author: NORVELL, Justice.

text:
    James O. GERST et al., Petitioners, v. Orren L. NIXON et al., Respondents.
    No. A-II357.
    Supremo Court of Texas.

      Nov. 30, 1966.
    Rehearing Denied Feb. 8, 1967.

      Waggoner Carr, Atty. Gen., Austin, Hawthorne Phillips, T. B. Wright, Paul W. Phy, John W. Fainter, Jr., Asst. Attys. Gen., for petitioner, James O. Gerst.
    Joe R. Long, Austin, for petitioner, Southeast Texas Savings & Loan Assn.
    Heath & Davis, Dudley D. McCalla, with firm; Alvis & Carssow, Austin, for respondents.
   NORVELL, Justice.

On November 19, 1964, the petitioner James O. Gerst, Savings and Loan Commissioner of Texas, refused the application for a charter filed by respondents Orren L. Nixon, J. R. McDonald, Thomas I. Fet-zer, Benjamin C. Lively, J. M. Windham and Sidney R. Smith, who had been selected as members of the board of directors of a proposed savings association to be known as Livingston Savings and Loan Association and located at Livingston, Polk County, Texas.

The refusal of the application by the Commissioner was based upon his negative findings relating to Vernon’s Ann.Tex. Stats., art. 852a § 2.08(3), (4). These provisions read as follows:

“Sec. 2.08. The Commissioner shall not approve any .charter application unless he shall have affirmatively found from the data furnished with the application, the evidence adduced at such hearing and his official records that: * * *
“(3) there is a public need for the proposed association and the volume of business in the community in which the proposed association will conduct its business is such as to indicate profitable operation ;
“(4) the operation of the proposed association will not unduly harm any existing association.”

Among other holdings, the trial court concluded as a matter of law that the negative findings of the Commissioner were not reasonably supported by substantial evidence and hence his action was null and void. This judgment was affirmed by the Court of Civil Appeals, 399 S.W.2d 845.

We granted the Commissioner’s application for writ of error which contains a sole point challenging the holdings of the courts below that the Commissioner’s negative findings were not reasonably supported by substantial evidence. We also granted the application of Southeast Texas Savings and Loan Association located at Wood-ville, Tyler County, Texas, the intervenor in the trial court, which here seeks to support the Commissioner’s order. Such in-tervenor as petitioner here, in addition to asserting that the Commissioner’s order is reasonably supported by substantial evidence, contends by 'its second and third points that the Court of Civil Appeals erred in failing to hold that art. 852a § 11.12 (5) (b) is unconstitutional insofar as it requires a redetermination by the trial court of the fact issues material to the validity of the Commissioner’s order upon a preponderance of the evidence basis, and that the trial court erred in receiving in evidence the record of the hearing conducted by the Commissioner. In this case, we have no question of procedural due process.

We do not understand that the Court of Civil Appeals has held that the preponderance of the evidence standard has appli-' cation to this case, but intervenor-petitioner’s second and third points raise questions of method and procedure relating to a judicial review of orders of the Savings and Loan Commissioner under section 11.12 (5) (b) of the Savings and Loan Act which calls for our determination and should be first discussed before we consider the point raised by the Commissioner’s application.

The record in this case is unusual because of the trial judge’s doubt as to the validity of certain provisions contained in the Texas Savings and Loan Act relating to judicial review of orders entered by the administrative agency. Art. 852a § 11.12 provides in part:

"Judicial Review
“Sec. 11.12. Any person with an interest in the subject matter thereof who is dissatisfied with any act, order, ruling or decision of the Commissioner taken or made, or with any rule or regulation promulgated by the Commissioner and the Building and Loan Section of the Finance Commission in connection with the administration of this Act, may secure judicial review thereof in the following manner: * * *
“(5) Trial, (a) The review of an order issued under Section 8.14 of this Act shall be tried in the same manner as civil actions generally and the complaining party shall be entitled to a jury. The trial shall be governed by the rules of civil procedure and all fact issues material to the validity of such order shall be determined de novo on the preponderance of the evidence and the substantial evidence rule shall not apply. Any relevant and competent evidence shall be admissible for or against the order.
“(b) The review of any other act, order, ruling or decision of the Commissioner or of any rule or regulation shall be tried by the court without a jury in the same manner as civil actions generally and all fact issues material to the validity of the Act, order, ruling, decision or rule or regulation complained of shall be redetermined in such trial on the preponderance of the competent evidence, but no evidence shall be admissible which was not adduced at the hearing on the matter before the Commissioner or officially noticed in the record of such hearing.”

The trial judge made findings on a preponderance of the evidence basis which were contrary to those made by the Commissioner, that is, the judge found that there was a public need for the proposed association, that there was a likelihood that its operations would be successful and that the operation of such proposed association would not unduly harm any existing association. Also, as above stated, the trial judge concluded as a matter of law that the Commissioner’s negative findings under art. 852a § 2.08(3), (4) were not reasonably supported by substantial evidence. It was the obvious purpose of the district judge to decide the issues upon a preponderance of the evidence basis and also in accordance with the substantial evidence rule so that an appellate court could in all probability dispose of the case or remand the same to the Commissioner for further proceedings, art. 852a § 11.12(6), and avoid a remand to the trial court.

The provision for judicial review which purports to vest a court with the power to redetermine upon a preponderance of the evidence basis the issues set forth in art. 852a § 2.08(3), (4) is unconstitutional because it is violative of the separation of powers provision of the Texas Constitution which provides:

“The powers of the Government of the State of Texas shall be divided into three distinct departments, each of which shall be confided to a separate body of magistracy, to wit: Those which are Legislative to one; those which are .Executive to another, and those which are Judicial to another; and no person, or collection of persons, being of one of these departments, shall exercise any power properly attached to either of the others, except in the instances herein expressly permitted.” (Art. 2 § 1, Texas Constitution, Vernon’s Ann.St.).

The granting or withholding of a permit, certificate or authority to do business in a statutorily regulated commercial endeavor is an administrative function and under the constitutional provision above quoted, such function cannot he delegated to the judiciary. The judicial inquiry in regard to such matters is restricted to the method employed by the administrative agency in arriving at its decision. By way of example, it is the province of the administrator to determine whether there is a public need for the proposed association. The administrator having determined that there is no public need for such association, the judicial question then arises as to whether the decision of the administrator is fraudulent, capricious or arbitrary. See, Davis v. City of Lubbock, 160 Tex. 38, 326 S.W.2d 699 (1959); Chemical Bank & Trust Co. v. Falkner, 369 S.W.2d 427 (Tex.Sup.1963). The so-called substantial evidence rule may be more accurately described as a test rather than a rule. When properly attacked, an arbitrary action cannot stand and the test generally applied by the courts in determining the issue of arbitrariness is whether or not the administrative order is reasonably supported by substantial evidence. In the Trem Carr case (Railroad Commission v. Shell Oil Company, 139 Tex. 66, 161 S.W.2d 1022, 1942), the order of a regulatory body, namely, the Railroad Commission, was likened to that of a commissioners’ court or a board of school trustees and it was held that the issue was not whether the regulatory agency came to the proper fact conclusion on the basis of conflicting evidence, but ‘‘whether or not it acted arbitrarily and without regard to the facts”. The court then stated that one of the tests applicable to determining the asserted arbitrary nature of the administrative act was whether or not the action of the agency in reaching the disputed conclusion was reasonably supported by substantial evidence.

The rule thus stated has been consistently followed. In the recent case of Gerst v. Cain, 388 S.W.2d 168 (Tex.Sup.1965), this court said:

“The discretion conferred on the Commissioner to grant or refuse charters by Arts. 881a-2 and 881a-3, Vernon’s Texas Civil Statutes, was not an unbridled discretion; his findings could not be arbitrary or capricious, but must have had support in substantial evidence. Phillips v. Brazosport Savings and Loan Ass’n, Tex.Sup., 366 S.W.2d 929; Gibraltar Savings and Loan Ass’n v. Falkner, Tex.Sup., 371 S.W.2d 548; Benson v. San Antonio Savings Ass’n, Tex.Sup., 374 S.W.2d 423.”

In the usual judicial review of an administrative order in Texas, the issue is not whether the regulatory agency actually heard and considered sufficient evidence to reasonably support its action, but whether at the time the questioned order was entered there then existed sufficient facts to justify the agency’s order. The evidence actually heard by the agency is not material but the parties are given a full opportunity in their appearance before a judicial body “to show that at the time the order was entered there did, or did not, then exist sufficient facts to justify the entry of the same”. Cook Drilling Company v. Gulf Oil Corporation, 139 Tex. 80, 161 S.W.2d 1035 (1942).

This rule of procedure has application to judicial review when the statute allowing such review expressly so provides; or the statute, while allowing judicial review, is'silent as to the method or when in the absence of express statutory provision, a judicial review is allowed because of constitutional considerations. See, Brazo-sport Savings & Loan Association v. American Savings & Loan Association, 161 Tex. 543, 342 S.W.2d 747 (1961); Chemical Bank & Trust Company v. Falkner, 369 S.W.2d 427 (Tex.Sup.1963). °

Art. 852a § 11.12 relating to judicial review of an act, order, ruling or decision of the Savings and Loan Commissioner does not provide for the application of the tests or procedures usually employed in determining the validity of an administrative order. Part of subsection (5) (b) of the section may not be applied to subsections (3) and (4) of Section 2.08 of the Act because of constitutional considerations. However, the Act contains a severability clause and hence the partial invalidity of a portion of a paragraph thereof does not necessarily render such paragraph void in toto.

Section 11.12, subsection (5) (b) with the invalid portion eliminated reads as follows :

“The review of any other act, order, ruling or decision of the Commissioner or of any rule or regulation shall be tried by the court without a jury in the same manner as civil actions generally, but no evidence shall be admissible which was not adduced at the hearing on the matter before the Commissioner or officially noticed in the records of such hearing.”

Upon the trial respondents introduced the record of the hearing held by the Commissioner and the matters officially noticed by him. Respondents’ position was stated at the beginning of the trial when the record of the Commissioner’s hearing was offered:

“[T]his is the first case to be heard under the Appeal Provisions of theso-called new Savings and Loan Act which became effective in January of 1964; and the Appeal Provisions provide that the record heard before the Commissioner and the matters officially noticed by him in such record are to be the basis for Courts’ re-determination of the issues which were before the Commissioner.”

The Assistant Attorney General appearing on behalf of the Commissioner stated his position as follows:

“The Defendant would take the position, and I believe, by inference, it has taken that position in its original answer that the provisions relating to a preponderance of the evidence are unconstitutional in this Statute * * *.
“I think that the purpose of this Act is probably to insure that the Commissioner will have a full presentation of the Proponents and Opponents concerning an Application for Charter and, certainly, that he would be best informed and be able to render the best decision possible. * * *
“Also, I think, as a practical matter, it would be unnecessary (to call the witnesses who had appeared at the hearing before the Commissioner) since the testimony taken at the hearing was taken under oath and before a reporter there; and, of course, Your Honor is qualified to sift out the immaterial and incompetent evidence that may have filtered its way into the record.”

As above noticed, the Attorney General asserts as his sole proposition that the Commissioner’s order is reasonably supported by substantial evidence. The intervenor-petitioner, Southeast Texas Savings & Loan Association, recognizes that Section 11.12 of the Act provides for an appeal, but strongly urges that subsection (5) (b) of said article must fall in its entirety and that there.is no valid statutory authority for admitting the record of the Commissioner’s hearing in evidence. It is argued that the provision in subsection (5) (b) that the review shall be tried in the same manner as civil cases generally cannot be reconciled with the provision that no evidence shall be admissible which was not adduced at the Commissioner’s hearing. From these premises it is concluded that Section 11.12 judicial reviews are controlled by the usual rule stated in Cook Drilling Company v. Gulf Oil Corporation, 139 Tex. 80, 161 S.W.2d 1035 (1942), and numerous subsequent cases, namely, that whether the Commissioner actually heard sufficient evidence to sustain the order is immaterial, but that the true issue is whether or not there was in existence at the time of the Commissioner’s hearing, sufficient facts to reasonably support the order. In other words, it is said that because of the total invalidity of subsection (5) (b), the judicial review is controlled by the procedure generally employed in this state to determine whether or not an administrative order is arbitrary. It is said by way of argument that at the Commissioner’s hearing very little or no attempt was made to comply with the rules of evidence, that the record contains numerous inadmissible statements, hearsay declarations and the like, and that a consideration of the record of the Commissioner’s hearing cannot be considered as constituting a trial “in the same manner as civil cases generally”. The end result of intervenor-petitioner’s argument is that the burden of proof being upon respondents, they necessarily fail because the record of the Commissioner’s hearing is not admissible in evidence and is in law “no evidence”.

There is force in intervenor-pe-titioner’s argument. However, it is within the legislative prerogative to specify the kind and nature of review to be employed by the courts so long as constitutional safeguards and requirements are not transgressed. The Legislature may provide that the basis of judicial review when arbitrariness is asserted shall be the record made at the hearing before the administrative agency rather than upon evidence produced originally in open court. We do not construe the phrase, “tried by the court without a jury in the same manner as civil cases generally” as adopting in toto all procedures that are generally applicable to the ordinary judicial trial.

Section- 11.11 relates to hearing procedures before the Commissioner. It provides that opportunity shall be afforded any interested party to respond and present evidence and argument on all issues involved in the hearing and that, upon written request, the Commissioner shall keep a formal record of such hearing. -The judicial review section provides that after the filing of a petition in the District Court seeking a judicial review of an administrative order, the Commissioner within the time prescribed for the filing of an answer “shall certify to the District Court in which such petition is filed the record of the proceedings to which the petition refers.” Section 11.12(4).

These statutory provisions seem to contemplate that the record of the Commissioner’s hearing shall be considered by the District Court. This view is borne out by the administrative construction of the Act as evidenced by the rules applicable to the Commissioner’s hearing which provide that the Commissioner shall secure the services of a competent reporter “who shall keep a formal record of the proceedings of any hearing held under the provisions of the Texas Savings and Loan Act”; that the purpose of such hearing is “to accumulate a record of all pertinent information, testimony, records, reports and other data in favor of or opposed to the application upon which the Commissioner shall make his determination of whether the application should be granted or denied”; and that if the Commissioner desires to base his decision on any evidence disclosed by an investigation which is not a part of the official record, “he is to make the results of such investigation a part of the official record of the hearing and permit all parties to the hearing an opportunity to be heard in respect thereto by reopening the hearing if necessary”.

The above quoted statutory provisions, together with the rules promulgated thereunder, demonstrate that a hearing before the Savings and Loan Commissioner is a different proceeding from the informal hearing considered by this Court in Cook Drilling Co. v. Gulf Oil Corporation, 139 Tex. 80, 161 S.W.2d 1035 (1942), wherein the validity of an order granting a permit to drill an oil well as an exception to spacing rule 37 was considered. The requirement that the Commissioner file a record of the proceedings had before him with the District Court clearly implies that such record is to be considered by the court. While the last phrase contained in Section 11.12, subsection (5) (b), could have been more artfully worded, it seems reasonably clear that when considered in connection with other portions of the Act, the purpose of the words, “no evidence shall be admissible which was not adduced at the hearing on the matter before the Commissioner or officially noticed in the record of such hearing”, was to adopt the rule that the Commissioner’s order is to stand or fall upon the evidence adduced and matters noticed at the Commissioner’s hearing. It is from this record that the District Judge is to determine whether or not the Commissioner’s order is arbitrary, i. e., whether it is reasonably supported by substantial evidence. The circumstance that the record of the Commissioner’s hearing contains hearsay or other species of evidence deemed unreliable is a matter for the consideration of the trial judge in determining the issue of “substantial evidence”.

As pointed out by the Court of Civil Appeals, the Commissioner found that the prerequisites, where applicable, set forth in Sections 2.02, 2.03, 2.04, 2.05 and 2.06 of the Act had been complied with; that the proposed Articles of Incorporation were in proper form and that those named as initial directors in such articles were fit and proper persons to direct the affairs of the proposed Livingston Savings and Loan Association, but made negative findings as to subsections (3) and (4) of Section 2.08. In Gerst v. Cain, 388 S.W.2d 168 (Tex.Sup.1965), we considered art. 881a-2, Vernon’s Ann.Tex.Stats. (repealed by Acts 1963, 58th Leg., p. 269, ch. 113, § 2, the 1963 Savings and Loan Act,' art. 852a, Vernon’s Ann.Tex.Stats.), which required that before granting a charter, the Commissioner must affirmatively find that (1) the public convenience and advantage would be promoted by allowing the proposed building and loan association to be incorporated and engaged in business, and that (2) the population in the neighborhood of the place of location and in the surrounding country afforded a reasonable promise of adequate support for the association. The Commissioner in the Cain case made negative findings upon these issues and refused to grant a charter. We ruled that before the judgments of the trial court and the Court of Civil Appeals setting aside the Commissioner’s order could be affirmed, it was necessary to hold that the negative findings made by the Commissioner “are not supported by substantial evidence, and that the evidence so conclusively required affirmative findings that the refusal to .make them was arbitrary or capricious”.

The substantial procedural change in this rule by the 1963 Act was to make the record of the Commissioner’s hearing rather than evidence produced originally in court the basis from which it must be determined if the evidence conclusively required affirmative findings relating to the matters mentioned in subsections (3) and (4) of Section 2.08. These statutory provisions require findings that: (a) there is a public need for the proposed association; (b) the volume of business in the community in which the proposed association will conduct its business is such as to indicate that the association may be profitably operated; and (3) the operation of the proposed association will not unduly harm any existing association.

We think the words “public need” as used in Section 2.08(3) have the same meaning as the words “public necessity” as used in the Texas Banking Code of 1943, 1. c. art. 342-305, Vernon’s Ann.Tex. Stats., that is, a substantial or obvious community need for the proposed association in the light of attendant circumstances, as distinguished from a mere convenience on the one hand and an absolute or indispensable need on the other.

We are in general accord with the holdings of the Court of Civil Appeals upon the issues of public need, likelihood of success and non-injury to an existing association. We need not repeat the evidence detailed in the intermediate court’s opinion other than by way of summary. The record of mortgages and liens for Polk County show that a total of 655 loans aggregating $6,089,979.28 on real estate were made for the years 1962, 1963 and up to and including September of 1964. Only 64 of these loans were made by savings and loan associations located in Lufkin, Huntsville, Liberty, Orange, Woodville and Houston. This number percentage-wise is well below the national average. There was uncontroverted testimony as to the difficulties experienced and extra expense incurred by residents of Polk County in obtaining loans from nonresident institutions. It was stated by the Supreme Court of Mississippi in Planters Bank v. Garrott, 239 Miss. 248, 122 So.2d 256 (1960), that “mere convenience is not sufficient to satisfy the statutory requisite of ‘necessity’. But, * * * when supplemented by proof of facts and circumstances which, * * * are persuasive of ‘necessity’, it is proper to take into consideration testimony as to the element of convenience”. The evidence shows an existing mortgage market; that the proposed association is properly capitalized; and that it would be controlled by competent personnel. Upon the issue of injury to an existing association, we think the case is largely controlled by Gerst v. Cain, 388 S.W.2d 168 (Tex.Sup.1965). It appears that there is a strong probability that a dam may be constructed on the Trinity River near Livingston and that a paper mill and other industrial plants may be located in Polk County. This would as a matter of course result in increasing business and house building activities in the Livingston area. Polk County adjoins Tyler County and the intervenor-petitioner, Southeast Texas Savings & Loan Association, is located at Woodville, the county seat of Tyler County, which is 38 miles from Livingston. Should business activity in the Livingston area and Polk County increase, an additional opportunity for profitable operations by the Woodville association would become available and there is evidence that Polk County is regarded as an area of expansion by such association. These expectations of profit would be diminished to some extent by operations of a new savings and loan association located at Livingston. It appears, however, that during the years 1962, 1963 and the first nine months of 1964, the Polk County area had not been developed as a territory of appreciable economic importance to Southeast Texas Savings and Loan Association (Woodville). In substance, the “injury” resulting to Southeast Texas by the granting of a charter to a Livingston association would be related solely to competition for future business. The probable slowing down of the rate of growth of an existing association because of a lessened opportunity to obtain business in a prospectively developing area because of competition cannot be regarded as an injury to such existing association. In Gerst v. Cain, 388 S.W.2d 168 (Tex.Sup.1965), this court said:

“Competition is the lifeblood of a free enterprise economic system. It is only because savings and loan associations are affected with a public interest, Brazos-port Sav. & L. Ass’n v. American Sav. & L. Ass’n, 161 Tex. S43, 342 S.W.2d 747, that they are protected from undue injury brought about by excessive competition. Southwestern Sav. & L. Ass’n of Houston v. Falkner, 160 Tex. 417, 331 S.W.2d 917. There is no evidence here that the chartering of Metropolitan would provide excessive competition for existing associations which would result in undue injury to them. * * *
“We doubt that proof of nothing more than that chartering a new association will make it ‘more difficult’ for an existing new association to increase its savings to ‘a satisfactory’ level can, under any circumstances, constitute substantial evidence to support a finding of undue injury to the association.”

The judgments of the courts below are affirmed.

ON REHEARING

Southeast Texas Savings and Loan Association asserts that the statutory and rules provisions governing hearings before the Savings and Loan Commissioner are defective as no adequate procedure for compelling the attendance of witnesses or securing testimony by means of deposition is provided for. There is no showing that the lack of witness attendance or discovery procedures, if any there be, operated to the prejudice of said protesting association. Apparently it developed all the facts and circumstances it deemed pertinent to the inquiry before the Commissioner. It is in no position to contend that they were prejudiced because of a lack of statutory or rule-making provisions empowering the Commissioner to compel the attendance of witnesses, secure deposition testimony or enforce discovery. The present record does not present a question of procedural due process and we decline to rule upon a purely hypothetical case.

The motions for rehearing are overruled.

      . This section relates to the removal of directors, officers and employees of sav-tags and loan associations under certain prescribed conditions.

      . There is no issue of fraud in this case.

      . The severability clause of the Act provides :
      “If any part, Section, Subsection, paragraph, sentence, clause, phrase, or wbrd contained in this Act shall be held by the courts to be unconstitutional, such holding shall not affect the validity of the remaining portions of the Act, and the Legislature hereby declares that it would have passed such remaining portions despite such invalidity.”

      . The invalid portion of the section appears between the words “generally” and “but” and reads: “and sill fact issues material to the validity of the Act, (sic) order, ruling, decision or rule or regulation complained of shall be redetermined in such trial on the preponderance of the competent evidence, * *

      . Respondents call our attention to the Illinois Administrative Review Act which in part provides (Ill.Rev.Stat.1965, Chapter 110, § 272):
      “Pleadings and record on review.
      “(a) Complaint. The complaint shall contain a statement of the decision or part thereof sought to be reviewed. It shall specify whether the transcript of evidence if any, or what portion thereof, shall he filed by the agency as part of the record. Upon motion of any defendant, or upon its own motion, the court may require of the plaintiff a specification of the errors relied upon for reversal.
      “(b) Answer. Except as herein otherwise provided, the administrative agency shall file an answer which shall consist of the original or a certified copy of the entire record of proceedings under review, including such evidence as may have been heard by it and the findings and decisions made by it.”
      Section 274 of the Act reads as follows:
      “Every action to review any final administrative decision shall be heard and determined by the Court with all convenient speed. The hearing and determination shall extend to all questions of law and of fact presented by the entire record before the court. No new or additional evidence in support of or in opposition to any finding, order, determination or decision of the administrative agency shall be heard by the court. The findings and conclusions of the administrative agency on questions of fact shall be held to be prima facie, true and correct.”
      As to the effect of these provisions, it was said in a Survey of Illinois Law, 1951-52, 31 Chicago-Kent Law Review 1,' 85 that:
      “Even the most cursory reading of that statute should, however, make it obvious that it contemplates no more than a review of the record formulated during the administrative hearing, for the statute expressly states that the record is to be filed with the court and prohibits the introduction of new evidence.”
      In Parker v. Department of Registration and Education, 5 I11.2d 288, 125 N. E.2d 494 (1955), the Supreme Court of Illinois said:
      “The reviewing court is limited to a consideration of the record to determine if the findings and orders of the administrative agency are against the manifest weight of the evidence.”

      . In Chimney Rock National Bank of Houston v. State Banking Board of Texas, 376 S.W.2d 595 (Tex.Civ.App.1964, no writ), the Court of Civil Appeals fol-' lowed the definition or exposition of the term “public necessity” set forth in Moran v. Nelson, 322 Mich. 230, 33 N.W.2d 772 (1948), wherein the Supreme Court of Michigan said:
      “[S]ince the primary function of banking facilities involves the welfare and convenience of the portion of the public concerned, it would seem reasonably to follow that ‘necessity’ as used in the controlling statute was not intended by the legislature which enacted the law to mean absolute or indispensable need. Instead, we are of the opinion that the meaning or import of ‘necessity’ as employed in the statute is a substantial or obvious need justifying the chartering of a new bank in view of the disclosed relevant circumstances.”
      The Moran case has also been followed by the Supreme Court of Mississippi. In Planters Bank v. Garrott, 239 Miss. 248, 122 So.2d 256 (1960), the court in speaking of Moran, said:
      “We agree with the statement made by the Michigan Court in its opinion in the Moran case, that the meaning or import of ‘necessity’, as the word is used in a statute such as we have here, is ‘a substantial or obvious need justifying the chartering of a new bank in view of the disclosed relevant circumstances.’ ”

      . Insofar as Polk County is concerned, it appears that in 1962, Southeast Texas made only three loans aggregating $22,-000.00. In 1963, it made one $8,000.00 loan and during the first nine months of 1964, it made no loans.

      . A comment relating- to judicial review of administrative decisions appearing in 115 U. of Pennsylvania LJEtev. 40 (1966) makes the following pertinent observations with reference to the Federal Administrative Procedure Act:
      “In order to give a reasonable meaning to section 10(e) (of the Administrative Procedure Act, 5 U.S.O. § 1009), and in light of legislative reluctance to exclude judicial review, the most rational construction of section 10(a) would seem to be that once a question has been committed to agency discretion, the only ground for reversal would be an agency decision which is ‘arbitrary’, or in other words, an abuse of discretion.
      “The question of what constitutes abuse of discretion, however, is not an easy one. Clearly the existence of discretion in an agency demands judicial deference to some agency decisions which the court would have made differently in the first instance. ‘Abuse of discretion’, then, must mean more than that the agency, after considering and weighing all the relevant facts, struck a balance different from that which the court would have reached.
      On the other hand, administrative agencies are vested with discretion by Congress primarily because of their expected expertise in divining and effectuating congressional policy. The agency’s expertise is probably only of value so long as it weighs those considerations, and only those considerations, which Congress intended that it take into account in effectuating the legisla-five policy. Thus, if an agency were to include within its consideration irrelevant factors, or if it were to exclude a factor which Congress intended it to consider in enforcing federal policy, it would have ‘abused’ its discretion, because: 1) the agency would no longer be acting under the congressional mandate; and 2) its value as an expert body — the reason for deference by the courts and for congressional trust— would be lost.
      “A third way in which an agency might abuse its discretion would be to give unreasonable weight to one or more relevant factors. Congress presumably did not, and possibly could not, delegate authority to an agency to act arbitrarily or capriciously. Thus, if an agency reached a completely unreasonable result after weighing the relevant facts, the court should set that finding aside. Admittedly it is a delicate task for a court to decide that an agency acted arbitrarily despite the fact that it purported to have weighed all those considerations, and only those considerations, which are relevant to the congressional purpose; but the task is probably one which the courts must be willing to perform if the vast advantages of administrative agencies are not to be lost through misuse. Because the balance is so delicate, however, the courts should, and probably do, avoid striking down agency action unless they feel competent to find that the agency has clearly acted unreasonably, and thereby ‘abused its discretion’.”


source: Caselaw Access Project

author: MORRISON, Judge.

license: Public Domain

text:
    Ex parte Jessie TREVINO.
    No. 40131.
    Court of Criminal Appeals of Texas.
    Feb. 8, 1967.
    Jessie Trevino, pro se.
    Leon B. Douglas, State’s Atty., Austin, for the State.
   OPINION

MORRISON, Judge.

This is an application for writ of habeas corpus filed directly in this Court. Petitioner’s conviction was affirmed by this Court in Trevino v. State, Tex.Cr.App., 380 S.W.2d 118. Rehearing was denied on June 29, 1963. Petitioner, according to the record before us, made no application to the Supreme Court of the United States for writ of certiorari within the 90 days provided by 28 U.S.C.A., Supreme Court Rules, Rule 22. Instead, petitioner made application for writ of habeas corpus to the United States District Court for the Northern District, which was denied, and on appeal, the order of denial was affirmed. Trevino v. State of Texas, 5 Cir., 326 F.2d 403.

Petitioner seeks to invoke the rule in Aguilar v. State of Texas, 378 U.S. 108, 84 S.Ct. 1509, 12 L.Ed.2d 723, which was decided June 15, 1964, long after the expiration of the 90 days mentioned above. See footnote 5 in Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601.

We are aware of no holding of the Supreme Court of the United States making the rule in Aguilar v. State of Texas, supra, retroactive.

The relief prayed for is denied.


author: DICE, Judge.

text:
    Bobby Don McCALLUM et al., Appellant, v. The STATE of Texas, Appellee.
    No. 40062.
    Court of Criminal Appeals of Texas.
    Feb. 8, 1967.

      James H. Martin, Dallas, for appellant.
    Henry Wade, Dist. Atty., Robert H. Stinson, Jr., and Kerry P. FitzGerald, Asst. Dist. Attys., Dallas, and Leon B. Douglas, State’s Atty., Austin, for the State.
   OPINION

DICE, Judge.

This is an appeal by John T. Boyce, as surety upon the appearance bond of Bobby Don McCallum, from a forfeiture of the bond.

The principal, Bobby Don McCallum, was charged by information in the County Criminal Court No. 2 of Dallas County in Cause No. 66-264 — B with the misdemeanor offense of driving while intoxicated.

The bond, dated May 12, 1966, in the penal sum of $350, was conditioned that the principal appear instanter before said County Criminal Court No. 2 and any other court provided for therein to answer the charge pending against him and “for any and all subsequent proceedings had relative to the charge * *

On June 24, 1966, Bobby Don McCal-lum, the defendant-principal, entered a plea of guilty to the information and was by the court assessed punishment at a fine of $100 and thirty days in jail. No final judgment was rendered in the cause and on such date McCallum was placed on probation, under the provisions of the Misdemeanor Probation Law, Art. 42.13 of the 1965 Vernon’s Ann.Code of Criminal Procedure, for a period of one year upon certain terms and conditions. Among the conditions of probation was that he “(8) pay the fine imposed herein not later than July 29, 1966.”

Motion for new trial was filed by the defendant, McCallum, on June 24, 1966, and on July 14, 1966, he filed an amended motion for new trial.

On August 3, 1966, judgment nisi was entered, forfeiting the bond upon the failure of the defendant to appear in court and answer at the hearing of his amended motion for néw trial.

On September 22, 1966, the court, after a hearing, entered an order revoking the defendant’s probation upon a finding that he had failed to pay the fine within the time specified and further directing that the finding of guilty be made a final judgment in the cause.

On October 21, 1966, final judgment of forfeiture on the bond was rendered by the court, from which judgment the appellant-surety has appealed.

Appellant’s sole contention on appeal is that the court was without authority to forfeit the bond after the principal-defendant had made his appearance in the cause, entered a plea of guilty to the charge, and was placed on probation. It is insisted that such appearance in court by the defendant and the subsequent proceedings therein fulfilled the obligation of the bond and discharged the surety thereon.

With such contention we do not agree.

The defendant’s appearance in court on June 24, when he was placed on probation, did not fully discharge the conditions and obligations of the bond.

By the terms of the order placing the defendant on probation and under the provisions of Sec. 4 of the Misdemeanor Probation Law, Art. 42.13, supra, no final judgment was rendered against the defendant at the time.

The defendant, at the time he was granted probation, had the right to appeal his conviction. Art. 42.13, Sec. 8(a). Pursuant to such right, he filed the motions for new trial.

The condition of the bond was that the defendant make his appearance in court, instanter, to answer the charge and at any and all subsequent proceedings had relative to the charge. Such condition is provided by Art. 17.09 of the 1965 Code of Criminal Procedure, formerly — with some changes — Art. 275a of the Code of Criminal Procedure of 1925.

The hearing on the defendant’s amended motion for new trial on August 3 was a subsequent proceeding had relative to the charge. His failure to appear at the hearing was a violation of the condition of the bond. Upon such failure the court was authorized to order the bond forfeited.

The judgment is affirmed.


text:
    Franklin JOHNSON, Appellant, v. The STATE of Texas, Appellee.
    No. 40110.
    Court of Criminal Appeals of Texas.
    Feb. 8, 1967.
    Thomas H. Dent, Galveston, for appellant.
    Carol S. Vance, Dist. Atty., James C. Brough and Robert Floyd, Asst. Dist. Attys., Houston, Leon B. Douglas, State’s Atty., Austin, for the State.
   OPINION

MORRISON, Judge.

The offense is felony theft; the punishment, five years.

Under an indictment alleging the primary offense of felony theft and two prior non-capital convictions alleged for enhancement, appellant was found guilty under a charge submitting the primary offense only. His first ground of error is that the court erred in overruling his motion to quash the enhancement counts of the indictment and his motion in limine requesting that State’s counsel be instructed not to allude to the prior convictions. Since the prior convictions were not submitted to the jury in the court’s charge and since no bad faith on the part of the prosecutor is shown, no error appears. When appellant testified, the prior convictions became admissible for impeachment.

Appellant’s next ground of error is that he was denied due process because the prosecutor exercised peremptory challenges to Negro members of the jury panel. From his examination of the panel counsel developed the fact that there were seven members who gave their racial identification as being Negro, but there is no showing other than statement of counsel that the seven were stricken. Be this as it may, the Supreme Court of the United States in Swain v. State of Alabama, 380 U.S. 202, 85 S.Ct. 824, 13 L.Ed.2d 759, said, “But purposeful discrimination may not be assumed or merely asserted. * * * It must be proven”, and “[wjith these considerations in mind, we cannot hold that the striking of Negroes in a particular case is a denial of equal protection of the laws.” See Whitney v. State, 43 Tex.Cr.R. 197, 63 S.W. 879, and United States ex rel. Dukes v. Sain, 7 Cir., 297 F.2d 799.

Appellant’s next ground of error is that the evidence is insufficient to support the conviction. Accident Investigator Gart-man of the Houston Police testified that shortly before midnight on the night in question he heard the tires of an automobile “screeching” as it approached the point where he was on duty. He stated that he brought the automobile being driven by appellant to a halt, at which time he observed a pistol on the seat beside appellant, and placed him under arrest. He further testified that he ascertained the next day that the automobile was stolen.

Appellant, testifying in his own behalf, stated that he saw another man bring the automobile in question to a halt and run away and that the officers arrested him instead of the man who ran away, and denied that he had ever been in the stolen automobile. The jury resolved this conflict in the evidence against appellant, and we find the evidence sufficient to support the verdict.

Finding no reversible error, the judgment is affirmed.


author: BELCHER, Judge.

text:
    Bobby Andrew WATKINS, Appellant, v. The STATE of Texas, Appellee.
    No. 40084.
    Court of Criminal Appeals of Texas.
    Feb. 8, 1967.

      Richard T. Churchill, Fort Worth, for appellant.
    Doug Crouch, Dist. Atty., Charles Butts and R. J. Adcock, Asst. Dist. Attys., Fort Worth, Leon B. Douglas, State’s Atty., Austin, for the State.
   OPINION

BELCHER, Judge.

The conviction is for burglary with two prior convictions of felonies less than capital alleged for enhancement; the punishment, life.

Notice of appeal was given on March 24, 1966.

The primary offense upon which this conviction rests is for the breaking and entering of a building in which a cafe was operated.

For reversal, the appellant contends that the trial court erred in admitting the testimony of Officer Beard that after his arrest of the appellant, the appellant told him at the scene that he had broken into the cafe.

The appellant urges that he objected to such statement on the ground it was an oral confession which was not taken in accordance with provisions of the statute applicable thereto. He further insists that the trial court again erred in refusing his motion to strike said statement from the record and instruct the jury not to consider it.

Following the testimony of two other officers who had followed Officer Beard to the witness stand and after the state, on the second day of the trial, had rested its case in chief, the appellant for the first time objected and moved to strike said testimony of Officer Beard, who had testified on the first day of the trial, and instruct the jury not to consider it.

Nothing appears from the record which prevented the timely objection of the appellant to the testimony complained of. In the absence of a timely objection, this ground has not been preserved for review.

It is insisted that the trial court erred in not discharging the defendant on the ground that he was held in jail without being taken before a magistrate and without counsel having been appointed to defend him.

The indictment was returned herein on November 2, 1965. Counsel was appointed to represent the appellant on November 5, 1965. The statement of facts reveals that appellant’s counsel was present when appellant was arraigned on January 5, 1966; that before arraignment the appellant and counsel had previously conferred one time, and upon inquiry by the court stated that they had no motions or pleas to present. There is nothing in the record showing that an examining trial was held or when the appellant was first advised of his right to counsel. This is confirmed by the briefs by both parties. The trial on the merits was had on January 10 and 11, 1966.

The claimed failure to take the appellant before a magistrate and appoint him counsel, under the record, reveals no error.

The judgment is affirmed.


author: WOODLEY, Presiding Judge.

text:
    Johnnie HOLLINS, Appellant, v. The STATE of Texas, Appellee.
    No. 40083.
    Court of Criminal Appeals .of Texas.
    Feb. 8, 1967.
    Maurice U. Westerfeld, Houston, for appellant.
    Carol S. Vance, Dist. Atty., James C. Brough, Phyllis Bell and Alvin A. Horne, Asst. Dist. Attys., Houston, Leon B. Douglas, State’s Atty., Austin, for the State.
   OPINION

WOODLEY, Presiding Judge.

The offense is felony theft; the punishment, enhanced by two prior convictions for felonies less than capital, life.

Trial was before a jury on a plea of not guilty. The jury having found appellant guilty, evidence was heard by the court including proof of the allegations of the indictment as to the prior convictions, and punishment was assessed at life.

Four grounds of error are presented.

The first relates to the sufficiency of the evidence to sustain the jury’s verdict.

The indictment alleged the theft of an automobile from John Wigzell on or about October 7, 1965. The state’s evidence reflects the following:

Mr. Wigzell parked his car at a downtown location at 1:15 P.M. Twenty-five minutes later he returned to the place where he had left the car and it was gone. He immediately notified a police officer who was in the next block. The officer called by radio to report the car stolen and received reply that the automobile described had been involved in an automobile accident several blocks away. Mr. Wigzell proceeded to the scene of the accident by taxi where he found his automobile and saw appellant.

Appellant was identified as the driver and only occupant of the automobile involved in the accident by the driver of the other car involved in said accident; by a bystander and by a police officer who reached the scene before appellant had time to get out of the car.

Appellant left the scene without communicating with anyone. He was arrested a block away from the scene by the officer who saw him abandon the car. He made no explanation of his possession of the automobile.

Mr. Wigzell testified that he had never seen appellant prior to the time his automobile, of the value of more than $50, was taken and had not given him permission to take it.

The unexplained possession of recently stolen property is sufficient to authorize a jury to convict for theft of such property. Bryant v. State, Tex.Cr.App., 397 S.W.2d 445; Wall v. State, 167 Tex. Cr.R. 634, 322 S.W.2d 641; 5 Branch’s Ann. P.C.2d, Sec. 2650; 55 Tex.Jur.2d 480, Sec. 214.

The second ground of error relates to the court’s charge wherein the jury was instructed as to the punishment for felony theft. The contention is that the court’s charge led the jury to believe that appellant would be assessed a term of not less than 2 years nor more than 10 years.

In the absence of any objection or exception to the court’s charge, the claim of error is not before us.

We observe, however, that the case was tried under the 1965 Code of Criminal Procedure and that pursuant to the provisions of Art. 37.07, Section 2(a), Vernon’s Ann.C.C.P., the charge included “instructions showing the jury the punishment provided by law for each offense submitted,” and the portion of the indictment reciting prior convictions was not read until the hearing on punishment was held, as provided in Art. 36.01 C.C.P. It follows that the court’s instruction to the jury as to the punishment for felony theft was not error.

The third ground of error presents the contention, wholly unsupported by the record, that the jury was permitted to separate and commingle with the state’s witnesses and arresting officers after the charge of the court was read.

The fourth and last ground of error is predicated upon the premise that the prior convictions used for enhancement of the punishment were void for want of a sentence.

The exhibits offered by the state in support of the allegations as to the prior convictions include certified copy of the sentence as well as the judgment in each of such prior convictions.

The judgment is affirmed.


author: ONION, Judge.

text:
    Ex parte Mitchell EVANS.
    No. 40111.
    Court of Criminal Appeals of Texas.
    Feb. 8, 1967.

      Sam J. Dwyer, Jr., El Paso, for appellant.
    Leon B. Douglas, State’s Atty., Austin, for the State.
   OPINION

ONION, Judge.

This is an appeal from an order entered in a habeas corpus proceeding remanding appellant to custody for extradition to the State of Pennsylvania, to answer indictments charging him with the offenses of burglary, larceny and receiving stolen goods.

At the hearing on the 30th day of June, A.D., 1966, the State offered into evidence the Governor’s Warrant of Extradition, the Requisition, and other supporting papers, and rested. The introduction of the Governor’s Warrant, regular on its face, established a prima facie case authorizing extradition. Ex Parte Cattes, Tex.Civ.App., 399 S.W.2d 543; Ex Parte Escarrega, Tex.Cr.App., 388 S.W.2d 192. The burden, then, is on the accused to show that the warrant was not legally issued. 1 Branch’s Ann. P.C.2d 309, Section 270.

Appellant attacks the sufficiency of the affidavit of the prosecuting attorney, found among the supporting papers, as being based upon information and belief and not sworn to by a person cognizant of the facts therein. He cites as his authority the decisions of this Court in Ex Parte Parker, Tex.Cr.App., 390 S.W.2d 774 and Ex Parte Tucker, 168 Tex.Cr.R. 286, 324 S.W.2d 853.

We have carefully examined the Governor’s Warrant and other supporting papers in the record before us. The only affidavit of the Pennsylvania prosecuting attorney in the record is the one attached to his written petition to the Governor of Pennsylvania in accordance with Section 3 of the Uniform Criminal Extradition Act, under which the States of Texas and Pennsylvania operate. Art. 51.13, Texas C.C.P.; 19 P.S. Sec. 191.1-191.31. The affidavit is not one supporting an information or purporting to charge the appellant with a crime in lieu of an indictment. Further, it is not based on information and belief.

Article 51.13, Section 3, Vernon’s Ann. C.C.P., provides, in part, as follows:

“No demand for the extradition of a person charged with crime in another State shall be recognized by the Governor unless in writing, alleging, except in cases arising under Section 6, that the accused was present in the demanding State at the time of the commission of the alleged crime, and that thereafter he fled from the State, and accompanied by a copy of an indictment found or by information supported by affidavit in the State having jurisdiction of the crime, or by a copy of an affidavit before a magistrate there, together with a copy of any warrant which issued thereupon; or by a copy of a judgment of conviction or of a sentence imposed in execution thereof * *

In Ex Parte Parker, supra, cited by appellant, the proof failed to show that “ ‘Burglary and Larceny’ ” could be prosecuted upon an information in Kansas. Furthermore, the information was not supported by affidavit or complaint, and the supporting affidavit of the prosecuting attorney was upon information and belief only. In the case at bar there was no information or affidavit, but the extradition proceedings were based upon the Pennsylvania indictments, exemplified copies of which were introduced into evidence. Ex Parte Parker, supra, is distinguishable from the case at bar on both the law and the facts, as is Ex Parte Tucker, supra.

The appellant having failed to overcome the prima facie case made by the introduction of the Governor’s Warrant, the judgment is affirmed.


text:
    Robert Earl HURLEY, Appellant, v. The STATE of Texas, Appellee.
    No. 40095.
    Court of Criminal Appeals of Texas.
    Feb. 8, 1967.
    John H. Chambers (on appeal only), Arlington, for appellant.
    Doug Crouch, Dist. Atty., Gordon Gray and Rufus Adcock, Asst. Dist. Attys., Fort Worth, and Leon B. Douglas, State’s Atty., Austin, for the State.
   OPINION

WOODLEY, Presiding Judge.

The offense is burglary; the punishment, three years.

Appellant’s sole ground of error is that it was improper for the state to read his confession to the jury before allowing him to present rebuttal evidence to the jury on the issue of the voluntariness of the confession.

At a pretrial hearing, after hearing evidence with regard to the voluntariness of appellant’s confession, the trial court resolved the issues of fact and law and entered an order finding that the confession was voluntary, as was required of him by Art. 38.22(b) Vernon’s Ann.C.C.P.

On the trial of the case, the police detective to whom the confession was given testified as to its taking, stating that it was voluntarily given. The confession was then read to the jury. Subsequent to that time, the defendant attempted to rebut the state’s contention that the confession was voluntary, testifying that he was threatened and that his signature was coerced.

This Court, in Lopez v. State, 384 S.W. 2d 345, in setting out the proper procedure to be followed when a confession is to be offered by the state, stated:

“After a confession has been admitted in evidence to the jury, the defendant may still adduce evidence relating to its voluntariness * *

The procedure set out in Lopez was followed by the trial court in the instant case.

The judgment is affirmed.


author: McDONALD, Chief Justice.

text:
    Laura ZAX, Appellant, v. COAST PROPERTIES COMPANY, Appellee.
    No. 4557.
    Court of Civil Appeals of Texas. Waco.
    Jan. 19, 1967.
    Rehearing Denied Feb. 9, 1967.

      Aaron Hessel, Jay D. Hirsch, Leon Weis-berg, Houston, for appellant.
    Fulbright, Crooker, Freeman, Bates & Jaworski, St. John Garwood, Jr., Houston, for appellee.
   OPINION

McDONALD, Chief Justice.

This is an appeal by defendant, Laura Zax, from a judgment for plaintiff, Coast Properties, in a suit on a note.

Defendant Laura Zax owned ¼⅛ the stock, and her children, Robert Zax, Phyllis Zax Holland and Leonard Holland, owned %ths of the stock in Dixie Glass Company, Inc. In 1952 Laura Zax married Harry Pollock, and afterwards Pollock was employed by Dixie as Comptroller, pursuant to an employment contract. Thereafter Dixie terminated Pollock’s employment, and in 1956 Pollock sued Dixie for wrongful termination of the employment contract, and recovered judgment for some $100,000. The judgment was reversed and remanded by the Court of Civil Appeals. On August 1, 1961 Laura Zax and Harry Pollock separated from each other. On August 22, 1961 Harry Pollock settled his suit against Dixie for $7500 cash, and a note for $17,500 executed by Dixie Glass Company, Inc., and endorsed by all of the stockholders, including his wife, defendant Laura Zax Pollock. On January 16, 1962 defendant Laura Zax Pollock and Harry Pollock signed a property settlement agreement as a part of their divorce (which was granted on such date) as follows:

“ * * * Laura Zax Pollock does release any claim or right which she may have in and to the proceeds of any funds which Harry Pollock shall receive as a result of that note executed by Dixie Glass Company and guaranteed by various individuals, including the undersigned Laura Zax Pollock, and agrees that she will make no claim whatsoever for any portion of the proceeds thereof * *

Dixie paid the note down to $9386.46, and thereafter defaulted. Pollock assigned the note to plaintiff Coast Properties Company. Plaintiff filed suit on the note against Dixie and the stockholder endorsers. Defendant Laura Zax answered by pleas of coverture and no consideration.

Trial before the court without a jury resulted in judgment for plaintiff on the note against Dixie Glass Company and all stockholder sureties. Laura Zax only appeals.

The trial court filed Findings and Conclusions summarized as follows:

FINDINGS OF FACT

1 & 2. Plaintiff Coast Properties is a corporation. Defendant Laura Zax is a single woman.
3. Laura Zax married Harry Pollock in 1952; and they were divorced January 16, 1962.
4. Laura Zax owned ¼⅛ of the stock of Dixie Glass Company.
5. On August 1, 1961 Laura Zax and Pollock permanently separated from each other with the intention of becoming divorced, and did not thereafter live together. Laura Zax executed the note on August 22, 1961.
6. Laura Zax executed the note to improve the value of her stock interest in Dixie, by inducing Harry Pollock to settle his pending lawsuit against Dixie.
7. Pollock would not have accepted the note had Laura Zax not signed same.
8. On January 16, 1962 Laura Zax executed a written property settlement agreement with Harry Pollock which was confirmed as part of their divorce.
9. Pollock sold the note to plaintiff.

CONCLUSIONS OF LAW

1. Laura Zax was married to Harry Pollock on the date she executed the note sued on.
2. Laura Zax was disabled by coverture when she signed the note, regardless of the fact she was permanently separated from Harry Pollock.
3. Laura Zax’s stock interest in Dixie Glass was her separate property.
4. Laura Zax received valuable consideration for executing the promissory note, as surety for Dixie Glass.
5. Laura Zax is estopped to deny she received consideration for her signature.
6. The note as to Laura Zax was not void, but a voidable obligation, which she had the right to reject or affirm.
7. By executing the property settlement agreement with Harry Pollock, Laura Zax ratified her prior execution of the note and is barred from thereafter asserting her defense of coverture. Defendant Zax appeals on 6 points, contending:
1) There is no evidence to support Findings of Fact 5 and 6, and same are against the great weight and preponderance of the evidence.
2) The trial court erred in Conclusions of Law 4, 6 and 7.

Plaintiff by cross point contends that coverture is not available to defendant as a defense.

Finding of Fact 5 was that on August 1, 1961 Laura Zax permanently separated from her husband with the intention of becoming divorced, and did not thereafter live with her husband. Laura Zax filed suit for divorce against Pollock, in which her petition stated she and Pollock lived as husband and wife until August 1, 1961, when they separated and that they have not lived as husband and wife since such date. Laura Zax testified the foregoing were the facts.

Finding of Fact 6 was that Laura Zax executed the note to improve the value of her stock in Dixie Glass, by inducing Pollock to settle his lawsuit against Dixie. Laura Zax owned a ¼ of the stock of Dixie as her separate property. Pollock had a claim against Dixie upon which he had gotten a $100,000 judgment, but which judgment had been reversed and remanded. Prior to retrial, settlement was made by Dixie with Pollock for $25,000. From such facts the trial court had a right to conclude that Laura Zax executed the note to improve the value of her Dixie stock.

Conclusion of Law 4 is that Laura Zax received valuable consideration for signing the Dixie note as a surety. Laura Zax owned ¡4th of the stock of Dixie. Where an officer or stockholder of a corporation endorses a corporation’s note, the stockholder or officer is denied the status of accommodation endorser, and such interest constitutes consideration to the endorser. Bonner Oil Co. v. Gaines, 108 Tex. 232, 191 S.W. 552; Commercial Inv. Co. of Uvalde v. Graves, CCA, Er. Ref., 132 S.W.2d 439; Motor & Indus. Finance Corp. v. Hughes, 157 Tex. 276, 302 S.W.2d 386; Otto v. Republic National Co., CCA, Er. Ref., 173 S.W.2d ,235; Robertson v. City Nat. Bank, 120 Tex. 226, 36 S.W.2d 481.

Conclusion of Law 6 is that the note as to Laura Zax was voidable, and she had the right to ratify; and Conclusion 7 is that in executing the property settlement with Pollock she ratified the prior agreement. The settlement agreement quoted supra, assigns all Laura Zax’s interest in the note to Pollock (she had a community ½ interest) ; and recites that same had been “guaranteed by various individuals, including the undersigned Laura Zax.”

We think the property settlement agreement sufficient to constitute a ratification of Laura Zax’s prior endorsement.

Plaintiff’s cross point is that coverture is not available to defendant as a defense.

Defendant’s endorsement of the note was in connection with and incident to her separate property. The defense of coverture is not available to defendant Laura Zax. Archer v. Griffith, Sup.Ct., 390 S.W.2d 735; Cauble v. Beaver-Electra Ref. Co., 115 Tex. 1, 274 S.W. 120.

Defendant’s points and contentions are overruled.

Plaintiff’s cross point is sustained. The judgment is correct.

Affirmed


author: RENFRO, Justice.

text:
    BANKERS HEALTH AND LIFE INSURANCE COMPANY, Appellant, v. Hettie RYAN, Appellee.
    No. 16792.
    Court of Civil Appeals of Texas. Fort Worth.
    Jan. 20, 1967.
    Rehearing Denied Feb. 17, 1967.
    Kelly, Morris, Walker & Maynard, Creighton Maynard, Jr., Elvin E. Tackett, Fort Worth, for appellant.
    Fulgham & Grogan, Frank E. Fulgham, Weatherford, for appellee.
   OPINION

RENFRO, Justice.

On May 5, 1965, appellant Bankers Health and Life Insurance Company issued a life insurance policy on the life of J. C. Ryan, which named Hettie Ryan, appellee, beneficiary. The insured died on January 17, 1966.

Timely proof of loss was made to appellant, who refused to pay the claim.

Appellee thereupon brought this suit.

Appellant pled that the insured had cancer prior to the effective date of the policy and died of cancer on January 17, 1966, and there was therefore misrepresentation of health or physical condition of said Ryan; that the answer to 11(b) of the application misrepresented that insured had never had cancer.

The trial court held that since appellant did not allege that insured was not in good health and did not allege that representations made were made willfully and with intent to defraud, the pleadings failed to present a defense to appellee’s claim.

Appellant declined to amend after the court sustained appellee’s special exceptions, whereupon the court held that appellant was not entitled to offer evidence on the alleged misrepresentations.

As we view the answer, appellant’s defense was based on misrepresentation in the application.

The policy contained a provision that “ * * * any misstatement of health or physical condition may be cause for voiding any claim arising therefrom during the contestable period of the policy * *

Contained in the application and incorporated in the policy was the following provision: “I understand and agree that the policy being applied for shall not be in force until received by me while I * * * (am) alive, and that any misstatement of health or physical condition may be cause for voiding any claim arising therefrom during the contestable period of the policy, but in the absence of fraud all statements made herein shall be deemed representations and not warranties.”

It is a general rule in Texas that, in order to avoid a policy, false statements must have been made willfully and with design to deceive or defraud. Great Southern Life Ins. Co. v. Doyle, 136 Tex. 377, 151 S.W.2d 197 (Tex.Sup., 1941); American Central Life Ins. Co. v. Alexander, 56 S.W.2d 864 (Tex.Com.App., 1933).

In Clark v. National Life & Accident Ins. Co., 145 Tex. 575, 200 S.W.2d 820 (1947), the Supreme Court stated: “We find no testimony in this record that conclusively shows that the insured knew that he had heart trouble at the time he signed the application for insurance, or that he made the false answers willfully and with the fraudulent intention of deceiving the insurance company and inducing it to issue the policy.”

In the instant case there is neither pleading nor proof that the insured or beneficiary (who signed the application) knew he had cancer at the time the application was made or that false answers were made willfully and with fraudulent intent.

In the Clark case, supra, the Supreme Court held: “It is also well settled in this State that to avoid a policy of insurance because of misrepresentations, the burden is on the insurer to plead and prove, not only that the answers made by the insured were false or untrue, but that the insured knew, or should have known, that they were untrue, and that he made them willfully and with the intention of inducing the insurer to issue him a policy.”

Other cases following the same rule are: General American Life Ins. Co. v. Martinez, 149 S.W.2d 637 (Tex.Civ.App., 1941, dism., judg. cor.); American Nat. Ins. Co. v. Green, 96 S.W.2d 727 (Tex.Civ.App., 1936, no writ hist.) ; Provident Life & Accident Ins. Co. of Chattanooga v. Flowers, 91 S.W.2d 847 (Tex.Civ.App., 1936, dism.); 46 C.J.S. Insurance § 1319, pp. 435-437; Krayer v. Prudential Ins. Co. of America, 360 S.W.2d 844 (Tex.Civ.App., 1962, reversed on other grounds, 366 S.W.2d 779); Golden State Mutual Life Ins. Co. v. Pruitt, 357 S.W.2d 812 (Tex.Civ.App., 1962, no writ hist.); Pioneer American Ins. Co. v. Meeker, 300 S.W.2d 212 (Tex.Civ.App., 1957, ref., n. r. e.); Universal Life & Accident Insurance Co. v. Murphy, 368 S. W.2d 878 (Tex.Civ.App., 1963, no writ hist.).

In view of the manner in which this controversy, as disclosed by the record before us, was presented to the trial court, his ruling on the pleading was correct, and, under the above authorities, his judgment for appellee should be affirmed.

Affirmed.


author: MOORE, Justice.

text:
    W. A. MADDOX, Appellant, v. OLDHAM LITTLE CHURCH FOUNDATION, Appellee.
    No. 251.
    Court of Civil Appeals of Texas. Tyler.
    Jan. 26, 1967.
    Rehearing Denied Feb. 16, 1967.

      Clayton, Kolander, Moser & Templeton Cleo G. Clayton, Jr., Amarillo, for appellant.
    Morris, Termini, Harris, McCanne & Lacas, John C. Harris, Jr., Houston, for appellee.
   MOORE, Justice.

This is an appeal from a summary judgment for the plaintiff on a promissory note and denying defendant any relief upon his affirmative defenses and cross action.

Plaintiff, Oldham Little Church Foundation, hereinafter referred to as “Oldham,” brought suit upon a $5,000.00 promissory note executed on December 8, 1958, by defendant, Dr. W. A. Maddox, hereinafter referred to as “Maddox.” The note sued upon was a renewal note renewing a note theretofore executed by Maddox as part payment for the purchase price of land purchased from Oldham. Defendant Maddox answered with an unsworn general denial and by way of a cross action alleged that on September 8, 1952, prior to the purchase of the land, he entered into a contract with Oldham, under the terms of which the parties agreed to an exchange of certain lands and agreed to furnish each other with a complete abstract of their lands; that he, Maddox, delivered a complete abstract to his lands but that plaintiff Oldham, though representing that it was delivering a complete abstract, failed to furnish a complete abstract of the title to its property, which fact he, Maddox, did not learn until long after the exchange; that when he attempted to trace the mineral interest to the Cooper-Neel tract of land, he found that Oldham had failed to furnish a complete abstract; that by reason of the breach of the agreement, he was obliged to spend $6,000.00 in procuring a complete abstract; that when he finally secured a complete abstract, he discovered for the first time that Oldham did not own all the minerals that it represented to own and as a result, defendant suffered damages in the amount of $10,000.-00. His prayer was for judgment over and against Oldham for his damages for breach of the contract and for general relief.

In reply to the cross action, Oldham filed a supplemental petition alleging that at the time of the execution of the renewal note on December 8, 1958, the defendant had full knowledge of the fact that the deed did not convey the mineral estate under the Cooper-Neel tract and that by the execution of the renewal note, with full knowledge of the condition of the title, defendant waived any defense which he might have to such note. Oldham also alleged that the cross action was barred by the statutes of limitation.

Oldham then filed a motion for summary judgment under the provisions of Rule 166-A, Texas Rules of Civil Procedure, alleging there was no genuine issue upon any material fact because the note upon which plaintiff’s suit is based shows on its face that it is a renewal note; that the original indebtedness which this note renewed arose out of a transaction which was consummated in 1952 and that all defenses alleged in the answer of defendant were waived because at the time of the execution of the new note, the defendant had full knowledge of all of the facts pleaded in his answer as a defense to the plaintiff’s cause of action, and that the cross action alleged by the defendant was barred by the statutes of limitation.

The motion was accompanied by numerous affidavits and exhibits.

Defendant Maddox resisted the motion for summary judgment by filing an unsworn pleading alleging that there were numerous genuine issues as to material facts which were in dispute and in support thereof, attached the affidavits of defendant, W. A. Maddox, and a witness, W. H. Powell.

Certain rules have been firmly established to govern dispositions of appeals from summary judgments. Summary judgments disposing of the entire action upon its merits are proper when, but only when, the trial court, on motion therefor, is satisfied that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law; all doubts as to the existence of a genuine issue as to a material fact must be r solved against the movant. Hunley v. Gamer, (Tex.Civ.App.) 254 S.W.2d 813; Zapffe v. McElroy, (Tex.Civ.App.) 364 S.W.2d 299. A genuine issue of fact is raised, so as to preclude a summary judgment, when the facts alleged, if proven, constitute a legal defense, King v. Rubin-sky, (Tex.Civ.App.) 241 S.W.2d 220, or where the defendant files a counter claim which raises material issues of fact which are in substantial dispute.

The courts normally look to the pleadings to determine the issues that may exist in the case, but if the depositions, admissions or affidavits disclose facts which show that the position of the moving party is untenable, summary judgment should be denied regardless of defects which may exist in the pleadings of the opposite party. Where facts appear in affidavits which would justify an amendment of the pleadings, such amendment should not be prevented by the entry of a summary judgment. Womack v. Allstate Insurance Company, 156 Tex. 467, 296 S.W.2d 233.

Thus in determining whether the plaintiff has discharged its burden of proof of showing that there is no genuine issue as to a material fact upon the whole case, the trier of the fact is not permitted to rest his judgment upon the pleadings alone, but is required to pierce the formal allegations of facts in the pleadings and examine all the testimony in the record and determine (1) whether the evidence is sufficient to establish the claim asserted by the plaintiff; (2) whether the evidence introduced by the defendant creates a dispute of a material fact upon some element of the plaintiff’s claim or (3) whether the evidence raises a genuine issue as to a material fact created by the defensive matters asserted by the defendant or (4) whether the evidence offered on the cross action asserted by the defendant raises a material issue of fact. Gulf, Colorado & Santa Fe Railway Company v. McBride, 159 Tex. 442, 322 5.W.2d 492.

In support of the motion for summary judgment, plaintiff offered affidavits showing that at the time of the purchase of the land in 1952, Dr. Maddox executed his promissory note in the amount of $25,-000.00 as a part of the purchase price. Thereafter, from time to time, payments were made on the note until it was reduced to the amount of $10,000.00. On December 8, 1956, Dr. Maddox executed a new note for the sum of $10,000.00. On December 6, 1957, he paid the sum of $2,500.00, together with the interest, leaving the balance due in the amount of $7,500.00. On December 8, 1958, when the note became due, Maddox paid the sum of $2,500.00, with interest, and requested an extension of time on the payment of the remaining $5,000.00. Oldham granted his request and permitted him to execute a new note in the amount of $5,000.00, dated December 8, 1958, which note is the subject of this litigation. The affidavits further show plaintiff to be the present owner and holder of the note; that the same was due, owing and unpaid and had been placed in the hands of an attorney for collection. Maddox did not deny the execution of the note. It therefore appears that the plaintiff is entitled to a summary judgment upon the note, unless the evidence offered by the defendant Maddox raises a genuine issue of fact in connection with the defenses asserted by him or a genuine issue of fact upon his claim for affirmative relief.

The defenses relied upon by Maddox are set forth in his affidavit which shows that prior to the sale, the parties entered into a written contract wherein Oldham agreed to convey to Maddox 33,668 acres of land, including 100% of all mineral rights thereon, for the agreed consideration of $450,500.00; that Oldham also agreed to furnish him with a complete abstract showing merchantable title; that prior to the purchase, Oldham furnished him an abstract and represented the same to be a complete abstract; that the abstract was not complete in that it omitted instruments of record relating to the minerals under a 6,000-acre tract known as the Cooper-Neel tract; that on December 2, 1952, after the abstracts pertaining to the transaction had been examined, a warranty deed to the property was prepared by Mr. John C. Harris, attorney for Oldham; that when the deed was presented to him, due to the lengthy description of the property, he asked Mr. Harris if the deed conveyed all that was agreed to be conveyed under the contract and he says that both Mr. Harris and Mr. Oldham assured him that it did; that in reliance upon these representations, he accepted the deed and it was not until after he had executed the $5,000.00 renewal note in question that he learned that the abstract was incomplete and that the deed did not convey to him the minerals under the Cooper-Neel tract; that in order to clarify the ownership of the mineral estate, he was required to expend the sum of $6,500.00; that because of the fact that the deed failed to convey all the mineral rights the parties had agreed to convey, he refused and still refuses to pay the note.

The written contract entered into by the parties agreeing to the exchange of their properties contained the following pertinent provisions:

“ * * * The above consideration also includes the conveyance of 100% of all mineral rights on said 33,668 acres, * *
“ * * * each party hereto agrees to furnish the other with a complete abstract of the property to be conveyed showing merchantable title to his property * *.
“Within ten days from the receipt of abstract, the party receiving same shall accept title or return abstract with written objections thereto. Failure to comply with this provision shall be construed as an acceptance of the title.
“When title objections have been cured, each party agrees to deliver a good and sufficient warranty deed properly conveying his property to the other *

The deed consummating the sale, dated December 6,1952, conveyed numerous tracts of land, among which was the Cooper-Neel tract. Immediately following the field notes describing the 6,000-acre Cooper-Neel tract, the deed recited as follows:

“Subject to * * * the terms of that certain deed, made, executed and delivered by the Arlington Land Company to the Mosota Land Company, which said deed is dated March 6, A.D., 1914, and was filed for record on the 22nd day of April, A.D., 1919, in the office of the probate clerk and ex-officio recorder of the County of Rio Arriba in the State of New Mexico, and duly recorded in the 23rd day of April, A.D., 1919, in Vol. 21-A, of records in said office at page 225-226, in which said deed reservations are made of all minerals on the premises hereinbefore described and of which said deed and the contents thereof and grantee herein has accepted and acknowledged actual and complete knowledge.” (Emphasis supplied).

The deed also contained a covenant of warranty, warranting title to the land conveyed under and by virtue of the terms of the deed.

The sworn pleadings, affidavits and exhibits filed by the plaintiff, Oldham, assert that the abstract which was furnished Dr. Maddox contained a deed to the Cooper-Neel tract showing that Oldham did not own the minerals because of the reservation in previous deeds. Maddox does not deny that the abstract contained a deed to the Cooper-Neel tract showing the previous reservation of the minerals by plaintiff’s predecessors in title. He says only that some of the deeds relating to the minerals on the Cooper-Neel tract were omitted from the abstract.

Plaintiff also attached to its affidavits a letter from Dr. Maddox dated December 5, 1957, addressed to Mr. John C. Harris, Jr., attorney for Oldham. The letter, in part, reads as follows:

“Dec/5/1957
“Dear Mr. Harris;—
“I received a letter from Mrs Florence Oldham asking that I mail you a copy of Simms, Modrall, Seymour & Roehl, opinion relative to the Mineral interst in the Cooper-Neal tract compsoed of some 6000 acres more or less out of the south portion of waht is comonly know as the El Poso Ranch in Rio Arrabia County N.M. formely owned by Mr M. C. Old-ham, or Little Church foundation, which was founded my Mr Oldham now deceased.
“The No ONE copy in red, is a exact copy of the opinion partaining to the Cooper-Neal tract, only, which was or is an extract out of the entire opinion par-taining to the entire ranch, 1 am asuming that the portion regarding their opinion on the tract involved is all that you will nead.
“The No (2), Copy is a letter signed by Wilson Hurley, who examined the title on the El Poso ranch or Oldham lands, all the way through, this firm of Albuquerque Lawyers, examine over 75 percent of all N.M. Titles for all Loan Co in the entire state and have a enviable repetition.
“At my request Wilson Hurley wrote the firm of lawyers, in Tucumcaris, N.M. of Rowley, Breen and Bowen who 1 have employed to see if the can clearify the mineral interst, on said Cooper-Neal tract.
“I will have to admit that Wilson seams to doubt his own opinion, to the Oil Co that was leasing said ranch, but at the same time the Albuquerque firm of Lawyers will not pass the lands involved under the Cooper-Neal tract, untill it has been cleared by a Suit to Quiet title.
“The sixty-four dollar question is, can the mineral interst be clear up, by this suit??????, I am sure that Mr, Breen of Tucumcari, will me more than glad to accept any information, that you or the Oldham estate has in their posetin that could posibly be used in this fourth coming suit to Quiet the title on Minerals only.
“Again wishing to thank you, and asur-ing you of our corporation in the matter I am,
“Yours very truly
“/s/ W. A. Maddox
“Dr. W. A. Maddox”

The “No ONE copy in red,” which was enclosed in the letter is a title opinion upon the Cooper-Neel tract. The opinion reads in part as follows:

“The Cooper-Neel tract, however, presents a different problem. This tract was also subject to the conveyance of minerals to Mosoto by Arlington Land Company. On the face of the deed, as it appears in the abstract examined, which abstract was prepared by the Rio Arriba County Title Abstract Company and was certified to the 20th day of December, 1938, said deed appearing on page 75 thereof, is the following: ‘The abstractor has not in. this abstract followed the transactions, if any, of the Mosoto Land Company involving the above mineral rights.’ * * * ”

The opinion further states that in all previous conveyances of the Cooper-Neel tract, the parties appear to have conveyed the land in accordance with the descriptions and reservations contained in previous deed, which previous deeds have the mineral reservations under the deed from Arlington Land Company to Mosota Land Company set forth, and the opinion then adds :

* * * This is true up to the present time, and such a reservation is found in the warranty deed of December 6, 1952 from the Oldham Little Church Foundation to William A. Maddox, * * * »

The “No (2), Copy,” which is attached to Dr. Maddox’s letter, is likewise a title opinion. In this opinion, the attorney says that the only evidence of ownership of the minerals under the Cooper-Neel tract, which he could find, was the conveyance out to Mosota Land Company forty-three years ago, and in his opinion the title to the minerals remained in it. He also states in effect that the various deeds conveying the Cooper-Neel tract contained an unequivocal reservation of the minerals.

Dr. Maddox does not deny the letter or the contents thereof nor that the letter contained copies of the title opinions referred to above. It is significant to note that neither in this letter nor at any other time prior to this suit, did Dr. Maddox complain of the fact that the deed did not convey the minerals under the Cooper-Neel tract.

On this appeal, Maddox contends that his pleadings and affidavits raised issues of fact upon his defensive plea of fraud and failure of consideration, as well as issues of fact on his cross action for damages, and therefore the rendition of the summary judgment against him was improper. Oldham, on the other hand, contends that those defenses were waived when Maddox executed the renewal note with full knowledge of the fact that the title was defective, or with full knowledge of the fact that the deed did not convey the minerals under the Cooper-Neel tract. Therefore, the first question before us is whether the sworn pleadings, affidavits and exhibits offered by the parties establish as a matter of law that Maddox waived his defenses.

We have concluded that Maddox waived his defenses of fraud and failure of consideration when he executed and delivered the note sued upon. We believe the rule announced in the case of Hunter v. Lanius, 82 Tex. 677, 18 S.W. 201, (1892) and subsequently followed by the Supreme Court of this state in Gaylord Container Division, etc. v. H. Rouw Company, Tex., 392 S.W.2d 118, is controlling in determining the question of whether or not a material issue of fact was raised by the evidence in the present case. In both the Hunter and Gaylord cases, as in the present case, the holder brought suit on a note which he claimed to be valid. In the Gaylord case, the Supreme Court reaffirmed the rule announced in the Hunter case, wherein the court held:

“ ‘Where one executes an obligation in renewal of a note claimed by the holder to be valid, but known to the maker to be fraudulent or without consideration, the latter will be deemed to have freed the transaction of the fraud, and to have waived the want of consideration, and will not be permitted to plead it. So, a note is supported by a sufficient consideration, if executed to secure the abandonment of a suit brought to enforce a doubtful right, or in compromise of a disputed claim made in good faith, though it ultimately appears that the claim was without merit. Keefe v. Vogle, 36 Iowa 87; Babcock v. Hawkins, 23 Vt. 561; 1 Daniel, Neg.Inst. § 205; 1 Add.Cont. § 14.”’

Although Dr. Maddox denies in his affidavit that he had any actual knowledge of the fraud until after he had executed the renewal note on December 8, 1958, he admits in his affidavit that he wrote the letter to Mr. Harris on December 5, 1957, in which he included the title opinions showing that Oldham had not in fact conveyed him the title to the minerals under the Cooper-Neel tract. Therefore, we believe the evidence conclusively shows that he either had knowledge of the alleged fraud or had knowledge of facts that would lead a reasonably prudent person to discover the alleged fraud on December 5, 1957, approximately one year before he executed the renewal note. He waited some three years after the execution of the note involved herein before asserting his right to rescind for fraud and failure of consideration. We therefore conclude that defendant waived his defense based upon fraud and failure of consideration.

We now turn to the question of whether the evidence presents a genuine issue as to a material fact upon the cross action for damages for breach of contract, or for damages for actionable fraud. Oldham contends that any cause of action which Maddox might have had by reason of breach of contract or for actionable fraud is barred by the statute of limitations. We think this contention must be sustained.

The limitations statute provides that all actions founded upon a written contract must be commenced and prosecuted within four years after the cause of action shall have accrued, and not afterwards. Article 5527, Vernon’s Ann.Tex.Civ.St. Limitations commence to run on a breach of the contract or when the claimant has notice of sufficient facts to place him on notice of the breach thereof. Thus, in suits for breach of contract where a party seeks to avoid limitations because of fraud, he must show not only the fraud, but must show that after exercising ordinary diligence, he failed to discover the existence of a cause of action. Limitations will commence when he knows or should have known of the breach. Owen v. King, 130 Tex. 614, 111 S.W.2d 695, 114 A.L.R. 859; Boyd v. Knox, (Tex.Civ.App.) 273 S.W.2d 81; 37 Tex.Jur.2d, Sec. 62, page 189.

A review of the evidence shows that when Maddox wrote the letter to Mr. Harris on December 5, 1957, enclosing the title opinions showing that he did not have title to the minerals of the Copper-Neel tract, he either knew or by the use of reasonable diligence should have known of the breach of the contract and therefore limitations commenced on that date. He did not file his cross action until March 17, 1962, which was more than four years after his cause of action on the written contract accrued. Therefore, any cause of action he might have had for breach of contract was barred by the four-year statute of limitations.

If the pleadings and affidavits are sufficient to show that Maddox is asserting a cause of action for damages for actionable fraud, we believe such action would be barred by the two-year statute of limitations. Article 5526, V.A.T.S.

Here again the evidence shows that on December 5, 1957, Dr. Maddox had before him a title opinion showing that the deed failed to convey the mineral interest under the Copper-Neel tract. We think such evidence conclusively shows that he either knew or by the exercise of reasonable diligence should have known of the fraud on that date. Certainly, he had knowledge of facts which would lead a reasonably prudent person to discover the fraud. Knowledge of facts which would lead to the discovery of fraud is, in law, knowledge of fraud itself. White v. Bond, Tex., 362 S.W.2d 295.

It thus appearing that the plaintiff discharged its burden of showing that there was no genuine issue of a material fact upon the whole case, we think the matter was properly disposed of by summary judgment.

Accordingly, the judgment of the trial court is affirmed.