author: CALVERT, Chief Justice.

text:
    EMPLOYEES FINANCE COMPANY et al., Petitioners, v. Crit C. LATHRAM, Respondent.
    No. A-9482.
    Supreme Court of Texas.
    July 24, 1963.

      Abney, Howell, Abramson & Burleson, Dallas, R. Dean Moorhead, Austin, for petitioners.
    Fritz & Vinson, Dallas, for respondent.
   CALVERT, Chief Justice.

In his suit based upon usurious interest charges and unreasonable collection efforts, Crit C. Lathram, as plaintiff, recovered separate judgments against a number of defendants for double the amount of interest paid on loans, as authorized by Art. 5073, Vernon’s Texas Civil Statutes, and a joint and several judgment against Employees Finance Company, First Finance Service, Texas Finance Company, Union Finance Company, W. Lee Moore, Jr., individually, W. Lee Moore, Jr., independent executor of the estate of W. Lee Moore, United Finance & Thrift Corporation of Fort Worth and State Loan and Finance Corporation for $2,900.00 as damages resulting from unreasonable efforts to collect loans. The Court of Civil Appeals affirmed. 363 S.W.2d 899.

We sever the case into two causes, as follows: 1. Lathram’s claims for recovery from the various defendants of double the amount of interest paid on loans as authorized by Art. 5073. As to this cause we affirm the judgment of the Court of Civil Appeals. 2. Lathram’s joint and several claim against the defendants for recovery of actual damages caused by the defendants’ unreasonable efforts to collect loans made to him. As to this cause we reverse the judgments of the Court of Civil Appeals and trial court and order the cause dismissed, without prejudice to the rights of the various defendants.

Among the recoveries awarded to Lath-ram under Art. 5073 by the trial court’s judgment was an item of $486.90 from United Finance & Thrift Corporation of Fort Worth, State Loan and Finance Corporation and General Fidelity Life Insurance Company, jointly and severally. It has been noted above that United Finance & Thrift Corporation of Fort Worth and State Loan and Finance Corporation were, with others, also made jointly and severally liable for the recovery of $2,900.00 awarded as actual damages for unreasonable collection efforts. These defendants did not appeal from the trial court’s judgment, and, upon issuance of a writ of execution, United paid in full the items of $486.90 and $2,900.00, together with accrued interest and all court costs.

Other recoveries awarded to Lathram under Art. 5073 by the trial court’s judgment were as follows: 1. $273.85 against Employees Finance Company and W. Lee Moore, Jr., individually and as independent executor of the estate of W. Lee Moore, jointly and severally. 2. $329.35 against First Finance Service and W. Lee Moore, Jr., jointly and severally. 3. $436.90 against Texas Finance Company and W. Lee Moore, Jr., individually and as executor of the estate of W. Lee Moore, jointly and severally. 4. $306.70 against Union Finance Company and W. Lee Moore, Jr., individually and as executor of the estate of W. Lee Moore, jointly and severally. All of these defendants appealed from the trial court’s judgment and are the petitioners here. In the Court of Civil Appeals they challenged the correctness of the judgment as to the recoveries here itemized and as to the recovery of $2,900.00 as damages for unreasonable collection efforts. As heretofore noted the Court of Civil Appeals affirmed as to both.

In this Court petitioners seek a reversal of the entire judgment of the Court of Civil Appeals, but they do not, by point of error or otherwise, point to any error in the judgment of the Court of Civil Appeals in so far as it affirms the various items of recovery awarded under Art. 5073.

Rule 503, Texas Rules of Civil Procedure, provides, in part, that if an error of law has been committed by the trial court, and it appears to this Court “that the error affects a part only of the matter in controversy, and the issues are severable, the judgment shall only be reversed and a new trial ordered as to that part affected by such error.” The errors here complained of affect only the part of the judgment awarding a recovery of $2,900.00 as damages for unreasonable collection efforts. That issue is severable from the issues of statutory damages arising out of the collection of usurious interest. We must, therefore, affirm the judgment of the Court of Civil Appeals in so far as it affirms the judgment of the trial court awarding respondent recovery of the several items of damages under Art. 5073.

We are next concerned with a proper disposition of the remaining cause in which Lathram recovered a judgment for $2,900.00. Lathram has filed a motion to dismiss in this cause. In support of his motion he argues that since the judgment in this severed cause has been paid in full, the questions presented • by petitioners’ points of error are moot. We are disposed to agree.

Petitioners present no points of error which, if sustained, would require or permit a reversal of the judgment and a rendition of judgment that plaintiff take nothing. The only points of error presented complain of the action of the trial court in striking allegations of contributory negligence from petitioners’ answer to respondent’s claim for damages for unreasonable collection efforts, and of errors committed in the submission to the jury of special issues and an instruction relating to respondent’s claim for damages resulting from unreasonable collection efforts. For purposes of this opinion we may assume, without deciding, that the points of error are good and should be sustained.

As heretofore noted, the judgment in this cause with all accrued interest and court costs has long since been paid by United, a non-appealing defendant. Sus-taming the points of error would result in a reversal of the judgment and a remand of the cause to the trial court for retrial. Having already collected the full amount to which he is entitled, respondent, by both written brief and oral argument, understandably disclaims any interest in a retrial of the matter. He could promptly take a nonsuit and no doubt would do so. None of the defendants adjudged to be jointly and severally liable for the item of $2,900.00 sought or obtained a judgment over against the others for contribution in the event of payment. Thus if the cause were remanded it would stand on the trial court docket with no prosecuting plaintiff, with no judgment against petitioners, with all legal obligations ■ of the petitioners to the plaintiff discharged by United and with no pleadings by United seeking contribution from petitioners. To reverse the judgment and remand the cause for retrial would afford petitioners no effective relief whatever. The questions presented are moot, and to decide them in this context would be nothing more or less than an advisory opinion as to the proper manner in which to try a case of this type.

Petitioners assert that they are entitled to have the questions they have presented decided because those who have paid the judgment may seek contribution from them. If their points of error were such as to require a rendition by this Court of judgment that the plaintiff take nothing against them, perhaps they would be entitled to have the points decided. That is a matter not before us. The fact is that deciding the questions actually presented, even in the manner petitioners wish them decided, could not possibly insulate them against a subsequent suit for contribution by those defendants who have paid the judgment. Whether deciding them would insulate petitioners against liability in a suit for contribution is an altogether iffy matter, depending on whether such a suit is filed and what issues are raised.

Our holding that the issues in this severed cause are moot is supported by Pad-gitt v. Young County, 111 Tex. 98, 229 S.W. 459. There it was ruled that a holding of mootness was compelled by voluntary payment of a judgment by a third person who was not a party to the suit.

Petitioners seek to distinguish Pad-gitt on the ground that payment in that case was voluntary, whereas in this case payment was made only after issuance of writ of execution. Whether payment is voluntary or involuntary cannot be controlling when liability is extinguished by payment by a third person. In either event the one cast in judgment is relieved of all liability for payment of the judgment. The rule is otherwise, of course, when payment is obtained from an appealing party adjudged to be liable for payment of money. As to such a party voluntary payment moots the case, Norris Implement Co. v. Ogden, Tex.Civ.App., 147 S.W. 279, no writ history; Travis County v. Matthews, Tex. Civ.App., 221 S.W.2d 347, no writ history; cf. City of West University Place v. Martin, 132 Tex. 354, 123 S.W.2d 638; but involuntary payment does not. Cravens v. Wilson, 48 Tex. 321, 323; Texas Trunk R. Co. v. Jackson, 85 Tex. 605, 22 S.W. 1030, 1031.

Petitioners’ final argument against mootness is that they are entitled to have the stigma cast on them by the judgment removed. The argument is probably generated by respondent’s request that the application for writ of error or the points in the application be dismissed. If the request were honored, the entire judgment of the Court of Civil Appeals would be left standing. But the request is not to be honored. The judgment properly to' be rendered is one reversing the judgment of the Court of Civil Appeals in this severed cause and ordering it dismissed. Freeman v. Burrows, 141 Tex. 318, 171 S.W.2d 863; Travis County v. Matthews, Tex.Civ.App., 221 S.W.2d 347, no writ history; Cullen v. Ellis County Levee Imp. Dist. No. 3, Tex.Civ.App., 77 S.W.2d 310, no writ history. The stigma of the judgment in this severed cause is thus removed. We need not decide, therefore, whether a party’s right to have the stigma of a judgment removed is sufficient reason for declining to moot a cause. Moreover, we have no basis upon which to remove the stigma, if any, cast on petitioners by the judgment in the cause for recovery under Art. 5073 based on the charging of usurious interest since no complaint is made of that judgment.

The case is severed into two causes. In one the judgment of the Court of Civil Appeals is affirmed and in the other the judgment of the Court of Civil Appeals is reversed and the cause is ordered dismissed, all as is herein set out.


source: Caselaw Access Project

author: HUGHES, Justice. HUGHES, Justice.

license: Public Domain

text:
    RAILROAD COMMISSION of Texas, Appellant, v. OIL FIELD HAULERS ASSOCIATION, Inc., et al., Appellees.
    No. 11102.
    Court of Civil Appeals of Texas. Austin.
    May 29, 1963.
    On Motion for Stay June 5,1963.
    •On Motion for Rehearing June 19, 1963.
    Rehearing Denied July 10,1963.

      Waggoner Carr, Atty. Gen., Norman V. Suarez, Asst. Atty. Gen., Austin, Ralph W. Currie, Sp. Asst. Atty. Gen., Dallas, for appellant.
    Clark, Thomas, Harris, Denius & Winters, James H Keahey and Wallace McLean, Austin; Joe G. Fender, Houston; Callaway, Reed, Kidwell & Brooks, Dallas, for appellees.
   HUGHES, Justice.

This appeal is from an order granting a temporary injunction enjoining enforcement of an order of the Railroad Commission of Texas reducing railroad transportation intrastate rates on carload shipments of wrought iron, cast iron and steel pipe or tubing.

The above order was made by the Commission upon complaint filed with it by Lone Star Steel Company against then existing rates on wrought iron and steel pipe or tubing in carloads by railroad between points in Texas. Lone Star intervened in the Trial Court and aligned itself with the Commission; it, however, did not join the Commission in appealing from the injunc-tive order.

The suit below was filed by the Oil Field Haulers Association, Inc., the purpose of which was to have the order of the Commission set aside and to enjoin its enforcement. A plea in intervention was filed by Hill and Hill Truck Line, Inc., seeking the same relief. A similar plea in intervention was filed by Chicago- Rock Island and Pacific Railroad Company, Gulf Colorado and Santa Fe Railway Company, Missouri Pacific Railroad Company, Panhandle and Santa Fe Railway Company, The Pecos Valley Southern Railway Company, St. Louis, San Francisco and Texas Railway Company and The Texas and Pacific Railway Company.

The Oil Field Haulers Association, Inc., in a sworn pleading alleged that it was a trade association composed of many members of the oil field motor, carrier industry, which members hold and operate under specialized motor carrier certificates of convenience and necessity issued to them by the Railroad Commission; that these certificates authorize them to transport for hire by motor vehicle, over irregular routes within Texas, oil field equipment and materials, that they are presently engaged in such activities and have expended huge sums of money therein. It was particularly alleged that, “In the conduct of their operations, plaintiff’s members are in direct competition with the railroads in this State. Such competition is particularly vigorous in the transportation of pipe or tubing, iron or steel.”

The order of the Commission was attacked by Haulers on these grounds:

1. It purports to amend a tariff, Railroad Commission Tariff No. 322, which is no longer in effect, and hence it is “illegal and void as a matter of law.”

2. There is no evidence that present rail pipe rates have become “unreasonable, unfair or excessive,” and that the reductions ordered by the Commission are “wholly unjustified and it cannot be shown that they are reasonable, fair or compensatory.”

3. There is no evidence that present rail pipe rates are “unduly prejudicial of certain shippers in localities of the State and unduly preferential to other 'shippers in localities of the State” as found by the Commission.

4. There is no evidence that the present rail pipe rates discriminate against shipments from Lone Star by not giving that point the advantage of its geographical location.

5. The order of the Commission is arbitrary and invalid because it reduces rates on the' transportation of cast iron pipe despite the recitation in the Commission notices for the hearing preceding the issuance of such order that cast iron pipe was not involved in the complaint before it by Lone Star Steel.

6. The Commission based its order on an Interstate Commerce Commission tariff which has no relation to what is fair or compensatory for transportation intrastate rates in Texas.

7. The Order of December 18, 1962, “would impose rail pipe rates which would be discriminatory against plaintiff [Haulers] and its members. If put into effect, it will cut the rail rates on pipe to such an extent that the oil field carriers will no longer be competitive. As a result, plaintiff [Haulers] and its members will not participate in the transportation of pipe between any two points in Texas which can be served by railroad. And not only will the Order of December 18, 1962, have the effect of diverting intrastate shipments of pipe to the rail carriers, but it will also divert interstate exbarge traffic to intrastate rail routes. The long-haul transportation of pipe is a main source of revenue to plaintiff [Haulers] and its members, and the Railroad Commission erred in ignoring the disastrous effect that its Order of December 18, 1962, will have on the oil field carriers of this State.”

8. The order of the Commission “totally ignores the basic elements of transportation economics.” The essence of this objection is that the Commission used erroneous data in determining the rate prescribed and that it failed to take into account the principles of “classification of freight, the theory of volume rates, and the theory of declining costs” in considering the rate it fixed.

We now copy from the concluding paragraph in Haulers’ petition:

“The Defendant Commission in prescribing the rates complained of through the issuance of its December 18, 1962, Order has reduced the rates on pipe or tubing, iron or steel, without any testimony or evidence of record upon which to predicate a finding that the rates now in existence are discriminatory, unjust, or unreasonable. All the evidence before the Commission was and is to the contrary. -The action of the Commission in its Order of December 18, 1962, was taken without substantial evidence or any evidence to support its action and constitutes an abuse of discretion on its part, and is unlawful. As a result of such arbitrary, unreasonable, and capricious action by the Commission, plaintiif and its members will no longer be able to compete with the intrastate railroads for the long-haul movement of pipe, which traffic now constitutes a main source of income for plaintiff’s members. The Commission’s Order will result in monetary loss and damages to plaintiff and its members that are incapable of determination.”

Intervenor, Hill and Hill Truck Line, Inc., by sworn pleading, alleged its anticipated loss in revenues as a result of the Commission Order in question and further alleged that the rates therein prescribed for railway transportation were “below the cost of handling in truck service and, by reason thereof, intervenor cannot lower its intrastate rates to the level prescribed by the Commission,” and that, “By reason of the foregoing * * * the rates prescribed by the Railroad Commission are unjust, unreasonable and confiscatory * * * ”

The railroad intervenors, above named, pleaded, by an unsworn petition, that if the rates set by the Commission remain in force that their revenues on the shipments affected would be reduced by more than 25'%. They also allege that they will suffer losses from their interstate business as well. The railroads plead that the rates prescribed by the Commission for pipe are the same as those applying on iron and steel articles, other than pipe, moving interstate which rates, they allege “were brought about and forced into being by competitive conditions and circumstances that are not applicable in connection with shipments of pipe intrastate in Texas.”

We quote the final paragraph of the railroad’s petition:

“The prescribed rates on pipe are so low they will unnecessarily and unwarrantably dissipate the revenues of the Railroads and therefore are unjust and unreasonable, in violation of the statutes of the State of Texas. This is particularly so as the Railroads do not now earn an adequate return on their investment in property devoted to public service.”

The response of the Commission to the pleadings of Haulers was that it was not a party at interest under Art. 6453, Vernon’s Ann. Civ. St., and, hence, had no right to bring this suit, and that its pleadings failed to show that the order of the Commission was unjust and unreasonable to it.

The Trial Court heard the case upon the sworn pleadings and affidavits only. The Trial Court made no findings of fact other than those contained in its order granting the temporary injunction, which we quote:

“The Court is of the opinion that Plaintiffs are entitled to the temporary injunction as herein granted, same being within their allegations and prayer, for the reason that the Railroad Commission’s order of December 18, 1962, purports to amend a tariff, Railroad Commission Tariff No. 322, which is no longer in effect; applies to cast iron pipe or tubing, when no notice or hearing was given as to such commodity; attempts to apply a reduced, volume rate statewide in Texas when, in fact, there is no support for classifying all points in Texas as volume points; attempts to reduce Texas rail pipe rates to the abnormally low level of interstate rail pipe rates which have been reduced to meet barge-truck competition; adopts a scale of rates from an interstate tariff which applies in a forty state area and does not apply to pipe, such being a wholly arbitrary way of fixing a scale of rates to apply in Texas on pipe; totally ignores basic rate making principles without justification for so doing; and ignores the effect that its order will have upon the buying public in Texas and upon the competing oil field carrier industry. If the Defendants Railroad Commission of Texas, et al., proceed to enforce the rates set out in its order of December 18, 1962, such action would deprive the Plaintiffs of the bulk of their pipe tonnage and revenue, resulting in irreparable and inestimable damage to Plaintiffs; it would also probably substantially reduce the revenue which the intervening railroad companies derive from the transportation of pipe in Texas, to their irreparable and inestimable damage. I therefore find that the Plaintiff-Intervenors have made a proper showing of a probable right and probable injury of the matters in the temporary injunction prayed for.”

The Commission, in its brief, has quoted or summarized the substance of affidavits filed on behalf of Haulers and its members who are plaintiffs and, since the accuracy and completeness of such summaries and quotations are not questioned, we adopt them. Affiant Edgar P. Hardin:

“ ‘If the rates prescribed by the Commission in the order of December 18, 1962, become effective, the over-the-road pipe traffic now being handled by oilfield carriers will be diverted almost entirely to the railroads. The order of December 18, 1962, cuts the rail pipe rates so greatly that oilfield carriers will be unable to compete for the transportation of pipe between points and areas in Texas served by railroads. The comparison in Exhibit A effectively illustrates this fact. In this exhibit, the present and proposed Texas intrastate rail rates are compared with the present 30,000 pound motor carrier pipe rates. As an example of severe rate cutting, note the comparison at 300 miles: At the present time the rail rates are only 3Yzf per Cwt. below those of the oilfield carriers; under the order of December 18, 1962, they would be 28⅜⅛ per Cwt. below the oilfield carrier rates. The oilfield carriers cannot compete under such conditions.’
Acknowledging that much of the pipe traffic moves between oilfield locations and the oilfield hauler is therefore a necessity, the affidavit then states:
‘The net effect of the Commission’s order will be to reduce oilfield carriers to short haul field operators insofar as pipe traffic is concerned. As a result, the oilfield carriers of Texas will be deprived of substantial portion of the revenue upon which they now depend.’
After reciting certain reports of several oilfield carriers and referring to certain exhibits on file with the Commission for the year 1961, the affidavit continued:
‘As is indicated in these exhibits, the financial condition of the oilfield carrier industry is now extremely precarious; the reduction in traffic and revenue which unquestionably will result from the order of December 18, 1962, would be disastrous to this industry.’
The affidavit concludes with the following statement:
‘If the order is permitted to become effective, individual oilfield carriers will lose traffic which accounts for from, approximately 10% to approximately 50% of their total revenue. Investments have been made in plant and equipment necessary to participate in over-the-road pipe traffic and this investment will be lost.’ ”
Affiant Chauncey White, Jr.:
“The affidavit recites in substance that his employer, T. E. Mercer Trucking Company, derives about one third .of its revenue, ‘from the transportation of shipments of pipe or tubing, iron or steel, between points in Texas.’ The great hulk of this traffic will be lost if the order becomes effective. The loss of this traffic would require reduction in personnel. It would reduce Mercer to a short-haul carrier. This would require .considerable more expense while, because of the much shorter hauls, Mercer would receive much less revenue. That even under the existing rates a number of motor carriers go out of business annually due to rising costs and strong competition from other modes -of transportation. If the reduced rail rates go into effect, Mercer will have to reduce employees and ■equipment and there is some danger that it could not stay in business.”
Affiants T. V. Woodard and Jack Gaines:
‘"These affidavits are on a printed form differing from each other only with respect to the identity of the affiant, the amount of equipment used, the number of people employed, pipe shipments made, their weight and the revenue. Plaintiffs’ Exhibit 3, T. V. Woodard, Is typical. It recites in substance that during 1962 his company transported 311 shipments of pipe or tubing, iron or steel, both in intrastate and in interstate commerce in Texas. These would be affected by the Railroad Commission’s order of December 18, 1962. The shipments weighed, total, 19,772,584. His company received total revenue of $111,328.00 for this transportation. In affiant’s opinion if the order becomes effective his company will become non-competitive with the railroads in this state and will lose most, if not all, of the traffic and revenue above described.”
Affiant W. J. Derrick:
“(a) Revenue and cost on present intrastate rates with competitive rates which Hill & Hill Truck Line, Inc., would be forced to observe if the prescribed rates in the order under attack should become effective.
(b) The per mile operating cost of Hill & Hill. This is stated to be $.4166 (per mile).’.’

We add to this summary that the Exhibit attached to the affidavit of Mr. Derrick shows that the revenue of Hill and Hill from the shipments considered would be $37,341.28, whereas the competitive railway rates, if they become effective, would be $27,897.35 from the 40,000 pound minimum rate and $26,457.15 from the 80,000 pound minimum rate, prescribed by the Commission order.

Affiant H. Ormston:
“ * * * Hill & Hill derives about 40% of its gross revenue from the transportation of pipe between points in Texas; the preponderance of this pipe moves in interstate commerce from the port of Houston; pipe from interstate origins moves to destinations in Texas in combination barge and truck service. The truck portion of this movement constitutes a substantial part of Hill & Hill’s total business. The interstate rates charged by Hill & Hill are prescribed at a minimum level by the Interstate Commerce Commission so that these rates cannot be adjusted downward to the level here proposed for intrastate movement. The rates prescribed by the Commission are below the cost of handling in truck service, and by reason thereof Hill & Hill cannot lower its intrastate rates to the level prescribed by the Commission. By reason of the foregoing the rates prescribed by the Commission are unjust, unreasonable and confiscatory.”

The intervening railways offered four affidavits, the substance of which we take from the brief of the Commission, unchallenged in this respect:

Affiant B. V. Reynolds:
“This affidavit reveals that Texas & Pacific Railway Company for the nine months period beginning January 1, 1962, and ending September 30, 1962, received from the transportation of iron and steel pipe, freight revenue in the amount of $1,365,847.00. Exhibit A attached to this affidavit is a comparison of the new and the old rates. To judge the effect of the new rates on tonnage actually moved affiant examined movement records for the six months period beginning June 1, 1962, and ending November 30, 1962. Since most of them were destined to Odessa, Texas, Exhibit B to the affidavit was prepared showing information about those shipments. During that period the T. & P. had 65 cars which moved from Lone Star or Bond to Odessa. Only 5 of them are cars on which the lowest charge to the shipper would be on the basis of the newly prescribed 40,000 pound rate. So far as the T. & P. is concerned, the amount of revenue which it received on these intrastate movements of pipe was $26,435.32. Had the new rates been in effect the revenue would have been $19,507.81 or a reduction of $6,927.51. Based on the percentage of reduction thus shown, it is the opinion of affiant that during the six months period Texas & Pacific, would suffer a reduction of $17,648.00 on intrastate pipe revenue. Affiant did not take into account any revenue losses that T. & P. might have on interstate traffic.”
Affiant A. R. Kilian:
“Affiant works for Panhandle & Santa Fe Railway Company which operates entirely within the State of Texas. It does handle shipments moving in interstate commerce by virtue of its connection with other railroads. The new rates provided would reduce: the revenue his company receives from the transportation of pipe when moving in intrastate commerce. During the period June through November inclusive, 1962, if the new rates had ’been in effect the P. & S. F. would have suffered a loss of $1,267.50 or 19% of revenue on this traffic. (Intervenors’ Exhibit No. 2, page 2.) Page 3 of the Exhibit deals with railroad rate-of-return as shown by reports from the Railroad Commission to the Governor of the State of Texas. Page 4 of said exhibit asserts that ‘The Railroads would receive less revenue on shipments of pipe under certain circumstances than they would on comparable shipments of iron and steel articles.’ This is due to an unloading allowance which the railroads make of 7.S<¡¡ per 100 pounds to the consignee, when the shipment originates at either Bond or Lone Star, Texas, and is delivered at Fort Stockton, McKamey, Midland, Odessa, Rankin, or Seagraves, Texas, provided such shipment weighs 70,000 pounds or more. (Intervenors’ Exhibit No. 2, page 4.) Also, interstate iron and steel articles rates are not subject to classification, Rule 24, whereas the newly prescribed pipe rates are subject to such rule. (Intervenors’ Exhibit No. 2, page 5.)” ’
Affiant S. P. Lawrence:
“Affiant, is with the Missouri-Pacific, This railroad handles a large volume of interstate traffic that originates or
terminates in Texas and also a substantial volume of Texas intrastate traffic. During the six month period investigated the Missouri-Pacific handled 170 cars of pipe moving in Texas intrastate commerce, some in single-line service and others in conjunction with other railroads. The total revenue paid to the rail carriers for handling that tonnage amounted to $44,045.00. If the new rates had been in effect there would have been a reduction of $9,594.00, or 21.7%. If the new rates become effective they will materially effect Missouri-Pacific’s movement of pipe in all rail service. If this line should be forced to reduce the long-haul all-rail rates in order to more effectively compete with barge traffic, the revenue loss in dollars would be greater than indicated.”
Affiant J. S. McElclowney:
“Affiant is employed by the Gulf, Colorado & Santa Fe Railway Company. It handles both interstate traffic and intrastate traffic, including iron or steel pipe or tubing. During a four months period in 1962 this road terminated in excess of 1,400,000 pounds of pipe moving in Texas intrastate commerce. Santa Fe revenue for this traffic was $1,803.71. Had the traffic . moved under the new rates, the G. C. & S. F. revenue would have been reduced by $718.44. The long-haul all-rail interstate rates and the tonnage handled on them are directly influenced by the level of the Texas intrastate rates. One shipper has already made formal application to reduce the interstate all-rail rates to the same level as the Commission has prescribed in this docket.”

The Commission offered four counter affidavits. They came from C. _R. McNamee, Rate Director for the Commission; Caroll G. Mathews, Assistant General Freight Agent for the Fort Worth and Denver Railway Company; R. W. DeLay, Assistant General Freight Agent for" Kansas City Southern Lines, which include Louisiana and Arkansas Railway Company; and Cecil L. Williamson, General Traffic Manager for Lone Star Steel Company.

The pertinent substance of these affidavits is given by the Commission in its brief, as follows:

“That the rates are fully compensatory and even attractive to the railroads; that the railroads are presently receiving but little intrastate pipe traffic because the rates are too high; that the new scale is on the same basis as is the scale presently applicable in Texas on iron and steel articles other than pipe; that from a transportation standpoint there is little, if any, difference between the two and both should be on the same level; that the plaintiffs, motor car-, riers, are already applying the same rates which they are here attacking, in movements between Texas points in intrastate commerce, on iron or steel articles other than pipe.”

The railways criticize the affidavit of Mr. Mathews, saying-: “He gave 'no testimony about the length of his railroad, but did make the significant statement ‘There is very little traffic moving by rail in carloads on pipe intrastate in Texas on the line of my railroad.’ Manifestly, if the Ft. Worth and Denver is not transporting any pipe traffic it has little interest in how much, the challenged order might reduce the revenue on that traffic. Stated another way, if that railroad only moves one car every six months or every year, it has little to lose from the standpoint of revenue even if it should be required to transport that single car free of charge. This is a completely different situation from that of the railroad intervenors. They are actually hauling the traffic in appreciable quantities and therefore have revenues which can be reduced in large amounts.”

The railways also criticize the affidavit of Mr. DeLay and summarize this criticism by saying, “We submit that one reasonable conclusion to be drawn from the testimony of Messrs. Mathews and DeLay, and possibly the only sound one, is that the Ft. Worth and Denver does not handle any of the intrastate pipe traffic, and, therefore, has little concern with the level of the rates, while for some reason the Kansas City Southern is willing to have its revenue drastically reduced so it can handle all of the Texas intrastate pipe traffic.”

Upon the hearing below, the following colloquy between the Trial Judge and counsel for the railways occurred:

“THE COURT: Do you allege confiscatory effect?
"MR. BROOKS: We do not allege that the rates are confiscatory. Neither do we allege that they are non-compensatory, if there is distinction between the two.
“THE COURT: You do allege that they are unreasonable?
“MR. BROOKS: We allege that they make excessive and unwarranted reductions in the Railroads’ revenues, and therefore that they are unjust and unreasonable. I will say this, anticipating the argument, that is one thing I was coming to. I would like to point out to the Court at that time that the rate, in order to be compensatory in the legal sense, does not necessarily just have to cover the bare cost of performing the services.
“THE COURT: I recognize that.
“MR. BROOKS: All right.
“THE COURT: I just wanted to know.
“MR. BROOKS: We do not say to the Court that these rates are non-compensatory in the sense that they would not cover the cost, perhaps, of handling the goods, and therefore we do not raise the issue of confiscation. We do say that they result in drastic reductions that make them unjust and unreasonable.”

The railways, in their brief, make the following comment in regard to this matter:

“We wish to make it absolutely clear, as was done in the record, that these railroad intervenors have not, as yet, alleged the purportedly prescribed rates are confiscatory or non-compensatory. It has been alleged that the rates are unjust and unreasonable. This state of the pleadings, we submit, does not in anyway constitute an admission, actual or implied, that the rates are compensatory, much less that they are fully compensatory.
“Whether the rates are compensatory or not, depends, at least in part, on whether they produce enough revenue to cover the cost of handling. In order to determine that fact, it is necessary to have evidence, not only to the amount of revenue received, but as to the expense involved in handling the traffic. Then, and only then, can the conclusion as to whether the rates are compensatory or non-compensatory be reached. We do not wish to in anyway mislead this court. Thus, it should not in anyway be understood that railroad intervenors at the trial on the merits will introduce evidence tending to show the expense of handling the traffic is in excess of the revenue received, but we do insist that under the state of the pleadings, even assuming no further amendment, railroad intervenors could introduce evidence concerning the cost involved in handling the traffic which could support a finding that the spread between the expense incurred and the revenue received is such the rates are unjust and unreasonable.
“The simple fact is that, contrary to the assertion in appellant’s brief, it is not established in the record, at the present time, whether the rates are compensatory or non-compensatory, and nothing said by counsel in response to the trial court’s questions settles the question, one way or another. In addition, particular rates can be unjust and unreasonable even though they are compensatory.”

We have made what we consider to be a full and fair statement of the essential facts before the Trial Court when it issued the injunction, the validity of which is before us and will now be determined.

The objection that the order of the Commission amends a tariff no longer in effect is, we believe, trivial under the record. The order purported to amend tariff R.C.T. ¿22. This tariff had been can-celled by R.C.T. 366, and it was this tariff which was actually amended by the order in suit.

The error was numerical only. This appears from the uncontroverted affidavit of Mr. McNamee. The substance, purport and effect of the order was plain and obvious. No one complains of being harmed by this most innocuous of errors. Besides, if there was no order to amend, the order in suit would be an original order, regardless of its nomenclature.

The objection to the order is that it applies to cast iron pipe when such commodity did not appear in the notice for the hearing at which the order was made. We quote from the affidavit of the Commission’s Rate Division Director, Mr. Mc-Namee, as to this objection:

“The Commission does not regard the order under attack in Cause No. 129,705, shown in Railroad Commission Docket 12819-R as prescribing any rates on cast iron pipe. The caption of the proceeding is, ‘wrought iron and steel pipe.’ When the order as a whole is read, I think it is plain that the Commission was dealing only with wrought iron pipe and not cast iron pipe. If there still be any question about it the Commission has authorized me to state that it will authorize the tariff publishing agent to show that the rates are applicable only on wrought iron or steel pipe and not on cast iron pipe.”

While neither the Commission nor the Director may judicially construe this order, it is our opinion that the order as a whole would not be rendered invalid by the omission from the notice of a commodity, but that the invalidity of the order would extend no further than to the commodity omitted from the notice. All parties seem to concede the invalidity of the order insofar as cast iron pipe is concerned if it in fact affects such pipe. No authorities are cited to support the contention that this invalidity voids the entire order. We are unable to perceive of any good reason for this effect to follow. It is-our opinion that the remainder of the order does not fall because of its conceded inapplicability to cast iron pipe.

The objections to the order of the Commission based on the methods employed, or the criteria used, by the Commission in arriving at the rates prescribed by it are beyond the scope of judicial review. In Railroad Commission v. Galveston Chamber of Commerce, 105 Tex. 101, 145 S.W. 573, the Court stated:

“It is not within the language nor the spirit of the law, which authorizes the courts to review the action of the Railroad Commission, that any court should investigate the methods adopted by the Commission in fixing its rates, nor the motives or purposes which prompted such action. The result and its effect upon the rights of railroads and shippers mark the limit of judicial inquiry.”

The remaining objections to the order of the Commission are matters of substance and are properly presented under Arts. 6453-6454, V.A.C.S. Art. 6453 provides, in part, that any party at interest who is dissatisfied with any order of the Commission prescribing railroad rates may appeal to the Courts, and Art. 6454, provides that the burden shall be on the complaining party to show that such rates “are unreasonable and unjust to it or them.”

As to the Railroad appellees it is abundantly clear that they neither plead nor prove, nor do they even promise to plead or prove that the railroad carload rates prescribed by the Commission are confiscatory or non-compensatory. They do assert that rates can be “unjust and unreasonable though they are compensatory.” No authorities are cited to support this assertion. We believe this statement to be erroneous. In Texas & New Orleans Railroad Co. v. Railroad Comm., 155 Tex. 323, 286 S.W.2d 112, the Court stated:

“Freight rates should be fair and nondiscriminatory between shippers similarly situated and between geographical locations. They should be based upon the carrier’s cost of operation plus a fair profit. Any greater charge would constitute a subsidy to the carrier made for the purpose of favoring and protecting some industry or locality or maintaining an artificial price level and would constitute discrimination. * * *
“There is nothing in [cases discussed] which deprives a rate-making agency of the authority to reduce rates on a particular commodity simply because the reduction will result in a loss of revenue to railroads whose return on investment is already low. Unless the rate fixed on the particular commodity is unreasonable and unjust, the railroads should not be heard to complain of it simply because it results in a loss of revenue. They have their remedy under the statutes in seeking a general revenue increase in rates.”

If the rates here are compensatory to the Railroads within the rule of the above (T. & N. O.) case then it is not possible for them to be unreasonable or unjust to them. If the rates are inadequate under the test of this case then they would be either unreasonable or unjust or perhaps confiscatory. Texas & N. O. Ry. Co. v. Sabine Tram Co., 61 Tex.Civ.App. 353, 121 S.W. 256, writ ref. If they are excessive under such rule, then they, as stated, are invalid. “The public is entitled to demand that no more shall be extracted from it than the services [transportation of freight] are reasonably worth * * *.” 10 C.J., p. 418, quoted with approval by this Court in Abilene & So. Ry. v. Terrell, Tex.Civ.App., 131 S.W.2d 37, writ ref.

It is our opinion that the Railroad appel-lees have shown neither a probable right nor a probable injury to justify the issuance of the temporary injunction by the Trial Court.

The motor carrier appellees have unquestionably established the probability of injury from enforcement of the rate order of the Commission if it becomes effective. We are convinced, however, that they have not shown a probable right which will be violated by the enforcement of such order. It is our opinion that their right to avoid these injuries, or even their right of survival, must be viewed from the standpoint of public interest, free enterprise, and our competitive economic system. Assuming that the rates prescribed by the Commission for railroads are fairly compensatory to them, paying them a reasonable return for their services, then the question presented is whether or not the public should be deprived of these beneficial rates because of injuries to be sustained by less efficient carriers. If this question is resolved favorably to appellee motor carriers, then obsolescence in this area is perpetuated and progress arrested. This would be detrimental to the public interest. We believe that the injuries to be sustained by appellee motor carriers represent the price they must pay for their confessed inability to be competitive in this area.

Not too many years ago (1951) numerous railroads, including some of the railroad intervenors here, protested the action of the Commission in granting to certain specialized motor carriers authority to transport certain chemicals on the ground, among others, that “said rail lines received a large revenue for the transportation of chemicals in Texas; that the transportation of chemicals is attractive traffic, and that the diversion of the transportation of the tonnage now being transported by said companies would seriously affect the service now being rendered by them; that such traffic is very material to the rail lines; that the rail lines have quite an investment in the terminals located at different points on their lines, and that some of said terminals would have to be abandoned if they lose the chemical traffic; that the revenue received from the transportation of chemicals is a substantial part of the total revenue received by some of said rail lines; that if they lose the chemical transportation they might have to operate a less number of trains and curtail their service to the public; * * * ”

This protest was overruled by the Commission and approved by this Court in Thompson v. Railroad Commission, Tex.Civ.App., 232 S.W.2d 139, reversed on other grounds, 150 Tex. 307, 240 S.W.2d 759. The complaint here is the same; only the complainant is different. This should not alter the law.

We believe the correct principle to be applied here was stated by Justice Baugh for this Court in Texas Motor Coaches v. Railroad Commission, Tex.Civ.App., 59 S.W.2d 923, aff., 123 Tex. 517, 73 S.W.2d 511, in this language:

“If public convenience and need outweigh, as the trial court and the commission found in this case that it did, the private interests of those already in the field, the latter become subservient to the former, and must abide the result even though it involve financial loss. All these things, and the weight to be given -them, were matters within the scope of the powers delegated to the commission to determine; and, unless the commission abused its discretion in the conclusions reached, the courts are not at liberty to set aside the result.”

As illustrative of the principle which we apply here, we quote from Missouri Pacific Railroad Company v. United States, 203 F.Supp. 629, 635, U. S. District Court, E.D.Mo.:

“The general rule is that all relevant factors of the NTP must at least be considered by the ICC in proceedings involving the reasonableness of rail rates. Cantlay & Tanzola v. United States, D.C., 115 F.Supp. 72, 79,1. c. 81. The Commission has considered the NTP’s prohibition of ‘destructive competitive practices’ to the exclusion of all else, but other elements of the NTP dictate the preservation and not the cancellation of the rates. For example, it states:
“ ‘It is hereby declared to be the national transportation policy of the Congress to provide for fair and impartial regulation of all modes of transportation subject to the provisions of this Act * * * so administered as to recognize and preserve the inherent advantages of each * * *.’
“Preservation of inherent advantage is thus recognized by the NTP. It has also been recognized by the Supreme Court in Schaffer Transportataion Co. v. United States, 355 U.S. 83,1. c. 91, 78 S.Ct. 173, 1. c. 178, 2 L.Ed.2d 117, where it was said:
“ ‘The ability of one mode of transportation to operate with a rate lower than competing types of transportation is precisely the sort of “inherent advantage” that the congressional policy requires the Commission to recognize.’
“It is the rails’ inherent advantage of being able to haul increasingly heavy loads at reduced rates which is being asserted in the instant rates. It is evident that in the demonstrated absence of any destructive competition, there are no grounds for precluding such assertion. Cancellation of the proposed rates would hinder competition fostered by Section 15a(3) and destroy, not preserve, inherent advantage.”

The real question presented by this appeal is of basic importance. If it should be held that, as a matter of law, reduced but compensatory transportation rates may not be initiated for the sole reason that they may deleteriously affect a carrier who is unable to compete with them, then it should now be known in order that proposed canalizing of the Trinity, San Antonio and other waterways at the cost of billions of dollars will not be undertaken in the mistaken belief that the cheap transportation thereby created can be effectively utilized.

The order before us was signed by the Railroad Commission Chairman, the Hon. Wm. J. Murray, Jr., and Commissioner, the Hon. Ben Ramsey, and in our opinion they, in adopting such order, have acted legally reasonably and in accordance with their responsibility as guardians of the public interest in the field of transportation rate regulation.

It follows that, in our opinion, appellees have failed to establish a probable right, justifying equitable interposition in their behalf for its protection.

The judgment of the Trial Court is reversed and the temporary injunction granted by it is dissolved.

Reversed. Temporary Injunction dissolved.

ON MOTION NO. 12,839 FOR STAY

PER CURIAM.

Appellees herein having filed a Motion that we stay our order dissolving the temporary injunction granted by the Trial Court pending further proceedings herein, and appellant interposing no objection, and the Court having considered such Motion, It is ordered that such Motion be and the same is hereby granted and our order dissolving such injunction is stayed: (1) Until time for filing Motions for Rehearing herein have expired without any such Motion being filed (2) If such Motions are filed until such Motion or Motions are acted on by this Court (3) If such Motions are overruled, then until time for filing application for writ of error to the Supreme Court has expired without such application being filed (4) If such application is filed, then until such application is acted on by the Supreme Court of Texas.

ON MOTION FOR REHEARING

HUGHES, Justice.

Appellees’ Motions for Rehearing reflect that we are embroiled in a war of words. The Railroads say, “It will be seen that the Supreme Court [Texas & N. O. v. R. R. Comm., 155 Tex. 323, 286 S.W.2d 112] contrary to this Court’s decision, does not equate ‘confiscatory’ and ‘unreasonable and unjust.’ ” They also say, “A noncompensa-tory rate obviously is one that takes property without proper compensation or without due process of law.”

In our opinion we said, “If the rates here are compensatory to the Railroads within the rule of the above (T. & N. O.) case then it is not possible for them to be unreasonable or unjust to them.” (The Railroads)

The rule we referred to, and which was stated in the preceding paragraph, was, the Supreme Court speaking, “Freight rates should be fair and nondiscriminatory between shippers similarly situated and between geographical locations. They should be based upon the carrier’s cost of operation plus a fair profit.” Italics ours.

If a rate meets this test it is not unreasonable nor unfair to the carriers Jiarging the rate. It is fully compensatory. This is all we intended to say or hold. We do not equate the word “compensatory” nor the words “unreasonable” and “unjust” with the word “confiscatory.” We agree with Railroads that a “non-compensatory rate” is one which does not provide “proper compensation” to the carrier. By “proper compensation” we mean cost of operation plus a fair profit.

Railroads make the point that in any event we should not have dissolved the injunction in so far as it related to rates on cast iron pipe. We sustain this assignment. The invalidity or inapplicability of the order of the Commission as to rates prescribed for the transportation of cast iron pipe is conceded by all parties. The injunction as to such rates was properly granted, and should remain in force.

In the respect indicated, the Motions for Rehearing are granted; in all other respects they are overruled.

Granted in part and in part overruled.

      . The Commission contends that the order, properly construed, does not include cast iron pipe.

      . This objection has been eliminated by the filing of a trial amendment by adding as plaintiffs numerous individuals and corporate truckers, including intervenor Hill & Hill Truck Line, Ine.

      . Mr. Ormston swore to the intervention of Hill and Hill Truck Line which the Commission treats as an affidavit in behalf of Haulers petition.

      . Railroad Comm. of Tex. v. National Transport Corp., 363 S.W.2d 360, Austin Civil Appeals, writ ref., n, r. e.


author: HUGHES, Justice.

text:
    C. H. LANGDEAU, Receiver of Southern Industrial Life Insurance Company and Liquidator for the State Board of Insurance, et al., Appellants, v. GREAT AMERICAN INSURANCE COMPANY, Appellee.
    No. 11110.
    Court of Civil Appeals of Texas. Austin.
    July 17, 1963.
    Rehearing Denied Aug. 1,1963.
    Further Rehearing. Denied Aug. 8, 1963.

      John R. Grace, Kerns B. Taylor and Harold G. Kennedy, Austin, Waggoner Carr, Atty. Gen., Dudley D. McCalla, Joe R. Long, Asst. Attys. Gen., Austin, for appellants.
    Brown, Sparks & Erwin, Will G. Barber, Austin, for appellee.
   HUGHES, Justice.

This suit is by C. H. Langdeau in his official capacity as Receiver of Southern Life Insurance Company and as Liquidator for the State Board of Insurance and the State Board of Insurance against Great American Insurance Company of New York upon a fidelity bond executed by it in the sum of $20,000.00 whereby it became bound to pay not to exceed such sum to the “Commissioner of Insurance for the use and benefit of Southern Industrial Life Insurance Company” the amount of all direct losses caused by Ralph Derrell Huffman, an employee of such company, through “larceny, theft, embezzlement, forgery, misapplication, wrongful abstraction, willful misapplication, or any other act of fraud or dishonesty” committed during the term of such bond by Mr. Huffman acting directly or in collusion with others.

Southern Industrial Life Insurance Company was a Mutual Assessment Company under the Laws of Texas. Ch. 14, Texas Insurance Code, Vol. 14A, V.A.C.S.

In July 1960, Southern Industrial was adjudged delinquent and insolvent, its authority to conduct business was revoked, and its affairs were placed in receivership by the District Court of Travis County, 53rd Judicial District. Mr. C. H. Langdeau was appointed receiver and statutory liquidator and he qualified and is acting herein as such.

Art. 14.08 of Ch. 14, supra, provides, in part:

“Such association shall, by resolution adopted and entered on its minute book, a copy of which properly certified to by the president, secretary, or general manager shall be filed with the Board of Insurance Commissioners, designating therein some officer who shall be responsible in the handling of the funds of the corporation. Such association shall make and file for such officer a surety bond with a corporate surety company authorized to write surety bonds in this State, as surety, satisfactory and payable to the Board of Insurance Commissioners of Texas in the sum of not less than Two Thousand Five Hundred ($2,500.00) Dollars for the use and benefit of said association, and which shall at all times be equal to the amount of the mortuary fund on hand, not to exceed Twenty Thousand ($20,000.00) Dollars, which said bond shall obligate the principal and surety to pay such pecuniary loss as the association shall sustain through acts of fraud, dishonesty, forgery, theft, embezzlement, wrongful abstraction or willful misapplication on the part of such officer, either directly and alone, or in the connivance with others, while employed as such officer or exercising powers of such office.”
Art. 14.09 of Ch. 14, provides:
“Art. 14.09. Recovery on Bond
“When the Board is informed that any officer of any such association has violated the terms of either of said bonds it shall demand a written explanation of such officer as to such charge, and if after such explanation the Board is not satisfied as to the existing facts in controversy it shall notify such officer to be and appear in Travis County with such records, writings, and other correspondence and facts as the Board deems proper, not earlier than ten (10) days or later than fifteen (15) days from service of notice, and it shall there conduct an examination into such affair, and if upon such examination the Board shall become satisfied that the terms of said bond have been violated by said officer the Board shall immediately notify the company executing said bond and prepare a written statement covering said facts and deliver same to the Attorney General of Texas, whose duty it shall be to investigate said charges and if satisfied that the terms of said bond have been violated he shall enforce the liability against said cash or securities, or he shall file suit on said bond in the name of the Board of Insurance Commissioners of Texas for the benefit of the beneficiaries thereof against said officer as principal and the sureties of his bond for the recovery of said amounts due by said officer, and all costs of suit in some court of competent jurisdiction, in Travis County, Texas.”

At a special meeting of the Board of Directors of Southern Industrial Life Insurance Company February 13, 1959, R. D. Huffman was elected Secretary-Treasurer, Director and principal bonded officer of the Company and he was specifically “authorized and empowered to open one or more bank accounts in the name of the Company in any bank or banks in Texas that are legal depositories for funds of such Companies and to sign such signature cards, checks, resolutions or other instruments of writing as may be required for the normal conduct of business of the Company.”

Mr. R. D. Huffman signed and attested the accuracy of the minutes of the Company reflecting its actions, as stated, under the “penalties of perjury.”

Mr. Huffman assumed the position of Secretary-Treasurer of the Company and as its bonded officer and accepted the accompanying responsibilities.

We will now describe the manner in which Mr. Huffman testified that he discharged his duties:

“Q Now, having taken over as secretary-treasurer and bonded officer of Southern Industrial Life Insurance Company, did you have occasion to write some checks from time to time in that company?
“A Yes, sir.
“Q Did you write all or most of the checks in that company ?
“A No, sir. I signed most of the checks.
“Q How did you sign them?
“A I signed checks in blank in most instances. Possibly some bills I had before me; I paid them with the bill in front of me. * * *
“Q Did you ever look to see the source of these expenditures resulting from the blank checks that you signed—
“A No, sir, other than—
“Q —to see where the money was going ?
“A No, sir, other than casually looking at a check, while I was signing it, maybe, sometime.
“Q And did you ever bother to see whether any papers were executed to support these disbursements, the blank checks that you were signing?
“A No, sir; Mr. Bridges handled all the paper work, the legal documents, the processing of all investments.
“Q You never did bother to check on that?
“A No, sir. * * *
“Q Did you see any of the mortgage loan papers in the office there, supporting those purported mortgage loans, for the year 1959 for Southern Industrial ?
“A No, sir. As I said, Mr. Bridges handled the investments and all the necessary legal documents.
* ⅝ * * ⅜
“Q Did you attempt to make an investigation whatever of the financial affairs or bookkeeping of Southern Industrial Life Insurance Company while you were the secretary-treasurer and principal bonded officer of the company?
“A No, sir.
“Q Did you exercise any care whatever in seeing that the money that was disbursed went for authorized investment purposes under the Insurance Code?
“A I only made disbursements when I was instructed to by Mr. Bridges. As far as checking on any of those disbursements, I did not.
“Q Well, did you exercise any degree of care or responsibility with reference to determining whether the disbursements were for authorized purposes and were proper?
“A No, sir; since Mr. Bridges handled that, he took care of it.
“Q Did you ever make any attempt to recapture any of the money that went out of the company on these blank checks which you said you signed, where it went for purposes other than the insurance company, Southern Industrial ?
“A Did I personally make any attempt to recover?
Yes. a
No. <
Q Did you ask anybody in the company or any of the officers or directors to make any attempt?
“A No, sir.
“Q Did you ever call to the attention of any of the officers or directors of Southern Industrial Life Insurance Company any irregularities, or the fact that you were signing all the checks in blank ?
“A No, sir, I was not aware of any irregularities, either in signing checks in blank, or in anything else.”

Part of Mr. Huffman’s duties was to . check premium receipts and to pay claims.

The record is undisputed that as a direct result of the looseness with which Mr. Huffman handled the funds of the Company that W. L. Bridges, Jr. was allowed to withdraw $277,500.00 of such funds for which the Company received nothing of value, and that this loss was never recouped.

The only excuse which Mr. Huffman offers for the manner in which he conducted the financial affairs of the Company is that he trusted Mr. Bridges who employed . him. Mr. Huffman stated that he was impressed with W. L. Bridges, Jr. because he wore tailored suits, a large diamond ring, drove a Cadillac and boasted of the amount of money he could borrow, and that he had a pleasing personality. Mr. Huffman also believed that Bridges owned the Company and could do with it as he pleased.

Mr. Huffman on February 29, 1960, joined other officers of the Company in filing with the State Board of Insurance a sworn annual statement of the Company for the year 1959 which falsely reported the financial condition of the Company.

There is no evidence that Mr. Huffman received any of the funds of the Company which were unlawfully withdrawn by W. L. Bridges, Jr.

Mr. Huffman was paid a salary of from $500 to $600 per month, one-half being paid by Southern Industrial Life and one-half by another Bridges Company. He was a 1958 graduate of the University of Texas, with a B.B.A. degree.

This case was tried to a jury which found:

1. (a) That in signing checks (totaling $265,000) and making them available to W. L. Bridges, Jr., R. D. Huffman did not commit an act of fraud or dishonesty upon the Company acting either directly and alone, or in connivance with Bridges (b) nor was he thereby guilty of such reckless, willful and wanton disregard for the interests of the Company that his acts were manifestly unfair to the Company and clearly subjected it to the likelihood of loss (c) nor was he thereby guilty of wrongful abstraction of funds of the Company.

2. That the Company did not receive mortgage liens for the proceeds of the aforementioned checks.

3. (a) That the failure to secure such liens was not fraud or dishonesty on the part of R. D. Huffman toward the Company, nor (b) in the failure to secure such liens was R. D. Huffman guilty of such reckless, willful and wanton disregard for the interest of the Company that his acts were manifestly unfair to the Company and clearly subjected it to the likelihood of loss.

4. With respect to other checks totaling $12,500.00 the jury made findings similar to those made regarding the checks totaling $265,000.00.

5. The jury also found that no liens were received for these latter group of checks, but that the failure to secure them was subject to the same findings made with regard to first group of checks and the failure to secure liens therefor.

On this verdict, judgment was rendered that appellants take nothing by their suit.

Appellants in the Court below, in various ways, raised the question, and they present points here to the same effect, that they were entitled to judgment as a matter of law. We agree with appellants, and but for the failure to make Mr. Huffman a party, as the above statute requires, we would render judgment on the bond for appellants.

The bond sued upon, being a statutory bond, carries the obligations of the statute requiring it whether or not such obligations are actually contained in the bond itself. Bonds, Sec. 26, 9 Tex.Jur.2d, p. 438.

This statute, Art. 14.08, and hence the bond given to satisfy it, made R. D. Huffman, who had been theretofore duly appointed, the officer of Southern Industrial “responsible in handling the funds of the corporation.” The conclusion is inescapable that he, R. D. Huffman, did not, himself, handle the funds of the corporation. He surrendered this responsibility to W: L. Bridges, Jr. In so doing he, in our opinion, committed acts of fraud and dishonesty within the meaning, of those words as used in the statute. The resulting pecuniary loss to the Company is undenied.

In construing this bond we liberally construe it to effectuate the purpose for which it is required by statute, the protection of the public interest. Bonds, 9 Tex. Jur.2d, Sec. 25, p. 438.

Judge Simkins, in his work on Contracts and Sales, defines fraud as follows:

“Fraud is an act or concealment involving a breach of legal duty, trust or confidence justly reposed, and from which injury results to another * *

This definition of fraud was quoted approvingly in Russell v. Industrial Transportation Co., 113 Tex. 441, 251 S.W. 1034, 258 S.W. 462, 51 A.L.R. 1.

In 50 Am.Jur., Sec. 335, p. 1126, we find this statement of the law:

“A fidelity bond indemnifying against loss by any act of ‘fraud or dishonesty’ is ordinarily held to extend beyond acts which are criminal; construing the bond most strongly against the insurer, the words are given a broad significance. An act showing want of integrity, a breach of trust, or an abstraction of funds, together with deceit and concealment, may be within the meaning of such a bond. It is not necessary that the employee act for purposes of personal profit.”

, In 45 C.J.S. Insurance § 802, pp. 852-853, the law is stated to be:

“The terms ‘fraud’ and ‘dishonesty’ include any acts which show a want of integrity or a breach of trust.”

In 9 Appleman, Ins. Law and Practice, Sec. 5668, p. 513, the law is similarly stated as follows:

“Liability on a fidelity bond covering fraud or dishonesty is not limited to such losses as result from the criminal acts of the employee, but such words have been construed to have a broader meaning and to include any acts which show a want of integrity or a breach of trust.”
Appellants cite many cases supporting these statements of the law, but further confirmation is not deemed appropriate in view of the failure of appellee to cite any truly countervailing authorities. We quote from its brief:
“We respectfully submit that, as used in the statutory fidelity bond made the basis of this suit, acts of ‘fraud and dishonesty’ on the part of Huffman mean (1) conduct involving moral turpitude or want of integrity, intentionally committed by Huffman with a sense of conscious and willful wrong, or (b) conduct committed by Huffman with such reckless, willful, and wanton disregard for the interests of Southern Industrial that such conduct was manifestly unfair to such company and clearly subjected it to the likelihood of loss. Such meaning of ‘fraud and dishonesty’ is derived from authorities construing both common law and statutory fidelity bonds and from the legislative history of Article 14.08, Texas Insurance Code.”

With respect tó Texas cases and Federal Texas cases it states:

“There is a sparsity of Texas cases involving fraud and dishonesty bonds, and not much definitional help is to be found therein. * * *
The same is true of cases from Texas decided by the United States Court of Appeals for the 5th Circuit, * *

With respect to out of State authorities appellee states:

“There are numerous cases from other jurisdictions involving fidelity bonds, which declare that for an act to be dishonest or fraudulent there must exist an element of moral turpitude or want of integrity on the part of the bonded person.”
Appellee also states:
“For conduct to be dishonest or fraudulent within the meaning of the type of bond made the basis of this suit, it must have been committed with a sense of conscious and willful wrong. This is implicitly recognized in many of the authorities cited and discussed above and is explicitly stated in such authorities as Sade v. National Surety Corp., 203 F.Supp. 680 (D.C., 1962); Foster v. Bowen, 311 Mass. 359, 41 N.E.2d 181 (1942); and Massachusetts Bonding & Ins. Co. v. Raskin [43 Ga. App. 582], 159 S.E. 778 (Georgia Court of Appeals, 1931). The basis for requiring that the bonded person’s conduct be committed with a sense of conscious and willful wrong is twofold. First, from the requirement that to be dishonest or fraudulent the bonded person’s conduct must involve moral turpitude or want of integrity, it follows that covered conduct will have been committed with a sense of conscious and willful wrong. Second, from the use of the terms ‘fraud’ and ‘dishonesty’ together with ‘forgery, theft, embezzlement, wrongful abstraction, and willful misapplication’ in Article 14.08 and the statutory bond sued upon herein, it follows that the coverage contemplated was for conduct committed with a conscious and willful sense of wrongdoing.”

It is our opinion that the conduct of Mr. Huffman falls clearly within the meaning of fraud as defined by the Texas and other authorities which we have cited. In short, we believe Mr. Huffman breached the trust lawfully reposed in him.

Mr. Huffman could not rationally believe that the money entrusted to him was subject to the unrestricted wishes or desires of W. L. Bridges, Jr. He knew that the primary income of an insurance company was from premiums on policies issued by it. He knew this because he processed the premiums of this company as they were received. Mr. Huffman also knew that this premium money was used to pay claims. He knew this because he paid claims for this company. Mr. Huffman knew that the State, the public, was interested in the monetary matters of Southern Industrial. He knew this because he made a sworn statement, albeit a false statement, to the State Board of Insurance concerning its financial condition. Hence, Mr. Huffman knew, as any person of average intelligence would know, that it was legally and morally wrong for him to forsake his trust. These authorities so hold:

“If a trustee enters into any arrangement with reference to the trust funds which surrenders or limits his control over them, he is guarantor of the fund, irrespective of his motives, or whether his surrender of control was the cause of the loss.” McCollister v. Bishop, 78 Minn. 228, 80 N.W. 1118.

As in case of an administrator, in whom confidence is reposed, his trust duty required him

“ * * * ‘to take exclusive charge of the personal property * * * and to bring to its administration his own personal attention and judgment. He has no right to allow others to control it * * *. If he does, he exposes it to unnecessary hazards and subjects it to the disposition of persons in whom the officer of the law has reposed no confidence.’ * * * such an arrangement is contrary to public policy, * * Wood’s Estate & Guardianship, 159 Cal. 466, 114 P. 992, 994, 36 L.R.A.,N.S., 252.
“If a person takes upon himself the management of property for the benefit of another, he has no right to impose that duty on others, and if he (delegates discretionary powers with reference to the control and management of the trust property he becomes a guarantor) and is responsible to the cestui que trust, to whom he owes the duty. Therefore, if a trustee confides his duties or the trust fund to the care of a stranger (or to a trust company,) or to his attorney,- or even to his co-trustees or coexecutor, he will be personally responsible.” Republic Na"tional Bank & Trust Co. v. Bruce, 130 Tex. 126, 105 S.W.2d 882.

We are also of the opinion that the •conduct of Mr. Huffman falls within the •definitions of fraud and dishonesty as ap-pellee would have such terms defined.

In so far as Southern Industrial was •concerned, W. L. Bridges, Jr. abstracted $277,500 belonging to it. Mr. Huffman watched him do it. He posted the very •checks declared on which showed their diversion to the private account of W. L. Bridges, Jr. He did not close his eyes •or turn his back. He facilitated its execution. He covered up its perpetration. This was willful, intentional and constituted moral turpitude.

Appellee has filed six cross-points which we will now consider.

Appellee alleged that when this suit was filed all policies of insurance of Southern Industrial, in force, had been Teinsured with Southern Fidelity Life Insurance Company; that all creditors and •claimants had or could be satisfied without recovery of the amount here sued for; lienee, the Receiver had no authority to maintain or prosecute this suit. Appellee stood ready to offer proof of these allegations.

Appellee contends that under Sec. 9(h), Art. 21.28, V.A.C.S., and Guardian Consumer Finance Corp. v. Langdeau, 329 S.W. .2d 926, Austin Civil Appeals, the affairs •of Southern Industrial should have been surrendered to Southern Fidelity.

The case cited is not in point. There ;a stock company was being liquidated and .Sec. 9(a), Art. 21.28, was applicable.

Sec. 9(b), Art. 21.28, provides:

“(b) Excess Assets—Other Companies. After the receiver shall have made provision for unclaimed dividends and all of the liabilities of any insurer •other than a stock insurance company, ihe shall dispose of any remaining assets as directed by the receivership court.”

The re-insurance contract between the Receiver-Liquidator, Langdeau, and Southern Fidelity Life Insurance Company expressly provided that the claim upon which this suit is based, (unadmitted asset) should be reserved and prosecuted by Mr. Lang-deau, in his official capacities. This contract was approved by the receivership court. Hence, Mr. Langdeau, in the prosecution of this suit is acting literally within the provisions of Sec. 9(b), Art. 21.28. Appellees’ first cross-point is overruled.

Appellees’ fifth and sixth cross-points are that appellants’ failure to file proof of loss within the time prescribed in the fidelity bond sued on precludes recovery.

This being a suit upon a statutory bond, and the statutes requiring the bond containing no limitation of time for the filing of a claim, it is our opinion that this provision of the bond being more onerous on appellants than authorized by the statutes, that such provision is unenforceable. Bonds, 8 Am.Jur., Sec. 26, p. 717; United States Fidelity Co. v. Poetker, 180 Ind. 255, 102 N.E. 372, L.R.A.1917B, 984; Western Cas. & Guaranty Ins. Co. v. Board of Com’rs, 60 Old. 140, 159 P. 655, L.R.A. 1917B, 977.

The remaining points relate to the absence of Mr. Huffman as a party. As indicated, we sustain these points. Appellants contend that the statute, above quoted, is, in this respect directory only. From a jurisdictional point of view, we would probably agree. Where the point, as here, is raised by the insurer, we believe that the statute should be followed, unless some legal reason be shown for not making the principal a party.

The judgment of the Trial Court is reversed and this cause is remanded with instructions to abate this cause until Mr. R. D. Huffman is made a party or legal excuse for not doing so is established.

Reversed and remanded with instructions.


author: BARROW, Justice.

text:
    Louis F. LABBE et al., Appellants, v. F. William CARR, Appellee.
    No. 14135.
    Court of Civil Appeals of Texas. San Antonio.
    June 26, 1963.
    Rehearing Denied July 24,1963.

      Sidney P. Chandler, Corpus Christi, for appellants.
    Head & James, Corpus Christi, for ap-pellee.
   BARROW, Justice.

This is an appeal from a summary judgment which permanently enjoined appellants, the Labbe Family, from interfering with appellee’s possession and operation of an oil and gas lease, and further provided that appellants take nothing by their cross-action against appellee. On a prior appeal we affirmed the temporary injunction granted Carr by the trial court. See 352 S.W.2d 860.

The Labbe Family as leasing agents for the State, of land within the Texas Relinquishment Act, Arts. 5367-5371, Vernon’s Ann.Rev.Civ.St, executed the lease which was subsequently assigned to Carr, and upon which is located a producing well. After the temporary injunction was affirmed, the Labbe Family filed a cross-action against Carr in which they assert three counts: (1) They allege that on April 11, 1961, Carr voluntarily abandoned and surrendered the lease and the producing well to them, and they operated it from April 11, 1961, until August 14, 1961. In this count they pray for possession and exclusive right of operation of the lease. (2) They allege that, after they took over operation of the well, it was necessary to expend from $900 to $1,000 for repairs to the machinery and maintenance of the well. They pray for this sum and for foreclosure of their mechanic’s and materialman’s lien upon the well and machinery. (3) They allege that Carr failed to develop the lease as an ordinarily prudent operator and that they thereby were not paid a production payment of $6,000, which they should have received under the terms of an assignment of the lease from the original lessee to Carr.

The transcript does not show that Carr filed an answer to this cross-action, although his motion for summary judgment referred to a supplemental petition in answer to the cross-action. His motion for summary judgment is unsworn and is based upon the pleadings, the prior opinion of this Court, an affidavit of his production superintendent, and an unsworn letter from the Duval County Clerk. The affidavit of Carr’s production superintendent stated that no itemized claim was presented by the Labbe Family after April 11, 1961. The letter from the County Clerk advised that no itemized mechanic’s or materialman’s lien was filed in the Duval County records by the Labbe Family. In opposition to the summary judgment, the Labbe Family adopted the statement of facts of the hearing on temporary injunction, which was filed in connection with the prior appeal, and urged that genuine issues of material facts were raised in the unanswered cross-action.

Carr urges that our prior opinion makes final disposition of all fact issues on the question of possession which is a necessary element to the Labbe Family’s claim of abandonment. It is seen, however, that the only issue before us on that appeal was whether the trial court abused its discretion in holding that the last peaceable possession of the lease was that of Carr and that this was the status quo to be maintained pending trial on the merits. We held that the trial court did not abuse its discretion and set forth evidence to support its implied finding. There was evidence to the contrary. Emil Labbe testified that the well servicing company employed by Carr to look after the well after Labbe quit did not begin its work until August 6, 1961; Labbe testified that Carr refused to pay for repairs to the well pump incurred in April, 1961. In addition, the record made on the hearing- of temporary injunction reflects that Carr’s attorney recognized that it was not proper to go into the issue of abandonment at this hearing. In our prior opinion, we said: “On final trial, there may be issues about Carr’s abandonment of the oil lease.”

It is well settled that the granting or refusing of a temporary injunction is subject to a very different character of appellate review from that of a permanent injunction. The purpose of the issuance of a temporary injunction is to preserve the status quo in regard to the matter in controversy or prevent irreparable injury or damage to applicant, pending final determination of the case on its merits. Ordinarily, it is not a substitute for, nor does it serve the same purpose as the hearing on the merits. Southwest Weather Research, Inc. v. Jones, 160 Tex. 104, 327 S.W.2d 417; West Texas Gulf Pipe Line Co. v. Hardin County, 159 Tex. 374, 321 S.W.2d 576; Texas Foundries v. International Moulders & Foundry Workers’ Union, 151 Tex. 239, 248 S.W.2d 460. We, therefore, hold that the fact issues determined at the hearing for temporary injunction do not preclude a hearing on the merits in this case, and the trial court erred in summarily granting the permanent injunction.

Appellee urges that the Labbe Family does not have a judicial interest or standing under the Texas Relinquishment Act to assert their cross-action for abandonment. It is our opinion that this point must be overruled, when the allegations in the cross-action are examined in the light required by our summary judgment practice. To uphold Carr’s summary judgment, granted solely on the pleadings, it is necessary that we take as true every allegation contained in the cross-action. Hatten v. Mohr Chevrolet Co., 366 S.W.2d 945; McDonald, Texas Civil Practice, § 17.26.3(a). All doubts as to the existence of a genuine issue of material fact must be resolved' against the moving party, and the opposing party is entitled to the benefit of every reasonable inference which can properly be drawn in his favor. Womack v. Allstate Ins. Co., 156 Tex. 467, 296 S.W.2d 233;, Gulbenkian v. Penn, 151 Tex. 412, 252 S.W. 2d 929.

If there was no abandonment or surrender of the lease by Carr to the Labbe Family, there is a genuine issue of material fact as to the amount owed by him to the Labbe Family for the expense of operating the well from April 1, 1961, to August 16, 1961. It is therefore our opinion that the trial court erred in granting Carr a take-nothing judgment on the Labbe Family’s cross-action.

The judgment of the trial court is reversed and the cause remanded.

On Motion for Rehearing.

The land and lease involved are subject to the Texas Relinquishment Act. It is seen, however, that the Labbe Family’s cross-action does not challenge the validity of the lease from the State nor the rights of the State as lessor, but says that the lease has been abandoned or surrendered to appellants by appellee. When these-pleadings are tested in the light required! under summary judgment practice, we cannot say that appellants have no cause of action.

Appellee urges that we should set forth the issues to be tried upon the trial-on the merits in order to simplify that trial. We do not feel that this Court is in a position to do so at this time. Appellee has never filed an answer to the cross-action and we can not anticipate the defenses that will be urged to the cross-action. Furr ther, we can not anticipate the evidence that will be developed during a full hearing.

The motion for rehearing is overruled.


text:
    The STATE of Texas et al., Appellants, v. CROWN CENTRAL PETROLEUM CORPORATION et al., Appellees.
    No. Illll.
    Court of Civil Appeals of Texas. Austin.
    June 26, 1963.
    For majority opinion see 369 S.W.2d 458.
   HUGHES, Justice.

In so far as the majority holds that the State has no cause of action based on failure to comply with Railroad Commission Special Order No. 7-47,648, until its validity has been finally determined, I agree. In so far as the majority holds that the State cannot sue for appropriate relief based on acts of discrimination not the subject matter of the above Special Order, I disagree. The Court states, as to the latter holding: “The Commission has exclusive original jurisdiction to consider complaints of discrimination by common-carrier purchasers under Article 6049a [Vernon’s Ann.Civ.St] and the appropriate Sections thereunder.” Cited to support this holding are Agey v. American Liberty Pipeline Co., 141 Tex. 379, 172 S.W.2d '972, Austin Court of Civil Appeals opinion, 167 S.W.2d 580; Deep South Oil Company of Texas v. Texas Gas Corporation, 328 S.W.2d 897, Beaumont Civil Appeals, writ ref., n. r. e.

Neither the State nor the Attorney General nor any County or District Attorney were parties to either of those cases. All that Agey held was that a private individual could not bring suit for himself to recover penalties recoverable under Sec. 11, Art. 6049a, for alleged discrimination by the Pipe Line in refusing to buy his oil the Court holding that only the Attorney General or a County or District Attorney possessed such authority. In the course of its opinion the Court stated:

“The Attorney General is the chief law officer of the State, and it is incumbent upon him to institute in the proper courts proceedings to enforce or protect any right of the public that is violated. Section 22 of Article 4 of the State Constitution, Vernon’s Ann. St.; 5 Tex.Jur., p. 373, § 5. He has the right to investigate the facts and exercise his judgment and discretion regarding the filing of a suit. 5 Tex. Jur., p. 380, § 8.”

With regard to this case appellees say: “Appellants seek to avoid the plain holdings of American Liberty Pipe Line Co. v. Agey, 167 S.W.2d 580 (Aus.Civ.App., 1942, aff’d 141 Tex. 379, 172 S.W.2d 972), that ‘Section 8, Article 6049a, which required common purchasers to purchase “without discrimination in favor of one producer or person as against another in the same field, and without unjust or unreasonable discrimination as between fields” also provided, “the question of justness or reasonableness to be determined by the Railroad Commission.” ’ ”

This quotation from the Court of Civil Appeals’ opinion, this Court, is a correct statement of the statutory provisions to which it refers. Such opinion does not in any manner resolve the question before us. It is to be noted that this Court in that case indicated that Agey’s remedies were not restricted to those available through appeal to the Commission when it said: “In so far as Agey’s rights under the statute may have been infringed, he had ample protection through the Commission and by suit for damages and injunction in the courts.” Concededly this language was dictum, but it helps dispel the notion that Agey is authority for appellees here.

Deep South was a declaratory judgment suit in which the Court held:

“As this statutory regulation provides in detail the remedies for discrimination where none existed before, Thompson v. Consolidated Gas Utilities Corp., 300 U.S. 55, 57 S.Ct. 364, 371, 81 L.Ed. 510, these remedies are exclusive. Vance v. Southern Kansas R. Co., Tex.Civ.App., 152 S.W. 743; Mingus v. Wadley, 115 Tex. 551, 285 S.W. 1084. We therefore hold that damages may not he recovered in this action for any discrimination that may have existed or now does so, but appellant’s remedy therefor must he through the provisions of Art. 6049a and related articles of our conservation statutes.”

Two questions were presented to the Supreme Court in this case by Deep South and we quote from its application for writ of error:

“(1) the basis upon which a common purchaser must prorate its purchases of gas in a given field in accordance with Article 6049a, V.A.T.S., and (2) the remedies available to a gas producer which has been discriminated against by the common purchaser in violation of said statute.”

It is obvious that the scope of authority of the Attorney General was not before the courts in Deep South.

Sec. 22, Art. 4, Texas Constitution, provides in part:

“The Attorney General * * * shall * * * from time to time, in the name of the State, take such action in the courts as may be proper and necessary to prevent any private corporation from exercising any power * * * not authorized by law.”

Appellees here are private corporations. The Attorney General has charged them with the commission of acts which are not authorized by law. He has brought a suit which only he has the authority to bring. If the statutes in question interfere with this constitutional power of the Attorney General, then they must yield. I am not satisfied that they should be so construed.

Arts. 6045 and 6048, Vol. 16B, V.A.C., defines and prohibits discrimination in the transportation of crude petroleum.

Art. 6049a, id., regulates storage tanks for hire and pipelines as public utilities in the storing and transportation of crude petroleum. The following portions of such Article are relied upon by appellees as vesting the Commission with exclusive original jurisdiction of all matters involved in this, suit, and I copy them as shown in their brief:

“Section 4 provides:
“ ‘The Railroad Commission of Texas shall establish and enforce rules and regulations governing the character of facilities to be furnished by such utilities * * * and it shall also, exercise such power upon petition of any person showing a substantial interest in the subject matter thereof.’
“Section 6 provides that every common carrier of crude petroleum shall file monthly reports with the Railroad Commission concerning its business during the preceding month.
“Section 6a provides:
“ ‘The Commission shall establish and promulgate rates of charges and regulations for gathering, transporting, loading and delivering crude petroleum by such common carriers in this State * * * and prescribe and enforce
rules and regulations for the government and control of such common carriers in respect to their pipeline and receiving, transferring and loading facilities. * * * ’
“Section 7 provides that the Commission may, after notice and hearing upon complaint by a party at interest, or upon its own initiative without complaint, require common carriers to extend or enlarge their pipelines, ‘provided such extension or enlargement shall he found to be reasonable and required in the public interest and that the expense involved will not impair the ability of such common carrier * * * to perform its duty to the public.’
“Section 8 provides:
“ ‘ * * * (that a common purchaser) shall purchase oil offered it for purchase without discrimination in favor of one producer or person as against another in the same field and without unjust or unreasonable discrimination as between fields * * * ; the question of justice or reasonableness to be determined by the Railroad Commission. * * * ’
“Section 8b provides:
“ ‘It shall be the duty of the Railroad Commission of Texas to see that the provisions of this Act are fully complied with, and it shall have the power, after notice and hearing, to make rules, regulations and orders, defining the distance that extensions or gathering lines shall be made to all oil or gas wells; and such other rules, regulations or orders as may be necessary to carry out the provisions of this Act, and to prevent discrimination in purchases.’
“Section 9 provides:
“ ‘The Railroad Commission of Texas shall have authority to make rules and regulations for the enforcement of the provisions of this Act.’
“Section 10 provides:
“ ‘Any person * * * or the Attorney General of Texas on behalf of the State may institute proceedings before the Railroad Commission, or apply for a hearing before said Commission upon any question relating to the enforcement of this Act, and jurisdiction is hereby conferred upon said Commission to hear and determine the same after notice provided by Article 6038, * *
“Section 11 provides:
“ ‘For the violation of any provision of this Act, or for the violation of any valid rule or regulation promulgated hereunder or any order passed by the Railroad Commission in pursuance of any such provision, rule or regulation, such person, association of persons, or corporation shall be subject to a penalty of not less than One Hundred Dollars ($100.00) nor more than One Thousand Dollars ($1000.00) for each offense recoverable in the name of the State in any District Court in Travis County, Texas, and each day of such violation shall constitute a separate offense. One half of such penalty may be recovered by and for the use of any person, association of persons or corporation against whom there shall have been an unlawful discrimination as herein defined, such suit to be brought in the name of and for the use of the party or parties aggrieved.’
“Section 12 provides that any person aggrieved by any order of the Railroad Commission issued under the Act may have such order reviewed in the manner prescribed by Article 6453.”

I also direct attention to and copy Art. 6047, id.:

“Art. 6047. Penalty
“Any common carrier as herein defined who shall violate any provision of this law, or who shall fail to perform any duty herein imposed, or any valid order of the Commission when not stayed or suspended by order of court, shall be subject to a penalty of not less than one hundred nor more than one thousand dollars for each offense, recoverable in the name of the State. Such penalty may also be recovered by and for the use of any person, corporation or association of persons against whom there shall have been an unlawful discrimination as (herein defined; such suit to be brought in the name of and for the use of the party aggrieved.”

It is to he noted that Sec. 10, in regard to the Attorney General’s authority, is permissive only.

It is also to be noted that Sec. 8, the ■question of “justice and reasonableness” to be determined by the Commission refers 'and applies only to “discrimination as between fields.” In this suit the State charges •discrimination in favor of one person •against another “in the same field.” This type of discrimination is not, by the statute, relegated to the Commission for the purpose of determining its justness or reasonableness.

Section 11, Art. 6049a and Art. 6047 both provide for the institution of suits by the State, for penalties for violation of the law or for violation of orders of the 'Commission. The Commission cannot institute this suit in its own behalf. It cannot supplant, nor does it here seek to supplant, the constitutional or statutory duties •of the State’s attorneys.

Construing these statutes reasonably and with effort to sustain their constitutionality, it is my judgment that they do not impinge upon the authority of the State and its attorneys to bring suit for violation of the statutes here involved. Resort to the Railroad Commission first would accomplish nothing. The Commission cannot try this case. If it entered an order with respect to statutory violations by appellees this order would be subject to appeal and in the meantime the penalty statutes would be in a state of repose. This construction and enforcement of these statutes would thwart their purpose and redound to the benefit of those who violate them.

I quote appellees’ response to the claim of constitutional authority made by the Attorney General:

“Section 22 of Article 4 of the Texas Constitution authorizes the Attorney General to 'especially inquire into the charter rights of all private corporations, and from time to time in the name of the State, take such action in the courts as may be proper and necessary to prevent any private corporation from exercising any power * * * not authorized by law. He shall, whenever sufficient cause exists, seek a judicial forfeiture of such charters. * * * ’ Section 22 of Article 4 is totally irrelevant to this suit. Here, the Attorney General has not brought a quo warranto action against appellees. Rather, he has brought an action for penalties and injunction under Article 6049a, Section 11 and Section lie, as this Court recently stated in its Opinion on the venue facet of this case. Duffy v. Crown Central Petroleum Corporation, 366 S.W.2d 956 (Aus.Civ.App., 1963, no writ history) :
“ ‘Here we have a claim for alleged discrimination under Section lie, Article 6049a for penalties being sought by the Attorney General under a penalty statute which must be strictly construed.’
“If the Attorney General were prosecuting a quo warranto action, there would be merit in his contention that he could bring such action in the first instance without the Railroad Commission’s having considered the matter. But he is not bringing a quo warranto action. He has brought an action asserting discrimination by a common purchaser-common carrier pipeline for penalties and injunction under the Common Purchaser Act. These statutes quite plainly state that the question of whether or not a common purchaser-common carrier pipeline is discriminating against producers is within the primary jurisdiction of the Railroad Commission.”

I cannot subscribe to this narrow construction of the Constitution. I believe that this provision of the Constitution empowers the Attorney General to do much more than to bring suits to forfeit the charters of private corporations. I believe it authorizes him to bring this suit which, the Supreme Court has said, that only he or a County or District Attorney may bring. If any statute interferes with this authority, it must give way.

I respectfully dissent from the majority opinion which does not mention, and, of course, does not explain, the Constitutional provision upon which the Attorney General relies as giving him the authority to maintain this suit.

      . Resort to administrative remedy where such remedy would be of no value is generally held to excuse resort thereto. 2 Am.jur.2d p. 441.