least put the burden on the plaintiff to produce the checks sued on. It does not appear there were any sworn copies of the checks. In the Alexander case there was no sworn copy of the note nor any sworn pleading that could be construed as verifying the copy attached to the petition. The court recognizes, however, that in a motion for summary judgment a sworn copy of the note or affidavits accounting for the original and showing plaintiff was the holder would suffice.

We are of the view that appellee undis-putedly proved by affidavit that it was the holder of the note and the renewal and extension agreement. In the first place, appellee’s attorney, in the sworn motion for summary judgment, recited as a fact that copies of the note and the renewal and extension agreement were attached to the original petition and made a part thereof for all purposes. In his affidavit he states affirmatively that the matters, facts and allegations in the motion for summary judgment are within his personal knowledge true and correct. In the second place, Mr. Wheeler in his affidavit stated that as shown by correspondence between himself and appellant, copies of which were attached, appellant acknowledged the debt and agreed to pay same. Attached to the affidavit is a copy of the renewal and extension agreement, though there is no verification on the copy itself. The copy of the agreement fully describes the note and gives the terms of the renewal and extension.

There was no exception in the trial court to the failure to attach certified or verified copies. In such case, where unverified or uncertified copies are attached and no exception is taken to the absence of certification or verification, there is a waiver of such requirement and the copies afford sufficient basis upon which to base a denial or granting of a motion for summary judgment. Youngstown Sheet & Tube Co. v. Penn, 363 S.W.2d 230 (S.Ct.); Boswell et al. v. Handley, Tex., 397 S.W.2d 213.

That appellee was the holder of the note and renewal and extension agreement, and what amount is due, is undisputedly established by the affidavit of Mr. Wheeler, the president of appellee Company. He swears positively that the originals of both instruments are, and always have been, among the books and papers of the appel-lee and that he is in charge of all the books and papers. He also swears positively as to the amount owing and that no part of the debt has been forgiven by appellee, “the holder thereof.” Article 5948, Sec. 191, V.A.T.S., defines a holder as the “payee or endorsee of a bill or note, who is in possession of it * *

Affirmed.

Judgment rendered.


author: NORTHCUTT, Justice.

text:
    CONSOLIDATED GAS & EQUIPMENT COMPANY OF AMERICA, Appellant, v. H. M. THOMPSON et al., Appellees.
    No. 7543.
    Court of Civil Appeals of Texas. Amarillo.
    Nov. 22, 1965.
    Rehearing Denied Dec. 20, 1965.

      Clayton, Kolander, Moser & Templeton, Amarillo, for appellant.
    Hugh L. Umphres, Jr., Gibson, Ochsner, Harlan, Kinney & Morris, Amarillo, Frank Dove, Panhandle, for appellees.
   NORTHCUTT, Justice.

This is an appeal from a judgment in favor of the plaintiffs based upon the findings of the jury.

Plaintiffs’ suit was to establish a constructive and resulting trust upon the working interest of an oil and gas lease executed to defendant. Plaintiffs Thompson, D. A. Griffith and C. A. Griffith, filed this suit against Consolidated Gas and Equipment Company, and L. B. Newman, its president and alter ego. Plaintiffs alleged that defendant Newman (acting for himself and Consolidated) advised plaintiff D. A. Griffith that he was interested in acquiring leases on lands near known oil and gas production; that Griffith located unleased lands in Carson County, Texas, and advised Newman. Newman agreed with Griffith that if the leases were passed by his geologist, the working interest would be acquired by defendant, subject to a JÍ6 of y% override interest in Griffith. After such agreement and in reliance thereon, Griffith disclosed to Newman the location of the land; Newman wanted Griffith to go and lease the lands immediately; that when Griffith could not do so Newman suggested that plaintiff Thompson was available to secure the leases; Griffith agreed that he would pay Thompson for securing the leases (and assigned him a 1/3 interest in his Vis overriding royalty for same; and also assigned a 1/3 interest in the Yie overriding royalty to his father, plaintiff C. A. Griffith).

It was suggested that some of the leases would require payment of a bonus, and Newman said that this should be Griffith’s burden; Griffith agreed, but said he had no cash and Newman agreed to advance the bonus money, and hold it out of Griffith’s overriding royalty payments. Thereafter, Thompson secured the leases which were taken in Consolidated Gas Company’s name. Plaintiffs allege that D. A. Griffith and defendant stood in a position of trust and confidence toward each other, by virtue of which facts when Consolidated took the legal title to the leases there arose by operation of law a resulting and constructive trust in favor of plaintiffs. Defendant drilled and took large sums of oil and gas from the lease but refuses to account to plaintiffs for their Yi6 override interest (less bonus advance indebtedness). Plaintiffs prayed for judgment that defendant be decreed to hold the lease in trust as to plaintiffs’ Yie override and for accounting.

Defendant answered, among other things, that plaintiffs’ suit was to recover a commission as real estate brokers, and that they had no real estate license; that the alleged trust, if a trust, was an express trust for an interest in real estate, and unenforceable unless in writing; and that plaintiffs’ cause of action is for an interest in real estate upon a parol agreement and is in contravention of the Statute of Frauds.

The evidence reflected, among other things, that plaintiff D. A. Griffith’s father, C. A. Griffith, had dealt in the past with defendant on oil and gas leases; that plaintiff D. A. Griffith located 2 or 3 sections of unleased land near production; that the Griffiths went to see defendant Newman. Newman agreed to give D. A. Griffith override for information as to the location of the property; that Newman wanted Griffith to go and lease the land immediately, and when Griffith could not do so, Newman suggested Thompson could do the job, but that Griffith would have to pay him for doing so out of his Via override. Griffith agreed to this and assigned Thompson 1/3 of his Vm override. Thompson leased the lands, taking the leases in the name of Consolidated. Consolidated drilled, brought in production, but refused to account to plaintiffs, or to assign them the %e overriding interest. There is evidence that the leases were to be taken by D. A. Griffith in his name and then be transferred to defendant.

In answer to the special issues submitted to the jury, the jury found that at the time of the transaction in question L. B. Newman was acting on behalf of Consolidated Gas & Equipment Company of America; that L. B. Newman and D. A. Griffith entered into a final oral agreement whereby it was agreed that if D. A. Griffith would reveal to L. B. Newman the location of a section of land available to be leased for minerals and if such lease covering such land was acquired and if drilled and production obtained thereon, that plaintiffs would own Vie of %■ overriding royalty interest in the production under the lease; that pursuant to said agreement D. A. Griffith did reveal to L. B. Newman the location of the land in question; that at the time and place Griffith had confidence in Newman; that at the time and place Griffith trusted Newman and that the lease in question was acquired as a result of the oral contract in question. Mr. Malone, executive vice-president of the defendant corporation, gave an accounting of the net proceeds received from production under the lease in question and estimated that %e of the % working interest would be $16,000. Judgment was entered upon the verdict of the jury declaring the plaintiffs a constructive trust as to a Vie overriding royalty in and to the % working interest estate granted under the oil and gas mining lease here involved and judgment in the sum of $16,000, such sum being the amount of net proceeds attributable to production from the overriding royalty interest owned by the plaintiffs. From that judgment the defendant perfected this appeal and will hereafter be referred to as appellant.

Appellant contends the trial court erred in granting judgment for plaintiffs (ap-pellees) because the plaintiffs’ cause of action became barred by the 2 and 4 year statute of limitations; because plaintiffs did not have a real estate broker’s license; because the action herein was brought to enforce an alleged oral agreement which contravenes the statute of frauds and because it is an action seeking to establish by parol evidence an express trust in relation to realty which is prohibited under the Texas Trust Act. It seems to be the contention of appellant that there was no basis for the application of the doctrine of constructive trust.

This is a second appeal of this case. In the first trial the trial court discharged the jury and rendered judgment that plaintiffs take nothing. The plaintiffs appealed the case and the Court of Civil Appeals reversed and remanded the case. Thompson v. Newman, Tex.Civ.App., 378 S.W.2d 879. The court there in part stated as follows: “It is our view that under the facts, Griffith did not act as a broker or real estate dealer, hence required no real estate broker’s license.” We believe that holding as to real estate broker’s license was binding on appellant here; but should we be in error in holding that the same was binding upon appellant in this case, we are of the opinion, and so hold, that Griffith did not act as a broker or real estate dealer and consequently did not require to have a broker's license.

We think the record in this case clearly shows that this is a suit to impress the overriding royalty interest with a constructive trust and that neither the 2 nor 4 year statute of limitations are applicable. Peek v. Berry, 143 Tex. 294, 184 S.W.2d 272, 156 A.L.R. 949; MacDonald v. Follett, 142 Tex. 616, 180 S.W.2d 334; McGowen v. Montgomery, Tex.Civ.App., 248 S.W.2d 789 (N.R.E.); Binford v. Snyder, 144 Tex. 134, 189 S.W.2d 471.

“The term ‘constructive trust’ is broadly defined as a trust raised by construction of law, or arising by operation of law, as distinguished from an express trust; but in a more restricted sense and contra-distinguished from a resulting trust, it is defined as a trust not created by any words, either expressly or impliedly evincing a direct intention to create a trust, but by the construction of equity in order to satisfy the demands of justice.” 89 C.J.S. Trusts § IS, p. 726. Equity will impose a constructive trust to prevent one who obtained property by fraudulent means from being unjustly enriched. Thigpen v. Locke, Tex., 363 S.W.2d 247; Binford v. Snyder, supra.

In this case at bar L. B. Newman, president of appellant, kept putting off the request of the plaintiffs to convey the Via interest by telling them to wait until the company could get the pipe line in and selling oil, then later asked them to wait until they could get the gas lease straightened out and then he would make an assignment. Newman first stated he would have his attorney draw up a contract. Newman on several occasions stated as soon as he completed certain things he would convey the plaintiffs their interest. These representations continued until finally Newman said the wells were not paying out and they never would pay out in 100 years and he would have the pipe lines and everything moved off of their land within 60 days and there was nothing there to make an assignment on. That was the first repudiation. It was then that this suit was filed.

It seems to be well settled that limitation does not begin to run against the beneficiary of a trust in favor of the trustee until the latter has repudiated the trust and the beneficiary has had notice of the repudiation. Smith v. Dean, Tex.Civ.App., 240 S.W.2d 789 and cases there cited.

Appellant contends this record shows as a matter of law that plaintiffs are seeking to enforce an express trust created by parol which is prohibited by Section 7 of the Texas Trust Act, Articles 7425b-l to 7425b-48. We are of the opinion, and so hold, that the Trust Act does not apply in this case because if the plaintiffs were entitled to recover it was under the theory of a constructive trust and under this record and the findings of the jury, we are of the opinion a constructive trust was shown. The Trust Act provides that it does not include constructive trust. Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256. We have carefully considered all of appellant’s assignments of error and overrule all of them.

Judgment of the trial court is affirmed.


author: BATEMAN, Justice.

text:
    Ray McGINTY, Appellant, v. MOTOR TRUCK EQUIPMENT CORPORATION, Appellee.
    No. 16609.
    Court of Civil Appeals of Texas. Dallas.
    Nov. 19, 1965.

      Andress, Woodgate, Richards & Condos, Wm. Andress, Jr., Dallas, for appellant.
    Leachman, Gardere, Akin, Porter & De-Hay and Edward E. Crowell, Jr., Dallas, for appellee.
   BATEMAN, Justice.

The appellant Ray McGinty sued the ap-pellee Motor Truck Equipment Corporation for damages to one of his trucks alleged to have been proximately caused by negligence of appellee.

Appellant owned five new dump trucks and bought bodies for them from appellee. Appellee installed the bodies by welding them to the chassis of the trucks, although a printed brochure published by the manufacturer of the bodies pictured one of them as being fastened with bolts. Shortly after such installation, on July 8, 1963, one of the bodies, heavily loaded, became severed from the truck chassis at the place where it had been welded thereon. Appellee then bolted this body to the truck chassis, at a charge to appellant of $95.56, and at that time ap-pellee’s shop foreman told appellant he should have the other four bodies bolted on also. Appellant acted on this advice to the extent of having three of them bolted and the remaining one, which was not bolted, was the one which came loose on July 22, 1963, falling forward and seriously damaging other parts of the truck.

The findings of the jury in response to special issues were: (1) appellee’s employees did not fail to install the bodies on the trucks in a good and workmanlike manner; (3) the failure of appellee’s employees to install the bodies with bolts was not negligence; (5) appellant did not fail to inspect the body of the dump truck damaged on or about July 22, 1963; (8) the failure of appellant, after July 8, 1963 and before July 22, 1963, to have the body attached to the dump truck in question with bolts was negligence, (9) which was a proximate cause of the damage to the truck in question; (10) after July 8, 1963 there was danger of the welded body of the truck in question coming loose from the chassis; (11) appellant had knowledge of such danger, and (12) voluntarily exposed himself to the damage, if any, which might result from such danger; (13) such exposure was a proximate cause of the damages to the truck on July 22, 1963; (14) the instruction by the manufacturer of the dump truck bodies was not the sole cause of the damage. The jury then answered “None” to Special Issues IS, 16 and 17 inquiring as to appellant’s alleged damages. The court rendered judgment on this verdict that appellant take nothing, and he appeals on four points of error.

By his first point of error on appeal the appellant complains of the admission of certain printed instructions which appellee had received from the manufacturer of the bodies, recommending that these bodies be installed by welding them to the hinges at or near the rear of the chassis, instead of bolting them thereto. Appellee offered this sheet of instructions in evidence three different times, and each time appellant’s objection that it was hearsay was sustained. While the appellee was making its bill of exceptions to these rulings in the absence of the jury, it was developed that appellee kept a file of bulletins received from manufacturers of articles it sold as a dealer, which file was maintained in the usual course of its business by its employees under the custody and control of the shop superintendent. Thereupon the court announced that the instructions would be admitted under the authority of Vernon’s Ann.Civ.St., Art. 3737e. It was so admitted when the jury returned.

We do not agree that the provisions of Art. 3737e would be applicable to this instrument, since it did not even purport to have been made by an employee or representative of appellee “with personal knowledge of such act, event or condition.” National Surety Corp. v. Moore, Tex.Civ.App., 386 S.W.2d 327, wr. ref. n. r. e.; Skillern & Sons, Inc. v. Rosen, Tex.Sup., 1962, 359 S.W.2d 298. However, we pretermit further discussion thereon because we do not think the hearsay rule has any application to this evidence.

As stated in McCormick & Ray, Texas Law of Evidence, § 781, p. 558, “The rule in truth is this: evidence of a statement made out of court when such evidence is offered for the purpose of proving the truth of such previous statement, is inadmissible as hearsay. It is obvious that such statements may be offered in evidence for a great number of other purposes than establishing the truth of the statement and whenever this is so the evidence is not hearsay and some other ground for its exclusion must be sought.” It is obvious to us from a reading of the record that ap-pellee did not offer the document in question to prove the truth of its contents, but to counteract the effect of a brochure appellant had introduced, which contained a picture of the dump body bolted to the truck chassis. Appellant had taken the position that appellee was negligent in welding the bodies on appellant’s trucks in the face of the manufacturer’s recommendation that they be attached by bolts. Appellee merely offered to prove by the document in question that later recommendations received from the manufacturer were that the bodies be welded rather than bolted. Whether the contents were true or false, the instrument was admissible as original and material evidence bearing on the question of appellee’s negligence. McAfee v. Travis Gas Corp., 137 Tex. 314, 153 S.W.2d 442.

Moreover, if this instrument were found to have been erroneously admitted in evidence, we would be compelled for two reasons to hold that under Rule 434, Vernon’s Texas Rules of Civil Procedure, the error was harmless. In the first place, ap-pellee’s shop foreman had already testified without objection that the bodies had been welded on appellant’s trucks on recommendations of the manufacturer. To the same effect was testimony given by ap-pellee’s service manager, also without objection. The instrument was therefore merely cumulative of direct testimony of two witnesses to the same effect, and any error in admitting it was harmless. Gulf, Colorado & Santa Fe Ry. Co. v. De Leon, Tex.Civ.App., 373 S.W.2d 886, 889, wr. ref. n. r. e.

In the second place, the jury findings that appellant was guilty of contributory negligence, and that he had voluntarily exposed himself to a known danger, and that such negligence and such exposure were each proximate causes of the damages complained of, furnished adequate support for the judgment quite aside from the matter of appellee’s negligence.

Therefore, appellant’s first point is overruled.

By his second point of error appellant asserts that, since the instructions from the manufacturer, being hearsay, constituted no evidence, there was in fact no evidence to sustain the jury’s findings acquitting ap-pellee of the negligence charged against it.

The burden was on appellant to prove such negligence and obtain a jury finding thereof, not on appellee to disprove the same. The jury failed to find that such negligence existed. This they had a right to do, as they were not compelled to believe appellant or any of his witnesses. Moreover, in view of the positive findings of contributory negligence and voluntary exposure to known danger, any error in this respect would be harmless. Rule 434, T.R.C.P. The second point of error is overruled.

Appellant’s Point 3 is as follows: “Failure of one truck body installed within thirty days did not make continued necessary use of four others an assumption of risk of their defective installation also.”

While this point, standing alone, does not “direct the attention of the court to the error relied upon,” pursuant to Rule 418, T.R.C.P., a consideration of the statement and argument thereunder in the brief, together with the references made to portions of appellant’s amended motion for new trial, indicates that it is intended by the point to assert error in the overruling of appellant’s objections to the submission of Special Issues Nos. 10, 11, 12 and 13; also that there was no competent evidence, and no sufficient evidence, to support the answers of the jury to those special issues, which together constituted the findings of voluntary exposure to known danger. We shall consider the point as if it had properly presented these various complaints. Fambrough v. Wagley, 140 Tex. 577, 169 S.W.2d 478.

Appellant argues that the doctrine of volenti non fit injuria does not apply to this case because “it is not sufficient that the plaintiff have knowledge of some danger under the circumstances, but must have knowledge of the precise danger which does occur,” citing Brown v. Lundell, 162 Tex. 84, 344 S.W.2d 863; also, that the record did not show that appellant made the decision deliberately to incur the risk “with knowledge and appreciation of the danger so that it may be said that the person acted as a result of an intelligent choice,” citing Halepeska v. Callihan Interests, Inc., Tex.Sup., 1963, 371 S.W.2d 368, 379; Wood v. Kane Boiler Works, 150 Tex. 191, 238 S.W.2d 172; and Chickasha Cotton Oil Co. v. Holloway, Tex.Civ.App., 378 S.W.2d 695, wr. ref. n. r. e. We do not agree with appellant. He must be charged with actual knowledge of the fact that the bodies had been welded on all five of his new trucks, and that one of them had sheared off at the very place of welding. It is undisputed that appellee’s shop foreman recommended to appellant that the other four bodies be bolted. Moreover, appellant acted on this advice with respect to three of the remaining four trucks. For reasons best known to himself he did not have the fifth one bolted on, and this was the one which also sheared off and caused the complained of damages. With this evidence before them the jury made the findings of the essential elements of the volenti doctrine. These findings were supported by competent evidence of probative force, and in view thereof the court rendered the only judgment that could properly have been rendered.

It is also noted that appellant does not by any point in his brief attack either the submission of Special Issues Nos. 8 and 9, or the findings in response thereto, as being without support in the evidence or as being against the great weight and preponderance of the evidence. Those findings were that appellant was negligent in failing to have the body of the truck in question attached to the truck with bolts and that such negligence was a proximate cause of the damages in question. Those two findings in themselves are sufficient to support the judgment appealed from, and, if we are mistaken in what we have heretofore said with reference to the applicability of the volenti doctrine and the binding effect of the jury findings thereunder, the errors complained of in that respect must be held to be harmless under Rule 434, T.R.C.P. The third point is overruled.

By his fourth point of error appellant raises for the first time in this case an issue of implied warranty of the fitness of the dump bodies sold by appellee, including their installation. Appellant’s petition, upon which he went to trial, pitched his case solely on the ground of negligence and proximate cause; his pleadings did not assert any claim of liability because of breach of warranty, either expressed or implied. Appellant did not object to the court’s charge because it failed to submit the theory of breach of warranty, and he requested the submission of no such special issues. Appellant not having pled warranty, or the breach thereof, and the case not having been tried on the theory that a breach of warranty was involved, we overrule appellant’s fourth point.

No reversible error having been shown, the judgment of the court below is affirmed.

      . McWilliams v. Muse, 157 Tex. 109, 300 S.W.2d 643, 646; Dallas Fountain & Fixture Co. v. Hill, Tex.Civ.App., 330 S.W.2d 648, 649, 651, wr. ref. n. r. e.