author: TUNKS, Chief Justice.

text:
    COOPER PETROLEUM COMPANY et al., Appellants, v. LaGLORIA OIL & GAS COMPANY, Appellee.
    No. 20.
    Court of Civil Appeals of Texas. Houston (14th Dist.).
    Nov. 29, 1967.
    Rehearing Denied Jan. 31, 1968.

      John A. Croom, Houston, for appellant.
    John C. Snodgrass, John B. Holstead, Vinson, Elkins, Weems & Searls, Houston, for appellee.
   TUNKS, Chief Justice.

This case involves a suit on two alleged contracts of guaranty, one in writing and the other oral. As to the written contract, it is alleged that Cooper Petroleum Company guaranteed that International Marketing, Inc. would pay to LaGloria Oil & Gas Company the purchase price of certain petroleum products sold by LaGloria Oil & Gas Company to International Marketing, Inc. It is alleged that under the oral contract of guaranty, Albert E. Fagan guaranteed the payment by International Marketing, Inc. to LaGloria Oil & Gas Company of the purchase price of other petroleum products which was the subject matter of other contracts between LaGloria Oil & Gas Company and International Marketing, Inc.

LaGloria Oil & Gas Company is a corporation having its office in Houston, Texas. It is engaged in the refining and sale of petroleum products. Its refinery, from which the petroleum products here involved were delivered, is located at Tyler, Texas. It was the plaintiff in the trial court and is appellee here. It will sometimes be referred to in this opinion as “LaGloria.”

Cooper Petroleum Company is a corporation having its office in Houston, Texas. It is engaged in the marketing of petroleum products. It was a defendant in the trial court and is an appellant here. It will sometimes be referred to in this opinion as “Cooper Petroleum.”

Albert E. Fagan is president of Cooper Petroleum. He and his wife and children own all of the stock of Cooper Petroleum. He was a defendant in the trial court and is an appellant here.

International Marketing, Inc., was a corporation having its office in Abilene, Texas. It, too, was engaged in the marketing of petroleum products. At times material to .the transactions here involved, Fagan, and one James A. Clark, Fagan’s son-in-law, owned one-half of the stock of International Marketing, Inc. and the other half of the stock in that corporation was pledged to Fagan to secure a loan made by him to other shareholders. By December, 1963, Fagan had given his share of the stock in that corporation to a son and another son-in-law. International Marketing, Inc. was not a party to the lawsuit, but it was the buyer of petroleum products under the contract alleged to have been guaranteed by the appellants. It will, in this opinion, be referred to as I.M.I.

James A. Clark is the son-in-law of Albert E. Fagan. He was vice-president of Cooper Petroleum and also vice-president of I.M.I. He was, as above noted, also a shareholder in I.M.I. and received a small salary from it.

In September, 1962, Cooper Petroleum was a party to a contract under the terms of which it agreed to supply aviation gasoline to Slick Airways. The contract was to run for a period of 21 months. Fagan and Clark approached the representatives of LaGloria to request that LaGloria sell, on credit, to I.M.I. the gasoline required by Cooper in this performance of the Slick Airways contract. LaGloria, on September 28, 1962, orally agreed to sell I.M.I. the gasoline on open credit. In the negotiations, Fagan and Clark orally agreed that Cooper Petroleum would guarantee payment of the amounts which became due under this contract. LaGloria requested that Cooper Petroleum’s guaranty be reduced to writing and it was agreed that such a writing would be forthcoming.

On November 16, 1962, that oral agreement to sell to I.M.I. was reduced to writing.

In December, 1962, I.M.I. was awarded a contract to supply aviation gasoline to the United States government for a six-month period beginning January 1, 1963. During December, Clark requested of Bruce Jones, general sales manager of LaGloria, that LaGloria furnish I.M.I. the aviation gasoline required by it in the performance of its United States government contract. At that time, Cooper Petroleum had not executed its written guaranty of the first contract. Jones told Clark that LaGloria would again require the guaranty of performance by Cooper Petroleum. Clark assured Jones that such a guaranty would be made and assured him that the guaranty would be reduced to writing in the near future. Under those circumstances, La-Gloria agreed to furnish the gasoline required to perform the government contract.

During the month of January, 1963, La-Gloria was furnishing to I.M.I. the gasoline required under the terms of the two existing contracts. Cooper Petroleum had not yet executed and delivered its written guaranty^ During that month, frequent oral requests were made of Clark that the guaranty be executed and delivered. On February 1, 1963, the guaranty of Cooper Petroleum was reduced to writing. It guaranteed performance by I.M.I. under both of the contracts then in force.

Before July 1, 1963, I.M.I. decided to bid on another United States government supply contract. At I.M.I.’s request La-Gloria orally agreed to supply the aviation gasoline which I.M.I. would require in the performance of that second government contract. I.M.I. was successful in its bid and became obligated to deliver to the government during a period of six months, beginning July 1, 1963, more than 5,000,000 gallons of aviation gasoline. Clark had promised LaGloria that Cooper Petroleum would again guarantee the performance of I.M.I. of its contract. On July 1, 1963, in accordance with the terms of its oral contract, LaGloria began supplying I.M.I. with the gasoline required to perform its second government contract. That oral contract was not reduced to writing until July 22, 1963. At that time, the contract between LaGloria and I.M.I. to furnish the gasoline required in the performance of the first United States government contract had expired. I.M.I. fully paid the amounts due under that first government contract.

On September 27, 1963, Cooper Petroleum delivered its new letter of guaranty which was given in substitution for the one previously executed, dated February 1, 1963. That letter of guaranty was as follows:

“September 27, 1963
LaGloria Oil & Gas Company P. O. Box 1189 Houston 1, Texas
Gentlemen:
“In consideration of your extention of credit to International Marketing, Inc., with principal place of business located in Abilene, Texas, the undersigned hereby guarantees payment at maturity of whatever amount shall at any time be owing to you on deliveries of products to International Marketing, Inc. under the following contracts between you and International Marketing, Inc.:
“1. Contract designated DSA-63039, pertaining to the approximately 5,-560,000 gallons of aviation gasoline to be delivered to the United States Government.
“2. Letter agreement dated September 28, 1962, pertaining to deliveries of aviation gasoline to Slick Airways.
“This is an absolute and continuing guaranty which is applicable only to transactions under the above cited contract.
Very truly yours, COOPER PETROLEUM COMPANY
By: /s/ James R. Clark_ Vice President
Witness: /s/ Gerald G. Arnold Secretary”

That is the guaranty which is the basis of the present suit against Cooper Petroleum.

On July 22, 1963, I.M.I., by a purchase order confirmed in writing, agreed to purchase from LaGloria 75,000 to 100,000 gallons per month of a product called Lite Alkylate.

On August 1, 1963, LaGloria and I.M.I. entered into another contract under the terms of which LaGloria agreed to sell to I.M.I. 200,000 gallons per month, for a period of two years, of a product known as “100 R.O.N. Gasoline.”

In December, 1963, I.M.I. was successful bidder on a third contract to furnish aviation gasoline to the United States government for a period beginning January 1, 1964 and ending June 30, 1964. By a contract dated December 16, 1963, LaGloria agreed to sell to I.M.I. more than 5,000,000 gallons of aviation gasoline to be used by I.M.I. in the performance of its third contract with the United States government.

It is alleged by LaGloria that Fagan, personally, guaranteed payment for the petroleum products sold under these last three contracts. That is the guaranty which is the basis of the suit against Fagan.

In February, 1964, I.M.I. defaulted. It was subsequently adjudicated as bankrupt. At the time of its default, I.M.I. was indebted to LaGloria, under the five contracts then in force, in the amount of $296,311.83.

In the trial court, the jury made findings favorable to the plaintiff, LaGloria. The trial court rendered judgment for LaGloria against Cooper Petroleum on its writtten guaranty, in the amount of $159,881.90, the balance due from I.M.I. to LaGloria under the Slick Airways contract and the second government contract. The trial court rendered judgment against Fagan, personally, on his oral guaranty, for $136,429.92 — the balance due under the July 22, 1963 Lite Alkylate contract, the August 1, 1963 100 R.O.N. contract, and the December, 1963 contract covering the aviation gasoline to be supplied by LaGloria to I.M.I. in its performance of the third government contract.

Some of the points of error presented by the appellants relate to both of them. Those points of error are as follows: (1) the trial court erred in admitting into evidence plaintiff’s Exhibit No. 5; (2) I.M.I., the principal obligor, was a necessary and indispen-sible party to this suit against its guarantors; (3) by its acceptance of a note from I.M.I., representing the amount due on its contracts, LaGloria agreed to a change of the form of the indebtedness and thereby released the guarantors.

Plaintiff’s Exhibit No. 5, (the original of which was sent to this court as a part of the Statement of Facts) is a cardboard box containing the records of individual deliveries of petroleum products made by. LaGloria to I.M.I. under the terms of the above listed contracts. Plaintiff’s witness, Bruce Jones, testified that he was general sales manager of LaGloria and that, while he did not himself personally have custody of the records in plaintiff’s Exhibit No. 5 and had not personally made the entries thereon, those working under him did have such personal custody and control and did make the entries thereon. When the Exhibit was offered in evidence, the defendant objected on the ground that Jones had not sufficiently qualified as the custodian of the records so as to be able to identify them in such a manner as to make them admissible as business records under Article 3737e, Vernon’s Ann. Tex.Civ.St. That objection was overruled by the trial court. The overruling of that objection and the admission of the Exhibit into evidence is the subject matter of one of appellants’ points of error.

We do not believe that the trial court erred in its ruling. If it was error, though, the error was harmless. Plaintiff’s Exhibit No. 4 was admitted in evidence without objection. It was identified as being a compilation of LaGloria’s business records showing the deliveries of petroleum products under the contracts in question and the unpaid balances thereon. The facts reflected in Exhibit No. 5 were cumulative of those shown in Exhibit No. 4. In view of the cumbersome bulk of Exhibit No. 5, we feel quite certain that the jury did not examine the many items in it in detail and base its verdict on such examination. Exhibit No. 4, showing the same facts in summary form, constitutes sufficient evidence on which the jury based its verdict as to the deliveries under the contract and the unpaid balances thereon. The error, if any, in admitting Exhibit No. 5 was, under the circumstances, harmless. Mueller v. Central Power & Light Co., Tex.Civ.App., 403 S.W.2d 901, no writ history; Brown v. Dale, Tex.Civ.App., 395 S.W.2d 677, writ ref., n. r. e.; Rule 434, Texas Rules of Civil Procedure.

The points based upon the proposition that I.M.I. was a necessary and indispensable party to the suit are overruled. The evidence shows that I.M.I. was insolvent and was bankrupt at the time of the suit. Under such circumstances, it was not a necessary nor an indispensable party. Article 1987, V.A.T.S.

On February 27, 1964, LaGloria was informed that I.M.I. was insolvent. On that date, I.M.I. executed and delivered to La-Gloria its promissory note in the amount of $296,311.83, the balance due on its contracts of purchase.

Both appellants contend that LaGloria, by accepting this note, agreed to a change of the form of the indebtedness and accepted the note in payment of the indebtedness on the contract, thereby releasing the guarantors. Their points of error to that effect are overruled.

The jury found that LaGloria did not accept the note in substitution for the account owed by I.M.I. The sufficiency of the evidence to support this finding is not challenged. There is no challenge here of the form of the issue submitted to the jury making this inquiry.

Appellee did not sue Cooper Petroleum and Fagan as guarantors of the note. It sued them as guarantors of the accounts. Since the jury made an unchallenged finding that appellee did not accept the note in substitution for the debts on the contracts of sale, the acceptance of the note did not constitute a novation which would have extinguished the debts under the contract. A novation, which extinguishes an existing debt, arises when the parties intend that the new liability created be given and accepted as a substitute for the existing debt. Frost v. First State Bank & Trust Co. of Mineral Wells (Com.App.), 276 S.W. 222.

Points of error presented in behalf of appellant, Cooper Petroleum, may be summarized as follows: (1) Clark’s lack of authority to act in behalf of Cooper Petroleum in executing the letter of guaranty; (2) there was no consideration for the letter of guaranty; (3) the guaranty agreement is unenforceable because it was illegal and ultra vires.

As to the authority of Clark, we find that there is testimony sufficient to sustain the jury’s finding to the effect that he had such authority, actual and apparent. He was the son-in-law of Fagan, who, with his family, owned all of the stock in Cooper Petroleum. Clark’s testimony on the subject of his authority is equivocal and evasive, but is susceptible of interpretation as evidence that he had authority. There is evidence that Fagan knew of the letters of guaranty (the one dated February 1, 1963, and one dated September 27, 1967, which letter is the basis of this suit), and never renounced them until after he and Cooper Petroleum had appropriated to themselves practically all of the valuable assets of I. M.I. and after that corporation had defaulted on its contracts with LaGloria. Clark had, with admitted authority, negotiated large contracts as the agent of I.M.I. in which corporation Fagan had substantial financial interests.

We also note that the point of error attacking the jury’s findings as to the authority of Clark to execute the letter of guaranty as an authorized agent of Cooper Petroleum is not briefed by appellant. It was, therefore, waived. Thigpen v. Locke (Tex.Sup.Ct.), 363 S.W.2d 247; Hicks v. Hoover, Tex.Civ.App., 410 S.W.2d 534, no writ history; Rule 418 T.R.C.P.

The appellant, Cooper Petroleum, as defendant in the trial court, made a sworn plea of want of consideration. The contract of guaranty, itself being in writing, imported a consideration. Wright v. Robert & St. John Motor Co., 122 Tex. 278, 58 S.W.2d 67. On the issue of want of consideration, Cooper Petroleum, seeking to avoid the written contract, had the burden of proof. Fireman’s Fund Ins. Co. v. Abilene Livestock Auction Co., Tex.Civ.App., 391 S.W.2d 147, writ ref., n. r. e. Cooper did not request submission to the jury of any issue on this defense. Thus, under Rule 279, T.R.C. P., this defense was waived unless want of consideration was conclusively shown.

The argument on behalf of Cooper Petroleum is to the effect that the only consideration given by LaGloria for Cooper Petroleum’s making of this contract of guaranty was LaGloria’s agreement to extend credit to I.M.I. Since the guaranteed contracts between LaGloria and I.M.I. were already in effect at the time of the execution of the letter of guaranty dated September 27, 1963, Cooper Petroleum contends that LaGloria’s promise to extend credit was a promise to do only that which it was already legally hound to do and was therefore no consideration. That argument ignores the fact that as part of the negotiations, and before LaGloria became bound, Clark, as agent for Cooper Petroleum, made an oral agreement of guaranty. The record shows that in almost all of the transactions involved between these parties, an original oral agreement was made and performance began under the terms of the oral agreement. The oral agreements were subsequently reduced to writing.

Furthermore, on September 27, 1963, the date of the written guaranty, I.M.I. owed to LaGloria between $180,000.00 and $200,-000.00 for gasoline that had been delivered to it. _ Under such circumstances, LaGloria was not bound to continue to extend credit to I.M.I. Ross v. McLelland, Tex.Civ.App., 281 S.W.2d 773, writ ref., n. r. e.; Kidd-Scruggs Co. v. Tyler Hotel Co., Tex.Civ.App., 270 S.W. 566, err. ref. LaGloria, not being so legally bound, extended its credit in consideration of the guaranty of Cooper Petroleum. That consideration was a valid, lawful consideration. Gulf Liquid Fertilizer Co. v. Titus, 163 Tex. 260, 354 S.W.2d 378. Want of consideration was not conclusively shown by appellant, Cooper Petroleum.

The third line of attack on the judgment of the trial court presented in behalf of Cooper Petroleum, is based upon the contention that its letter of guaranty was illegal and ultra vires.

Cooper Petroleum points out, that since it is a corporation, its letter of guaranty was contrary to the provisions of Article 1349 and 1302-2.06, V.A.T.S. It contends that this renders the contract illegal, void and unenforceable.

We hold that the contract was not, because of its violation of the terms of Articles 1349 and 1302.06, rendered illegal and void. Even before the enactment of those statutes, the courts of Texas recognized that guaranty contracts made by mercantile corporations were ultra vires. The enactment of those statutes was but declaratory of the common law as it existed before their enactment. Richardson v. Bermuda Land & Live Stock Co. (Com.App.), 231 S.W. 337; Bond v. Terrell Cotton & Woolen Mfg. Co., 82 Tex. 309, 18 S.W. 691.

Under Article 2.04(B) of the Texas Business Corporation Act, V.A.T.S., a corporation, itself, is denied the defense of ultra vires when sued on its contract. Inter-Continental Corp. v. Moody, Tex.Civ.App., 411 S.W.2d 578, no writ history; Empire Steel Corp. of Tex. v. Omni Steel Corp., Tex.Civ.App., 378 S.W.2d 905, writ ref., n. r. e.

The points of error of the appellant, Cooper Petroleum, based upon its propositions that its contract was illegal and ultra vires, are overruled.

The points of error urged in behalf of the appellant, Fagan, are as follows: (1) there was no consideration for his guaranty; (2) Clark lacked authority to bind him on the guaranty; and (3) the guaranty is unenforceable under the Statute of Frauds.

As to Fagan’s plea of want of consideration, it is to be noted that he, too, failed to request the submission of any issue on want of consideration and has waived that defense unless the evidence conclusively shows that there was a want of consideration.

In December, 1963, while the officials of LaGloria on the one hand, and Clark on the other hand, were negotiating for the sale on credit of the gasoline to be used by I.M.I. in performing its third contract with the United States government, the past due amount owed by I.M.I. under the various contracts then being performed was about $250,000.00. The officials of LaGloria decided that it would be unwise to continue to extend credit to I.M.I. without further security. The September 27, 1963, letter of guaranty from Cooper Petroleum did not cover the liability of I.M.I. under the contracts relating to the sale by LaGloria to I.M.I. of the Lite Alkylate nor the contract relating to the sale by LaGloria to I.M.I. of the R.O.N. gasoline. It also would not cover the contract then being negotiated. They called on Clark for further security, point-’ ing out that their legal department had requested that they have a personal security rather than a corporate security. Clark told them that his father-in-law, Albert E. Fa-gan, would give them a personal letter of guaranty covering the three contracts not included in the Cooper Petroleum guaranty. LaGloria continued making deliveries and extending credit to I.M.I. As was the case in the earlier promises by Clark to procure the letter of guaranty from Cooper Petroleum, the promised guaranty was not immediately forthcoming. The LaGloria officials, as in their earlier transactions, continued to call on Clark requesting that he procure the letter from Fagan. As was the case in connection with the earlier contracts, LaGloria began making the deliveries in reliance on the promise of Fagan’s guaranty and, as on the occasion of the former transactions, Clark continued to promise that the letter of guaranty would be forthcoming. On January 2, 1964, LaGloria sent to Clark a form for the letter of guaranty to be signed by Fagan. When the LaGloria officials called Clark to ask if it had been signed, he, Clark, told them that it had not been because Fagan was out of the city.

Under the authorities hereinabove cited, we hold that the evidence did not conclusively show want of consideration for Fa-gan’s contract of guaranty.

We also overrule the points of error to the effect that Clark did not have authority to bind Fagan on his oral promise of guaranty.

There is evidence to the effect that Fagan knew of the promise made on his behalf by Clark and knew that LaGloria was making deliveries of its products to I.M.I. in reliance on that promise. The sales to I.M.I. were made on credit. Fagan did not communicate to the officials of LaGloria any denial of the authority of Clark to make that promise. There is evidence from which it could be inferred that he, Fagan, knew that I.M.I. was insolvent and would not be able to pay for the products being delivered to it.

On or about February 1, 1964, some of the pending contracts between LaGloria and I.M.I. were, at the request of Fagan, assigned to Cooper Petroleum. It is true that this was done with the knowledge and consent of LaGloria, but it is also true that it was done without their having been told that I.M.I. was insolvent.

Trans-Texas Transport, Inc., a corporation, was a wholly owned subsidiary of I.M.I. I.M.I. had paid $110,000.00 for its stock. That subsidiary owned the trucks used in delivering the petroleum products for I.M.I. On January 28, 1963, all of the stock in Trans-Texas Transport, Inc. was sold by I.M.I. to Fagan. In a letter from I.M.I. to Fagan reciting the terms of that sale, the recited consideration was stated to be $110,000.00. According to that letter, $11,000.00 of that consideration was paid in cash and the balance of the purchase price was to be represented by Fagan’s $99,000.00 note to I.M.I. The letter from I.M.I. to Fagan setting out the terms of the transaction contains the following paragraph :

“It is further agreed that said note shall contain a provision providing that the due date thereof shall be suspended and that it shall not bear interest so long as you or Cooper Petroleum Company are on any guaranty agreement benefiting the undersigned, or so long as either of you is contengently liable on any contract or other obligation of the undersigned, or so long as any debts or claims are owing by the undersigned to either you or Cooper Petroleum.”

Soon after Fagan acquired all of the stock of Trans-Texas Transport, Inc., I.M.I. made a payment to it of $9,900.00. If that payment to his corporation be deducted from the cash payment made by him, Fagan may be considered as' having acquired all of the Trans-Texas Transport, Inc. stock, the principal asset of I.M.I., at a cash outlay of $1,100.00.

It was on February 27, 1964, that La-Gloria was told of the insolvency of I.M.I. and by the time of Fagan’s renouncement of his guaranty, most of the assets of I.M.I. had been transferred to Fagan or to his corporation, Cooper Petroleum.

The jury made findings of fact which we hold were supported by the above stated evidence on the basis of which the trial court properly concluded that Fagan was estopped to deny the authority of Clark to make the promise of guaranty in his behalf and that Clark had apparent authority to make such promises in Fagan’s behalf. Wheeler v. White (Tex.Sup.Ct.), 398 S.W.2d 93; Clark v. Texaco, Inc., Tex.Civ.App., 382 S.W.2d 953, ref., n. r. e.; 2 Tex.Jur.2d 481 and cases cited therein.

We come now to the defense of the Statute of Frauds pled in the trial court by the defendant, Fagan, and by him here urged as support for his contention that the judgment of the trial court against him should be reversed and rendered. The Statute of Frauds, Article 3995, subdivision 2, V.A.T.S., provides in substance that no action shall be brought in any court “to charge any person upon a promise to answer for the debt, default or miscarriage of another;” unless such promise be in writing and signed by the party to be charged therewith or by some person authorized to sign for him.

There can be no question but that the promise of Fagan to answer for the debt of I.M.I. was oral. That promise was made by Clark, a person who, under the findings of the jury, the trial court properly held was authorized to make the promise in behalf of Fagan.

We are here confronted with the question as to whether, under the facts found by the jury and by the trial court, and the other evidence shown in the record, Fagan is precluded from asserting the defense of the Statute of Frauds.

The appellee says that the Statute of Frauds defense is not available to Fagan here because the “main purpose” rule is applicable. The main purpose rule was first announced in Texas, in Lemmon v. Box (Tex.Sup.Ct.), 20 Tex. 329. In that opinion the court said: “Wherever the main purpose and object of the promisor is, not to answer for another, but to subserve some purpose of his own, his promise is not within the statute, although it may be in form a promise to pay the debt of another, and although the performance of it may incidentally have the effect of extinguishing the liability of another.” The court also said: “Here the leading object of the plaintiff (as charged in plea) was not to guarantee or to secure the debt of the Carpenters to the defendant, but it was to subserve some purpose of his own.”

Since the opinion in Lemmon v. Box (supra), the courts of Texas have on many occasions applied to main purpose rule to cases in which the promisor was sued on his promise to pay the debt of another. The case of Gulf Liquid Fertilizer Co. v. Titus (supra) is one involving the Statute of Frauds defense in such a case. In its opinion in that case, the Supreme Court pointed out that this Statute has given rise to thousands of cases and that no clear, settled rule for its construction has been devised. The court then says, at p. 383 of 354 S.W.2d:

“In reading the cases and the texts, it appears to us that most cases have turned upon two or more of the following inquiries which are made to determine whether an oral promise to pay the debt of another is without the Statute and enforceable. They are phrased in different ways by different courts, ,but in substance they are:
“1. Did the promisor intend to create primary responsibility in himself to pay the debt, or did he intend merely to be a surety? The courts may answer this question by saying that the words used in making the oral promise are, themselves, so clear as to be unsusceptible of any other intent than to be, or not to be, only a surety as a matter of law. Or the courts may find that the words are not clear and that the question of intent is one for the finder of fact, taking into account all of the facts and circumstances of the case, including the words used by the promisor. Closely allied with this test is number 3 set out below: was the promise given to subserve some desire of the promisor, or was his purpose merely or only to act as a surety?
“2. Was there consideration for the promise? This inquiry is the same that would be made for any other promise, oral or written. Sufficient consideration is necessary to create a binding contract, generally speaking.
“3. Is the consideration given for the promise the sort of consideration which the courts say is necessary to take the promise out of the Statute? Not all consideration, though sufficient in law, is sufficient for this purpose; and a majority of the courts have applied, in this regard, a rule called the ‘main purpose’ or ‘leading object’ rule. This rule places the promise without the Statute, and therefore enforceable, if the consideration given for the promise is primarily for the promisor’s own use and benefit. In this area the terms ‘collateral’ and ‘original’ are also sometimes used: ‘collateral’ referring to a promise for which the promisor does not get the main benefit; and ‘original’ referring to one where he does.” (Emphasis added)

In the testimony as to the oral promise made in behalf of Fagan, the witnesses repeatedly used such words as “guaranty,” “guarantee,” and “collateral.” The word “guarantee” was used by the court in the special issues submitted to the jury Inquiring as to the nature of the promise made by Fagan through the agency of Clark. Thus, the words used in the making of the promise on behalf of Fagan, did not, themselves, denote an intention to create an unconditional liability for the payment of the account represented by the purchase price of the petroleum products delivered to I.M.I.

We hold, in response to the first of the three inquiries set out in the Titus case (quoted above), that the words used by the parties in making the promise did not create a primary responsibility in Fagan to pay the debt of I.M.I.

As to the second of the three inquiries set out in the Titus case and quoted above, we feel that the inquiry as applied to this case can clearly be answered in the affirmative. There was consideration for Fagan’s guaranty of the account of I.M.I. That consideration was the extension to I.M.I. of further credit at a time when it was $250,000.00 in arrears on its current account. Also, the jury found that it was to the direct financial interest and benefit of Albert E. Fagan, himself, that LaGloria continued to deliver its products to I.M.I.

As to the third of the three inquiries set out in the Titus case as being those on which the cases have turned, we frel that it, too, can be answered in the affirmative. The consideration given for Fagan’s promise was the sort of consideration which the courts say is necessary to take the promise out of the statute of frauds. As noted above, the jury has found that it was to the direct financial interest of Fagan that the delivery of products to I.M.I. continue. The continued delivery of the products was the consideration given to Fagan by LaGloria for his promise. That is one of the component elements of the “main purpose” or “leading object” rule.

A special issue was submitted to the jury asking if it was “for the main purpose of serving his own financial interest and benefit that Alfred E. Fagan affirmed the representation” of Clark, that he, Fagan, would guarantee payment for the products delivered to I.M.I. The jury did not answer that special issue. The record is not entirely clear as to the action taken in the trial court in connection with the jury’s failure to answer it. The judgment recites that it was “withdrawn from consideration of the jury by agreement of the parties.” The judgment also recites that the verdict of the jury was received without objection. The appellee takes the position that the parties agreed that the issue might be submitted to the court for its finding of fact. The appellants take the position that under the circumstances, the appellee has waived a finding on such issue. There is nothing else in the record indicating what action was taken than tl.e recitation in the judgment itself. Under the circumstances, we feel that we should place such a construction on the record as is consistent with the judgment rendered by the trial court. We therefore take the position that the trial court, in rendering its judgment for the appellee, made an implied finding consistent with appellee’s contention that the main purpose rule was applicable. Rule 279, T.R.C.P.

It is to be noted that the Supreme Court in Titus (supra) said that the cases have turned on “two or more” of the three inquiries listed. Here we have findings by the jury and the court on two of those inquiries in such a manner as to support the appellee’s contention that the main purpose rule is applicable. Other cases have held that the Statute of Frauds defense was unavailable under the main purpose rule even when the facts showed that the guarantor did not intend, by his guaranty, to create a primary liability for the payment of the debt which was the subject matter of the guaranty. Dallas Title & Guaranty Co. v. Jarrell, Tex.Civ.App., 320 S.W.2d 696, no writ history; Stillman v. Hirsch, Tex.Civ.App., 84 S.W.2d 501, affirmed 128 Tex. 359, 99 S.W.2d 270.

We hold that despite the fact that the words used in the oral agreement promising to pay the debt of another are not words denoting a primary unconditional obligation to pay the debt, nevertheless, when the main purpose of the promisor is to get for himself a direct benefit, which direct benefit is the consideration given him for his promise, he may not avail himself of the Statute of Frauds as a defense to his liability on that promise.

The availability of the Statute of Frauds defense to one who has been sued on his oral promise to pay the debt of another, has not been looked on with favor by the courts. As early as Lemmon v. Box (supra), the Supreme Court indicated some doubt as to whether the Statute “has on the whole been beneficial.”

In Gulf Liquid Fertilizer Co. v. Titus, (supra), at p. 382 of 354 S.W.2d the following language appears:

“The Statute of Frauds was first enacted in England in 1677. Considering modern rules of evidence and business practice, there are some who believe that insofar as applicable to facts similar to those here, such statute has outlived its usefulness. It is a two-edged sword. It is argued that it may be used to perpetrate frauds as well as to prevent them. Under it a person may obtain a substantial benefit for himself under an oral promise to pay the debt of a third person and then resist payment on the ground that his promise is oral and therefore unenforceable under the Statute of Frauds. Because of this and other dangers, the courts of England and this country have sought to keep the Statute within its intended purpose.”

It has often been said that the purpose of the Statute of Frauds is to prevent a fraud, not to protect one. See 26 Tex.Jur.2d 160, Sec. 9, and cases cited therein.

Here the jury found on sufficient evidence that the making of the promise of guaranty was to the direct financial interest of Fagan; that he knew that Clark had represented that he would guarantee the payments due LaGloria; that he failed to notify LaGloria until January 23, 1964; that he would not execute a guaranty letter; that he knew that LaGloria would deliver its products to I.M.I. in reliance on the guaranty made in his behalf by Clark; that LaGloria did so believe that he would make such a guaranty and acted in reliance on that belief; and that under the same or similar circumstances as existed after the latter part of December, 1963, and before January 23, 1964, a reasonable person in the position of Fagan, in the exercise of ordinary regard for the interest of others, would have notified LaGloria that he would not execute the written guaranty of payment for products delivered to I.M.I.

The trial court impliedly found that it was for the main purpose of serving his own financial interest that Fagan affirmed the representation by Clark to the effect that he would guarantee payment for the products

The evidence showed that after LaGloria began making deliveries in reliance on Clark’s promise, that Fagan would guarantee payment, the indebtedness of I.M.I. increased almost $50,000.00. The evidence further showed that during this period of time while the I.M.I. indebtedness was being so increased, Fagan appropriated to himself and to his wholly owned corporation, Cooper Petroleum, substantially all of the valuable assets of I.M.I. Under the circumstances, we feel that Fagan should be, and he is, barred by the principles of equitable estoppel, as well as the main purpose rule, from asserting the Statute of Frauds to avoid liability for his oral guaranty. Wheeler v. White (supra); Bethea v. Wall, Tex.Civ.App., 362 S.W.2d 414; 48 A.L.R.2d 1079.

The judgment of the trial court is in all things affirmed.


source: Caselaw Access Project

author: MOORE, Justice.

license: Public Domain

text:
    Jimmie Nathan ROSE, Appellant, v. D. T. FRIDDELL, M.D., Appellee.
    No. 306.
    Court of Civil Appeals of Texas. Tyler.
    Dec. 28, 1967.
    Rehearing Denied Feb. 8, 1968.

      Mitchell D. Stevens, Dallas, for appellant.
    W. H. Frank Barnes, Terrell, for appellee.
   MOORE, Justice.

This is a damage suit brought against Dr. D. T. Friddell, a physician of Terrell, by Jimmie Nathan Rose, for malpractice in setting a fractured arm. At the conclusion of the plaintiff’s evidence, in response to defendant’s motion, the court withdrew the cause from the jury and entered judgment in favor of defendant. From such ruling and judgment, plaintiff duly perfected this appeal.

The allegations of the plaintiff’s petition were, in substance, as follows: that on or about May 16, 1948, when appellant was four and one-half years of age, he fell and suffered a supracondylar fracture of his left arm at a point just above the elbow. Upon receiving the injury, his parents took him to defendant, who reduced the fracture, and negligently bound the arm so tight with tape and gauze that the circulation in the arm was obstructed, which finally resulted in total paralysis of the left arm and hand; that as a direct and proximate result of defendant’s negligence, plaintiff suffered what is known as a Volkmann’s contracture, causing the arm to wither and fail to grow to the same size as the right arm, resulting in a contracture to the left wrist and hand so that the same was left in a claw-like position. Plaintiff alleged that defendant failed to exercise that degree of care and skill as other doctors in the same vicinity would have used and was guilty of the following specific acts of negligence proximately causing his injuries, to-wit:

“A. The Defendant failed to made an adequate physical inspection of the Plaintiff’s arm to determine the nature and extent of all underlying pathology, to wit: the jagged portions of the hone that could cause extensive damage to the vascular and nervous system in and around the said fracture.
“B. Defendant, in setting the arm, placed said arm in flexion, but should have placed the arm in extension until he could discover all of the underlying pathology.
“C. In placing the gauze and tape bandage in and around the fractured area that impeded the circulatory flow of blood and thereby causing the damage as heretofore described.
“D. In failing to take adequate remedial measures to determine whether or not the circulatory system had been damaged prior to setting the arm or after discovering that there was swelling in and around the fractured area underneath the tape and gauze bandage.
“E. In failing to loosen the tape and gauze bandage immediately after the mother brought the boy back in the next morning after the fracture had been set.
“F. In failing to call in a specialist to treat an injury of this nature especially after he had discovered that there was swelling, pain and discoloration in and around the tape and gauze bandage placed around the fractured area.”

The ground, recited by the court, for withdrawing the cause from the jury and rendering judgment in favor of the defendant was “ * * * the evidence failed to show that defendant was guilty of any negligence that was the proximate cause of any injury and damages sustained by plaintiff * * *

Plaintiff predicates his appeal upon five points of error, asserting that the trial court erred in ruling that there was no evidence of probative force showing that the various acts and omissions by the defendant amounted to negligence proximately causing his injury.

The burden of proof in a malpractice case is upon the plaintiff, first to prove the negligence in treatment as alleged, and, second, to prove that this negligence was the proximate cause of the injury complained of. Bowles v. Bourdon, 148 Tex. 1, 219 S.W.2d 779, 13 A.L.R.2d 1; Thomas v. Beckering (Tex.Civ.App.), 391 S.W.2d 771.

It is well settled that a physician and surgeon cannot be held to guarantee the results of his professional services. However, it is equally well settled that in undertaking the treatment of a patient, the practitioner impliedly contracts and represents, not only that he possesses the reasonable degree of skill and learning possessed by others of his profession in the locality, but that he will use reasonable and ordinary care and skill in the application of such knowledge to accomplish the purpose for which he is employed; and that, if injury is caused by a want of such skill or care on his part, he is liable for the consequences which follow. Gifford v. Howell (Tex.Civ.App.), 119 S.W.2d 578. Furthermore, it is held that actionable negligence in cases of this kind consists in his doing something which he (the practitioner) should not have done, or in omitting to do something which he should have done; and that what is or is not proper practice in examination and treatment, or the usual practice and treatment, is a question for experts and can be established only by their testimony. Bowles v. Bourdon, supra; Sim v. Weeks, 7 Cal.App.2d 28, 45 P.2d 350.

In determining whether the plaintiff has discharged his burden of proof with respect to negligence and proximate cause, we are required to interpret the evidence in a light most favorable to the plaintiff, disregarding all evidence and the inference therefrom favorable to defendant. Cartwright v. Canode, 106 Tex. 502, 171 S.W. 696 (1914).

The cause of the plaintiff’s Volkmann’s contracture, it seems to be agreed by both defendant and plaintiff, was starvation of the muscles and nerves in the arm for lack of blood supply. To establish that defendant’s treatment in this regard was not proper, when measured by the requisite standard and hence negligence, under the foregoing rule, plaintiff introduced the testimony of but one medical expert, Dr. J. L. Touchstone, a physician and surgeon from Dallas, Texas, who testified that he had been in the private practice of medicine since 1919, and had for many years been on the teaching staff at Baylor Medical School. His testimony was based entirely upon a hypothetical question.

The hypothetical question contains a summary of all the evidence offered by the plaintiff. No objection was registered to the hypothetical question or to the testimony of Dr. Touchstone in response thereto. Since the hypothetical question, together with the testimony in response thereto, constitutes the basis of plaintiff’s cause of action, we quote the question and answers as follows :

“Q. Doctor, I would like for you to assume that we have a four and half year old child who has fallen down and he has fractured the bottom end, the distal end of the humerus. He has chipped off the condyle and it’s floating free. This crying child is brought into the doctor by his parents some fifteen minutes after the break. The doctor, and he’s a general practitioner, with no specialty in orthopedic surgery, or general surgery or internal medicine or anything else, a general practitioner. They bring this boy in to this general practitioner’s office. The general practitioner determines that the boy still has — He can open and close his fists, his elbow is jerking, but he can move his elbow. Apparently there is still function of the medial and the ulnar nerve and that the doctor checked and he finds a radial pulse. This doctor then xrays it to find that this condyle has been chipped off down here. This doctor puts this arm up in extreme flexed position. First of all, he wraps gauze around the forearm and around the upper arm, he puts a piece of gauze or cotton in here in the bend of the elbow, the ventral side of the hand, if you hold the palm up here, then he pulls this arm up in extreme flexed position and he puts a circular bandage around the elbow. He puts the arm in a sling, he tells the parents to bring the boy back if there is any, or to contact him if there is any swelling or any discoloration. They send the boy home. The boy is brought to the doctor’s office about 3 or 4 o’clock in the afternoon. The boy is sent home and the next morning the boy is brought back to the doctor and the boy had extreme pain all night. Now the boy has pain in the elbow when he fractured it, but he has extreme pain that night. He’s very uncomfortable, doesn’t sleep any. His mother is up with him all night long. They take him back around 9 or 10 o’clock the next morning. The doctor merely lays his pencil on the bandage like this and says everything is all right, but there is swelling and you can see swelling pooching up above the bandage. Then the boy is taken home again and he is still in extreme pain, extreme discomfort, he doesn’t sleep at night at all, he’s very uncomfortable and finally the parents late the next afternoon called the doctor. The doctor goes out and he looks at the arm and he sees the swelling and tells them to take him to his hospital. The boy is taken to the hospital and the doctor removes the bandage and he finds discoloration and he finds big watery blisters on the forearm and the upper arm, along with the swelling. At that time there is decreased or diminished flexation of the hand, he the left arm, ex-' treme, not extreme, but decreased or diminished flexation of the hand and the arm. He finds no radial pulse. He then goes in and he determines that there is infection. The boy is running a fever of about 102 or better, 102 to 104. The doctor determines there is infection. Now, that doctor doesn’t try to determine what kind of infection it is. He just starts putting antibiotics in there. The boy’s arm tends to clear and then several days later, six days later, he calls the orthopedic surgeon and tells him he has a boy over here with this kind of an arm and he wants to refer him to this orthopedic surgeon on a consultive basis to determine if there’s future treatment that’s necessary. An appointment is made by this doctor with this orthopedic surgeon. The boy was taken over there on the appointed day with the orthopedic surgeon and the orthopedic surgeon then finds the arm in an extended position, not extended out fully, but in an extended position of about 20 degree flexion. He finds there are remnants there of blisters. He finds no ulnar or medial nerve function. He finds no radial pulse and then he commenced to treat the boy’s arm at that time and he suspects that a Volk-mann’s contracture or a Volkmann’s ische-mia is going to take place. The first doctor, the general practitioner, figured that when he sees the boy the third day after the break and takes the bandage off that there is a constricture of the blood vessels in the elbow and damages to the nerve. Now when the orthopedic surgeon gets the elbow he finds that there is marked blueness and bruises around the elbow. The general practitioner doesn’t remember what he saw in regard to the color. He said it was discolored, but he said it was red. Doctor, from that hypothetical situation, could you form an opinion as to what caused the constriction of the blood vessels and the damages to the nerves in the elbow?
“A Yes, Sir, I can.
“Q Do you have such an opinion?
“A Yes.
“Q What would be your opinion?
“A When he put that up like that — He didn’t mean to do it, but he did it.
“Q Up in a flexed position?
“A Yes, and he cut off his blood supply with that tight bandage, on there. That’s what happened.
“Q All right Sir, when he put this cotton in there, what did that do, Doctor?
“A .Made it worse.
“Q That’s where the watery blisters appeared, was on that surface in there. Now then, Doctor, what else — Is that the type of treatment that a medical doctor in this area should have done for the type of injury that the boy was brought to him to treat, the chipped off condyle bone?
“A Well, I wouldn’t think that was the course to follow and think also that he might have gotten a consultant immediately, the following day anyhow to see what procedure to take. I mean the following day after it was done. I believe he still had a radial pulse at that time. Isn’t that right?
“Q Yes, Sir, at the time that the boy was brought in to him he had a radial pulse, when he was first brought in to him.
“A I think he should have either put the arm in extension until he got the thing all figured out what he was going to do or gotten an orthopedic man to advise him.
“Q From the treatment that T have described here to you that the general practitioner did to the boy’s arm when he first set that arm, Doctor, is that the type of treatment that the ordinary doctor under the same or similar circumstances would have done, in this area, the type of treatment the boy actually received?
■‘A I just doubt that many doctors would take a chance on a thing like that. I think the majority of them would ask for help, not later than the second day.
“Q What about putting the arm up in a flexed position? Is that what the ordinary doctor would have done?
“A I don’t think so. I think they would have either put sand bags on each side and kept it out until they found out what was going to be necessary to be done. It looks like he might have needed an open operation at the time .to fit that end of the bone there that was loose.
“Q All right, Sir, the conduct of the general practitioner on that second morning when they brought the boy back to him and he had seen the swelling there, did not loosen the bandage, is that the kind of treatment that an ordinary practitioner in this area would have done under the same or similar circumstances?
“A I don’t believe so.
it * ⅜ *
“Q Now then, assuming our four and a half year old boy that he does develop Volkmann’s contracture, and the hypothetical that I gave you a while ago and assuming the same facts, could you say whether or not the treatment of the general practitioner in pulling that arm up in a flexed position, putting cotton in the bend of the elbow here and pulling the arm up in a flexed position, and not putting it in an extended position, was the cause of the ultimate Volkmann’s con-tracture that occurred to that boy ?
“A I believe so. That would be my opinion.
“Q Doctor, could you state whether or not once Volkmann’s contracture has started, it is possible to cure Volkmann’s contracture ?
“A No.
“Q Once, it’s started it’s irreversible?
“A Yes, Sir.”

According to the testimony of plaintiff’s parents, Mr. and Mrs. George A. Rose, after Dr. Friddell reduced the fracture, he wrapped gauze around plaintiff’s arm at the elbow. They testified that plaintiff had intense pain all night and the following morning they noticed swelling and discoloration. They testified that they took plaintiff back to Dr. Friddell on the morning of May 17th and called his attention to the swelling and suggested that the bandage around the arm was too tight. After an examination, Dr. Friddell assured them that the bandage was not too tight. The plaintiff continued to suffer intense pain and on May 18th, the third day after the break, blisters appeared on his arm and he developed a high fever. Dr. Frid-dell was called to the home, and upon observing the blisters, advised that plaintiff be taken to the hospital.

Both Dr. Friddell and Dr. Touchstone agree that a Volkmann’s contracture will not occur so long as radial pulse is present in the arm. Dr. Friddell testified that when he first saw the plaintiff shortly after his injury on May 16, 1948, plaintiff was suffering from a simple fracture of the bone of the upper arm where it enters the elbow joint. He described it as a supracondylar fracture where the condyle was broken off and floating free. He testified that appellant had movement in the fingers and forearm and had good radial pulse, indicating good circulation. After making x-rays, he testified that he reduced the fracture, put some cotton down in the bend of the elbow joint, and then used tape to tape the forearm to the upper arm so as to hold the elbow at about a 60 degree semi-flexed position. He denied that he wrapped the arm with circular-type tape or bandage. He testified that he advised plaintiff’s mother to return in two days or before if swelling or discoloration occurred; that he did not see plaintiff again until May 20, at which time he was called to the home by plaintiff’s parents; that because plaintiff had some swelling and large watery blisters on the forearm and near the wrist, he advised his parents to take him to the hospital. Upon examination he found that there was some constriction of the circulation of the soft tissues in the forearm and the arm had no radial pulse; that as a result of the large watery blisters, plaintiff had an infection and he immediately began giving him penicillin to combat the infection and fever; that on May 25, the infection and fever had cleared and he referred him to Dr. P. M. Girard, an orthopedic surgeon in Dallas. Throughout his testimony, he maintained he administered proper treatment and he did nothing to cause the Volkmann’s contrac-ture. He insisted that the contracture of the blood vessel was caused either by the injury itself or by the formation of a blood clot in the blood vessel which blocked the circulation to the lower arm.

When viewed in a light most favorable to the plaintiff, the evidence shows, without dispute, that plaintiff’s arm had good radial pulse after the injury, thus indicating that the blood vessel was not impaired as a result of the injury. The evidence also shows, without dispute, that a tight bandage around the arm is one of the recognized causes of the loss of radial pulse and loss of circulation. Dr. Touchstone testified that in his opinion the treatment administered by Dr. Friddell in placing cotton in the bend of the elbow and drawing the arm up in a flexed position with tight bandages failed to measure up to the required standard of care. He further testified that in his opinion such method of treatment caused the plaintiff to suffer a Volkmann’s contracture. This testimony, we think, raises more than just a mere possibility that the injury was caused by the treatment. We think the testimony was of sufficient probative force to present questions of fact upon which reasonable minds could differ. It is not for this court to decide whether the treatment administered by Dr. Friddell was in fact negligence proximately causing plaintiff’s injury. Rather it is for this court to decide whether or not 'the evidence in the record presents facts which must be passed upon by the jury. As we view it, the record contains at least some evidence of probative force raising an issue of negligence and proximate cause, especially with reference to whether or not the treatment caused a loss of circulation and the resulting Volkmann’s contracture. Hart v. Van Zandt, Tex., 399 S.W.2d 791, (1965); Van Der Bie v. Kools, 264 Mich. 468, 250 N.W. 268; Sim v. Weeks, supra; Bowles v. Bourdon, 148 Tex. 1, 219 S.W.2d 779, 13 A.L.R.2d 1.

Defendant argues that because Dr. Touchstone qualified his opinion by admitting that the contracture could have developed pathologically by the formation of a blood clot, the evidence shows two possible causes of the plaintiff’s injury. Consequently, he says that the trial court properly rendered judgment in his favor because the evidence as to causation was speculative and therefore insufficient to support the submission of an issue thereon.

We recognize the rule which states that where there are two or more causes which might have produced the injury, for only one of which the defendant is responsible, and there is no evidence to show which cause the injury is actually attributable, a verdict should be directed for the defendant. Bowles v. Bourdon, supra. However, we do not believe the rule goes so far as to require the plaintiff to prove causation by direct and positive evidence which excludes every other reasonable hypothesis. It is generally held that evidence which shows reasonable probability that defendant’s negligence or want of skill was the proximate cause is sufficient to raise an issue for the jury. 13 A.L.R.2d 28.

The vital inquiry in any case involving proximate cause is whether the negligent act set in motion the natural and unbroken chain of events that led directly and proximately to a reasonably foreseeable injury or result. Hart v. Van Zandt, supra; Porter v. Puryear, 153 Tex. 82, 262 S.W.2d 933, 936. The conflict, if any, between the opposing opinions expressed by Dr. Touchstone became a matter for the consideration of the jury in determining proximate cause.

For the reasons stated, the judgment must be reversed and the cause remanded for a new trial.


text:
    ROCK ISLAND INDEPENDENT SCHOOL DISTRICT NO. 907, Appellant, v. COUNTY BOARD OF SCHOOL TRUSTEES OF COLORADO COUNTY, Texas et al., Appellees.
    No. 51.
    Court of Civil Appeals of Texas. Houston (14th Dist.).
    Jan. 3, 1968.
    Rehearing Denied Jan. 31, 1968.

      Hollis Massey, Columbus, and J. C. Hins-ley, Austin, for appellant.
    M. L. Null and Joseph P. Kelly and Proctor, Houchins, Anderson, Smith & Null, Victoria, for appellee.
   TUNKS, Chief Justice.

On January 12, 1967, the County Board of School Trustees of Colorado County, Texas, acting pursuant to Article 2922a, Vernon’s Ann.Tex.Civ.St, passed a resolution annexing Rock Island Independent School District No. 907 to Eagle Lake Independent School District No. 903. Rock Island Independent School District No. 907, acting through its Board of Trustees, filed suit in the District Court of Colorado County to set aside that order of annexation. The case was tried to a jury. After receiving evidence, when both parties had rested, the trial judge, being of the opinion that there were no questions of fact, withdrew the case from the jury and rendered judgment holding the action of the County Board of School Trustees of Colorado County, Texas valid. Rock Island Independent School District No. 907 has appealed.

In this opinion, the names of the parties will sometimes be abbreviated. Rock Island Independent School District No. 907 will be called Rock Island; Eagle Lake Independent School District No. 903 will be called Eagle Lake; County Board of School Trustees of Colorado County, Texas, will be called County Board.

Though the record in this appeal is voluminous; the attacks of Rock Island on the action taken by the County Board may be summarized as falling within these areas: Article 2922a, V.A.T.S., on which the County Board action was based, is unconstitutional. There was no substantial evidence to support the County Board’s action. The January 12, 1967, meeting of the County Board, and the passing of the questioned resolution, were unlawful because the passing of the resolution was the result of an unlawful conspiracy in which three of the County Board members participated; because there was insufficient notice and erroneous notice to one of its members, Class, and such notice resulted in his absence from the meeting; because of the misinformation given to one of the Board members, Beken, which misinformation resulted in his voting for the questioned resolution when he otherwise would have voted against it; and because a purported member of the County Board, Engstrom, participated in the meeting and voted for the resolution when he was not a lawfully qualified member. The appellant also challenges the action of the trial court in excluding certain testimony.

We examine first the question of the constitutionality of Article 2922a, V.A.T.S.

This Article, before amendment in 1947, gave County School Trustees authority to annex an independent school district having less than 250 scholastic population to a contiguous independent school district in the same county having 250 or more scholastic population, “upon the approval of the board of trustees of each school district affected.”

In 1947, that statute was amended by, among other things, eliminating the requirement that the county school trustees’ act of annexation be upon approval of the boards of trustees of the districts affected. The caption of the amendatory act of 1947 does not make specific reference to the elimination from Article 2922a of the requirement of the approval of the boards of trustees of the districts affected by the order of annexation. It is the position of the appellant that, for that reason, the enactment of the amendatory act violated Article III, Sec. 35 of the Constitution of the State of Texas, Vernon’s Ann.St., and the Statute, as amended, is unconstitutional.

This precise question has been ruled upon twice by the Courts of Civil Appeals. Adkins v. Rogers, 303 S.W.2d 820, writ ref., n. r. e., and LaParita Independent School Dist. v. School Trustees of Atascosa County, 281 S.W.2d 123, writ ref., n. r. e. Other cases wherein annexations of school districts by county school boards under Article 2922a, as amended in 1947, without approval of the board of trustees of the districts affected, have been held valid are: Neill v. Cook, 365 S.W.2d 824, writ ref., n. r. e.; District Trustees of Campbellton Consol. Common School Dist. No. 16 v. Pleasanton Ind. Sch. Dist., 362 S.W.2d 122, writ ref., n. r. e.

The appellant points out that in none of the cases cited above has the Supreme Court unqualifiedly refused application for writ of error—in all of them the applications have been refused “no reversible error.” That is true. Appellants’ further statement that such a refusal “no reversible error” does not indicate an outright approval by the Supreme Court of the language of the Courts of Civil Appeals in the opinions is also true. Rule 483, Texas Rules of Civil Procedure. However, such qualification of its refusal of a writ by the Supreme Court does not indicate a disapproval of the language of the Courts of Civil Appeals. Furthermore, even such a qualified refusal by the Supreme Court of the applications for writ of error indicates an approval of the results reached by the Courts of Civil Appeals. Calvert “Application for Writ of Error,” Appellate Procedure in Texas, Sec. 22.9; Wilson “Precedent Evaluation in Texas,” 24 Texas Bar Journal, 1037; Simpson, “Notations on Applications for Writ of Error,” 12 Texas Bar Journal, 547.

In each of the cases cited above, the facts were such that the action held lawful by the Court of Civil Appeals would necessarily have been unlawful if Article 2922a, as amended in 1947, were unconstitutional. They all affirmed actions by county school trustees in annexing school districts without the approval of the boards of the districts affected. The appellant cites no cases from the Texas Supreme Court, nor from the Courts of Civil Appeals wherein writ of error has been outright refused, holding that the statute in question is unconstitutional. Under those circumstances, under the authority of the Court of Civil Appeals opinions above cited, we hold that Article 2922a, as amended in 1947, is constitutional.

We next examine the record from the standpoint of the “substantial evidence rule.”

It is clear that this appeal is governed by the substantial evidence rule. Pyote Independent School Dist. v. Estes, 390 S.W.2d 3, writ ref., n. r. e.; Neill v. Cook, supra.

In a trial under the substantial evidence rule, on appeal to the district court from an order of an administrative agency, the proceeding is not a trial de novo. The plaintiff has the burden of proving the absence of substantial evidence, that is, the burden of proving that the action of the county board was illegal, arbitrary, capricious, unreasonable or discriminatory. It is the evidence adduced in the trial court, not in the hearing, if any, conducted by the administrative agency, which is determinative of the issue of substantial evidence. The issue of substantial evidence is one of law to be answered by the court—not a question of fact to be answered by the jury. Under the substantial evidence rule, the administrative order in question will be upheld if, considering the entire record in the trial court, that order finds reasonable support in the evidence. Board of Fireman’s Relief & Retirement Fund Trustees of Houston v. Marks, 150 Tex. 433, 242 S.W.2d 181; Railroad Commission v. Shell Oil Co., 139 Tex. 66, 161 S.W.2d 1022; Neill v. Cook, supra.

In determining whether there is substantial evidence to support a county board’s order annexing one school district to another, it is helpful to compare the two districts involved. Pyote Independent School Dist. v. Estes, supra; Neill v. Cook, supra.

The evidence in the trial court showed that Eagle Lake has 549 scholastics in elementary school, 339 in junior high school, and 322 in high school—making a total of 1,210 scholastics in the district. Rock Island has 40 scholastics in elementary school, 16 in junior high school, and 27 in high school—a total of 83.

The property within the Eagle Lake district was assessed by the school district at á value of over $14,000,000.00, as compared to the State and County assessments of the same property at a value of about eight and one-half million dollars. The property in the Rock Island district was assessed by the school district at about seven and one-half million dollars and by the State and County at approximately the same figure. The tax rate used by the Eagle Lake district was $1.60 per $100.00 of assessed valuation and in Rock Island, the rate was $1.30. The bonded debt of Eagle Lake was over $400,000.00 and in Rock Island was $27,000.00. Thus, it is apparent that the tax payers of Rock Island had a considerable tax advantage over those of Eagle Lake and stood to incur some loss of that advantage as a result of the annexation.

In Eagle Lake, the education cost per year per student was $467.00 as to compare with $1,200.00 per year in Rock Island.

There were ten to eleven teachers in Rock Island district and fifty-six in Eagle Lake. The teacher-student ratio in Rock Island was one to eight and in Eagle Lake, one to twenty-one. In Rock Island, however, nearly all the teachers in junior high and high school were teaching some subjects for which they did not have the educational background necessary to meet the minimum requirements of the Texas Education Agency for the teaching of those subjects.

In Eagle Lake, the elementary, junior high and high schools were located on different campuses, while in Rock Island, they were all located on one. In Rock Island, the six grades of the elementary school were taught in three classrooms— two grades to each room. The different grades in elementary school had separate rooms in Eagle Lake. In Rock Island, there were three teachers for the six elementary grades and most of the other teachers taught classes both in junior high and in high school. In Eagle Lake, some teachers taught classes in both junior high and high school, but comparatively few.

The school building in Rock Island was comparatively new and in good condition. Some of the buildings in Eagle Lake were old but there were plans to build a new high school building near the center of the district.

Both school systems were accredited by the Texas Education Agency, but only Eagle Lake was accredited by the Southern Association of Secondary Schools and Colleges.

Though Rock Island increased the number of courses available to its students by changing the courses offered from year to year in four-year cycles, Eagle Lake offered a somewhat broader curriculum.

Applying the principals of the “substantial evidence rule,” as set forth in the authorities cited above, we are of the opinion that the evidence presented to the trial court constituted substantial evidence in support of the County Board’s order of annexation. That is to say, that reasonable men, sitting as members of the County Board, could have concluded that the facts presented to the trial court would indicate that the area affected by the annexation would benefit from such order. Pyote Independent School Dist. v. Estes, supra; Neill v. Cook, supra.

In the trial court the plaintiff offered evidence from which it could have been found, if relevant, that before January 12, 1967, three members of the County Board, McCreary, Wiese and Engstrom, secretly agreed to introduce and vote for the motion for annexation.

In the first place, we are of the opinion that such a finding of fact would have been wholly irrelevant to this proceeding which was governed by the substantial evidence rule. In the application of that rule to this cause, it is presumed, once it is established, that the motion for annexation was passed in a lawfully held meeting', following lawful procedure, that the members of the County Board were reasonable men acting in an honest effort to discharge their duties. The court is not concerned with their mental processes or motives, nor with the facts on the basis of which they acted — it is concerned only with what facts actually existed as shown by the evidence produced in court. If those facts are such that reasonable men in the honest exercise of their duty could have taken the action in question, then it is valid because it is presumed that the administrative agency acted on substantial evidence.

Of course, before the substantial evidence rule becomes applicable, it must be established that the administrative order in question was passed in a lawful meeting following lawful procedure. Conflicting testimony may present questions for the determination of a jury as to the existence of fact from which the legality of the meeting or the procedure followed in passing of the order may be concluded. For example, there might be conflicting testimony as to whether proper notice of the meeting was given. The answer to that question would be within the province of the jury. If the jury found, on sufficient evidence, that there was no such notice and the trial judge concluded that the meeting was not lawfully held, then the substantial evidence rule would have no application. There might be conflicting testimony giving rise to many other questions of fact to be answered by the jury before the legality of the challenged action of the administrative agency could be determined, but the alleged conduct of the three members of the County Board in making a prior agreement to pass the annexation resolution does not fall within that category. It is true that an agreement of a public officer to exercise his discretion to accomplish a particular result is illegal in contract law to the extent that it is unenforceable. 13 Tex.Jurisprudence 2d 387, “Contracts,” Sec. 183. But such agreement does not disqualify the participants from voting or otherwise acting <^n the proposition which was the subject matter of the agreement. District Trustees of Campbellton Consol. Common School Dist. No. 16 v. Pleasanton Independent School Dist., supra.

The trial court properly refused to submit to the jury the issues relating to the prior agreement of the three members of the board.

On January 9, 1967, Herbert A. Schroeder, County School Superintendent and ex-officio secretary of the County Board, sent out, by post card, written notice of the time and place of the meeting to be held on January 12, 1967. The notice did not state what business was to be conducted at the meeting nor the purpose of the meeting. The sending of such notice was in accordance with the customary procedure of the Board. The meeting was not held on a date fixed by Article 2687, V.A.T.S., for the holding of statutory meetings. That statute, however, permits meetings to be held at other times than those dates fixed in the statute.

A few minutes before the meeting was to begin, one of the members of the Board, Oscar Class, telephoned to Schroeder, saying that he, Class, was having transportation difficulties and asking if anything important was to be conducted at the meeting. While there is some dispute as to just what Schroeder said in reply to the inquiry, his answer was generally in the negative and it may be assumed that he told Class that nothing important was to be done at the meeting. Class testified that because of that answer, he did not attend the meeting. • He also testified that if he had attended, he would have opposed the annexation order. Class did not deny getting the written notice. There is nothing in the record to indicate that Schroeder intentionally made a false statement in his reply to Class.

The plaintiff requested special issues concerning this fact situation and the trial court refused to submit them. We, therefore, assume that if they had been submitted, all of them would have been answered favorably to the plaintiff.

As noted above, these facts had no relevance to the substantial evidence rule question unless they showed that the procedure employed in calling and conducting the meeting rendered its action unlawful, thereby preventing the application of the substantial evidence rule.

It has clearly been held that notice of the meeting of an administrative agency to which the legislature has committed a matter (or the attendance of the unnotified member) is necessary to lend validity to action taken at the meeting. Webster v. Texas & Pacific Motor Transport Co., 140 Tex. 131, 166 S.W.2d 75. However, there is no requirement, statutory or otherwise, that the notice state the purpose of the meeting nor outline the action to be taken thereat. In Sawyer v. Board of Regents of Clarendon Jr. College, Tex.Civ.App., 393 S.W.2d 391, no writ history, notice by telephone and without stating the purpose of the meeting, was held sufficient.

The fact that Schroeder gave the member, Class, the wrong information (if he did) as to the business to be conducted at the meeting and thereby prevented his attendance, did not make the action of the Board unlawful. District Trustees of Campbellton Consol. Common School Dist. No. 16 v. Pleasanton Independent School Dist., supra.

We hold that the evidence above outlined, did not raise any question of relevant fact for the jury and the trial court properly refused to submit the requested special issues.

The minutes of the January 12, 1967, meeting of the County Board show that the four members other than Class were present. The motion calling for the annexation order was made by Wiese and seconded by the member, Beken. The motion carried by a vote of four to nothing. There is no evidence that the minutes did not correctly show what happened at the meeting.

At the trial there was evidence that the member, Beken, who seconded the motion and voted for it asked, before doing so, if the people of the Rock Island area knew that the Board was going to consider the annexation matter, and was answered in the affirmative. There was also evidence that the people of the Rock Island district did not know that the annexation was to be considered by the Board. Beken testified that but for the erroneous information given him in response to his question, he would not have seconded and would have not voted for the motion.

The plaintiff again requested the submission of special issues relating to this phase of the testimony and the trial court refused to submit them.

The trial court properly refused the tendered special issues. This testimony neither raises a relevant fact issue nor shows, as a matter of law, that the annexation order was invalid. Even if Beken had voted against the motion (and disregarding the vote of the member, Engstrom), it would still have carried by a vote of two to one. There was a quorum present. Furthermore, Beken could not, by parol testimony, impeach his vote as shown by the admittedly accurate minutes of the meeting. District Trustees of Campbellton Consol. Common School Dist. No. 61 v. Pleasanton Independent School Dist., supra; Board of School Trustees of Lubbock County v. Woodrow Independent School Dist., Tex.Civ.App., 90 S.W.2d 333, no writ history. A rule of law which would permit a member of an administrative agency either to withdraw or to reverse his formal vote as shown by the correct minutes of that agency, after discovering new facts or discovering the error of those on which he had acted in mistake, would create a poor policy, indeed. Such a rule would destroy the stability of the administrative orders of such agencies and destroy the value of their functions as a part of our governmental organization.

At all times relevant to the litigation with which we are involved, Herbert E. Engstrom acted as a member of the County Board of School Trustees of Colorado County, Texas. He had originally been appointed to fill a vacancy on the County Board and was, in April, 1965, elected to a full term. In October, 1966, he was elected Supervisor of the Colorado Soil & Water Conservation District and qualified and accepted that position on October 14, 1966. The appellee concedes that both offices are offices of emolument and that Engstrom, by qualifying for the job of Supervisor of the Colorado Soil & Water Conservation District in October of 1966, automatically terminated his membership on the County Board of School Trustees.

The appellant contends that Engstrom’s continuation of his action as a member of the Board, when he was not lawfully qualified, renders the action of the board in passing the annexation order, at least voidable and unenforceable.

Neither party has cited any Texas cases which are directly in point on the issue here involved. The nearest in point case is Thomas v. Abernathy County Line Independent School Dist. (Tex.Com.App.), 290 S.W. 152. In that case, two members of a seven-man board of trustees of a school district, after having been elected and qualified as members of such school board, became city aldermen. After qualifying as city aldermen, a meeting of the school board was held, attended by the two who had qualified as aldermen and three other board members. At such meeting, action was taken to call an election on a bond issue. The election carried and tax payers within the school district filed suit to have the proposed bond issue adjudged void because of the participation of the two aider-men in the school board meeting. The trial court denied the injunction sought by the plaintiff and the Court of Civil Appeals affirmed on the ground that the office of school trustee was not a civil office of emolument so that the subsequent qualification of the two aldermen did not disqualify them from continuing their activities as members of the school board. Thomas v. Abernathy County Line Independent School Dist., 278 S.W. 312. The Commission of Appeals reversed the trial court and the Court of Civil Appeals on the ground that the office of membership on the board of school trustees was incompatible with the office of city aldermen. The Supreme Court held that the aldermen, having qualified as such, automatically surrendered their office as members of the school board of trustees. Since they were no longer members of that board and only three other members attended the meeting at which the action being attacked was taken, it was held that there was no quorum at this meeting of the board of school trustees so that the action taken there (the authorization of the bond election) was invalid. The Supreme Court did not hold that participation in the meeting of the board of school trustees by the members disqualified in the acceptance of another incompatible office, rendered the action of the board void. It rather held, simply, that their membership on the board having been terminated, their presence could not be counted in determining the existence of a quorum.

The appellant cites a number of out-of-state cases wherein it has been held that the participation in the affairs of an administrative agency by one who is disqualified because of his personal financial interest in the action being taken by that agency is enough to render the action taken void even where the vote of the disqualified member is not necessary for the passage of the motion being considered or necessary to constitute a quorum. We think those cases distinguishable. No contention is here made that Engstrom had any such personal financial interest in the action taken by the County Board as to disqualify his participation. He simply ceased to be a member of the board when he accepted a second office of emolument. Under those circumstances, his unlawful participation in the activities of the Board is not so colored by his own personal financial interest as to taint the entire action of the board. His presence was not necessary to constitute a quorum and his vote was not necessary to pass the motion leading to the annexation. We are of the opinion that the action of the County Board was valid despite the presence of Engs-trom, and his participation in that action.

In the trial court, the plaintiffs offered the testimony of two witnesses, Galbreath and Day, both of whom were superintendents of small schools and each had been president of the Small School Association. Both testified as to the advantages of small schools. Both were asked hypothetical questions as to whether the students of a small school district gained advantage by annexation to a large one. The trial court, on objection, excluded their answers. Their testimony, on bills of exception, showed that they both would have answered the questions in the negative.

The appellant, by points of error, challenges such action of the trial court.

Those points of error are overruled. Even if their testimony were considered part of the statement of facts, we would still hold, as a matter of law, on the basis of the authorities heretofore cited, that there was substantial evidence in support of the School Board’s order of annexation. Board of Fireman’s Relief & Retirement Fund Trustees v. Marks, supra. The excluded answers had no relevance to any other issue in the trial. Their exclusion, if error, was harmless error. Rule 434, T.R.C.P.

The judgment of the trial court is affirmed.


author: MASSEY, Chief Justice.

text:
    ROBERT S. WATSON COMPANY, Appellant, v. SOUTHWESTERN SOUND CONTROL, INC., Appellee.
    No. 16883.
    Court of Civil Appeals of Texas. Fort Worth.
    Jan. 12, 1968.
    Rehearing Denied Feb. 9, 1968.
    Burnett, Hines & Wood, and Norman P. Hines, Jr., Dallas, for appellant.
    R. A. Kilpatrick, Cleburne, for appellee.
   MASSEY, Chief Justice.

OPINION

Southwestern Sound Control, Incorporated, brought suit as plaintiff against -Robert S. Watson Company, a Texas Corporation, for indebtedness owing on contractual obligations. The defendant filed its plea of privilege to be sued in Dallas County, its residence. Controverting affidavit filed by plaintiff asserted right to retain venue under Vernon’s Ann.Tex.Civ.St. Art. 1995, “Venue”, section 23, “Corporations and associations”. On hearing the trial court overruled the plea of privilege and retained venue in the county of suit. Therefrom the defendant appealed.

Affirmed.

Propriety of the action of the trial court in overruling the plea of privilege is indisputable if we are correct in our holding that there is satisfaction of the requirement (of Exception 23 to V.A.T.S. Art. 1995) that “part” of the cause of action must have arisen in the county where the suit is brought upon proof that all or a portion of the performance under the contract rendered by the plaintiff was in that county.

“Where plaintiff performs services for defendant in a county other than that in which (a) the contract was entered into, and (b) the refusal to pay occurs, venue may be maintained in the county of performance provided the contract stipulated, or the parties contemplated, that the services would be rendered there. * * *” 1 McDonald Texas Civil Practice, p. 519, “Venue”, Sec. 4.30.2. “(Art. 1995(23) and (27)). Suits Against Corporations and Associations. — (I) Where Cause of Action or Part Thereof Accrued.”

Authority for our holding may also be found in San Jacinto Life Ins. Co. v. Boyd, 214 S.W. 482 (Amarillo Civ.App. 1919, no writ history); Hoffer Oil Corporation v. Brian, 38 S.W.2d 596 (Eastland Civ.App.1931, no writ history); and Employers Casualty Company v. West, 383 S.W.2d 251 (Amarillo Civ.App.1964, writ dism.).

The sub-contracts introduced in evidence in behalf of plaintiff show on their face that “Southwestern Sound Control” contracted with the defendant to perform certain of the work it had theretofore contracted to perform for other individuals and concerns in Tarrant and Dallas Counties. The majority of said work was in Tarrant County. There was oral evidence adduced upon hearing that “Southwestern Sound Control, Incorporated”, plaintiff, acted in the performance of said sub-contracts in Tarrant County and Dallas County.

All the sub-contracts were executed by the president of the defendant corporation. Two were not signed by anyone for “Southwestern Sound Control”. One was signed by Earl Bigham as “owner” of said concern, and one was signed by another party with capacity not stated.

Such circumstance is of no comfort in legal aid of the defendant on the plea of privilege hearing, either on its contention of “no evidence” or on the contention of “against the great weight and preponderance of the evidence”. There was no denial under oath that the plaintiff, which sued as “Southwestern Sound Control, Incorporated”, was a corporation as alleged nor that it was not entitled to sue in the capacity of owner of the cause of action asserted. On hearing, the only witness was Earl Bigham. He testified that he was the president of “Southwestern Sound Control, Incorporated”, plaintiff, which had acted as sub-contractor under all the aforesaid sub-contracts.

All points of error are overruled.

Affirmed.


author: BARROW, Chief Justice.

text:
    STRICKLAND TRANSPORTATION COMPANY, Inc., Appellant, v. INTERNATIONAL AERIAL MAPPING COMPANY, Inc., Appellee.
    No. 14640.
    Court of Civil Appeals of Texas. San Antonio.
    Jan. 24, 1968.
    Sawtelle, Goode, Troilo, Davidson & Leighton, San Antonio, Muse, Currie & Kohen, Dallas, for appellant.
    Wiley & Plumb, Jerry A. Gibson, San Antonio, for appellee.
   BARROW, Chief Justice.

Appellee, hereinafter referred to as Shipper, brought this suit against appellant, hereinafter referred to as Carrier, under 49 U.S.C.A. § 20(11), to recover for damages sustained to an aerial mosaic shipped from San Antonio, Texas, to New Orleans, Louisiana. The trial court rendered judgment for Shipper, after a non-jury trial, for the reasonable and necessary cost of repairs to the mosaic in the amount of $1,-065.00, but denied its prayer for attorney’s fees. Carrier has appealed.

The parties agree that a shipper of goods by common carrier makes a prima facie case of carrier liability by showing: (1) that the property was in good condition when delivered to the carrier at place of origin; (2) that the property was in a damaged condition when received by the consignee from the delivering carrier; and (3) the amount of the damages. Missouri Pac. R. Co. v. Elmore & Stahl, 368 S.W.2d 99 (Tex.Sup.1963), affirmed, 377 U.S. 134, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964). Here Carrier does not contend that the damage was caused solely by one of the excepted perils.

This appeal relates primarily to the finding of the trial court that the mosaic was in a damaged condition when delivered to the consignee by the agents of Carrier. Carrier asserts that there is no evidence, or insufficient evidence, to support this finding and therefore Shipper failed to make out a prima facie case.

The shipment originated on June 29, 1964. This mosaic was an assembla-nce of about 150 aerial photographs mounted to give the appearance of one photograph of a large area and was six by eleven feet in size. The photographs were glued to sheets of masonite which were screwed to a wooden frame to prevent bending. For shipping, a wooden crate made of 1" by 3", or 1" by A", pine lumber was built around the mosaic frame and enclosed the front and back of it.

The record does not conclusively establish the date of delivery of this mosaic by Carrier to the consignee, Industrial Photography, Inc., in New Orleans. Furthermore, there is very little evidence relating to this delivery. This is explained in part by the fact that the case was tried in San Antonio nearly three years after the delivery. The only direct evidence concerning the delivery was given by Jack Beech, owner of consignee, who testified by written interrogations. He testified that the mosaic was delivered on or about July 9, 1964. A sales engineer of Shipper went to New Orleans after receiving a call from consignee that the mosaic was damaged and this witness estimated that the mosaic must have been inspected about July 8. However, a business record of Carrier reflects that delivery was made to consignee on July 7, 1964.

Beech testified unequivocally that the mosaic was damaged when delivered to him. He said it was unpackaged on the day of delivery and the crate was broken, and the mosaic was cracked down through the middle; all the way through from the top to the bottom. Shipper’s engineer testified that when he inspected the damage one of the braces on the back of the frame was broken and there were a couple of tears in the mosaic. The cost of repairs to this mosaic was $1,065.00.

There was no other direct evidence of the condition of the mosaic after delivery, but two of Carrier’s business forms were introduced which relate to same. A form for “Inspection Report of Loss or Damage Discovered After Delivery” was introduced, which was signed by “James E. Wilson, Inspector.” It recites that the mosaic was received by consignee on July 9, 1964. The nature of damage is described as follows: “Damage is two splits on face of mosaic— one support on back broken. Crate appears to be in good condition. Unable to determine how this damage could have occurred.”

Carrier’s appeal is based primarily upon its delivery receipt form. It describes the item shipped as “1 mosaic board,” and in the lower right-hand corner of the form is a provision: “Received in good order except as noted.” No exceptions are shown on this form. There is no signature in the space provided below this provision, but across the body of the form is the signature, “Jack Beech.” Carrier urges that this written receipt is prima facie evidence that the mosaic was received in good order and that in the absence of some explanation or contradiction of same, there is no evidence or insufficient evidence that the shipment was damaged when delivered to consignee by Carrier. See Alexander v. Meredith, 262 S.W. 111 (Tex.Civ.App. — Austin, 1924, writ ref’d); Jones on Evidence, 3rd Ed., § 492.

The signature of Beech is not identified on this form and no interrogatories were propounded to him relative to this delivery receipt. This point is hardly in issue as he testified the damage was not discovered at the time of delivery. He was asked: “Please state whether you, after discovering the damage to said aerial mosaic, refused to accept same.” He answered: “No, we didn’t, we had already accepted it before we discovered the damage.”

The legal effect of a signed receipt of apparent good order was considered by this Court in Count II of Missouri Pacific Railroad Co. v. Elmore and Stahl, 360 S.W.2d 839 (Tex.Civ.App. — San Antonio 1962), affirmed, 368 S.W.2d 99 (Tex.Sup.1963). It was there held that such recital relates only to the condition of the outside of the crates. See also Matthews-Carr v. Brown Express, 217 S.W.2d 75 (Tex.Civ.App. — El Paso, 1948, no writ); Gulf, C. & S. F. Ry. Co. v. Holder, 10 Tex.Civ.App. 223, 30 S.W. 383 (1895); Missouri Pacific Ry. Co. v. Fennell, 79 Tex. 448, 15 S.W. 693 (1891); Hoover Motor Express Co. v. United States, 262 F.2d 832 (Cir.Ct. 6th, 1959).

Here the mosaic frame was completely enclosed in a wooden crate and could not be seen until the outer crate was removed. Although Mr. Beech referred to the “crate” being broken, the record is not clear as to whether he had reference to the crate or wooden form on which the mosaic was mounted. On the other hand, the testimony of Shipper’s engineer and the report filed by Carrier’s inspector clearly show that the wooden frame of the mosaic was broken. This agent of Carrier said that the crate appeared to be in good condition. The damage to this mosaic and the frame on which it was mounted could not have been seen until the packing crate was removed. Therefore, the delivery receipt does not establish, as a matter of law, that the mosaic was in good condition when delivered to consignee. Furthermore, we cannot say from an examination of the entire record that the finding of the trial court that the mosaic was damaged when delivered to consignee is so against the great weight and preponderance of the evidence as to be manifestly unjust.

Carrier also complains of the failure of the trial court to make additional findings of fact that the shipment was delivered to consignee on July 7, 1964, and at that time there was no apparent damage. This request, made fifteen days after the original findings were filed, was not timely and the trial court did not err in refusing to make same. Rule 298, Texas Rules of Civil Procedure; Adams v. Houston Belt & Terminal Ry. Co., 405 S.W.2d 838 (Tex.Civ.App. — Houston 1966, no writ). In any event, same were not ultimate issues and reversible error is not shown by this refusal. Rule 434, T.R.C.P.; Plaza Co. v. White, 160 S.W.2d 312 (Tex.Civ.App.— San Antonio, 1942, writ ref’d).

The judgment is affirmed.

      . 368 S.W.2d 99, 101.


author: WILSON, Justice.

text:
    Jeannette LUBINS, Appellant, v. PACIFIC MUTUAL LIFE INSURANCE COMPANY, Appellee.
    No. 4669.
    Court of Civil Appeals of Texas. Waco.
    Jan. 18, 1968.
    Marks, Time & Aranson, Fred Time, Dallas, for appellant.
    Thompson, Knight, Simmons & Bullion, Jerry P. Jones, Dallas, for appellee.
   OPINION

WILSON, Justice.

The beneficiary in a term life insurance policy sued the insurer to recover death benefits under the policy. The defense was that the policy lapsed for nonpayment of premiums. The facts are undisputed, the case having been tried on a stipulation. Judgment was rendered in the trial court for the insurer. We affirm.

The policy provided insured could elect, among other options, to have dividends “applied toward the payment of any premium if the remainder thereof is duly paid.” Insured elected to have his dividends so applied to the annual premium of $135.80. Insured paid the 1963 annual premium. He paid the next year’s premium which continued the policy in force to September 16, 1965, when another like premium was due. On September 16, 1965 there was an accrued dividend of $27.80, which insurer applied to the premium due September 16, 1965. Insured did not pay the balance of the premium, although two notices and an application for reinstatement were sent to him. He died November 19, 1965.

The beneficiary’s contention is that the insurer was obligated to apply the dividend so as to constitute it a prorata portion of the premium and to extend the term of the policy proportionately.

Appellant urges application of authorities supporting the principle that the insurer has a duty to use credits due under a participating policy to keep the policy in force as long as possible. These cases are not apposite. The rights of the parties here are fixed by contract. The contract clearly obligates the insurer to apply dividends toward payment of premiums “if the remainder” of the premium is duly paid. It does not provide for a partial premium payment by dividend if the remainder of the premium is not paid. The only premium contracted for is a single annual premium.

This is not a case, such as those cited by appellant, in which a whole life policy provided that upon default in premium payment the insurance would be continued as term insurance based on the amount of accumulated dividends or cash value. Sterling Mutual Life Ins. Co. v. State National Bank, (Tex.Civ.App., Galveston, 1933) 62 S.W.2d 541, also relied on by appellant, was reversed by the Supreme Court.

Absent a contractual provision, there is no right in the insured to pay less than the entire premium stipulated for, at the time due, or to require a part of the premium to be apportioned to a fraction of the term. Duncan v. United Mut. Fire Ins. Co., 113 Tex. 305, 254 S.W. 1101, 1103, 1104. Here, as in that case, “there was one entire, indivisible term of insurance for and in consideration of one entire, indivisible premium.” The term of the policy was not extended.

The judgment is affirmed.