author: NORVELL, Justice. SMITH, Justice

text:
    James W. MOSS, Petitioner, v. Emily GIBBS, joined pro forma by her husband, Chris Gibbs, Respondents.
    No. A-9497.
    Supreme Court of Texas.
    July 31, 1963.
    Rehearing Denied Oct. 2, 1963.

      Neal & Hazelwood, Amarillo, for petitioner.
    Monning, Monning & Umphries, Amarillo, for respondents.
   NORVELL, Justice.

Essentially, this is a “special community property” case. The petitioner, James W. Moss, sought to levy upon three town lots in Amarillo, Texas, under a writ of execution to satisfy a judgment against Chris Gibbs, the husband of respondent, Emily Gibbs. The trial court entered a perpetual injunction restraining petitioner and the sheriff of Potter County from selling the lots in question. The injunction was based upon a jury finding that said lots “were paid for (by Emily Gibbs) out of her separate funds and rents from her separate property.” The Court of Civil Appeals affirmed. 364 S.W.2d 268. The appellant court seems to have based its decision primarily upon the holding that the lots in question belonged to the special community and were exempt from the payment of the husband’s debts.

The controlling question ultimately reached is whether we should follow or overrule Strickland v. Wester, 131 Tex. 23, 112 S.W. 2d 1047 decided by this Court in 1937. We have decided to adhere to the rule of the Strickland case for the reasons hereinafter discussed. Accordingly, the judgments of the trial court and the Court of Civil Appeals are reversed and judgment here rendered vacating the injunction.

Despite some contention to the contrary, the undisputed evidence shows that the three lots in controversy are the community property of Emily and Chris Gibbs and not the separate property of Emily Gibbs. The following statement is based upon the testimony of Mr. and Mrs. Gibbs:

Before her marriage, Emily Gibbs worked for a Mr. Harding. She received her board and Mr. Harding “gave her a calf or two” and a Mr. Dysart gave her a horse. She sold these animals and kept the money. According to Chris Gibbs, “she didn’t have enough to put in a bank account, so she just kept it until she finally sold and traded around until she had enough to start her own bank account.”

Mr. and Mrs. Gibbs were married in 1912 and thereafter her uncle gave her cattle from time to time which she sold and purchased more cattle with the proceeds. She received some thirty head of cattle from her uncle, — five or six at a time, — over a period of time extending from 1919 into the 1940’s.. Mrs. Gibbs’ cattle buying and selling operations stemmed from the cattle and a few horses given to her by her uncle and Mr. Harding and Mr. Dysart.

Mrs. Gibbs testified that when the cattle were poor she fed them and when they got fat she sold them; that the proceeds of these sales were put in the bank account which she maintained and when she wanted to purchase cattle she wrote a check on this bank account to pay for them. She stated that she made a profit by buying and selling cattle.

In 1937, Mrs. Gibbs purchased a rent house and paid for it out of the bank account mentioned. This property is not directly involved here and we may assume that it was separate property as recited in the deed which she received.

The money in Mrs. Gibbs’ bank account came from three sources, namely, (1) her cattle operations, (2) rents from separate property owned by her and (3) re-payments of loans made to her husband in order to meet household expenses. Mr. Gibbs did not draw checks against this account.

In 1942, Mrs. Gibbs purchased the three lots here involved and paid for them with a check drawn on her bank account. She had destroyed her cancelled checks arid deposit slips, but the bank’s ledger sheet of her account showed deposits of $621.90, $1,100.00, $550.67, $507.67, $55.00, $507.67, $73.00, $1,142.66, $316.00, $200.00 and $919.74 for a period of time extending from August 4, 1941 to June 10, 1942.

In explaining the $1,100.00 item mentioned above, Mrs. Gibbs said:

“Well, we sold some cattle, I guess, and deposited it. I was buying and selling, and I would put it back again, and I was making money at that time.”

Similar explanations were made of other items. One witness testified that he had bought cattle from Mrs. Gibbs and also sold cattle to her. Chris Gibbs testified that his wife would pay him pasture rent for her cattle when she was fattening them for market.

No attempt at tracing the original separate investment into specific property was made other than that indicated by the keeping of the bank account by Mrs. Gibbs and her general testimony as to what went into the account and what was paid out therefrom.

We think the evidence shows without dispute that Mrs. Gibbs was in the business of buying, feeding and selling cattle. The greater part of her bank account in 1942 was accounted for by her cattle operations. She was buying and selling at a profit and the revenues of her business were community property. No portion of the bank account as it existed in 1942 could be traced and identified as Mrs. Gibbs’ separate property. It had been thoroughly commingled with the community. William O. Huie, Commentary, Texas Community Property Law, 13, Vernon’s Ann.Tex.Stats. 1, 1. c. 32 § 10, Problems Involved in Separating Income from Principal. See also, 28 Tex.Law Review 576; 29 Tex.Law Review 339.

Mr. Gibbs, so far as the testimony shows, made no attempt to interfere with his wife’s management of her cattle business, nor her control over her rent house operations. He drew no checks upon his wife’s bank account, nor did he deposit any money therein, except perhaps in payment of loans made to him by his wife. Upon occasion he provided pasturage for cattle and received payment therefor from his wife. At his wife’s direction, he sometimes delivered cattle which she had sold. This testimony shows no more than a noninterference with his wife’s business activities. It does not establish a gift of his community interest in the profits realized from such operations. If mere noninterference would establish a gift, then all special community revenues and earnings could be transmuted into separate property by a mere assertion or claim made by the husband and wife at any time convenient or advantageous to them, even though the rights of creditors might be affected. From the standpoint of a creditor, the distinction between special community and separate property becomes important when money, or the property originally received from the wife’s earnings and profits is converted into a. different form or species of property through exchange or mutation.

The three lots upon which the execution levy was made were purchased by Mrs. Gibbs in 1942 and paid for with a check drawn upon her bank account. The deed to the lots contained no recitation that the property was conveyed to her as a part of her separate estate.

The debt upon which the judgment supporting the writ of execution is based was contracted by Mr. Gibbs in 1960, some eighteen years after the acquisition of the three town lots in question here. As above stated, the Court of Civil Appeals was of the opinion that these lots were a part of the special community and were not subject to the payment of debts contracted by the husband without the consent of the wife.

The term “special community” had its origin in legislative attempts to enlarge upon the constitutional definition of separate property. In Arnold v. Leonard, 114 Tex. 535, 273 S.W. 799, it was held that:

“It is a rule of construction of Constitutions that ordinarily, when the circumstances are specified under which any right is to be acquired, there is an implied prohibition against the legislative power to either add to or withdraw from the circumstances specified. Koy v. Schneider, 110 Tex. 378, 218 S.W. 479, 221 S.W. 880; Dickson v. Strickland (Tex.Sup.) 265 S.W. 1015; Ex parte Vallandigham, 1 Wall. 252, 17 L.Ed. 589; Cooley’s Constitutional Limitations, p. 99; 6 R.C.L. § 43. Hence, when the Constitution says that as to property, not owned or claimed by the wife at marriage, it becomes her separate property when acquired in one of three specified modes, the Legislature is prohibited from saying that property acquired after marriage in some other mode may also become the wife’s separate property.”

The rents and revenues from the wife’s separate property and her personal earnings are not within the constitutional definition of separate property, Article 16, § 15, Texas Constitution, Vernon’s Ann.St., in that they are not acquired by gift, devise or descent.

The Court, however, also stated that:

“The sum of our conclusions is: The Legislature, in defining the wife’s rights in and to her separate property and property held in common with her husband, could lawfully deprive the husband of the power granted him for many years to manage and control the wife’s separate property and portions of the community property which were derived from use of the wife’s separate property or from her personal exertions, and could confide the management, control, and disposition thereof to the wife alone, and could exempt, not only her separate property, but said portions of the community from payment of the husband’s debts. In making this grant of enk/ged rights to the wife, and working the corresponding diminution in rights to be exercised by the husband, the Legislature was lawfully defining the wife’s rights in both her separate estate and common property, as expressly authorized by the Constitution. But the Legislature could not divest the husband of all interest in and to property which, under the Constitution, was guaranteed either to the community or to the husband’s separate estate, and use the same to enlarge the wife’s separate estate beyond its constitutional limits.”

Special community property therefore is that portion of the community which is under the wife’s exclusive control and is not liable for the husband’s debts.

The lots in question are community property. As such they are subject to the payment of the husband’s debts unless they belong to the special community,—a purely statutory creation. If the property is to be held exempt from execution for the husband’s debts, it is essential that there be some statutory provision which makes it exempt.

In contending that the property is nonexempt, the petitioner relies upon Strickland v. Wester, 131 Tex. 23, 112 S.W.2d 1047, wherein this Court said:

“A careful consideration of the question has led to the conclusion that when such earnings (of the wife) are converted into other property, that property is subject to the payment of debts contracted by the husband the same as any other community property.”

There is a close analogy between Strickland and the present case. Mrs. Gibbs converted the proceeds of her cattle operations and the income received from rent property into the town lots now in controversy.

The respondent in a well considered argument adopts the thesis set forth by Professor Huie in his Commentary heretofore mentioned. Briefly stated, it is contended that although the Legislature, because of constitutional considerations, failed in its attempt to classify the revenues from the wife’s separate estate and her personal earnings as her separate property, it is abundantly clear that the Legislature intended that the revenues from her separate estate and her earnings should be subject to her control and free from the debts of her husband to the same extent as if they were separate property. Under this theory, the only essential difference between the wife’s separate property and the special community would be that the husband would retain his half interest in the special community. Insofar as the wife’s control of the property and its exemption from the husband’s obligations are concerned the two classes of property would receive the same legal treatment so long as the community remained in existence. It would follow that the same rules would apply to mutations of the special community as are applicable to the wife’s separate property.

It is conceded that the statutory wording relied upon to bring about this result is not entirely clear. For example, the 1925 codification of the Revised Statutes omits certain provisions as to the wife’s control of the special community. A similar omission occurs in the 1957 Act amending Articles 4614, 4616, 4617 and 4623, Vernon’s Ann.Civ.Stats. Acts 1957, 55th Leg., Reg. Session, ch. 407, p. 1233. The briefs contain some discussion of these matters which we need not dwell upon at length here. See, Beardon v. Knight, 149 Tex. 108, 228 S.W.2d 837; 1 Speer, Marital Rights in Texas (4th Ed.) 488; Huie, Commentary, Community Property Law cf Texas, Vol. 13, Vernon’s Ann.Tex.Stats., p. 39; Blevins, Recent Statutory Changes in the Wife’s Managerial Powers, 38 Tex.Law Review 55; Conant, Article 4614 — Problems Ahead, 14 Baylor Law Review 207. It is not, however, essential to a decision of this case to examine these matters in detail, because the logical result of the adoption of Professor Huie’s views would be the overruling of Strickland v. Wester, 131 Tex. 23, 112 S.W.2d 1047 and this step is advocated by Professor Huie in his Commentary.

Respondent’s contention is that as mutations of separate property retain their separate character in law, Norris v. Vaughan, 152 Tex. 491, 260 S.W.2d 677, the same rule should be applied to the special community. Strickland v. Wester strictly construes the applicable statute as being an exemption provision which is not applicable to mutations and this holding squarely conflicts with Professor Huie’s thesis which we are urged to adopt.

Respondent reminds us of the dictum of Mr. Justice Holmes, sitting as the Circuit Justice in Johnson v. United States, 1 Cir., 163 F. 30, 18 L.R.A.,N.S., 1194 that:

“[I]t is not ail adequate discharge of duty for courts to say: We see what you (the Legislature) are driving at, but you have not said it, and therefore we shall go on as before.”

Cabell v. Markham, 2 Cir., 148 F.2d 737, (reversed, Markham v. Cabell, 326 U.S. 404, 66 S.Ct. 193, 90 L.Ed. 165) is likewise cited, wherein Judge Learned Hand said:

“Of course it is true that the words used, even in their literal sense, are the primary, and ordinarily the most reliable, source of interpreting the meaning of any writing: be it a statute, a contract, or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.”

It is said that Hawkins v. Britton State Bank, 122 Tex. 69, 52 S.W.2d 243 is in conflict with Strickland v. Wester and despite its being the earlier case, the rule stated therein is correct and should govern this case.

In the Hawkins case, this Court held that a hay press, mower, sulkey rake and buck rake apparently purchased by the wife out of the rents and revenues realized from a separately owned farm and used in connection with her separate farming operations was subject to her exclusive control and could not be mortgaged by the husband.

The case is consistent with respondents’ theory in that it can be reasonably argued that it represents an instance where this Court held that mutations of the special community (farm machinery purchased with the revenues from separate property) were under the exclusive control of the wife. On the other hand, as urged by the petitioner, the Hawkins case can be reconciled with Strickland by regarding Hawkins as being in the nature of an exception to the general rule set forth in the Strickland case. This is a permissible view and is supported by the rationale set forth in the Hawkins opinion.

Article 4616 as amended in 1957 provides that:

“Neither the separate property of the wife, her personal earnings, nor the revenue from her separate property shall be subject to the payment of debts contracted by the husband nor claims arising out of the torts of the husband.”

Any difference in wording between the present statute and its predecessor articles is immaterial to the decision of this case. See, historical note, Article 4616, Vernon’s Ann.Tex.Stats.

In Strickland v. Wester the issue was whether or not a certain town lot standing in the name of the wife was subject to the husband’s debts. In the course of its opinion, this Court said:

“According to the testimony of Mrs. Wester, she purchased this lot from her husband with money which she earned as a school teacher. She had been teaching 27 years at the date of trial, and many years ago she and her hus--band, who was also a teacher during his lifetime, entered into an agreement that her personal earnings should be her separate property. That agreement was not valid, for the community property law cannot be changed by contract. Her personal earnings were not subject to the payment of debts contracted by her husband, Article 4616, R.S., but they constituted a part of the community estate. Arnold v. Leonard, 114 Tex. 535, 273 S.W. 799; Hawkins v. Britton State Bank, 122 Tex. 69, 52 S.W.2d 243; In re Gutierrez, D.C., 33 F.2d 987. A careful consideration of the question has led to the conclusion that when such earnings are converted into other property, that property is subject to the payment of debts contracted by the husband the same as any other community property.”

Here is a definite holding based upon “a careful consideration of the question” that the statutory exemption of the special community does not extend to mutations thereof.

In Hawkins v. Britton State Bank the question of control of the special community was directly involved. The husband had attempted to exercise control by mortgaging certain items of farm machinery which the wife claimed was a part of the special community. The attempt of the husband’s creditor to foreclose the mortgage gave rise to the question of whether or not the farm machinery involved was subject to a debt contracted by the husband. Had this Court at the time of the Hawkins decision been of the opinion that the statutory exemption extended to all mutations of the special community it could have said so in language as clear as that employed in Strickland v. Wester in stating the contrary conclusion. It may be said that the basis of the Hawkins decision was the circumstance that the wife in the process of managing her separate estate had. used special community funds (over which she had exclusive control) to purchase equipment which was essential to an effective control or management of her separate property. This Court pointed out that under the statute the wife has control of her separate property and that such control would be effectually defeated if she were prevented from using the revenues from such separate property to provide the necessary equipment to operate her separate estate. It was stated that:

“It would be idle to say that the statute intends to confer on the wife the bare right to control and manage the land itself, but that the minute the rents she has contracted for come due, or the minute such rents are collected, the husband can take charge thereof, and use them to suit himself, all without the wife’s consent and against her will. Such a holding would saddle the wife with all the burdens incident to the management of her estate but rob her of all benefits, and render the statute but an idle and a vain thing.”

In the present case the property purchased by the wife’s profits and income from the separate rent houses was not something essential to or used in connection with the operations of the wife’s separate estate. The special community funds were simply used to buy an additional piece of community property. It is a pure case of mutation and regardless of whether the property purchased be held exempt from the husband’s debts, the wife’s management of her separate estate is not affected.

The question does not reach us in the same posture as if Strickland v. Wester had never been decided. It may be reconciled with' the Hawkins decision as pointed out by the petitioner and if there be any conflict between two cases, the later case is ordinarily held to modify the earlier holding.

In determining whether or not we should overrule Strickland there are these factors to be considered: This is essentially a matter of statutory construction. The literal wording of the statute supports the decision made in Strickland. Article 4616 provides that neither the wife’s “personal earnings, nor the revenues from her separate property shall be subject to the payment of debts contracted by the husband.” It does not speak of personal earnings and revenues from her separate property and all mutations thereof. It is necessary to construe the statute to include mutations in order to affirm the proposition urged upon us by the respondent.

“It is the Government’s contention that the Elgin decision misconstrued the Act, misunderstood its legislative liis- ' tory and misapplied the Court’s own prior decisions. It is not necessary in the view we take of the case to decide to what extent, if any, these contentions are correct. It is enough to say that if the Elgin case were before us as a case of first impression, its doctrine might not now be approved. But we do not write on a clean slate. What the Court has written before is but one of a series of events, which convinces us that its overruling or modification should be left to Congress. As the Court held on our last decision day, when the questions are of statutory construction, not of constitutional import, Congress can rectify our mistake, if such it was, or change its policy at any time, and in these circumstances reversal is not readily to be made. Massachusetts v. United States, 333 U.S. 611, 68 S.Ct. 747 [92 L.Ed. 968]. * * *»

This matter of construction was before this Court in 1937 in the Strickland case and a strict and literal interpretation of the statute was adopted. In the field of statutory construction the doctrine of stare decisis may be of most compelling force. Some twenty-six years have passed and some thirteen regular legislative sessions have taken place since Article 4616 was construed by this Court in the Strickland case. Seemingly no legislative dissatisfaction with the Strickland construction has been manifested, despite the fact that a comparatively simple amendment would have rendered respondents’ theory as to the nature, qualities and exemptions of the special community fully operative. This indicates either that the Legislature approved of the Strickland construction or that the general dissatisfaction therewith was not of sufficient strength to impel legislative action. It may not be considered desirable to effect a statutory enlargement of the special community exemption over that recognized by the Strickland case. This is now a policy matter for the Legislature.

While - the effect which should be given to legislative inaction varies with circumstances, we think that the statement of Mr. Justice Jackson in United States v. South Buffalo Ry. Co., 333 U.S. 771, 68 S.Ct. 868, 92 L.Ed. 1077, has application here:

We decline to overrule Strickland v. Wester. An order of reversal will be entered in the terms heretofore indicated.

SMITH and STEAKLEY, JJ., dissent.

SMITH, Justice

(dissenting).

This is a “special community property” case. The controlling question is whether the courts are going to give to the wife the contractual power necessary to effectuate her power to manage the special community estate? It has been held that the wife does have the power to manage certain revenues derived from her separate estate. Therefore, it should follow that she has the power to manage her personal earnings to the extent of investing such earnings which are a part of the special community estate without fear of having such property subjected to the payment of the husband’s debts. It is my view that the case of Bearden v. Knight, 149 Tex. 108, 228 S.W.2d 837, by this court, and the statutes stand for the proposition that all revenues from the wife’s personalty are under her sole management and control. The case of Strickland v. Wester, 131 Tex. 23, 112 S.W.2d 1047 (1938), also by this court does not deny the power of a married woman to manage the special community. It holds that the personal earnings of the wife “* * * were not subject to the payment of debts contracted by her husband, Article 4616, R.S., but they constituted a part of the community estate.” The Court, however, goes on to hold that “ * * * when such earnings [personal earnings] are converted into other property, that property is subject to the payment of debts contracted by the husband the same as any other community property.” This latter holding throws the Strickland case out of harmony with the cases like Bearden which hold that the wife has the power to manage and control the “special community,” and that to deny such control would materially interfere with the express power to manage the separate estate.

If we are now concerned, and I think we are, with a factual situation which establishes a “special community” status, then I think the same rules as laid down by the courts in regard to separate property when it undergoes mutations and changes should be applied in a case involving a “special community” estate. What is the rule in Texas where separate property undergoes mutations and changes ? The holding in the case of Stephens v. Stephens, (1927) Tex.Civ.App., 292 S.W. 290, wr. dism., was to the effect that the separate estate of the husband or wife, whether money or property, may undergo mutations and changes and still remain separate property so long as it can be clearly traced and identified. This holding was expressly approved by the Court in the case of Norris v. Vaughan, 152 Tex. 491, 260 S.W.2d 676, (1953). The principle announced in the Stephens and Norris cases should apply with equal force in the present case, otherwise the managerial career of Mrs. Gibbs or any wife in like circumstances can be brought abruptly to an end upon the exercise of her right to manage and control the “special community” by the investment of such property in “other property.” So far as a “special community” estate is concerned, it should be the law that so long as the “special community” property can be clearly traced and identified, no matter how many mutations it may undergo, such property remains under the control and management of the wife, and is not subject to the payment of debts contracted by the husband. Article 4616, Vernon’s Annotated Civil Statutes, expressly provides that neither the separate property •of the wife, her personal earnings, nor the revenue from her separate property shall be subject to the payment of debts contracted by the husband nor claims arising out of the torts of the husband. I believe that the enactment of this statute manifested an intention on the part of the Legislature to exempt not only personal earnings, but any property which could be clearly traced and identified as having been acquired with the proceeds of such personal earnings. The Strickland case effectively removes the exemption from Article 4616. Under that case, although the wife has the exclusive right of management, she will not be permitted to invest and reinvest the funds of the “special community” estate without interference from the husband or his creditors. By the Act of 1913, Texas Laws 1913, p. 61, 16 Gammel, Laws of Texas 61, the wife was given the management of her separate property and at the same time the management of the community property was divided between the husband and the wife. See William O. Huie, Commentary, Texas Community Property Law, 13 Vernon’s Ann.Tex. Stats. 1, 1. c. 32 § 10, Problems Involved in Separating Income from Principal. See also 28 Tex.Law Review 576; 29 Tex.Law Review 339. By way of digression, I point out that Mr. Huie discusses at some length the case of Norris v. Vaughan, supra. He seems to indicate that the principles announced in that case as to separate property should apply with equal force as to “special community” property. As pointed out in the Huie article, the Act of 1913, used broad terms: “the personal earnings of the wife, and the income, rents and revenues from her separate property,” in describing the types of community property that would be liable for debts contracted by the wife, whereas, in describing the types of community property that would be subject to her exclusive management and control and exempted from the husband’s debts, the act used more detailed terms, such as: “the personal earnings of the wife, the rents from the wife’s real estate, the interest on bonds and notes belonging to her and the dividends on stock owned by her. The Bearden v. Knight case, supra, removed all doubt as to the extent of management that the listing of certain varieties of income in the statutes created so far as the revenue from the wife’s separate land was concerned. The Bearden case simply held that all revenue from the wife’s separate land, whether technically classifiable as rent or not, is under the wife’s exclusive management and free from liability for the husband’s debts. See Huie, supra. The Bear-den case only involved revenue from land; therefore, that case became authority for the proposition that the listing of certain varieties of income was merely illustrative and the statute meant that the revenue from separate realty was to be managed exclusively by the wife. Since the Bear-den case only involved the problem of the status of revenue from the wife’s separate land, the Court confined its opinion to that problem and made no holding as to revenue from personalty. However, all doubt as to the status of revenue from personalty of types of income not specifically listed was removed upon the enactment of the amendment of the statutes in 1957. By the amendment, which became effective on January 1, 1958, the language listing specific items of revenue was replaced by the broad phrase “revenue from her separate property.” Thus it is clear that all kinds of revenue from the wife’s separate property, real and personal, were made exempt from the husband’s debts.

The 1913 act contemplated that the wife would have the power to manage the “special community” estate; and the omission in the 1925 revision of the act of the express provision of the 1913 act giving her such power is not indicative of an intention ■of the Legislature to deprive the wife of ■exclusive management and control, especially in view of the fact that the 1925 revision retained the provision of the 1913 act exempting personal earnings, etc., from the debts of the husband. In my opinion it was the intention of the Legislature that the special community property ■should remain under the wife’s management and control through all of its mutations and changes.

The Court in the present case adheres to the so-called rule of the Strickland case. In doing so, it seems to draw the issue between Professor Huie and the assertion in the Strickland case by this court that “* * * [a] careful consideration of the ■question has led to the conclusion that when such earnings (of the wife) are converted into other property, that property is ■subject to the payment of debts contracted hy the husband same as any other community property.” An examination of the record in the Strickland case leads me to conclude that the peculiar factual background of that case led to the result reached. I submit that the question now before this court was not squarely before the Court in the Strickland case. Clearly, the Court in Strickland was not considering and the points of error were not focused upon whether or not, if there was under the statutes to be a special community estate -under the wife’s exclusive management, she must be able to invest and reinvest funds •of that estate without interference from the husband or his creditors. The Strickland opinion offers no explanation for the above quoted conclusion. There is no •satisfactory explanation that can be made. In that case, J. K. Wester, the husband of Mattie L. Wester, was indebted to Strickland in the sum of $600.00, as evidenced •by his promissory note and a deed of trust covering lots 4 and 5, in block 28 of the Overton addition to the town of Lubbock. Wester defaulted in the payment of the note. Suit was filed in January, 1931, and judgment on the note and for foreclosure of the deed of trust lien was rendered in favor of Strickland on February 20, 1931. On March 2, 1931, Wester conveyed lot 3, the lot in question, to Mrs. Wester for a recited consideration of $15.00 cash and a promissory note for $200.00, secured by vendor’s lien.

Wester died in July, 1934. On October 17, 1934, Strickland filed suit against Mrs. Wester to cancel the deed of conveyance on the ground that it was a fraudulent conveyance made for the purpose of hindering, delaying and defrauding the creditors of J. K. Wester. Mrs. Wester answered, alleging that she purchased the property in controversy with her separate earnings and funds, and that she had no notice of any claim to the property by Strickland.

The trial court granted Strickland’s motion for an instructed verdict. The Court of Civil Appeals after giving a recitation of the facts, held that the trial court erred in holding there was no issue of fact to be determined. The holding of the Court of Civil Appeals, 87 S.W.2d 765, was that the rule is that when a creditor attacks a conveyance of this character, made for a valuable consideration, the burden of showing the debtor’s insolvency at the time of the conveyance is on the creditor, citing authorities. The Court declined to discuss the evidence, but remanded the case for a new trial with the statement: “Plaintiff did not prove his case with that degree of certainty which warranted the court in directing a verdict.”

Although the opinion of the Court of Civil Appeals makes no reference to an issue of gift, and did not reverse the case on the ground that the evidence raised an issue of fact as to a gift, this court, nevertheless, in affirming the reversal said that: “As we understand the opinion of the Court of Civil Appeals, that court held * * * that the evidence raised an issue of fact as to a gift by Mr. Wester to her of her earnings * * I am unable to find anything in the opinion upon which this court in 1938 could have based such a conclusion. It is my impression that the circumstance that the wife bought the land from her husband the next day after Strickland had advertised lots 4 and 5 for sale influenced the decision. Even so, and in spite of the allegations of fraud, this court theorized that there was an issue of fact to be submitted to a jury or the trier of facts in the trial court. The Strickland case is entirely out of line with the previously decided case of Hawkins v. Britton State Bank, 122 Tex. 69, 52 S.W.2d 243 (1932). It is significant that the Strickland case (1938) did not question the Hawkins case. This for the reason that the questions of the exclusive management of her separate estate and the right to invest and reinvest the funds of that estate (either separate or special community) were not squarely before the Court in the Strickland case. It is also worthy of note that in Bearden v. Knight, (1950), supra, the Hawkins case was cited as a controlling precedent. The holding in the Hawkins case that certain haying implements, purchased out of rents accruing from the separate estate of Mrs. Hawkins, was not subject to sale by Mr. Hawkins, the husband, was based primarily upon the Court’s interpretation of the statutes. The opinion admits of no interpretation to the effect, as some would argue, that the haying implements were held to be the separate property because such implements were used by the wife in the operation of her separate property farm. The certified question before the Court was:

“Did the trial court and this court err in deciding that the haying implements, purchased out of rents accruing from the separate estate of Mrs. Hawkins, was community property and subject to sale by M. D. Hawkins, the husband, in order to pay the debt he had contracted to the bank?”

The Court, after stating that the Act of 1913 materially changed and enlarged the rights of the wife relative to her separate property, held:

“From what we have said above it is evident that we hold that under the provisions of the 1913 act, supra, and all subsequent valid acts, the rents from the wife’s separate lands are community property, that is, they belong to the community estate but they are under the exclusive management and control of the wife, and cannot be subjected to the payment of debts contracted by the husband, either by execution or otherwise, without the wife’s consent.”

The Court went further to say that in making this grant of enlarged rights to the wife, and working the corresponding diminution in rights to be exercised by the husband, the Legislature was lawfully defining the wife’s rights in both her separate estate and common property, as expressly authorized by the Constitution.

The Court, in effect, held that the investment by the wife in purchasing the haying implements was such a change as was contemplated by the statute, and that such property was not subject to the payment of debts contracted by the husband. Common sense leads to the conclusion that if there is to be a special community estate under the wife’s exclusive management, she must be able to invest and reinvest the funds of that estate without interference from the husband or his creditors. The Hawkins case is the answer to the problem presented in the present case, whereas on the basic question of the applicability of the tracing principle to the community property under the wife’s management, the Strickland case is entirely out of line with the well-reasoned authorities herein relied upon. The Strickland case has done nothing more than becloud the area of the community property law involved in this controversy.

The only purpose of this dissent is to draw the line between the theories of law to be applied in a case such as this. Therefore, I deem it unnecessary to consider the claim of the respondent, Mrs. Gibbs, that she has met the burden of tracing the mutations of her separate earnings into the property involved, for such issue is entirely distinguishable from the issue upon which both the Court’s opinion and this dissent is predicated. Until the Court reaches this question, I shall not attempt to solve it.

STEAKLEY, J., joins in this dissent.


source: Caselaw Access Project

author: CALVERT, Chief Justice.

license: Public Domain

text:
    William A. LOTT, by Next Friends, Petitioner, v. M. T. LOTT et ux., Respondents.
    No. A-9367.
    Supreme Court of Texas.
    July 17, 1963.
    Rehearing Denied Oct 2, 1963.
    Roscoe Runge, Mason, Robert I. Wilson, Kerrville, for petitioner.
    Darrell G. Lochte, L. W. Pollard, Robert R. Barton, Kerrville, for respondents.
   CALVERT, Chief Justice.

This is a trespass to try title suit filed in the name of William A. Lott by three of his children, as next friends, against M. T. Lott and his wife to recover title to and possession of a 479 acre tract of land in Kerr County. M. T. Lott is a son of William A. Lott. The petition recognizes that record title to the land is in M. T. Lott, but it is alleged that it is held by him “under an express or constructive trust for the use and benefit” of the plaintiff. The defendants answered the suit by plea of not guilty, and thereafter filed a motion for summary judgment. The trial court granted the motion and rendered judgment that plaintiff take nothing. The Court of Civil Appeals has affirmed. 362 S.W.2d 410.

We affirm the judgment of the Court of Civil Appeals.

Attached to defendants’ motion for summary judgment are a number of exhibits, including a copy of a deed executed by Richard Holdsworth and his wife on August 10, 1936 conveying the land in question to M. T. Lott. The copy of the deed is conclusive proof that as of its date legal title to the land was vested in M. T. Lott. There is no evidence in the record that he has ever been divested of legal title.

An Answer was filed to the motion for summary judgment. To it is attached an affidavit of Oscar Lott, one of plaintiff’s sons, and an affidavit of one of plaintiff’s attorneys. The purport of these affidavits is that the one-half of the purchase price of the land paid in cash was paid with funds of the plaintiff, and that title was to be held by M. T. Lott for the plaintiff’s benefit. By these affidavits plaintiff sought to raise a question of fact as to the existence of a resulting trust under which, if established, equitable title to the land would be in him. Statements in the affidavits are largely conclusional and some are obviously hearsay. But we need not determine their sufficiency in meeting the requirements of Rule 166-A(e), Texas Rules of Civil Procedure, for, as held by the Court of Civil Appeals, they become immaterial in view of the presence in the record of another instrument.

Attached to the motion for summary judgment is a copy of an instrument, dated January 5, 1937 and captioned, “TENANT’S DISCLAIMER.” It is executed by G. H. Lott and William A. Lott and his wife, Emma Lott, and contains all of the formal requisites of a deed. Immediately preceding the description of the land, the premises clause of the instrument contains a recitation that the grantors

“ * * * do hereby disclaim and release unto said M. T. Lott and the Federal Land Bank of Houston, Texas,, and the Land Bank Commissioner, any right, title or interest or right of possession as tenants or otherwise, we or either of us may have or be entitled to' in or to the 479 acre stock farm

The habendum clause is in customary language with an addition, and reads:

“TO HAVE AND TO HOLD the said premises, together with all and singular the rights, privileges and appurtenances thereto in any manner belonging, unto the said M. T. Lott,. Federal Land Bank of Houston, Texas, and Land Bank Commissioner, their heirs, assigns and/or successors, as-their interest may appear, forever, SO' that neither we, the said Wm. Lott,. Emma Lott or G. H. Lott nor our heirs,, nor any person or persons claiming under us shall, at any time hereafter,, have, claim or demand any tenant right to the aforesaid premises or oppurte-nances, or any part thereof.”

It is conceded by all parties that the instrument was executed incident to the making of a loan by the Federal Land Bank to M. T. Lott, to be secured by a lien on the land.

The Court of Civil Appeals held that the instrument described is a quitclaim deed! and was thus effective to convey to M. T. Lott any interest or title that William A. Lott might have had on the date of its-execution. We agree with that conclusion.

It will be noted that by the execution and' delivery of the instrument William A. Lott released to M. T. Lott “any right, title,, interest or right of possession” he might have had or have been entitled to as tenant “or otherwise.” It thus appears that if, in law, release of an interest in land to another is effective to convey the interest, the operative effect of the premises clause of the instrument in question was to convey to M. T. Lott any equitable title which William A. Lott may have had on January 5, 1937.

This Court recognized in Richardson v. Levi, 67 Tex. 359, 3 S.W. 444, 448, that an instrument, otherwise legally sufficient, which releases the grantor’s right and title in land will transfer the grantor’s title to the grantee. In discussing the purpose in early common law of various words of grant, we said that “A release was used only when the releasee was in possession, and the releasor conveyed to him his own title.” We stated, however, that the signification of the various terms has been modified, in America at least, and continued: “A release may be used to convey a title to one who has no previous right in the land, and is in most states equivalent to the word ‘quitclaim.’ ”

It is too well settled to be open to question that a quitclaim deed, in the absence of limiting language, conveys to a grantee whatever right, title, or interest a grantor has in the premises as fully and effectually as if the grantor had given a deed purporting to convey the fee. Harrison Oil Co. v. Sherman, Tex.Civ.App., 66 S.W.2d 701, 705, writ refused; Leatherman v. Holt, Tex.Civ.App., 212 S.W.2d 1004, 1005, no writ history; 26 C.J.S. Deeds § 118, p. 946; 19 Tex.Jur.2d 257, Deeds, § 11.

Finally, the operative effect of the premises clause of the deed is not destroyed by the addition to the habendum clause of the words, “so that neither we, the said Wm. Lott, Emma Lott or G. H. Lott, nor our heirs, nor any person or persons claiming under us shall, at any time hereafter, have, claim or demand any tenant right to the aforesaid premises or appurtenances, or any part thereof.” (Emphasis ours.) If this recitation were held to limit the inter-est conveyed to “tenant right[s],” the grant in the premises clause would be in major part nullified. That result would run counter to sound rules of construction that the granting clause prevails over other provisions of a deed and that a deed will be construed to confer upon the grantee the greatest estate that the terms of the instrument will permit. Waters v. Ellis, 158 Tex. 342, 312 S.W.2d 231, 234.

The validity and operative effect of the quitclaim deed is unchallenged in the record by affidavit or any other type of summary judgment proofs. There is neither pleading nor proof which would authorize setting it aside for fraud, accident or mistake. By its terms any equitable title or interest in the land then held by William A. Lott was conveyed to the grantees named, and the trial court properly rendered summary judgment that the plaintiff take nothing.

But petitioner asserts that having presented proof raising a fact issue that legal title was held in trust by M. T. Lott, a presumption arose that the quitclaim deed was procured by unfair dealing; that, therefore, the burden was on M. T. Lott to show that the quitclaim was not the product of unfair dealing, and no proof having been made on this matter the summary judgment was unauthorized. This question was not preserved by point of error or by argument under the points of error in appellant’s brief in the Court of Civil Appeals. It comes too late.

The only other point of error presented in this Court complains of the action of the trial court in permitting defendants to file copies of Old Age Assistance records as a part of their summary judgment proofs. If that action was error, it was not reversible error. The records are not material to the judgment, as this opinion clearly discloses.

The judgment of the Court of Civil Appeals is affirmed.

SMITH, J., concurs in the result.


author: MOREMEN, Judge.

text:
    COMMONWEALTH of Kentucky ex rel. et al., Appellant, v. ASSOCIATED INDUSTRIES OF KENTUCKY, Appellee.
    Court of Appeals of Kentucky.
    June 7, 1963.
    Rehearing Denied Oct. 11, 1963.
    Paul E. Tierney, Melbourne Mills, Jr., Frankfort, Herbert L. Segal, Louisville, for appellant.
    Robert T. Caldwell, Ashland, for appel-lee.
   MOREMEN, Judge.

This is an agreed case testing the constitutionality of KRS 341.145 which relates to unemployment compensation. The trial court declared the Act unconstitutional as violative of Sections 180 and 28 of the Kentucky Constitution.

The Act in question (KRS 341.145) as amended in 1952, authorized the Commissioner of Economic Security to enter into reciprocal administrative arrangements with agencies of other states or the federal government for the purpose of broadening the coverage of unemployment compensation. This law was passed to permit the participation of Kentucky in an interstate unemployment plan originated by the federal government. Its basic purpose was to provide unemployment compensation benefits to those persons employed in more than one state. The plan authorizes adding together work periods in different states to determine a base period permitting an unemployed person to qualify for benefits which he otherwise might not do if his employment period was limited to employment in the state where the compensation claim is filed,

Under the plan the laws of the last state where a person was employed shall be applicable with respect to benefit years, base periods, qualifying wages, benefit rates and duration of benefits. The work and wage records of the employee in other states which are parties to the agreement shall be taken into account in the computation of benefits, and such other states are required to reimburse the state paying the claim for their fair share thereof.

KRS 341.145(3) (a) provides in part:

“Reimbursements to another state or the Federal Government, paid from the fund pursuant to this subsection, shall he deemed to be benefits for the purposes of this chapter * * (Our emphasis.)

The trial court decided that this scheme violated § 180 of the Constitution, particularly in view of Unemployment Compensation Commission v. Savage, 283 Ky. 301, 140 S.W.2d 1073. That section provides-in part that: “no tax levied and collected: for one purpose shall ever be devoted to< another purpose.” Admittedly the con tributions to the unemployment compensation fund levied upon employers are taxes.

In the Savage case the legislature had authorized the transfer of approximately $1,000,000 from the Unemployment Compensation Fund to the federal government to be administered by it in the payment of claims to railway employees under the Federal Railroad Unemployment Insurance Act. Taking the view that the state was relinquishing all control of this fund (consisting of tax monies) and that it might be used to pay railroad employees in other states, we held this constituted an unlawful diversion of taxes for a purpose foreign to that for which they were originally collected. Conceding the soundness of this decision (which appellants vigorously deny), we do not think the principles invoked in that case are applicable here.

The taxes involved in the present controversy were collected for the payment of unemployment compensation benefits to those who had joined Kentucky’s labor force. As plainly appears from KRS 341.-145(3) (a), from which we have quoted above, the legislature has expressly declared that unemployment compensation benefits paid under the reciprocal arrangement plan shall be deemed benefits within the scope of the purpose for which the taxes are collected. Certainly, increasing benefits is not changing the purpose of the fund. Consequently § 180 of the Constitution is not violated.

The more difficult question involves the delegation of power by the legislature to other states and the federal government to fix by their laws the various criteria for determining eligibility for, the amounts and the duration of compensation payments. While the judgment and appellee’s brief refer to § 28 of the Kentucky Constitution, perhaps § 29 is more clearly involved.

The question seems to he whether or not the .General Assembly may delegate to other states and the federal government the authority to fix by laws and regulations the conditions under which Kentucky taxes may be expended. The legislature has not adopted particular laws and regulations, and the plan obviously contemplates the future changes in such laws and regulations.

We considered this problem (which is not the customary one of delegation of powers to administrative agencies) in Dawson v. Hamilton, Ky., 314 S.W.2d 532. See also Clay v. Dixie Fire Ins. Co., 168 Ky. 315, 181 S.W. 1123 and Seale v. McKennon, 215 Or. 562, 336 P.2d 340.

Through many of the opinions of this court and those of other states and the federal courts runs the theme that legislative power may not be delegated and, so far as we have been able to find, the opinions have devoted little time to determining the origin of this dogma or even the necessity for its existence.

We find nothing in our State Constitution that declares explicitly: “Legislative power may not be delegated.” Here are the three sections of the Constitution usually quoted in support of that statement.

“§ 27. The powers of the government of the Commonwealth of Kentucky shall be divided into three distinct departments, and each of them be confined to a separate body of magistracy, to wit: Those which are legislative, to one; those which are executive, to another; and those which are judicial, to another.”
“§ 28. No person or collection of persons, being of one of those departments, shall exercise any power properly belonging to either of the others, except in the instances hereinafter expressly directed or permitted.-”
“§ 29. The legislative power shall be vested in a House of Representatives and a Senate, which, together, shall be styled the 'General Assembly of the Commonwealth of Kentucky.’ ”

We can read into § 27 only an intent to divide the sovereign power, which at one time existed in one person under the divine right of a king, into three separate and distinct departments.

Section 28 seems merely to prohibit one department from grabbing power that properly belongs to another, and the simple wording of § 29 sets up the mechanics for the exercise of legislative power in a bicameral assembly.

Section 29 uses the word “vested” and though it is quite generally considered to be a word of art, still the word has no settled meaning which precludes the one in whom the title is vested from permitting others to use it or even divesting title entirely. When one is once vested with the title, say to real estate, he is not forever precluded from allowing others to use that real estate permissively or otherwise dispose of it.

Although we have found nothing in the Constitution that declares legislative power may not be delegated, we do find instances where the legislature is inferentially authorized to delegate its legislative power, such as § 156 of the Constitution where it is said:

“ * * * The General Assembly, by a general law, shall provide how towns may be organized, and enact laws for the government of such towns until the same are assigned to one or the other of the classes above named; but such assignment shall be made at the first session of the General Assembly after the organization of said town or city.” (Our emphasis.)

‘ The Supplement § 166 of the Constitution reads in part:

“All acts of incorporation of cities and towns heretofore granted, and all amendments thereto, except as provided in section 167, shall continue in force under this Constitution, and all City and Police Courts established in any city or town shall remain, with their present powers and jurisdictions, until such time as the General Assembly shall provide by general laws for the government of towns and cities, and the officers and courts thereof; * * (Our emphasis.)

It will be noted that neither section specifically affirms the right of the General Assembly to delegate a portion of its legislative power to the governmental body of a municipality. Inferentially it has the right to define the means of government and by statute set up law-making bodies for cities of the various classes and, thereby, delegate a portion of its power.

Even if we assign to the word “vested,” as used in § 29, its usual meaning descriptive of a right which is complete and one of which the person to whom it belongs cannot be divested without consent, we find no admonition — here the right is and here it will remain. If the word is one of absolute limitation (a vested right may never be divested, even with the permission of the owner) then what right has the General Assembly to divest itself of this vested legislative power?

So, we repeat, the genesis of the phrase “legislative power may not be delegated” is not in the Constitution itself. That document indicates that it should be delegated in certain cases.

A research of many of the decided cases in this country discloses that this proposition is of rather obscure origin. Most often quoted, as .authority, is Judge Cooley’s statement that:

“One of the settled maxims in constitutional law is, that the power conferred upon the legislature to make laws cannot be delegated by that department to any other body or authority. Where the sovereign power of the State has located the authority, there it must remain; and by the constitutional agency alone the laws must be made until the constitution itself is changed.”

This passage was cited by this Court with approval as late as the year 1958. See Dawson v. Hamilton, Ky., 314 S.W.2d 532.

In turn, and as authority for his statement, Cooley relies upon this quotation from Locke on Civil Government:

“Fourthly. The legislative neither must nor can transfer the power of making laws to anybody else, or place it anywhere but where the people have.”

We suppose that all people who live in a democracy and enjoy its fruits must hold in high regard all pronouncements of John Locke, his contemporaries and those who> followed him: Whose ideas in turn led to the American and the French Revolutions, and the practical application of his novel conception that “all power is inherent in the people and all free government founded on authority.” But we must also remember that Locke’s works on social and governmental policies were written at a time when the principles of democracy had begun their tremendous struggle with that of the divine right of kings. We must remember too that Locke himself believed that all matters pertaining to the divine or the secular should be examined carefully and that no “innate principle” should be accepted or continued in practice merely because it was venerable.

“He believed that in attacking ‘innate principles’ he was pleading for universal reasonableness instead of blind reliance on authority and was thus, as he says, not ‘pulling up the foundations of knowledge/ but ‘laying those foundations surer.’ When men heard that there were propositions that could not be doubted, it was a short and easy way to assume that what are only arbitrary prejudices are ‘innate’ certainties.” (Encyclopedia Britannica.)

But above all, Locke believed that all human ideas, even the most complex and abstract, ultimately depended upon “experience” to dedicate their truth. It has been said of him that his “Essay Concerning Human Understanding” (1690) “represents ithe first major modern presentation of the •empirical theory of knowledge. In developing an account of human knowledge in ■.terms of how it is derived from experience, what its nature is, and how limited it is, Locke provided the basic pattern of future empirical philosophy.”

So, if Locke was the fountainhead of the thesis that power could not be delegated, we feel sure that the experience of the last several centuries would have caused him to repudiate this idea. Experience has demonstrated some of the power must be invested in other bodies so that the government may function in a world that progressively is becoming more complex. There is nothing wrong with this so long as the delegating authority retains the right to revoke the power. The wrong (and the hypocrisy) lies in affirming the truth of the catch phrase while at the same time denying its existence by a devolution of the power. The plain realities of recent cases show that rarely enactments involving this question are held defective.

In 1 Am.Jur.2nd 898, it is said:

’‘The rule precluding the delegation of power by the legislature does not embrace every power the legislature may properly exercise. Any power not legislative in character which the legislature may exercise it may delegate. What the rule precludes is the delegation of those powers which are strictly or inherently and exclusively legislative and the legislature’s abdication of its own power and the conferring of such power upon an administrative agency to be exercised in its uncontrolled discretion.
“The Constitution does not demand the impossible or the impracticable and has never been regarded as denying to the legislature the necessary resources of flexibility and practicality to perform its function. In fact, the Supreme Court has held that a constitutional power implies a power of delegation ■ of authority under it sufficient to effect its purposes. The delegation to administrative agencies of some legislative power is necessary particularly in modern regulatory enactments in which the legislature is incapable of defining the multitudinous details. Such delegation is not precluded by the basic concept of a ‘government of laws, and not of men.’ There is no doubt that the legislature may delegate to an administrative agency the exercise of a limited portion of its legislative power with respect to some specific subject matter.”

In Field v. Clark, 143 U.S. 649, 12 S.Ct. 495, 36 L.Ed. 294 (1892) it was said:

“That congress cannot delegate legislative power to the president is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the constitution.”

As late as 1932 in United States v. Shreveport Grain & Elevator Co., 287 U.S. 77, 85, 53 S.Ct. 42, 44, 77 L.Ed. 175 (1932) it was said:

“That the legislative power of Congress cannot be delegated is, of course, clear.”

Still Davis in his work “Administrative Law Treatise” is able to make this statement:

“In only two cases (Panama Refining Co. v. Ryan, 293 U.S. 388, 55 S.Ct. 241, 79 L.Ed. 446 (1935) A. L. A. Schechter Poultry Corp. vs. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947 (1935)) in all American history have congressional delegations to public authorities been held invalid. Neither delegation was to a regularly constituted administrative agency which followed an established procedure designed to afford the customary safeguards to affected parties. The Panama case was influenced by exceptional executive disorganization and in absence of such a special factor would not be followed today. The Schechter case involved excessive 'delegation of the kind that Congress is not likely again to make. The fact is that Congress avoided such delegation through the entire period of the Second World War.”

The pressures and the practicabilities of administration of modern government have led the courts to the continuous affirmation of the existence of this judge-made rule while at the same time denying its existence by the holding or decision in nearly all cases. This has sometimes been done by holding where “standards” are set up — however vague or general they may be — that legislative power has not been delegated because only details of the policy were devolved. We will not, however, examine that pretense here.

We have decided we will meet this problem with full recognition that legislative power often has been delegated, with full court approval, and it is not necessary to disguise such action in form of expression or words which have no verity.

In the case under consideration the specific issue is presented by KRS 341.145 {3) (a) which reads in part:

“Any provisions of this chapter to the contrary notwithstanding, the commissioner is hereby authorized to enter into reciprocal arrangements with duly authorized agencies of other states or •of the Federal Government, or both, whereby workers with potential rights to benefits in this and another state or other states or the Federal Government may have such rights determined upon the basis of his combined potential rights in such jurisdictions. Benefits, based upon such combined potential rights, may be paid either under provisions of this chapter or under the provisions of the law of another state or the Federal Government, or under such combination of provisions of both laws as may be agreed upon as being fair and reasonable to all affected interests. No such an arrangement shall be entered into unless each agency entering into such arrangement shall agree to reimburse the fund of the other agency to the extent of the liability incurred under terms of the arrangement.”

By passing that act the General Assembly has expressed its opiniofi about the necessity and desirability of investing in another ■the power to carry out th.e terms of the policy embodied in the enactment. The ephemeral qualities of each session of the legislature are such the desirable and beneficial purpose of the act could not be fulfilled if complete detailed laws were required for each case presented. By delegation it will accomplish the goal desired which otherwise could not be attained. The fact that the laws of other states may change is additional reason why the commissioner should be granted flexible power.

We find the acceptance of the laws of other states or of the federal government to be a sufficient and effective safeguard to the exercise of power by the commissioner — so much more than if the commissioner were handed that power without limitation. Since the General Assembly has seen fit to accept the judgment of other legislative bodies as to scales of base period, qualifying wages, et cetera, now and in the future, and adopted them as their own in these special cases, we see no reason it should be denied this right.

It will be noted that under § 28 of the Constitution, above quoted, no branch of the government shall exercise power properly belonging to another. This case demands judicial self-restraint and the accord of high respect to a policy determination which has been made by the General Assembly.

We believe the act to be constitutional in all aspects and the judgment is therefore reversed.

MONTGOMERY, J., dissenting.


text:
    KENTUCKY TAX COMMISSION, etc., Appellant, v. The AMERICAN TOBACCO COMPANY, Appellee.
    Court of Appeals of Kentucky.
    April 19, 1963.
    Rehearing Denied Oct. 11, 1963.
    William S. Riley, Dept, of Revenue, Frankfort, Frank A. Logan, and Richard W. Her, Louisville, for appellant.
    Lively M. Wilson, Stites, Peabody & Helm, Louisville, for appellee.
    Stoll, Keenon & Park, Lexington, for amicus curiae.
   CULLEN, Commissioner.

The circuit court held invalid a formula prescribed by the Department of Revenue for the allocation between Kentucky and other states, for income tax purposes, of the business income of The American Tobacco Company and other similar tobacco companies. The Kentucky Tax Commission has appealed.

In 1962 the controlling statutes were amended. We are concerned here with years prior to 1962, and our references to statutes will be to their provisions prior to the 1962 amendments.

Under KRS 141.120(4) (b) a three-factor formula was prescribed for allocation of business income of a corporation carrying on business partly within and partly without this state. The three factors were tangible property, payroll, and business. KRS 141.120(4) (f) provided that in applying the business factor, receipts from sales must be assigned to the office, agency or place of business of the corporation at which the transactions giving rise to the receipts were chiefly negotiated. However, KRS 141.120 (9) authorized the Department of Revenue, upon a determination by it that the statutory formula, as applied in a particular case, failed to allocate to Kentucky a fair and reasonable portion of the business income, to prescribe a formula which would allocate to Kentucky a fair and reasonable portion of the business income.

Under claimed authority of KRS 141.120 (9), the Department of Revenue prescribed a special formula for the tobacco industry, upon a recited determination that the statutory formula would not allocate to Kentucky a fair and reasonable portion of the business income of the tobacco companies because of peculiarities of the tobacco business, particularly the fact that all sales of the major tobacco companies are the result of consumer demand created by mass advertising without the use of a sales force and orders are initiated by the wholesalers without direct solicitation by the companies. However, the special formula differed from the statutory formula only in one respect — ■ it provided that all receipts from sales to licensed wholesalers in Kentucky should be allocated to Kentucky. The Department concedes that under the statutory formula, particularly KRS 141.120(4) (f), the sales to wholesalers would be allocable to New York, because the sales were “chiefly negotiated” in New York.

We consider the question to be one simply of statute construction. In our opinion KRS 141.120, read as a whole, clearly means that if receipts from sales are used in any formula the receipts must be assigned to the place of chief negotiation of the sales. Perhaps subsection (9) of the statute authorizes the Department to prescribe a formula that does not use receipts from sales as a factor (a question we need not decide), but we think that if such receipts are used as a factor they must bt assigned as provided in subsection (4) (f) Any other interpretation would enable the Department to nullify subsection (4) (f) and the decision of this Court in Allphin v. Glenmore Distilleries Co., Ky., 270 S.W.2d 168.

As we view it, the legislature has said that while the Department may depart from the prescribed formula, nevertheless the sales receipts factor, if used, can be applied only as prescribed by the statute.

The cases from other jurisdictions relied upon by the Department are not applicable because in none of those cases was there a statute prescribing in detail how a particular factor must be applied, if used.

The judgment is affirmed.


author: STANLEY, Commissioner.

text:
    James JOHNSON, Adm’r of Estate of Celie Johnson, Deceased, Appellant, v. Darrel L. VAUGHN, Appellee.
    Court of Appeals of Kentucky.
    June 7, 1963.
    liehearing Denied Oct 11,1963.

      Russell S. Armstrong, Evansville, for appellant.
    Geo. R. Effinger, Paducah, Leo King, Henderson, for appellee.
   STANLEY, Commissioner.

The appeal is from a judgment from a directed verdict for the defendant, Dr. Darrel L. Vaughn, in an action for negligence and malpractice, charged to have been the proximate cause of the death of Celie Johnson. The plaintiff claims three categories of negligence on the part of the defendant, namely, improper treatment, abandonment of the patient at a crucial time and unreasonably delaying consent for another physician to attend him. Our question is whether the evidence introduced by the plaintiff was insufficient as a matter of law to submit the case to the jury.

Celie Johnson, a 46-year-old colored man, had been shot in the neck and promptly taken to the Methodist Hospital in Henderson about one o’clock in the morning of April 8, 1961. A nurse called Dr. Vaughn, a surgeon, to attend him, and the doctor arrived soon thereafter. His deposition, which had been taken for discovery, was read by the plaintiff. He therein testified that he found the man had a punctured trachea (windpipe, in layman’s language) and a bullet lodged in the back of his neck, just above his shoulder. The patient was bloody, breathing with difficulty, vomiting, in “borderline shock,” and in a critical condition. The testimony as to the time intervening the doctor’s arrival and the removal of the man out of the emergency room to a ward room varies, but it was probably fifteen or twenty minutes. The doctor and an orderly undressed him and put him to bed.

Johnson’s son James had taken him to the hospital in an ambulance and remained there throughout the night. He and George Swope, another patient in the same room, testified that Dr. Vaughn was in the room only once. George Mays and his wife were at the hospital all night because of having a very sick child there. They were near the emergency room and the ward. Both testified that they did not see the doctor go in or out of the ward room after the wounded man was taken in. These three witnesses and Swope described Dr. Vaughn’s condition and actions as that he was “red-eyed,” “stumbled,” “wobbled,” “staggered,” “talked rough” and was “thick tongued.” The son smelled the odor of alcohol on the doctor’s breath and expressed the view “he had been drinking.” Objections were sustained to questions asked the other witnesses as to their opinion regarding the doctor’s being intoxicated. This was error. Howard v. Kentucky Aleo-holic Beverage Control Board, 294 Ky. 429, 172 S.W.2d 46. By avowals the witnesses stated the doctor seemed to be under the influence of liquor. It is fair to say that the hospital attendants who were asked about it testified they saw no indication that the doctor had been drinking.

Dr. Vaughn’s deposition contains testimony of his constant attendance and diligence in the care of the patient until 3 :45 A.M., and that is borne out by the nurses’ charts. One chart (Exhibit B) was made currently and another (Exhibit A), which is somewhat more detailed, was written up the following night. Its trustworthiness and competency are doubtful. Dr. Vaughn testified to having administered hypoder-mically anticoagulents and sedatives in the emergency room. The charts show that Johnson had been admitted to the hospital at 2:15 o’clock, which is not in accord with all the other evidence. They list in illegible writing three or four medications administered there, but apparently there is some contradiction between this record and the doctor’s testimony.

In the course of the doctor’s testimony as to the condition of the patient on his arrival, he stated that he realized that he had a serious emergency and that he wanted him kept quiet until he could get blood to combat shock. On the doctor’s order, about three o’clock the hospital laboratory technician was called from his home to come and prepare for a blood transfusion. Dr. Vaughn testified he would not “take a chance on slipping a tracheotomy tube into his trachea” until he got the blood to combat shock. He stated he was told before he left the hospital that it would be thirty or forty minutes until it would be ready. But according to the laboratory technician, the blood was ready and the equipment placed in the patient’s room before Dr. Vaughn left. It was not used. Dr. W. P. Woods, a physician of experience, who resided in Evansville, testified that transfusion of blood has a tendency to prevent or “help a person out of shock if they are in shock,” and, from the conditions described, this patient needed it promptly. In short, Dr. Woods’ testimony was that good medical practice of a reasonably careful and prudent physician and surgeon in Henderson and similar communities required that under the conditions described there should have been a blood transfusion as soon as possible.

A “tracheotomy set” was moved into the room, but Dr. Vaughn did not deem it necessary to use it, as the patient had then relaxed. This preparation was for the purpose of making an incision and inserting a tube in the windpipe, which would have prevented air from escaping through the small bullet hole into the body and causing emphysema and embolism. Dr. Vaughn testified, “My idea was to put the tracheotomy tube in the hole that was already in the trachea.” There was professional evidence, however, that proper procedure required cutting the windpipe at a more suitable location in order to insert the tube, and that such operation should not have been delayed.

The foregoing describes in summary the conditions when Dr. Vaughn left for home about 3:45 o’clock to change his clothes, he having come to the hospital with his outer garments over his pajamas. He deposed he regarded the patient as improved and in a satisfactory condition. He told the hospital supervisor he was going and asked her to call him if the patient’s condition became worse and he was needed. He stopped on the way home for coffee, and, apparently, there was a period of thirty minutes before he reached home.

Roy Johnson, another son of the patient, and George Swope, a patient in the same room, described the wounded man’s struggles and difficulty in breathing at the time the doctor left and his getting worse. An orderly put side bars on the bed, and someone, unidentified, placed him in an oxygen tent. Dr. Kissinger, referred to below, testified, in substance, that where a patient’s condition is serious and could change for the worse in a short time, a doctor should remain with him or arrange for another physician to attend the patient.

It does not appear that any effort was made to reach Dr. Vaughn at his home after he left the hospital. Instead, Roy Johnson had a nurse call Dr. Charles C. Kissinger. He arrived about four o’clock. The doctor described the man’s serious condition. He was “in shock,” and had “bubbling blood within the bronchical tubes and coming out of his mouth” and “subcutaneous emphysema,” which is air under the skin, and also in his neck and chest. The doctor said, “I felt the man was dying at the time.”

When he had ordered the patient’s removal to the emergency room, Dr. Kissinger learned that Dr. Vaughn had been in charge; and he advised the family that as a matter of professional ethics they would have to get the patient released to him by Dr. Vaughn. Dr. Kissinger described his dilemma; and while it appears that he gave such attention as appeared to be most urgent, he told the sons they should telephone Dr. Vaughn and get him to release the patient.

A nurse then called Dr. Vaughn at his home, and he asked to speak to Dr. Kissinger. The latter testified he told Dr. Vaughn the patient was dying and that something had to be done. Dr. Vaughn was irate and vulgar. He told Dr. Kissinger he was “a louse” to steal his patient and then hung up the receiver. Roy Johnson then called Dr. Vaughn and asked him to release his father to Dr. Kissinger. The son’s account of the conversation and Dr. Vaughn’s abuse and raving covers more than two pages of the transcript. At the end, the doctor demanded at first that the sons pay Kim $25 and then $50 “right now” before he would release the patient. He finally agreed to wait until nine o’clock the next morning for his money. Thirty or forty minutes had elapsed.

An X-ray of the man was made by a technician some time during the night, the hour not being shown. Dr. Kissinger testified it had been taken before he arrived, but the X-ray technician’s record showed he had ordered it. Dr. Kissinger, however, examined the X-ray films before starting to operate. Dr. Matthews, the hospital radiologist, exhibited the X-ray films in a view box and explained them to the court and jury. In short, they indicated the presence of “a fairly large amount of air under the skin in the tissues, both the muscles and tendons and various other structures in the neck which would not normally be present.”

The patient was given blood and an anesthetic, and Dr. Kissinger began operating on him about five o’clock, trying, as he testified, to save the man’s life. The operation was the only chance. He made an incision in the windpipe and put in a tube. The patient stopped breathing. His chest was opened and his heart massaged, but it did not respond. Johnson’s death was caused by air escaping through the hole in his windpipe and getting into his blood, causing an embolism around his heart.

There is evidence that a perforated trachea is not necessarily fatal but that proper surgical practice and treatment of such a wound, in accordance with usual surgical procedure and carefulness, required more than was done by Dr. Vaughn. With proper treatment and attention, according to the professional witnesses, the jury could reasonably believe this man would have recovered.

Dr. Vaughn’s deposition contains justification and evidence of proper treatment and care, and a jury could well find for him. We are concerned here only with such parts as were favorable to the plaintiff’s case. There were substantial contradictions between what he testified was proper and necessary and what he actually did.

Much law has been written on negligence and malpractice of physicians and surgeons, and the parties here have been diligent in citing it.

It is familiar law that errors of judgment in the treatment of a patient do not render a physician or surgeon responsible for injurious consequences, provided he had informed himself of the facts by proper investigation. Meador v. Arnold, 264 Ky. 378, 94 S.W.2d 626; Engle v. Clarke, Ky., 346 S.W.2d 13. But a doctor engages to treat a patient with care, skill and knowledge, and is held accountable for negligence or carelessness or inefficiency, one or all. The reasonableness of the skill, care and attention is gauged by the standards ordinarily possessed and observed by members of the profession engaged in the same line of practice in the same or a like locality. And, in a large degree, it is dependent upon the nature and circumstances of the particular case. The duty to be performed is according to the exigencies of the case and proportionate to the dangers to be apprehended and guarded against. If a doctor fails in the observance of his duty and obligation to his patient, he is liable for the proximate result. Stacy v. Williams, 253 Ky. 353, 69 S.W.2d 697; Steinmetz v. Humphrey, 289 Ky. 709, 160 S.W.2d 6; Merker v. Wood, 307 Ky. 331, 210 S.W.2d 946; Engle v. Clarke, supra, Ky., 346 S.W.2d 18; 70 C.J.S. Physicians and Surgeons § 45, p. 954.

The burden of proof in a malpractice case is, of course, on the party charging negligence or wrong. That must be established by medical or expert testimony unless the negligence and injurious results are so apparent that laymen with a general knowledge would have no difficulty in recognizing it. Stacy v. Williams, supra; Butts v. Watts, Ky., 290 S.W.2d 777; Engle v. Clarke, supra.

We have evidence in this case of two aspects of negligence. One is improper treatment of the wounded man, and the other is in leaving the patient unattended at a critical time when the doctor’s services were needed and unreasonably preventing another doctor from attending him promptly.

On the first proposition, the recitation of the evidence reflects proof by lay witnesses of some degree of negligence as a practical matter. It also reveals technical evidence of negligence in the testimony of Drs. Kissinger and Woods. Indeed, while Dr. Vaughn’s testimony, given in his deposition read to the jury, was that the medication he gave and treatment he administered were proper according to the generally approved practice, there was proof, factual and inferential, that he did not actually do those things, or some of them. The jury could believe that Dr. Vaughn was intoxicated so that his faculties and efficiency were impaired.

The second proposition:

It is a rule of general acceptance that a physician is under the duty to give his patient all necessary and continued attention as long as the case requires it, and that he should not leave his patient at a critical stage without giving reasonable notice or making suitable arrangements for the attendance of another physician, unless the relationship is terminated by dismissal or assent. Failure to observe that professional obligation is a culpable dereliction. McGulpin v. Bessmer, 241 Iowa 1119, 43 N.W.2d 121; Note 6, 70 C.J.S. Physicians and Surgeons § 48, p. 966. An un-waranted lack of diligence in attending the patient renders the doctor liable for the consequences. 41 Am.Jur., Physicians and Surgeons, §§ 72, 100; Norton v. Hamilton, 92 Ga.App. 727, 89 S.E.2d 809, 57 A.L.R.2d 426; Annotations, 60 A.L.R. 664; 57 A.L.R. 2d 379; 70 C.J.S. Physicians and Surgeons § 48f(2), p. 966. We have recognized this rule in Miller v. Blackburn, 170 Ky. 263, 185 S.W. 864; Stacy v. Williams, supra, 253 Ky. 353, 69 S.W.2d 697; Williams v. Tarter, 286 Ky. 717, 151 S.W.2d 783, 784; Butts v. Watts, supra, Ky., 290 S.W.2d 777. The case of Engle v. Clarke, supra, Ky., 346 S.W.2d 13, 18, presented a similar question of whether a surgeon was negligent in leaving the hospital while his patient was in a critical condition, and we held it was for the jury to decide. As above recited, Dr. Kissinger testified that this obligation of a doctor is recognized by the profession, and his testimony, in effect, was that the duty was violated by the defendant in this case.

We take note of Ricks v. Budge, 91 Utah 307, 64 P.2d 208, Note, 13 A.L.R.2d 144. There the defendant doctor had refused to continue treatment of the plaintiff unless he, satisfied an old account. The plaintiff was in an urgent need of medical attention and was being prepared for an operation. It was held it was a question for the jury whether the plaintiff suffered damages by the defendant’s refusal to treat him. Obviously, our case is different, although there are similar factors. The defendant here did not refuse to continue treatment, but there is evidence that he left the patient at a critical time and unreasonably delayed releasing him to another surgeon that he might perform an imperative operation to try to save his life.

In Thaggard v. Vafes, 218 Ala. 609, 119 So. 647, a patient had become desperately ill, apparently from reaction to his doctor’s improper treatment, and other doctors were called in but refused to treat the patient in the absence of his physician. In a malpractice action there was evidence of a nurse that she had phoned the doctor several times during the day and informed him of his patient’s critical condition and begged him to come to see him, but the doctor did not come until the nurse sent a car for him. He arrived a short time before the patient died. The evidence was held competent as it tended to show a culpable disregard of the physician’s duty and a lack of interest in the patient’s welfare. The court held as properly refused a certain charge to the jury to the effect that the failure or refusal of the defendant to visit the patient after being called could not be the basis of the verdict. The judgment for the plaintiff was affirmed.

Though the question of negligence on this aspect is closer than on the first, on the defendant’s motion for the peremptory instruction the plaintiff is, of course, entitled to the most favorable inferences and construction of which the evidence is fairly and reasonably susceptible; and if that tends to support the cause of action, the case should be submitted to the jury. Terrell v. Southern Ry. Co., 225 Ky. 645, 9 S.W.2d 993. We think that whether the defendant was guilty of negligence or a breach of duty to his patient in the respects described was a question for the jury. Engle v. Clarke, Ky., 346 S.W.2d 13; 70 C.J.S. Physicians and Surgeons § 63, pp. 1011, 1016; § 64, p. 1017.

We turn to the matter of proximate cause. That is, of course, an indispensable element of culpable negligence which must be established. Often there is difficulty in proving causation in malpractice cases because the proof rests largely upon the technical nature of the subject matter involved. Ordinarily, but not always, expert evidence is necessary to support the conclusion of causation. Hanners v. Salmon, 216 Ky. 584, 288 S.W. 307; Donoho v. Rawleigh, 230 Ky. 11, 18 S.W.2d 311, 69 A.L.R. 1135; Stacy v. Williams, 253 Ky. 353, 69 S.W.2d 697; Meador v. Arnold, 264 Ky. 378, 94 S.W.2d 626; Steinmetz v. Humphrey, 289 Ky. 709, 160 S.W.2d 6; Annotation, 13 A.L.R.2d at page 31. It is generally held that circumstantial evidence may be sufficient to prove reasonable probability or proximate cause where the evidence reasonably establishes a causal connection between the alleged negligence and the injury. 41 Am.Jur., Physicians and Surgeons, § 131; Annotations, 59 A.L.R. at p. 890; 13 A.L.R.2d at p. 28. There was such character of evidence in this case as a practical matter and, as well, the professional opinion of Dr. Kissinger on the point.

On the whole case, as made out by the plaintiff’s evidence, we are of opinion that a jury could reasonably have found the defendant to have been negligent in either or both respects and that his negligence was a proximate cause of Johnson’s death. Therefore, it was error to direct a verdict for the defendant.

Judgment is reversed.

PALMORE, J., not sitting.