author: RANDOLPH, J.

text:
    JONES et al. v. McCLATCHEY.
    No. 3508.
    Court of Civil Appeals of Texas. Amarillo.
    March 25, 1931.
    Rehearing Denied April 15, 1931.
    Bean & Klett, of Lubbock, for appellants.
    Vickers & Campbell and Douglas & Spiller, all of Lubbock, for appellee.
   RANDOLPH, J.

This suit was filed by J. A. McClatchey, as plaintiff, against W. A. and J. H. Bacon and J. O. Jones, as defendants, and the parties will hereinafter be styled as in the trial court.

The plaintiff’s suit was to recover the purchase price paid by him to defendants for 32.32 acres of land alleged to be a part of section 11, in block D-2, in Lubbock county, Tex., which the plaintiff claimed had been conveyed to him by the defendants at a time when they did not own it, and therefore he had paid them for property that he did not receive title to.

H. D. Beal intervened in the suit, claiming that he had previously conveyed said land to the defendants by warranty deed.

On trial of the ease, the court submitted two issues to the jury, which, after giving explanatory paragraphs and definitions, were as follows:

“Special Issue No. One: Do you find from a preponderance of the evidence that the true boundary line between Sections 10 and 11 is the line testified to by surveyor A. L. Harris?
“If your answer to the above special issue is in the affirmative, then you need not answer the following special issue, but if it is in the negative, then please answer this following special issue:
“Special Issue No. Two: Do you find from a preponderance of the evidence that the true boundary line between Sections 10 and 11 is located on the three mounds a few feet east of the old fence line pointed out by the defendant J. O. Jones to the plaintiff J. A. Mc-Clatchey?”

The jury answered the first issue in the affirmative, and, following the instructions of the court, did not answer the second. The court thereupon rendered judgment in favor of plaintiff and against defendants for the sum of $1,784.70.

Following the holding of this court in the ease of Parkinson v. Sears, 290 S. W. 556, and in the case of J. A. McClatchey v. A. W. Worsham (No. 3297) (not for publication) we hold that the jury’s finding that the I-Iarris line between the two sections is the true boundary line, and we will not again discuss that question.

The plaintiff, in his petition, alleged in substance as follows: That on August 2,1920, he purchased from the appellants Bacon, Jones, and Bacon the west half of section 10, block D-2, containing 320 acres of land, and paid and agreed to pay appellants $35 per acre for and did in fact pay a portion of said purchase price at the time and executed his notes for the balance, which have since been paid. That prior thereto appellants had sold and conveyed to A. W. Worsham by warranty deed' the east half of section 10, containing 320 acres. That, in the negotiations between -appellee and appellants relative to the sale to -appellee of the west half of section 10, the appellants represented that they were selling him 320 acres of land. That in the negotiations leading up to his purchase of said tract of land, he talked with appellant J. O. Jones, who was acting for himself and the other appellants, and who took appellee out and pointed out the stakes and mounds indicating the boundaries, and represented to him that they were selling him the land located inside of said boundaries, and that said corners and boundaries were correctly and truly marked on the ground for said-west half of section 10. That appellee was not familiar with and did not know where the true corners of said 320 acres of land' were actually located on the ground, and relied solely upon the representations of the said J. O. Jones, and believed his statements pertaining thereto. 1-Ie further alleged that he did not know at the time that there was any shortage in the acreage thereof or that there was any controversy in the vicinity between the owners of adjoining tracts of land relative to true location of lines, boundaries, -and corners, etc. That subsequent to the time of his purchasing he ascertained that there was some doubt - and uncertainty as to-the true location of the boundaries and acreage of said tract of land, and in 1927 and 1928 finally ascertained where the true boundaries were. That in truth and in fact the west line of the 320 acres of land he purchased from' appellants was located about 102 varas east of the line as pointed out to him by Jones, and by reason thereof he has lost 32.32 acres of land. That the tract of land so pointed out to him by J. 0. Jones overlapped onto section 11, which lies immediately west of section 10, to the extent of 32.32 acres. That appellee was the owner of said section 11. Appellee prayed that he recover as against appellants the amount of purchase money he had paid to them for said 32.32 acres of'land.

Defendants and intervener filed an answer consisting of a general demurrer, general denial, and then further alleged, in substance, as follows: That the said Bacon, Jones and Bacon had theretofore, on August 2, 1920, sold to the appellee 320 acres of land, which said tract was pointed out to him, and its boundaries and corners, being then fixed and marked on the ground, were also pointed out to him, they having been theretofore placed by the county surveyor of the county; that the northwest and southwest corners and the middle point of the west boundary of said tract of land were so pointed out by J. O. Jones- as being slightly to the eastward of a fence then standing between the pastures of McClatchey and of the said Bacon, Jones, and Bacon. They further alleged that, if the true west boundary line of section 10 was not at the places so marked and designated and pointed out to appellee, nevertheless they were the owners of said land lying eastward of said fence, including the 320 acres so pointed out by appellants, having acquired it from intervener Beal; that the deed of conveyance to appellee was intended to convey him all the land within the 320 acres so pointed out to him, and if it did not by its terms so convey said land to said appellee, thereafter-wards in a suit brought by appellee against A. W. Worsham, in which said suit these same appellants were parties defendant, judgment was rendered reforming the deed theretofore made to appellee so as to include the very land that had been pointed out to him; and that judgment had been rendered in such suit reforming said deed and fixing its west boundary line at the stakes and mounds just east of the'old fence between McClatchey’s pasture and that of the defendants and appellants herein; that the old fence had been standing for about eighteen years and had been during all of said time recognized, maintained, and claimed as being on or quite near the boundary between said sections 10 and 11; that the appellee at the time of his purchase and at all times during his ownership of • section 11 had recognized the fence as being on or within a few feet of the boundary line, and knew or by the exercise of ordinary diligence .'could have known that said fence had been standing at that position for a great many years, and that appellants had also recognized said fence as being on or near the line. Appellants and said Beal further alleged that the said Mc-Clatchey and those who had owned section 11 prior to his acquisition thereof, and the said Beal during his ownership of section 10, and all other persons having to do with said lands or any of them at any time, had for many years recognized the dividing line between section 10 and section 11 as being the old fence, or near thereto; that by reason of the foregoing facts appellee was estopped to claim that the boundary line between his section 11 and the lands he had purchased from ap■pellants was at any other place than the corners and mounds pointed out to him at the time of his purchase.

Appellants and said Beal further alleged that appellee was estopped to deny that the boundary line between his section 11 and the land purchased from appellants on August 2, 1920, is at any other place than pointed out to him by Jones, and is estopped to claim that he was the owner of 32 acres for which he sought the value thereof, because the question had theretofore been litigated between said parties in a suit that had been brought by appellee McClatchey against A. W. Wor-sham and against said Bacon, Jones, and Bacon, in which said suit H. D. Beal had intervened, which said suit had been prosecuted in the Ninety-ninth district court of Lubbock county, Tex., wherein judgment had been rendered reforming the deed made to appellee so as to include the very land pointed out to him at the time of his purchase, and the very land he now seeks to recover the value of; that said suit was appealed to the Court of Civil Appeals for the Seventh Supreme Judicial District of Texas, and judgment there rendered affirming the trial court, said Court of Civil Appeals further holding that there had been an agreement of boundaries as between McClatchey and the other parties.

The appellants also pleaded the two-year statute of limitation, claiming that appellee’s cause of action, if he ever had any, for recovery of money that had been paid for said 32.32 acres, was barred by the two-year statute of limitation.

Appellants further answered that the appel-lee was the owner of section 11, which was immediately west of section 10, and had owned said tract of land, in so far as it lay west of the old fence, hereinabove referred to, for some time prior to August 2, 1920, on which said latter date he purchased the land over which this suit has arisen. That appellee, at the time of the purchase of said west half of section 10 from appellants, knew, or by the exercise of ordinary diligence should have known, that there was a controversy existing in that neighborhood as to the true and correct location and boundary lines of the surveys of land in that vicinity, and especially with reference to the boundary lines of sections 10 and 11 and other adjoining surveys; and that with such knowledge he entered into negotiations with appellants and purchased from them as a part of section 10 the west 320 acres of land lying immediately east of said old fence, intending at the time that the boundary between said section 11 and the land he was purchasing was at the mounds and corners theretofore placed by Harris, .and at the time he purchased pointed out to him by J. O. Jones; and that by such acts and conduct appellee assumed the risk of the boundary line being at the place so pointed out to him by J. O. Jones, and so recognized by him ■at that time as being the correct boundary line between sections 10 and 11, well knowing, or at any rate being charged with notice of, the fact that, if the true boundaries of the east line of section 11 should be determined to be east of the lines pointed out to him by Jones for the west line of section 10, he would lose acreage by reason thereof. That on account of such acts and conduct, appellee is now estopped to claim that the boundary between his section 11 and the tract of land purchased from appellants is at any other place than the mounds and corners pointed out by J. O. Jones; and that his acts in the premises were equivalent to agreement to the boundary between the lands of appellee in section 11 and that of appellants that they were selling to him.

Plaintiff filed his supplemental petition in which he further specially pleaded, in substance, as follows: That at the time he purchased section 11 and the west half of section 10 he did not know where the true boundary lines of either of said tracts were located on the ground. That he purchased section 11 in October, 1919, from T. H. Sears and T. E. Barbee, and that the deed to him recited that it conveyed 640 acres; that he did not have it surveyed at the time he purchased it; that on August 2, 1920, he purchased from appellants the west half of section 10, which was conveyed to him by deed of general warranty in which it was represented that the tract contained 320 acres, and that he bought the land on the promise or representation that it did contain 320 acres. That J. O. Jones showed him the land and pointed out certain mounds, which he represented were the true corners and boundaries of the west half of section 10, and that it was several years thereafter before appellee discovered the true east boundary line of section 11, which is the west boundary line of section 10, was located at a point approximately 100 varas east of the mounds and stakes which J. O. Jones had pointed out; that shortly after ascertaining the true boundaries were not at the place pointed out by Jones he filed a suit against A. W. Worsham, owner, and Bacon, Jones, ■and Bacon, warrantors, of the east half of section 10, for the purpose of establishing the true and correct boundary line of the west half of section 10 at a place about 100 varas east of where it had been pointed out to him by J. O. Jones. That in said suit the deed to appellee was reformed so as to include the very land pointed out to him by J. O. Jones, but that said court found that the true west line of the west half of section 10 was about 100 varas east of where it had been pointed out by J. O. Jones. He further alleged that the east line of section 11 and the. west line of section 10 is a common line, and that its true location was about 100 va-ras east of where the said J. O. Jones pointed it out and had been so found in the suit, and that the reformation ordered in said suit had taken from appellee 32.32 acres of land; and that said deed as reformed conveyed to appel-lee 32.32 acres out of section 11, and to that extent was void, and by reason thereof he is entitled to recover in this suit $35 per acre for said land, being the purchase price.

The defendants, appellants, present the following proposition of error on the part of the trial court: “Since the undisputed evidence in this case shows that the subject-matter of this suit has heretofore been litigated between the same parties, and finally disposed of in this Court, the Trial Court should have submitted to the jury the defendants’ peremptory instruction, as requested.”

As shown above, the matter in controversy in this suit is the recovery of the sum of money alleged to have been paid for 32.32 acres of land off the east boundary of section 11, under a conveyance which called for the land to be part of the west half of section 10, and it was necessary to entitle the plaintiff to recover for him to show by the evidence that the true west boundary line of section 10 did not include the land conveyed to him and for which he paid the defendants. A sketch of sections 10 and 11, showing the claimed boundary lines and the true boundary lines is here presented:

The plaintiff owned section 11. He also became the owner of the west ½ of section .10 by purchase from the defendants. In the suit of J. A. MeClatchey v. A. W. Worsham et al. (No. 3297) in this Court (the opinion in which is not for publication), the plaintiff in this cause was the plaintiff in .that. While the defendant Worsham in that case is not a party in this, the other defendants in that case, as also the intervener in' this, were parties both in that case and in this. The question in the ease of MeClatchey v. A. W. Wor-sham et al. involved the true location of the east boundary line of the west half of section No. 10. The location of a certificate for land in the attempt to ascertain the true eastern boundary necessarily involves the location of its other boundaries. The contest in the Worsham Case, as between MeClatchey and Worsham-by reason of this boundary question, really involved the strip of land on the eastern boundary of the west 'half of section 10 and between the true line and the old fence line, but that does not limit the question of location, for the ascertainment of the true location of the west 'half of section 10 was the matter to be determined in that suit.

Again, MeClatchey being the owner of section 11, which called for section 10, the location of section 11 could have been determined in the Worsham suit if it was not, in fact, being directly litigated in that suit. In fact, the west boundary line of section 10 was located by the judgment in the Worsham Case.

It will be seen by reference to the judgment in the Worsham Case that the deed to A. W. Worsham was reformed in so far as the description of the land is concerned so as to conform to the true line, or Harris line, and that the deed from J. O. Jones, W. A. Bacon, and J. P. Bacon to J. A. MeClatchey, dated August 2, 1920, and recorded on page 413 of vol. 65 of the deed records of Lubbock county, was reformed so as to read:

“That certain tract or parcel of land situated in Lubbock County, Texas, and being the west half of Section 10 in Block D-2,
“Beginning at a stake set by Harris at the north end of the fence between A. W. Wor-sham and J. A. .jMcClatchey pastures;
“Thence west 950.4 varas to stake set by Harris;
“Thence south 1900.8 varas to stake set by Harris;
“Thence east 950.4 varas to stake set in the road;
“Thence north along the fenbe between Wor-sham and MeClatchey pastures 1900.8 varas to the beginning, and containing 320 acres of land.”

The Worsham Case having been submitted to a jury, the court, upon the answers of the jury to the issues submitted to them, rendered judgment in favor of the defendant Wor-sham for the strip of land lying between the Harris line and the old fence line. This judgment ascertaining that the true boundary line between said sections was the Harris line and locating section 10 accordingly, and by reason of the court’s judgment giving to Worsham the disputed strip, it necesarily decreed the land conveyed by the defendants to plaintiff was short in the amount of 32.32 acres. This, because the judgment involved the location of the west boundary line of survey 10, and the plaintiff being a party to the suit and being the owner of section 11, immediately west of and adjoining survey 10, was concluded by said judgment to the ownership of the west half of section 10, as so reduced in acreage.- It is therefore apparent that the matter of the boundary of sections 10 and 11 herein litigated was formerly litigated in the suit of the plaintiff v. Worsham et al. In that suit £he plaintiff did not seek to recover any excess payment for the land purchased by him. It was apparent thát, if he failed in that suit, and that if his ownership of the west half of section 10 was limited to the old fence line on the west and the Harris line on the east, the west half of section 10 would be decreased the 32.32 acres. In the Worsham suit the plaintiff could have litigated his right to recover the purchase money paid to the defendants for the 32.32 acres of land, but did not see fit to do so. This being true, the rule applies that matters that could have been litigated in that suit are presumed to have been litigated or waived in such suit.

A valid final judgment rendered upon the merits constitutes an absolute bar to a subsequent action between the same parties upon the same ‘claim or demand. It is a finality as to the claim or demand in controversy, concluding the parties or those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose. Belcher Land-Mtg. Co. v. Norris, 34 Tex. Civ. App. 111, 78 S. W. 890; Freeman v. McAninch, 87 Tex. 132, 27 S. W. 97, 47 Am. St. Rep. 79; Thompson et al. v. Lester, 75 Tex. 521, 14 S. W. 20.

The presumption is that every matter that could have been adjudicated in a former suit was before the court and is concluded by the judgment. Johnson v. Murphy’s Adm’rs, 17 Tex. 216.

A former judgment concludes the parties thereto, not only as to every matter which was offered and received to sustain the claim or demand, but as to any other admissible matter which might 'have been offered for that purpose. City of Houston v. Walsh, 27 Tex. Civ. App. 121, 66 S. W. 106 (writ denied).

A plea of res judicata applies to every matter which the parties might have had properly litigated and decided. Nichols v. Dibrell, 61 Tex. 539.

A former judgment is conclusive between the same parties and those claiming under them. It interposes a complete bar to further litigation so long as it remains in full force. The matter therein adjudicated, or that might have been adjudicated, cannot again, in another suit, be inquired into, but it must appear to have been a judgment on the merits. Weathered v. Mays, 4 Tex. 387.

The fact that Worsham was one of the defendants in the former suit and judgment does not affect the rule. That the parties in the first suit are not identically the same as those in the second suit when the first case was decided on the merits is no answer to the plea of res judicata; otherwise, no matter how often a case be decided, the parties might renew the. litigation by simply joining with them a new party, or, as in the case at bar, leaving out of the second suit one of the parties to the first. Girardin v. Dean, 49 Tex. 243. See, also, Russell v. Farquhar, 55 Tex. 355.

The writer’s views upon the question of res judicata as applied to this case are fully set out in the preceding discussion of this case, in which the other members of the court do not concur; but we all agree upon the following statement and. discussion as sustaining the said plea and the plea of estoppel:

This record shows that the judgment in' cause No. 3297 'had become final. That in said case the interveners therein, who are appellants herein, pleaded that on and'prior •to August 2, 1920, the plaintiff in said cause, who is appellee here, was the owner of section 11, located immediately west and adjacent to section 10. That prior to the last-mentioned date, the interveners had caused the county surveyor to mark the four corners of the west half of section 10 by stakes, which were standing at the time interveners conveyed the west half of section 10 to Mc-Clatchey. That the interveners agreed to sell and did sell to McOlatchey, the plaintiff in this suit, the identical tract of land lying within the boundary line indicated by said stakes. That the plaintiff agreed to purchase and did purchase from interveners said identical tract of land, which was pointed out to him. That the line extending from the stake so placed for the northwest corner of section 10 to the stake so placed for the southwest corner of section 10 ran very near and approximately coincident with an old fence that had for many years been recognized by all the parties as the division line between sections 10 and 11, and that said recognized line was the common and agreed boundary line between said surveys. That plaintiff had agreed to said line as the boundary line between sections 10 and 11, and had acquiesced in the location thereof as an agreed line, by all of which he was estopped to claim the location of said line at any other place.

The interveners alleged that, if the land described in their deed to plaintiff was not the identical land included within the boundaries indicated by the stakes pointed out to him, the description in the deed was made through mutual mistake of the parties, and asked that the deed be corrected and reformed so as to describe the identical land included within the boundaries indicated by said stakes.

The jury found, in effect, in the trial of cause No. 3297, that McOlatchey and inter-veners understood and agreed at the time of the transaction that the land purchased by McOlatchey lay wholly within the four stakes caused to be placed by interveners and pointed out by them to McOlatchey.

The court rendered judgment reforming the deed from interveners to McOlatchey and describing his land as heretofore set out.

The interveners having pleaded that, prior to the purchase by McOlatchey of the west half of section 10, McOlatchey had agreed to the boundary line betweeñ sections 10 and 11, the line indicated by the stakes at the northwest and southwest corners of section 10 manifestly put in issue such line as an agreed 'boundary: The jury having found that the plaintiff, by agreement with interveners, purchased the identical land lying within the boundaries indicated by the stakes pointed out to him, and the court having reformed the deed to comply therewith, the question of agreed boundary was necessarily determined in the former suit and the appellants’ plea in this cause of res judicata and estoppel should have been sustained and the jury directed to find a verdict in their behalf. Hermann v. Allen, 103 Tex. 382, 128 S. W. 115.

We therefore hold that plaintiff McOlatchey was estopped from bringing this, his second suit, against the defendants. As he was estopped from doing- so, the judgment of the trial court herein is reversed, and, as the case has been fully developed, the judgment in this case is here rendered that the plaintiff McOlatchey take nothing by his suit against the defendants herein, and that the trial court’s judgment as to the interveners be and is not disturbed.


source: Caselaw Access Project

author: BARCUS, J.

license: Public Domain

text:
    BIDA v. KING et al.
    No. 1044.
    Court of Civil Appeals of Texas. Waco.
    April 9, 1931.
    Rehearing Denied May 7, 1931.
    M. McCullough, of Eastland, for appellant.
    L. H. Flewellen, of Ranger, for appellees.
   BARCUS, J.

Appellant filed this suit on a note executed by F. N. King, payable to Adams & Co., a partnership, composed of H. G. Adams and T. O. Bray. Appellant sought’ judgment against appellees Adams & Co. as indorsers on said note. Adams & Co. sold the note to E. U. Ford, and their name is signed on the reverse side as indorsers. At the time they indorsed and sold the note to E. L. Ford, they and Ford, in connection therewith-and as a part thereof, signed a written agreement to the effect that Adams & Co. were not to be in anyway liable for the payment of said note either as indorsers or otherwise. Appellees Adams & Co., alleged that appellant at the time he purchased the note from E. L. Ford had actual knowledge of the written agree- • ment between them and Ford, and that appellant was not, therefore, as against them, a holder of said note in due course for value.

The cause was tried to the court and resulted in judgment being entered denying appellant any recovery against Adams & Co., and it is from this portion of the judgment the appeal is perfected. Appellant seasonably requested the trial court to file its findings of fact and conclusions of law, which said court failed to do, and appellant excepted and assigns error to the action of the trial court in failing to file same.

The issue as to whether appellant at the time he purchased the note knew of the written agreement made between appellees Adams & Co. and Ford, and whether appellant had actual knowledge that appellees’ indorsement upon said note was a limited one, were sharply contested issues of fact; the testimony relative thereto being irreconcilable. It seems now to be the well-settled law that, where a cause is tried to the court and the evidence is conflicting on any material issue, it is reversible error for the trial court, when timely requested, to fail to file its findings of fact and conclusions of law. G., H. & S. A. R. Co. v. Stewart & Threadgill (Tex. Com. App.) 257 S. W. 526. In the cited case, many authorities were collated and this question definitely determined. Said case has since said time been numerously cited with approval.

Because of the action of the trial court in refusing to file its findings of fact and conclusions of law, the judgment of the trial court is reversed, and the cause remanded.


author: JONES, C. J.

text:
    AMERICAN SURETY CO. OF NEW YORK v. M-B ISE KREAM CO.
    No. 10751.
    Court of Civil Appeals of Texas. Dallas.
    March 28, 1931.
    Rehearing Denied April 25, 1931.

      Lee G. Carter, of Dallas, for appellant.
    Nathaniel Jacks, of Dallas, for appellee.
   JONES, C. J.

In a suit by appellant, American Surety Company of New York, against appellee, MB Ise Kream Company, a corporation, and a number of individual defendants, a recovery against appellee was denied by the judgment rendered, but recovery was allowed against some -of the defendants and denied as to others. The appeal is prosecuted by appellant only from that part of the judgment in favor of appellee. The following are the necessary facts:

In 1921, the Crystal Ice Cream Company and the Smith Ice Cream Company, corporations, separate and independent of each other, operated the business in Dallas as manufacturers of ice cream for sale to the retailer in their respective territories. During that year, A. F. McLendon began separate negotiations with the officers of each of said corporations for the purchase of each of said plants and its properties, for the purpose of operating a new ice cream company for the manufacture of ice cream. The negotiations culminated in the purchase by McLendon of the entire plants, business, and properties of these two corporations. The questions raised on this appeal are concerned only with the purchase of the Crystal Ice Cream Company, designated hereafter as the 'Crystal Company, though the Smith Company was taken over by McLendon at approximately the same time. A written contract for the purchase of the Crystal Company was entered into between such company and McLendon on November 21, 1921, but the sale did not become effective until December 1, 1921.

It was the intention of McLendon when he purchased these two corporations to form a corporation to be known as the M-B Ise Kream Company, and to transfer to it the purchased properties. This corporation, however, was not formed until in May, 1922, when the appellee corporation was formed and the properties and business, then being operated by McLendon, passed to appellee. During the time existing between December 1, 1921, and the organization of appellee as a corporation in May, 1922, the business was operated by McLendon under the trade-name given to the new corporation. The undisputed evidence shows that there was no consolidation of the Crystal Company with ap-pellee by such sale, and that the new corporation was not a mere continuation of the old corporation, but that the transaction was a bona fide purchase of all the properties of the Crystal Company by McLendon, and that he operated the business as a new and independent business for approximately six months, when the properties he purchased were taken over by appellee and afterwards operated by it as a new and independent business.

The Internal Revenue Department of the United States government had a claim against the Crystal ■ Company for delinquent income taxes for the year 1918, in the sum of $1,780.15, and also for the year 1919, in the sum of $2,631.85. The Crystal Company disputed the right to these claims, and, desiring to contest the right of the government to such claims, applied to the proper forum for the privilege of executing a bond, the effect of which would be to abate the collection of these taxes, until the issue in reference to the validity of the claims could be determined by the forum existing for such purpose. The requested abatement was allowed, and on October 6, 1921, the Crystal Company, with the .American Surety Company, as surety, filed the required abatement bond, in effect guaranteeing the payment of the delinquent taxes, if the Crystal Company should be adjudged in default. In consideration for the execution of this bond by appellant as surety, the Crystal Company and its president, H. F. Owsley, expressly agreed to indemnify appellant and to pay to it any losses sustained by reason of its sure-tyship on the bond. The contest in reference to these taxes arose over the difference between the Internal Revenue Department and the Crystal Company as to the percentage of depreciation that should be allowed the said company as a credit on its receipts. The Crystal Company contended that this depreciation should be placed at 30 per cent.; the Revenue Department contended that it should be placed at 10 per cent. The result of the contest was that the Revenue Department prevailed, and appellant, as surety on the bond, was compelled to pay the delinquent taxes, together, with interest and penalties. This payment was made by appellant July 6, 1923, by checks issued to the collector of internal revenue at Dallas, Tex., and such payment is the basis for appellant’s suit. Appellant’s original petition was filed December 6, 1923. Final judgment in this cause was entered in the minutes of the court November 15, 1929.

As the issues in this case in a great measure depend upon the construction of the written sales contract entered into between the Crystal Company and McLendon, we deem it bpst to, qopy the entire contract, except the formal parts, and it is:

“1. That the company agrees to sell to McLendon, and McLendon agrees to purchase from the company for the consideration of $126,000.00, to be paid by McLendon to the company, that certain ice cream manufacturing business and plant, together with delivery equipment, and cars, all factory equipment, machinery, ice machinery, office furniture, and real estate, together with such other articles and equipment as are now being used by the Crystal Ice Cream Company, ' located in the City of Dallas, in Dallas County, Texas, at the corner of Canton and Wharton Streets. It is further agreed that the said McLendon buy from the Crystal Ice Cream Company, all of its merchandise used in the manufacture of ice cream, such invoice to include only such merchandise as is in good condition and suitable to be used in the manufacture • of ice cream at prices ruling on December 1st, 1921.
“2. It is also agreed that all accounts receivable and bills receivable of the Crystal Ice Cream Company be accepted at face value by the Crystal lee Cream Company for collection, and are to be applied as first payment to. .certain stockholders of Crystal Ice Cream Company for their stock in said company, and the difference between the amounts of bills receivable and accounts receivable as of December 1st, 1921, as shown by the Crystal Ice Cream Company’s books, balance of payment due to the stockholders of Crystal Ice Cream Company, to be paid in two equal payments, on May 1st and August 1st, 1922, such preferred payments bearing 7 per cent, interest.
“3. McLendon further agrees to issue stock in the M-B Ise Kream Company of Dallas, Texas, to H. F. Owsley, to the amount of $21,870, in payment of his stock in the Crystal Ice Cream Company. McLendon further agrees to accept and settle in full, all of Crystal Ice Cream Company’s indebtedness, covering open accounts, bills payable, and real estate mortgage amounting to $63,570.30, as per financial statement of October 31st, 1921. It is understood that the figures covering bills and accounts receivable and bills and accounts payable, are to be settled in the same ratio, December 1st, 1921, as shown in statement of October 31, 1921.
■“4. That the Crystal Ice Cream Company will furnish M-B Ise Kream Company, Dallas, Texas, with a deed and abstract covering its real estate situated at Canton and Wharton Streets, Dallas, Texas.
“5. It is further agreed that this contract shall be consummated and the purchase and sale completed by the delivery of. the possession of said property and .premises, together with the payment of the said purchase price by McLendon, within 10 days of date hereof. Unless otherwise specified in the foregoing paragraphs of this contract. It •being understood that all proper and necessary action by the Board of Directors of the Crystal Ice Cream Company shall be had and done of the proper and legal carrying out of this contract, and that proper instrument in writing conveying 'said property shall be duly executed and delivered.”

The financial statement of the Crystal Company for October 31, 1921, referred to in the contract, showed an indebtedness consisting of notes payable and accounts payable of $52,070.30, and a real estate mortgage indebtedness of $11,500, making a total indebtedness, as shown by said statement, of $63,-•570.30. The undisputed evidence shows that, at the time the deal was closed on December 1, 1921, the accounts payable by the Crystal 1 Company had been reduced by payments of the Crystal Company $1,867, and that the bills payable had been reduced to some extent by monthly payments on certain outstanding notes, so that the indebtedness actually existing at the time the deal was closed, as shown by said statement, was $61,-053.50. This decrease of indebtedness was taken care of by a corresponding increase in the deferred payments. All of this indebt•edness was paid by McLendon.

The undisputed evidence also shows that the books of the Crystal Company did not carry the item of indebtedness for delinquent taxes claimed by the Internal Revenue Department, and that such item was not embraced in the financial statement of October 31, 1921, nor in the itemized list of such indebtedness furnished to McLendon. The undisputed evidence shows that, at the time •of this sale, the Crystal Company was a solvent going corporation. The plant and buildings used in connection with its business were located in the city of Dallas at the corner ■of Canton and Wharton streets on a lot owned by the Crystal Company, which was transferred by deed of such company to A. P. McLendon on December 21, 1921.

The undisputed evidence further shows that McLendon, more than once, asked Ows-ley if the financial statement of October 81, 1921, contained all of the indebtedness his ■company owed, and he was repeatedly assured that such was a fact. The undisputed -evidence further shows that other inquiries were made by McLendon in respect to this matter, and that an advertisement was inserted in a newspaper requesting all parties who had claims against the Crystal Company to present such claims. The undisputed evidence further shows, however, that no inquiry was made of the internal revenue collector for the Dallas district as to any outstanding claim for income taxes of the' Crystal Company. Repeated demands were made on appellee to refund to appellant the amount paid by it to the Internal Revenue Department before this suit was filed.

Appellant’s petition and supplemental petitions are voluminous, but it is deemed necessary to present only the grounds upon which appellant relied an showing a right of recovery against appellee. The allegations of the petition stating these grounds are full and complete, and clearly form a basis for the contentions made in the lower court in the trial of this case, and made on this appeal by appropriate assignments of error. These allegations present the following theories as to appellant’s right of recovery: (a) In his contract of purchase, McLendon assumed to pay this indebtedness, and appellee is bound by such assumption; (b) the United States government had a statutory lien on all of the property of the Crystal Company for the payment of all income taxes assessed against the Crystal Company, and appellant, having been required to pay such taxes in the amount named in the petition, is subrogated to all the rights of the United States government to enforce its claims -against appellee; (c) the amount sought to' be recovered by appellant being a debt owed by the Crystal Company, a corporation, to appellant, and the corporation having been dissolved because of the sale to McLendon of all its assets, appellant has an equitable lien on the properties so sold against any subsequent purchaser; (d) the sale of the Crystal Company to McLendon being in violation of the provisions of article 4001, R. C. S. (Bulk Sales Law), was void against appellant as a ci editor of the selling company, and by reason theroof appellee, a subsequent purchaser, is liable for appellant’s claim. The allegations in reference to a violation of the Bulk Sales Law - were stricken from appellant’s pleading on special exception by appellee, and this action of the court is duly assigned as error.

Appellee’s defensive pleading and its counter propositions of law are sufficient to form a basis for the defensive matters herein discussed.

The certificate of the secretary of state, in reference to the dissolution as a corporate body of the Crystal Company, was issued in January, 1922. In addition to its suit against appellee, appellant also sought judgment against Owsley, both on the guarantee of indemnity to appellant and as a director of the Crystal Company. Recovery was also sought against the other directors of the Crystal Company and the other stockholders. Some of these defendants filed cross-actions against Owsley as president of the Crystal Company, and appellee also filed a cross-action against Owsley, in the event it should be adjudged to be liable for appellant’s claim. No appeal is prosecuted from that part of the judgment disposing of these controversies, and no comment thereon will be made. Judgment was entered by the court in favor of appellant, under the undisputed evidence, against those defendants who were shown to have been directors of the Crystal Company at the time of its dissolution, 'and they have not appealed. In other words, the judgment gave to appellant full relief as against the directors .of the Crystal Company, denied it any relief against those who were mere stockholders in the company, denied it relief against appellee, and the appeal is prosecuted by appellant only on that part of the judgment in favor of appellee.

Under the facts of this case, there can be no question but that appellant, having been required to pay a debt due the Internal Revenue Department of the United States government by the Crystal Company, is sub-rogated to all of the rights that the government had to enforce this payment against the Crystal Company at the time this payment from appellant was exacted. Appellant was compelled .to make this payment because of the obligation it incurred in signing as surety the abatement bond of the Crystal Company. At the time the income taxes in question became due and payable, the United States government had a lien to enforce payment on all of the property of the Crystal Company perforce of a federal statute creating such lien. Section 115 of title 26 of the United States Code Annotated is the statute in question, and it reads: “(a) If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount * * * shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person. Unless another date is specifically fixed by law, the lien shall arise at the time the assessment list was received by the collector and shall continue until - the liability for such amount is satisfied or becomes unenforceable by reason of lapse of time.”

Did this statutory lien follow the properties of the Crystal Company after the transfer of such properties to A. P. McLendon and by him to appellee; the undisputed evidence showing that neither McLendon nor appellee had any notice of the 'existence of the indebtedness forming the basis of such lien? It would unquestionably do so, unless another section of this statute provides otherwise. We think subdivision (b) of said statute does so provide. It réads: “(b) Such lien shall not be valid as against any mortgagee, purchaser, or judgment creditor until notice thereof has been filed by the collector—(1) in accordance with the law of the State or Territory in which the property subject to the lion is situated, whenever the State or Territory has by law provided for the filing of such notice; or (2) in the office of the clerk of the United States District .Court for the judicial district in which the property subject to the lien is situated, whenever the State or Territory has not by law provided for the filing of such notice. * * * ”

Texas did not provide for the filing of such notice until January 30, 1923, when article 6644, R. S. 1925, became effective, which provides for the'filing with the county clerk the notice to fix the said tax lien against a subsequent purchaser for value, and hence Texas had no law in this respect at the time of the sale in question. It necessarily follows, under the terms of subdivision (b) of said section 115, that, in order to have made the lien valid against McLendon or appellee, as subsequent purchasers for value, the collector of internal revenue should have filed the notice of such lien with the clerk of the United States District Court for the Northern District of Texas at Dallas. The undisputed evidence shows that ho such notice was filed with said clerk. From the very provisions of the federal statute creating the lien relied .upon by appellant, such lien is invalid as against Mc-Lendon and appellee. It therefore follows that, while appellee was subrogated to all of the rights of the United States government, in reference to the debt it discharged for the Crystal Company, there was no statutory lien in existence in favor of the government, and appellant’s right of subrogation gave it no lien whatever on the properties purchased by McLendon.

Did appellee, by McLendon’s written contract, assume to pay the indebtedness of the Crystal Company to the Internal Revenue Department for the delinquent income taxes? While appellee was not the direct purchaser of the assets of the Crystal Company, it is made clearly to appear that McLendon was purchasing the assets of the Crystal Company for the purpose of organizing the appel-lee corporation; and, without deciding the question as to whether the assumption of a debt by McLendon would be in law the assumption by appellee, for the purpose of this decision, we shall assume such to be the fact. As to the debts assumed, the contract of purchase is clear and explicit. That portion’ of the contract reads: “McLendon further agrees to accept and settle in full all of the Crystal Company’s indebtedness covering open accounts, bills payable and real estate mortgage, amounting to $63,570.30, as per financial statement of October 31, 1921. It is understood that the figures covering bills and accounts receivable and bills and accounts payable are to be settled in the same ratio, December 1, 1921, as shown in the statement of October 31, 1921.”

The plain meaning of this language is that there was assumed by McLendon only such indebtedness as is evidenced by the financial statement'of October 31, 1921. It necessarily follow's that, if an indebtedness existed against the Crystal Company, not shown by such statement, then it was not assumed by McLendon, and, as the undisputed evidence shows that appellant’s claim was neither shown by such statement nor by any entry •in the books of the Crystal Company, payment of it was not assumed by the written contract.

.In.addition to the clear and unambiguous language in which the assumption of indebtedness by McLendon is stated, other recitals in tlie contract as to the manner in which the consideration of $126,000 was to he paid by McLendon make it clear that there was no assumption of any indebtedness other than that specifically described in the contract. The Crystal Company was to accept as cash the face value of the bills receivable and accounts receivable. McLendon was to receive as credit the face value of the notes payable and accounts payable, shown by said statement, as such values existed at the date of closing the transaction. Another credit he was to -receive was the sum of $11,500 shown as mortgage indebtedness of the Crystal Company. All of these items of indebtedness of the Crystal Company McLendon assumed to pay, and the contract treated such assumption as cash payments on the recited consideration. The remainder of the consideration due, after the deduction of these credits and the value of the stock to be issued to Owsley, was to be paid by the execution of the two notes representing the deferred payments. The amount of the deferred payments was to be determined in a fixed and certain manner, to wit, to deduct from the total consideration of $126,000 the sum representing the amount of the notes and accounts receivable, retained by the Crystal Company, the amount of the notes and accounts payable, as shown by said financial statement and assumed by McLendon, the mortgaged indebtedness, and the named value of stock to be issued to Ows-ley. There was no provision made to charge against McLendon any other indebtedness. We therefore hold that appellee did not assume this income tax indebtedness, and overrule all assignments of error in respect to this issue.

If, however, we be mistaken in our construction of the terms of the written contract in respect to the indebtedness assumed by McLendon, and the contract does not show, as a matter of law, that only the indebtedness specified therein was so assumed, then there was at most raised a jury question as to the contention of the parties in respect to the proper construction of the contract. The trial court seems to have been of the opinion that there was such a jury question raised, and submitted same to the jury in the form of a special issue. Such special issue and the verdict thereon is: “No. 1: Do you find and believe from a preponderance of the evidence that it was the intention of the parties to the contract of sale by the Crystal Ice Cream Company that the M-B Ise Kream Company or A. P. McLendon, for the M-B Ise Kream Company, was to accept and settle in full all of the Crystal Ice Cream Company’s indebtedness, covering open accounts, bills payable and real estate mortgages, regardless of whether such indebtedness amounted to more or less than $63,570.30, and regardless of whether all of such indebtedness was included in the typewritten list of accounts or the typewritten list of notes introduced in evidence? Answer, ‘No.’ ”

The court also submitted in this connection special issue No. 2, which is: “No. 2: Do you find and believe from a preponderance of the evidence that A. P. McLendon or any agent of his making the purchase of the assets of the Crystal Ice Cieam Company had notice of any fact or circumstance, which would put a reasonably prudent person on inquiry of a nature which would, if followed with ordinary diligence, have disclosed the fact that there was a delinquent income tax debt? Answer, ‘No.’ ”

Appellant was of the opinion that such jury issues were raised by the evidence, and requested the submission of special issues covering the same subject-matter, which were refused by the court, presumably on the ground that such issues were covered in the main charge.

Did McLendon take the assets of the Crystal Company, charged with an equitable lien in favor of appellant, for the payment of its claim? In reaching a conclusion on this question, it must be borne in mind that the Crystal Ice Cream Company, at the time of its sale, was a solvent going corporation; that the transaction by which BieLendon became the owner of the assets of the Crystal Company was not a consolidation of one corporation with another, nor the formation of a new company or corporation for the purpose of continuing the old company, but was an outright purchase by him of the assets of the Crystal Company. Those decisions that deal with the sale of the assets of an insolvent corporation, and those decisions that deal with the merger or consolidation of two corporations, are governed by different principles,. and are not applicable to the instant case.

The purchase of the assets of one corporation by another, as declared by 7 R. O. L. p. 183, are very similar, in the matter of the liability of the purchaser for the debts of the seller, to the liability of an individual who purchases the assets of a debtor, and the purchasing corporation does not, merely by reason of the purchase, become liable for the debts of the selling corporation. In the same paragraph the same authority states a general rule of law that is controlling in the instant case: “So it may be stated as a general rule that in order to render the purchasing company personally liable for the debts' of the selling corporation, it must appear that (a) there be an agreement to assume such debts; (b) the circumstances surrounding the transaction must warrant a finding that there was a consolidation of the two corporations; or (c) that the purchasing corporation was a mere continuation of the selling corporation; or (d) that the transaction was fraudulent in fact. * * *"

The above rule obtains in this state. Lyons-Thomas Hdwe. Co. v. Perry Stove Mfg. Co., 86 Tex. 146, 24 S. W. 16, 22 L. R. A. 802; Orr & Lindsley Co. v. Thompson, 89 Tex. 501, 35 S. W. 473; Temple Lbr. Co. v. Pineland, etc., Co. (Tex. Civ. App.) 25 S.W.(2d) 675; Panhandle Nat’l Bank v. Emery, 78 Tex. 505, 15 S. W. 23; Cattlemen’s Trust Co. et al. v. Beck (Tex. Civ. App.) 167 S. W. 753, 756. The last-cited case states the rule as follows: “We have concluded, however, that appellants’ twenty-first assignment is well taken, which urges that the court erred in rendering Judgment for plaintiff against the Cattlemen’s Trust Company of Et. Worth for $742, the amount of the two smaller notes. In the first place there is no evidence in the record showing or tending to show that the new company assumed the liabilities of the old. The law seems to be that, in the absence of an agreement to this effect on the part of the new company, it is not bound for the obligations of the old.”

This announcement is sustained by a long list of cited authorities. It is true, on a mo tion for rehearing, the court set aside this judgment, for the reason that the court was “in error in holding that there was no evidence showing that the Cattlemen’s Trust Company of Ft. Worth assumed the liabilities of the Cattlemen’s Trust Company of Arizona. * ⅜ * ” The above-quoted announcement of law was not withdrawn.

The facts of the instant case show that McLendon was a bona fide purchaser of the properties of the Crystal Company; that there was no agreement to assume appellant’s claim; that the circumstances surrounding the transaction did not permit a finding that the Crystal Company was consolidated with, or was to be consolidated with, appellee; that appellee was not formed for the purpose of a mere continuation of the Crystal Company ; that the selling of its assets by tlie Crystal Company was not for the purpose of defrauding creditors. Hence, under the general rule above quoted, no equitable lien existed against the property purchased by McLendon in favor of appellant, and no liability of ap-pellee to pay this claim was incurred.

Again, the sale to McLendon appears to have been for the full value of the assets of the Crystal Company and for more than its book value, as disclosed by the financial statement of October 31, 1921. Article 1388, R. S. 1925, constituted the president and directors of the Crystal Company trustees for the creditors and stockholders to wind up its affairs at the time the corporation was voluntarily dissolved by the required vote of the stockholders. The undisputed evidence shows that there came into the hands of these trustees from the collection on assets, never delivered to McLendon, a sum of money equal to more than four times the amount of appellant’s claim, and that appellant was the only creditor of the Crystal Company whose debt was not assumed and paid by McLendon. This sum of money resulted from the collection of accounts and notes receivable retained by the Crystal Company. The law directs, under a provision of article 1388, supra, that: “Said trustees shall be severally responsible to the creditors and stockholders of such corporation to the extent of its property and effects that shall have come into their hands.” This article also gives the claim of a creditor preference over the claims of stockholders. So, at the time of the voluntary dissolution of the Crystal Company as a corporation, there was actually in the hands of the directors of said company, who are trustees of the creditors and stockholders, a trust fund amply sufficient for the purpose and charged first with the payment of appellant’s claim. These trustees ignored appellant’s claim, and thereby became personally responsible to appellant for the amount thereof. The trial court recognized such responsibility of the trustees, and gave judgment in favor of appellant against them for the full amount of appellant’s debt. The assignments of error in respect to this issue are overruled.

It is claimed by assignments of error that, as appellee did not conform to the provisions of article 4001, R. S. (Bulk Sales Law), it is responsible for appellant’s claim, and that the court erred in sustaining a special exception to the allegations making this issue. The transaction in question was'the sale of an ice. cream factory plant with its equipment for manufacturing ice cream, and all of the raw material used for such manufacturing purpose, on hand at the time of the sale. The Bulk Sales Law has no application to such sale, and the court did not err in sustaining an exception to appellant’s pleading in this respect. Hobard Mfg. Co. v. Joyce & Mitchell (Tex. Civ. App.) 4 S.W.(2d) 185; Grimes v. Huntsville State Bank (Tex. Civ. App.) 12 S.W.(2d) 1087; Industrial Acc. Corpn. v. Corey (Tex. Civ. App.) 19 S.W.(2d) 365; 27 C. J. 878. All assignments of error in respect to this issue are overruled.

We have carefully examined all other assignments of error, and have reached the conclusion that they present no grounds for reversal, and it follows that this case should be affirmed.

Affirmed.


author: WALKER, J.

text:
    GLOBE INDEMNITY CO. v. McCLURG.
    No. 2072.
    Court of Civil Appeals of Texas. Beaumont.
    April 8, 1931.
    Rehearing Granted April 22, 1931

      Baker, Botts, Andrews & Wharton, of Houston, for appellant.
    F. G. Vaughn, of Beaumont, for appellee.
   WALKER, J.

This suit originated as an appeal under the Workmen’s Compensation Act by appellee against , an adverse award of the Industrial Accident Board, wherein he was claimant and appellant was insurer. Appellee alleged that he was injured on October 6,1929, while in the course of his employment with Republic Production Company, and that appellant was the insurer, and that as a result of his injury he was totally and permanently disabled. His prayer was for compensation for 401 weeks at $18.75 per week and for a lump sum settlement. Appellant answered only by general and special demurrers and general denial.

Answering question No. 1, the jury found that appellee suffered total incapacity as the result of his injury, and by question No. 2 that the total incapacity was permanent and by special issue requested by appellee that he was not entitled to a lump sum settlement. On the verdict judgment was entered reciting that appellee was entitled to recover of and from appellant “the sum of $18.75 per week for a period of 401 weeks to commence on the 6th day of October, 1929, and to continue therefrom for a period of 401 weeks from said date, less 16 weeks compensation heretofore paid the plaintiff by the defendant.” The decree was as follows: “It is therefore, ordered, adjudged and decreed by the court that the plaintiff herein do have and recover of and from the Globe Indemnity Company the sum of $18.75 per week, payable weekly, beginning on the 6th day of October, 1929, and continuing for each and every week thereafter, and during each and every week thereafter from said date.!’

By its first and second propositions appellant insists that the court erred in overruling its general demurrer to appellee’s petition and in refusing to instruct a verdict in its favor on the ground that he failed to allege that it or his employer had notice of his .injury within 30 days after the injury was received. These propositions are overruled. Appellee alleged that appellant paid “some compensation” and the proof was that appellant paid appellee 16 weeks’ compensation, as recited by the judgment, and for which it was allowed credit. Appellee further alleged a liability against appellant for total permanent disability and prayed for judgment for total permanent disability for the statutory period of 401 weeks. We agree with appellant that without an allegation that it or the employer had notice of the injury within 30 days after the injury was received or without allegations of an excuse for the failure to give the notice, or without allegations of fact from which the conclusion could be drawn as a general intendment, the petition was subject to the general demurrer. Mingus v. Wadley, 115 Tex. 551, 285 S. W. 1084. However, though there was no affirmative allegation ■of 30 days’ notice nor of an excuse for the failure to give the notice, it is our conclusion that the allegation that appellant paid “some compensation” made the petition good as against the general demurrer. We say this because appellant could not have paid “some compensation” without notice of the injury, and from this allegation it is a reasonable intendment that appellant paid the compensation because it was liable therefor, and, since liability did not exist without 30 days’ notice or an excuse for the failure to give the notice, a reasonable intendment arises from the allegations of the petition that the notice was given within 30 days. Gulf Refining Co. v. Bonin (Tex. Civ. App.) 242 S. W. 776. On the issue of proof, this question was directly before this court in Texas Employers’ Ins. Ass’n v. Varner, 20 S.W.(2d) 334, 336, where we said: “Appellant’s fourth proposition complains that there was no proof by appellee of notice to his employer or the association of his injury within 30 days after receiving Same, and that allegation and proof of such notice was essential to give jurisdiction to the court to hear and determine the matter. Article 8307, § 4a, provides that no proceeding for compensation for injury under the Workmen’s Compensation Act shall be maintained unless notice of the injury shall have been given to the association or the subscriber within 30 days after the happening of the injury. Appellee’s petition alleges that he gave notice of his injury to his employer, Roy Jones, within 30 days after receiving his injury. He testified, and it is not 'disputed, that appellant paid him $37 as compensation. We think this sufficiently shows notice.”

If proof that compensation was paid constitutes proof of notice within 30 days, it must be said that the allegation of the payment of “some compensation” would make the petition good as against a general demurrer.

By propositions 3 to 6, inclusive, complaint is made that the court erred in overruling the special exceptions urged against appellee’s allegation of average weekly wage, that he failed, to establish by competent proof an average weekly wage, and that error was committed in receiving certain evidence on this issue. Appellee pleaded his average weekly wage as follows: “Plaintiff represents unto the court that he has been employed by the Republic Production Company for a period of about three months, working seven days per week and earning the sum of $4.75 per day, which was the wage paid to other employees in the same kind of employment who had been in said engagement for a period of more than one year, and that his actual weekly wage was $31.25 per week. That his annual wage as defined by said Act was $1,-675.00 and that on account of his total disability he is entitled, under the provision of said Act, to sixty per cent, of said wage, or $18.75 per week for a period of 401 weeks from the date of said injury.”

Under its special exception, appellant correctly contends that it was appellee’s duty to plead his average weekly wage, first, under subsection 1 of section 1 of article 8309, R. S. 1925, if not able to plead a ease under that section, then under subsection 2, and, if not able to plead a case under that section, then under subsection 3. American Employers’ Ins. Co. v. Singleton (Tex. Com. App.) 24 S.W.(2d) 26. The petition was subject to these exceptions, because appellee failed to allege a ease under subsection 1 and pleaded no facts showing that he could not prove his average weekly wage under that section. Also, it should be said, without analyzing the proof, that he failed to prove a case under subsection 1, though it reasonably appears from the evidence as a whole that he could have made out his case under that section. Therefore we conclude that he has failed to plead and prove an average weekly wage of $18.75.

However, as stated above, appellee pleaded that appellant had paid him “some compensation.” By general intendment this allegation is equivalent to an allegation of adjustment between appellee and appellant of his average weekly wage. Under this allegation the proof was that appellant paid him compensation for 16 weeks as found by the court in its judgment. Appellee testified: “They paid me every week in checks, $16.37.” Though he failed to plead and prove an average weekly wage of $18.75, we think he has sufficiently pleaded and proved an average weekly wage of $16.37.

While the jury answered only the questions above summarized, a large number of other questions were submitted to them which they did not answer. Among these were questions Nos. 4 and 5, which were as follows:

“Special Issue No. 4. Will the plaintiff, A. T. McClurg, suffer any partial incapacity immediately following the expiration of the time, if any, you find him to be totally incapacitated.
“Special Issue No. 5. Eor what period of time will the plaintiff suffer such partial incapacity, if any, you have found to exist?”

By propositions 7 and 8 complaint is made that these questions were on the weight of the evidence and'improperly influenced the jury in answering questions Nos. 1 and 2. These propositions are overruled. Questions Nos. 4 and 5 were not on the weight of the evidence.

Question No. 1 was submitted as follows: “Special Issue No. 1. Did the injury which the plaintiff A. T. McClurg received on October 6, 1929, if any, cause him to be totally incapacitated to labor for any period of time? Answer ‘Yes’ or ‘No.’ Answer: ‘Yes.’”

By the ninth proposition complaint is made against the submission of the issue of “totally incapacitated to labor”; the proposition being that the use of the words “incapacity to labor” “placed too heavy a burden on appellant and was incorrect in law,” but that the issue should have been submitted “incapacitated to work.” Appellee pleaded this issue as follows: “Plaintiff represents unto the court that previous to the time he received said injury that he was in good" health and capable of doing and did do and perform manual labor and that by reason of said injury that he is now unable to perform manual labor and that said injury has destroyed his earning power and that all of said injuries are the direct and proximate result of said accident.”

His proof fully sustained his allegations. One of 1⅛ doctors testified that in his judgment appellee was totally incapacitated to perform “manual labor.” The authorities cited by appellant sustain its proposition of a distinction between the terms “work” and “labor” and that they are not synonymous. The technical distinction between the meaning of these terms is only academic in this case because under the proof appellee was only a manual laborer. The issue was submitted as raised by his pleadings and sustained by his proof.

The court did not err in refusing to retain jurisdiction over this case so as to protect appellant in the event of a change in appellee’s condition. Federal Surety Co. v. Cook (Tex. Com. App.) 24 S.W.(2d) 394, 396. In that ease it was said that the trial court has no power “to reserve to itself this re-visory authority.” However, it should be said that, prior to the decision in that case, this court and several of the other Courts of Civil Appeals had announced the proposition now contended for by. appellant.

By the eleventh and twelfth propositions appellant complains that the court erred' in rendering judgment without giving it credit for the 16 weeks’ compensation paid and by ordering that it pay compensation for each and every week after October 16, 1929, “without placing a limitation upon the number of such payments to 401 weeks.” We do not think the judgment is subject to this construction. From the recitations made above from the judgment, it clearly appears that it was the intention of the trial court to give appellant credit for the 16 weeks’ compensation paid and to limit the payments to 401 weeks. With that construction of the judgment, it is ordered that it be reformed, reducing appellee’s average weekly wage from $18.75 to $16.37, and, as so reformed, affirmed.

Reformed and affirmed.

On Rehearing.

We are in error in our original opinion in our conclusion that the allegation that appellant paid appellee “some compensation” was equivalent to a plea of adjustment of the average weekly, wage between appellee and appellant. Appellee pleaded specifically the basis of his average weekly wage, which was subject to the special exception discussed in the original opinion. Though the omissions in this plea were thus called to appellee’s attention, he declined to file an amendment, but relied upon this allegation as a basis for his cause of action, and introduced his evidence in support thereof, and was awarded judgment on the basis thereof. It is thereby made to appear affirmatively that the allegation that “some compensation” had been paid was not made by appellee to raise the issue of average weekly wage and not looked to by. the trial court as a basis of his judgment.

On the facts stated Texas Employers’ Ins. Ass’n v. Nelson (Tex. Civ. App.) 292 S. W. 651, 653, directly supports the conclusion that the allegation of payment of “some compensation” did not raise the issue of ayerage weekly wage. It was there shid that the court was “not required to scan a petition for the purpose of selecting certain portions which present allegations of fact, made for the purpose of sustaining one proposition, and to say that by intendment it also presents another and different proposition.”

From what has been said, it follows that appellant’s motion for rehearing should be granted and the judgment of the lower court reversed and the cause remanded for a new trial, which is accordingly ordered.


author: LOONEY, J.

text:
    UNITED FIDELITY LIFE INS. CO. v. FOWLER.
    No. 10742.
    Court of Civil Appeals of Texas. Dallas.
    April 11, 1931.
    Rehearing Denied May 2, 1931.

      W. T. Henderson, D. A. Frank, and Hamilton & Hamilton, all of Dallas, for appellant.
    Ernest Becker and Luther Nickels, both of Dallas, for appellee.
   LOONEY, J.

Floyd L. Fowler brought this suit against the United Fidelity Life Insurance Company for the recovery of commissions, bonuses, and renewal fees earned by the sale of life insurance for defendant under three written contracts; the first dated February 11, 1922, provided for the sale of- insurance in and around El Paso, Tex.; the second and third, dated respectively April 15,1924, and October 3, 1924, provided for the sale of insurance in the city of Dallas. The contract of April 15, 1924, -superseded that of February 11, 1922, and that of October 4, 1924, superseded both the former, except plaintiff was entitled to certain hang-over benefits from insurance sold under preceding contracts.

In addition to the cause of action above described, plaintiff alleged as basis for the recovery of damages, in substance, that after working the El Paso territory for more than two years and establishing a profitable agency, defendant, by persuasion, representations, and certain promises, induced him to move to Dallas, and enter into the contract of April 15, 1924; that thereafter defendant failed and refused to co-operate with him as promised, interfered with the development of the Dallas agency, then induced him to execute the contract dated October 4, 1924, with the view of ultimately getting rid of him, and did in fact finally discharge him, wherefore he sought recovery of damages, actual and exemplary.

Defendant answered by general denial,, es-toppel, and other special defenses, and asserted in a cross-action an indebtedness against the plaintiff.

On application of defendant, auditors were appointed to state the accounts between the parties, in due time their report was filed, to the effect that plaintiff was indebted to defendant in the sum of $3,877.75; which was duly excepted to by plaintiff and evidence heard thereon.

The case was tried to a jury, and all issues relating to plaintiff’s alleged cause of action for damages were found against him ; the jury also found against defendant on its cross-action, and on plaintiff’s claim for earnings and compensation under the three agency contracts, the court submitted special issues, which, together with the answers of the jury, are as follows:

“Special Issue No. 3: Was the defendant indebted to the plaintiff in any amount on April 15,1924? Answer Yes or No. Answer: Yes.
“If you have answered Special Issue No. 3 by ‘Yes,’ then answer the following subsection (a): (a) How much was such indebtedness? Answer: $3133.42.
“Special Issue No. 4: Was the defendant indebted to plaintiff in any amount on June 1, 1929? Answer Yes or No. Answer: Yes.
“If you have answered Special Issue No. 4 by ‘Yes,’ then answer the following subsection (a): (a) How much was said indebtedness? Answer: $1944.24.”

On these findings the court rendered judgment in favor of plaintiff for $5,077.66, being the aggregate ' of the two amounts found by the- jury, from which defendant appealed.

Among other propositions urged by defendant for reversal is that the court erred in submitting special issues Nos. 3 and 4, because in order to answer same the jury were required to construe the written contracts sued upon.

Defendant objected to the submission of these issues, on the ground, among others, that the jury were required to construe and pass upon the legal effect of the pertinent provisions of these contracts.

The three contracts are lengthy, covering over thirty-five pages of the transcript, and the court nowhere explained their pertinent provisions, nor was any statement given as to the rights of the parties thereunder. To answer what, if in any amount, defendant was indebted to plaintiff on either of the dates named in the special issues, the jurors were necessarily required to adopt their own interpretation of the contracts, and thus to answer questions mixed with law and fact. When written obligations are not ambiguous, they must be construed by the court and not by the jury. See Allen v. Koepsel, 77 Tex. 505, 507, 14 S. W. 151; Ivey v. Williams, 78 Tex. 685, 687, 15 S. W. 163; Gulf, etc., Co. v. Malone (Tex. Civ. App.) 25 S. W. 1077; Varnes v. Dean (Tex. Civ. App.) 228 S. W. 1017,1018; Alexander v. Tips (Tex. Civ. App.) 268 S. W. 965; Hewitt v. Buchanan (Tex. Civ. App.) 4 S.W.(2d) 169, 174; Culbertson.v. Ashland Cement & Construction Co., 144 Ky. 614, 139 S. W. 792.

In Varnes v. Dean, supra, the court used the following language in point: “No direction is given to the jury in the charge as to what the essentials of the written agreement alleged to have been made by plaintiff and his wife and witness Holmes were. Nor is any issue of fact, unmixed and separate from questions of law, submitted in this issue. * * * A charge of the court must submit questions of fact solely to the decision of the jury, but should not include questions of law, which the court only is authorized to determine.” We are of opinion that the contention of defendant in this respect presents material error, for which the judgment must be reversed.

Defendant makes the further contention that the court erred in submitting issue No. 3, because not authorized by either pleadings or evidence, and further that the finding of the jury to the effect that defendant was indebted to plaintiff in the sum of $3,133.42 on April 15, 1924, finds no support whatever in the evidence.

These contentions are so interrelated that they will be grouped and considered together. The contract dated April 15, 1924, the second contract between the parties, entered into on the removal of plaintiff from El Faso to Dallas, contains, among others, the following provisions:

“2. A new contract will be issued superseding temporarily your old contract, which new contract is attached.
“3. All settlements taken under this new. arrangement whether in notes or cash, will be turned over to the company to be held as collateral to the note thus created, and the $200 per month advance above referred to.
“4. Excess funds, if any, are to be used by the company in reducing your present or old indebtedness as rapidly as possible.
“5. The new contract which is taken, and of-which'this is a part, is to remain effective until all indebtedness to the company has been wiped out. At that time, unless paragraph 15 is accomplished your old contract will go into full force and effect. The old contract in the interim is to remain dormant, with the exception of renewals, Which will be paid so long as the qualifications required under the new contract are met. * ⅜ *
“8. This contract is to be in full force and effect for one year from date unless old accounts are wiped out prior to that time. ⅝ ⅜ *
“15. If all indebtednesses are wiped out within one year from today, old contract will be retroactive to include all business from this date.
“16. On notes that we know to be good we will discount 10'% and apply on balance due the company. This is at the. discretion of the Vice President & General Manager.”

While the amount of plaintiff’s indebtedness to defendant mentioned in these excerpts was not stated, yet the • conclusions are inescapable that plaintiff was then indebted to defendant in some amount, that the parties contracted with reference to that fact, and provided for its reduction or payment from plaintiff’s future earnings. In view of this admitted fact, but without an intimation as to the status of the accounts between the parties at any subsequent date, we are of opinion that plaintiff is estopped to deny that lie was indebted to defendant on April 15, 1924; therefore, the submission of the issue was not authorized, and the finding of the jury in response thereto is without evidence to sustain it.

The rule of estoppel by contract is announced in 21 C. J. 1111, § 111, as follows; “If, in making a contract, the parties agree upon or assume the existence of a particular fact as the basis of their negotiations, they are estopped to deny the fact so long as the contract stands, in the absence of fraud, accident, or mistake.” Also see 10 R. C. L. p. 799, § 111, and note to 3 L. R. A. 308.

We overrule appellant’s contentions that the court erred in refusing its charges Nos. 1 and 2, requesting directed verdicts in its favor on the issues of the main suit as well as on its cross bill; the other questions raised, being subsidiary to those decided, will not be discussed.

In the interest of certainty and brevity, we respectfully suggest to the trial court the propriety of ordering a repleader by both parties, as provided by rules Nos. 2 and 29 governing district and county courts.

For the errors hereinbefore indicated, the judgment of the trial court is reversed, and the cause remanded for further proceedings.

Reversed and remanded.

On Motion for Rehearing.

We reversed and remanded this cause on •two grounds, viz.: (1) Because the court erred in failing to explain, for the guidance of the jury,' the legal meaning of and the rights-of the parties under the three contracts sued upon; and (2) because neither pleading nor evidence authorized the submission of special issue No. 3, and the finding of the jury, to the effect that on April 15, 1924, appellant was indebted to appellee in the sum of $3,133.42.

Appellee, in motion for rehearing, insists that appellant waived the failure of the trial court to construe the contracts, and that this court erred in reversing the cause on that ground, because appellant made no request for such instruction.

Construction of the written contracts was a question of law for the court, and not of fact for the jury; hence the court should have given all necessary explanations to enable the jury to properly pass upon the facts involved in the issues presented, and its failure so to do was, in our opinion, error. Article 2189, R. S. 1925. While it is true appellant failed to request a special charge designed to cure this defect in the court’s charge, yet a timely objection pointed out the defect, which, in our opinion, was sufficient basis for reversal, whether the defect was an affirmative error, or a mere omission. Robertson v. Holden (Tex. Com. App.) 1 S. W.(2d) 570.

Appellee assails our holding to the effect that under the admitted facts appellee was estopped to deny that he was indebted to appellant on April 15, 1924, and therefore that the submission of issue No. 3 was unauthorized and the finding of the jury in response thereto was not sustained by evidence.

The trial court saw fit to submit special [issue No. 3, that required the jury to answer what, if in any amount, appellant was indebted to appellee on April 15, 1924, and the jury having answered $3,133.42, we were called upon, by an appropriate assignment, to determine whether the facts justified this submission and authorized the finding. In determining the matter, we gave no consideration to pleading or evidence on other issues, for the obvious reason that, if in either respect error existed, the case would have to be reversed.

Appellee contends that the court erred in holding'him estopped to deny that he was indebted to appellant on April 15, 1924; because (1) estoppel in this connection was not pleaded, (2) elements of estoppel in pais are lacking, (3) the issue was neither submitted nor requested by appellant, and (4) the question was not properly raised by an assignment.

The question, in our opinion, was properly raised in assignment No. 53a, and in assignments Nos. 61 and 62 the error of the court in rendering judgment on the verdict, because not supported by pleading or evidence, is also properly raised, and questions germane to these assignments presented in appellant’s propositions Nos. 11 and 12 were also considered in this connection; therefore, the contention that the court was without jurisdiction, for want of proper assignment, is overruled.

The question we are now considering Is not a defensive matter at all, but involves the right of appellee to have the judgment affirmed on the verdict of the jury, to the effect that appellant was indebted to him on April 15, 1924, in the sum of $3,133.42.

The phrase “estoppel by contract,” employed in this connection, means no more than that a party is bound by the terms of his own contract until set aside or annulled for fraud, accident, or mistake. Estoppel by contract is not, strictly speaking, an estop-pel in pais, because it lacks several of the essential elements of an estoppel in pais, but is regarded merely a form of quasi es-toppel based on the idea that a party to a contract will not be permitted to take a position inconsistent with its provisions, to the prejudice of another. 21 C. J. 1110, § 110.

This doctrine is, in our opinion, applicable to and decisive of the question under consideration. Appellee based his right to recover upon three written contracts between himself and appellant; these he attached as exhibits to his petition, and were by him introduced in evidence. The second contract, the one under consideration, is dated April 15, 1024, and contains the excerpts, copied in our original opinion, relative to appellee’s existing indebtedness to appellant. While the amount of appellee’s indebtedness to appellant at this time is not mentioned in the contracts, the existence of an indebtedness is made certain by the language employed, in fact payment of said indebtedness, as disclosed by provisions of the contract quoted, seems to have been a major consideration.

With reference to this indebtedness, appellee made the following allegations: “That at the time defendant induced plaintiff to come to Dallas, defendant claimed plaintiff was, at such time, indebted to defendant in the sum of $5,500, but that plaintiff, as a mat ter of fact, was only secondarily liable to defendant for said amount, as shown herein, as follows: that said indebtedness, or rather said purported indebtedness, grew out of the failure of some of the subagents appointed by plaintiff and approved and accepted by defendant in plaintiff’s territory to pay the nets, that is, the defendant Company’s part of the first year’s premiums; that at the time of plaintiff’s appointment of such sub-agents and each of them, such agent executed a bond to defendant Company to secure defendant Company in the payments of such nets, and such bonds completely indemnified defendant Company for each and every dollar purported to be owed by plaintiff to defendant corporation; that defendant corporation, actuated by malice,, and in conformity with its scheme to breach its contractual obligations to plaintiff, failed and refused to enforce such bonds, -and refused to insist or compel such sub-agents to pay such notes, but instead, charged said amounts to this plaintiff’s account, claiming that this plaintiff was liable therefor; that this plaintiff was not liable and could not have been liable inasmuch as defendant corporation faffed and refused to enforce the bonds running to defendant and amply and absolutely securing them in such indebtedness, but plaintiff, under pressure from defendant corporation and then too relying upon representations of defendant, and also realizing he had. a valuable agency in El Paso, that he had spent large sums of money in advertising and building up such agency, and believing himself to be in a position to reap the benefit of his work in said territories and of the money and time and efforts he had spent in advertising, etc., acquiesced in defendant’s charging said nets to his account; but that this was acquiesced in by plaintiff only with the understanding that this would be done for the purpose of more easily keeping the records clear, and with the distinct understanding that defendant corporation would, at some future time, do its utmost to recover such nets from such subagents and if necessary would recover same on their bonds.”

The net result of the agreement, based in part on the fact of an existing indebtedness due from appellee to appellant, and the admissions -of appellee in his petition, is to the effect that appellant was claiming an indebtedness of $5,500, for the payment of which appellee admitted secondary liability, and had acquiesced in the amount being charged to his account, with the understanding on the part of appellant that, at some future time, effort would be made to recover on the bonds of the subagents, who were primarily liable.

This being the undisputed state of the account as it existed on April 15, 1924, we are of opinion that the submission of special issue No. 3 and the answer of the jury were not authorized by evidence, and that the judgment, based in part thereon, is erroneous and should be set aside, unless we should presume that the trial court made other findings from evidence, in such manner as to support the judgment. We are of opinion, however, that no such presumption can be indulged, because appellee did not seek cancellation of the contract or the annulment of any of its provisions. He charged appellant with fraud, deception, etc., but -not as a part of a plea seeking cancellation of the contract; but these allegations were made in support of his plea for damages. As appellee made no attempt to have the contract canceled or any of its provisions annulled, the submission of such an issue would have been unauthorized; hence we cannot presume that the court found an issue not authorized by the pleadings.

We have carefully considered all grounds urged by appellee for a rehearing, but finding no reason to change our former decision, the motion is overruled.

Overruled.