author: PER CURIAM.

text:
    TEXAS LIQUOR CONTROL BOARD et al., Relators, v. Honorable Herman JONES, Judge, Respondent.
    No. 11228.
    Court of Civil Appeals of Texas. Austin.
    April 1, 1964.
    Rehearings Denied April 29, 1964, May 20, 1964.
    • Waggoner Carr, Atty.- Gen., Howard M. Fender and Brady S. Coleman, Asst. Attys. Gen., Clark, Thomas, Harris, Denius & Winters, Mary Joe Carroll, Austin, for relators.
    R. Dean Moorhead, Austin, for respondent.
   PER CURIAM.

This is an original proceeding brought in this Court by the Texas Liquor Control Board, Coke Stevenson, Jr., Administrator of the Texas Liquor Control Act, and Waggoner Carr, Attorney General of Texas, in their official capacities, joined by Harry J. Feldman and Charles B. Feldman, Intervenors, in Consolidated Cause No. 132,400, hereinafter called relators, complaining of the Honorable Herman Jones, Judge of the 53rd District Court of Travis County, Texas and the other respondents, who were plaintiffs in Consolidated Cause No. 132,400 in the 53rd District Court of Travis County, Texas. Relators ask that this Court in the exercise of its original jurisdiction, issue a writ of prohibition and all other necessary and incidental writs prohibiting and restraining the respondents from, enforcing a purported extension of a temporary injunction which was issued after a final hearing on the merits and prior to the entry of final judgment on the merits granting a permanent injunction in effect substantially identical with the purported extension of the previously issued temporary injunctions, which by their own terms expired upon the final disposition of tire cause on the merits.

The pertinent parts of relators’ petition to this Court are as follows:

“Separate petitions were filed in the 53rd District Court of Travis County, Texas, by Respondents, each of which sought declaratory judgment to the effect that House Bill 782 (Acts 1963, 58th Leg., Ch. 108, p. 196, codified as Sub-Section 7(b) of Article 666-15, V.A.P.C., the Texas Liquor Control Act), is unconstitutional and temporary injunction restraining and enjoining the Texas Liquor Control Board, Coke Stevenson, Jr., Administrator of the Texas Liquor Control Act, and their agents, servants, employees, and attorneys from enforcing or attempting to enforce the provisions of that Act against the plaintiffs and each of which further prayed that ‘upon trial of this cause on its merits, such temporary injunction should be made a permanent injunction.’
“After a combined hearing on the above noted causes, beginning on September 25, 1963, the trial court in each cause issued an order granting a temporary injunction, each of which specified that said injunction should remain in effect ‘pending final disposition of this case on its merits.’
“At the hearing on the merits the five separate causes were formally consolidated under Cause No. 132,400.
“The hearing on the merits in the consolidated cause began on November 7, 1963, and continued from day to day until November 14, 1963, at which time all parties closed.
“On or before December 9, 1963, all parties filed with the trial court written briefs upon the legal questions involved.
“Oral argument of the case was set for and held on December 12, 1963, at which time all parties were represented by counsel.
“The trial court announced his decision by letter dated December 17, 1963, addressed to all counsel of record.
“On or about February 6, 1964, the Plaintiff Ammex filed an instrument designated ‘Application for Settlement of Form of Final Judgment and Extension of Temporary Injunction.’
“On March 6, 1964, hearing on the above noted motion was held the record of which is submitted.
“After the hearing on the above noted motion was held, other Plaintiffs in consolidated Cause No. 132,400 adopted the Ammex pleading by an instrument filed on March 9, 1964.
“Final judgment in consolidated Cause No.. 132,400, styled Ammex Warehouse Company, Inc., et al v. Texas Liquor Control Board, et al was rendered and entered by the 53rd Judicial District Court of Travis County, Texas, on March 9, 1964, granting to the Plaintiffs a permanent injunction.
“Contemporaneously with the signing of said final judgment and the granting of said permanent injunction, notice of appeal to this Honorable Court was given by the Texas Liquor Control Board and its members and administrator and by the Intervenors herein.
“On March 9, 1964, the same day on which final judgment was entered, the trial court also entered an instrument designated ‘Order Modifying and Extending Temporary Injunction.’
“Comparison of the final judgment with the so-called order modifying and extending temporary injunction reveals that the restraining provisions are substantially identical in each instrument, the major difference being that by the final judgment Defendants are ‘permanently enjoined,’ while the invalid extension of the temporary injunction purports to restrain and enjoin Defendants ‘pending final determination of this consolidated cause on the merits by the highest appellate court to which the judgment on the merits may be appealed by any of the parties.’ The so-called order modifying and extending the temporary injunction further specifies that ‘this temporary injunction shall not merge with any injunctive relief which might be granted by the court in the judgment which will be hereafter entered on the merits of this case, but shall at all times, until final determination of this cause by the court of last resort, remain separate and distinct therefrom’ and that appeal ‘shall not have the effect of suspending such injunction.’ The originally issued temporary injunctions by their own terms were effective only until ‘final disposition of this case on the merits,’ and months before the ‘extending’ order on the temporary injunction was entered the trial court had announced the nature of the judgment to be entered on the merits.
“After final hearing on the merits, the trial court on the same day and in the same cause has entered two judgments : one granting a permanent injunction and the other granting a temporary injunction. The entry of two final judgments in the same cause, on the same day, is in direct violation of Rule 301, Texas Rules of Civil Procedure, which specified that ‘only one final judgment shall be rendered in any cause except where it is otherwise specially provided by law.’ The so-called order modifying and extending the temporary injuction is, therefore, void.
“The order modifying and extending the temporary injunction is further void in that it is in defiance of the State’s right by appeal to supersede the final judgment of the trial court.
“The order modifying and extending the temporary injunction is further void in that it attempts to prevent su-persedeas (a proceeding at law) in violation of Article 4645, V.A.C.S., which specifies that ‘no injunction shall be granted to stay any judgment or proceeding at law, except so much of the recovery or cause of action as complainant shall in his petition show himself equitably entitled to he relieved against and so much as will cover the costs.’
“The notice of appeal given by the Texas Liquor Control Board, et al had the effect of superseding the final judgment of the 53rd District Court of Travis County, Texas, in Cause No. 132,400, and vesting in this Honorable Court exclusive jurisdiction over all the subject matter and all of the issues and relief requested in said Cause No. 132,400, and the attempt to change and extend the duration of the previously issued temporary injunctions has the effect of interfering with the proper jurisdiction and with the proper exercise of the jurisdiction of this Honorable Court and has the effect of preventing lawful supersedeas by the Texas Liquor Control Board of the final judgment entered by the 53rd District Court and for those reasons is null and void.
“As is shown by the application for settlement of form of final judgment and extension of temporary injunction Respondents were not asking for reformation of the final judgment granting the permanent injunction but instead were asking for a hearing on a temporary injunction after final judgment granting permanent injunction had been announced.
“The basic case here involves federal constitutional questions and may reasonably be expected to be appealed not only to this Honorable Court but also to the Supreme Court of Texas and ultimately to the Supreme Court of the United States. The trial court so recognized and, by the order modifying and extending the temporary injunction, has attempted to force his decision to remain in effect not only during appeal to this Court but during the pendency of any appeal which may be taken by any party. If this Court were to refuse the writ of prohibition here applied for and thus, to recognize the right of the trial court to enter a temporary injunction which could not be superseded and which could be forced to remain in effect through final appeal by any part to the highest possible appellate level, such action would give far greater weight to a temporary injunction than to the permanent injunction. Not only this Court but the Supreme Court of Texas also would be denied of its rightful jurisdiction over the cause.”

The factual averments in this pleading as to the record of proceedings in the Trial Court are not in dispute.

Respondents contend that unless restrained by some court, relators will destroy their businesses pending appeal, notwithstanding the favorable judgment which respondents received in the trial court. That relators are immune from any suit by respondents for damages resulting from the destruction of their businesses, and if the State is not required to file a bond in order to supersede a judgment they have no remedy except by injunction.

We hold that this case is controlled by our holding in Railroad Commission of Texas v. Roberts, Tex.Civ.App., 332 S.W.2d 745.

The effect of notice of appeal by and on behalf of the relators was to supersede the final judgment entered by the court below. Rule 368, Texas Rules of Civil Procedure, Arts. 2276 and 279a, Vernon’s Ann.Civ.St., 3 Tex.Jur.2d, Appeal and Error, 354, p. 612.

In the Roberts case we quoted from Cisco Independent School Dist. v. Dudley, 53 S.W.2d 639, wherein an application was made to the Eastland Court of Civil Appeals to issue a mandatory injunction to compel certain parties to immediately carry out the commands of a District Court judgment, it being alleged that:

“Such relief is sought ‘so that the jurisdiction of this court may be preserved and the subject matter of this suit not destroyed,’ and thus ‘prevent final rendition of judgment in this cause from being a vain and useless thing.’ ”

The judgment referred to was superseded and the court in denying the relief sought stated:

“ * * * the lawmaking power of this state has provided definite ways of appeal ‘from every final judgment of the district court in civil cases,’ and, where the appellant or appellants, as in this case, comply with the statutes, the trial court has no say, discretionary or otherwise, and neither does this court; that is, the effect of the supersedeas bond is ‘to suspend the execution of the judgment,’ and that without let or hinderance from the trial or appellate court.”

We quote further from our opinion in the Roberts case:

“In Wolf v. Young, 275 S.W.2d 741, 743, the San Antonio Court of Civil Appeals, in discussing Article 1823, V.A.C.S., said:
“ ‘Under Article 1823, our jurisdiction to issue an original writ of injunction is limited to the preserving of the jurisdiction of this Court. We have no jurisdiction to issue an original writ to prevent damage to a litigant pending appeal.’
“In view of these authorities, we are convinced that the effect of the temporary restraining order issued on February 8, 1960 was to deny to the Railroad Commission its rights accorded it by the statutes of this State to supersede the judgment of February 3rd and that such rights are the proper subject of protection by this Court as ancillary to the appeal from the final judgment of February 3, 1960, and that under Article 1823 which authorizes this Court to issue writs necessary to protect its jurisdiction that the writ of prohibition for which the relator prays should be awarded.”

Respondents cite our opinion in Victory Truck Line, Inc. v. Railroad Commission, Tex.Civ.App., 207 S.W.2d 210, writ ref., n. r. e., as holding that a temporary injunction may be prolonged beyond the date of final judgment in the cause and in this regard say: “If, as counsel for Relators now argue, it is somehow, in some unexplained way impossible for a temporary injunction to be extended and to have vitality beyond the date of entry of final judgment, how do they explain what happened in Victory Truck Lines, as reflected by the opinion of this Court herein?” Victory was an appeal from -an interlocutory order denying a temporary injunction in which the Trial Court granted to a date certain, and this Court continued in effect a temporary restraining order pending disposition of the appeal in this Court. The opinion does not reflect that a final judgment on the merits had been rendered by the Trial Court before our decision was announced. If such fact had been made known to this Court we undoubtedly would have done what Courts usually take relish in doing and would have dismissed the appeal from the order refusing the temporary injunction as moot. On this point we quote from International Association of Machinists, Local Union No. 1488 v. Federated Association of Accessory Workers, 133 Tex. 624, 130 S.W.2d 282, as follows:

“While the trial court lost jurisdiction of the temporary injunction when the appeal therefrom was duly perfected, it did not lose jurisdiction of the main case then pending in that court. It acted well within its powers in dismissing the cause upon motion of defendants in error. Since the temporary injunction by its terms, and by operation of law as well, could not continue in force after the main case was finally disposed of, the effect of the order of the trial court dismissing the main case was to terminate such injunction. The whole basis upon which it rested was removed and it automatically ceased to exist. The case before this court, that is to say, the temporary injunction case, has therefore become moot. No temporary injunction exists, and it follows that the question of whether it was rightfully issued is but an abstract question of law with which this court will not deal.”

The Victory case is without semblance of authority here. Only a temporary order was there before this Court. There was no supersedeas. The Trial Court made no pretense of impinging upon our jurisdiction. There is no similarity between the two cases.

The holding in Association of Machinists, supra, also completely refutes the attempt of respondents to effectively distinguish this case from Roberts on the ground that there the ancillary injunction was granted after rendition of final judgment while here it was granted before final judgment.

When final judgment was entered in this case the interlocutory injunction previously granted by the Trial Judge ceased to exist by operation of law, a result the Trial Court was powerless to prevent or resist. His attempt to do so is utterly void and of no force and effect. If the interlocutory injunction is still in effect, as Respondents assert, then there is no final judgment. All parties concede that a final judgment has been rendered. A final judgment must dispose of all issues and parties, otherwise it is not a final judgment.

Respondents do cite one case which is inconsistent with our opinion in Roberts, supra, towit: City of Athens v. Gulf States Telephone Company, 374 S.W.2d 757, Tyler Civil Appeals, no writ history. In that case the Court of Civil Appeals granted an injunction to permit the enforcement of a final judgment enjoining the enforcement of rate ordinances of the City even though such judgment had been superseded by the City. Since the effect of that opinion is to disregard and nullify statutes of this State and is in conflict with our opinion in Roberts and the authorities therein cited and herein, we respectfully decline to follow such decision.

The writ of prohibition as prayed for is granted, however, since we have no doubt that the Honorable Trial Judge will abide by this opinion and our judgment the clerk is directed not to issue a formal writ of prohibition for service.

Writ of Prohibition Granted.

ON MOTIONS FOR REHEARING

Respondents in Cause No. 11,228, other than Judge Jones, in their motion say:

“This Court is not correct in holding that the temporary injunction granted by the trial court ‘ceased to exist by operation of law.’ The Court does not refer to what law it has in mind. It must not be the law of Texas for the Supreme Court of this State has stated the law on that question in Riggins v. Thompson, 96 Tex. 154, 71 S.W. 14 (1902) and in Fort Worth St. Ry. Co. v. Rosedale St. Ry. Co., 68 Tex. 163, 7 S.W. 381 (1887). This Court is ordinarily bound to follow the law as expressed by our Supreme Court and to overlook doing so is error.”

The cases cited limit the decision in Williams v. Pouns, 48 Tex. 141, where the Court held that an injunction in force when a final judgment dissolving it was entered, remained in force while the judgment was suspended by an appeal under a supersedeas bond.

Regarding the rule of this case the Court in Rosedale St. Ry. Co., supra held it inapplicable to temporary restraining orders and stated:

“The rule that an appeal from a final judgment dissolving an injunction will continue it in force in cases in which the only relief sought is an injunction, may often operate harshly, if not oppressively; and we are of the opinion that it ought not to be so extended as to reach cases other than those to which it has been applied in this state.”

In the case here the injunction in force when final judgment was rendered was not dissolved by such final judgment, it was perpetuated by it.

The opinion in Pouns gives utmost and drastic effect to supersedeas; the Trial Court here went to the opposite extreme and denied it any effect. When the final judgment which granted a permanent injunction was superseded, the previous prohibiting decree of the same import by whatever name it may be called, was effaced.

We additionally cite in support of our decision herein the case of Kimbrough v. State, 139 S.W.2d 165, Eastland Civil Appeals. This was an original contempt proceeding in which it appeared that a temporary injunction had been issued by the Trial Court, then on final trial a permanent injunction was issued which was to the same effect as the temporary injunction. An appeal was taken and supersedeas given. The Appellate Court held that there was no contempt since the supersedeas prevented enforcement of the judgment pending appeal. As to the effect of the temporary injunction the Court said:

“But, even if it were contended that this court should entertain the contempt proceeding upon the ground that, under the authorities above mentioned, the superseding of the final judgment leaves in effect the temporary injunction, we are, nevertheless, of the opinion that we are not authorized to do so. If it be considered that there may be circumstances under which the subject matter of a temporary injunction and a permanent injunction awarded by the final judgment in the same case may properly be the same, saving only in the time of operation, still we think in such case the temporary injunction must be considered to have been merged in the permanent injunction. Otherwise, the right given by R.S.1925, Arts. 2270 and 2275, to supersede a judgment from which an appeal is prosecuted may be completely defeated. When a court, by its judgment in a trial upon the merits, decrees the same injunction previously and provisionally existing as a temporary injunction, there remains no function of the temporary injunction not equally as well performed by the permanent injunction. ‘The law is well settled in this state that the purpose of the issuance of a temporary injunction is to maintain the status quo in regard to the matter in controversy, and not to determine the respective rights of the parties under the cause of action asserted or defenses urged.’ * * *
“There was no appeal from the temporary injunction and we have adverted to the law governing same only by way of a reason supporting our conclusion that a temporary injunction of identical nature and effect as the permanent injunction should be held not to so operate as in practical effect to defeat the right of an appealing party to supersede the judgment from which the appeal is prosecuted.”

The contrary opinion of this Court in Ford v. State, Tex.Civ.App., 209 S.W. 490, original proceeding, was discussed and, ir\ our opinion, properly disregarded. The San Antonio Court of Civil Appeals in Ross v. State, ex rel. Shook, 97 S.W.2d 505, original proceedings, refused to follow Ford, saying of it:

“But, even if the decision in that case supports the state’s contention in this case, it is, nevertheless, contrary to the great weight of authority in this state, and has never been followed in any authoritative case that has come to our attention.”

With reference to the immunity of the State and its agencies from the necessity of giving a supersedeas bond in order to supersede a judgment appealed by the State or its agencies we hold, independent of any previous authority, that such right is plainly given by Arts. 2276 and 279a, V.A.T.S. The first Article provides, in part, that “Neither the State * * * nor the head of any department of the State of Texas, prosecuting or defending in any action in their official capacity, shall be required to give bond on any appeal * * * taken by it * * * in any civil case.” Art. 279a provides, in part, that “Neither the State * * * nor any state department, nor the head of any state department * * * shall be required to give any bond incident to any suit filed by any such agency, official * * * for costs of court or for any appeal * * * taken out by it or either of them * * Italics added.

These statutes, in our opinion, plainly provide that the State and its agencies and department heads shall not be required to give any bond on any appeal which they may take. A supersedeas bond is a bond given or which may be given on appeal. It, therefore, need not be given by those to whom the statutes refer.

See in support of our denial of leave to file an application for injunctive relief, City of Groves v. Port Arthur Independent School District, 364 S.W.2d 448, Beaumont Civil Appeals, original proceeding.

The Motions for Rehearing are overruled.

      . Respondents include: Ammex Warehouse Company, Inc.; Vincente Garza, Jr. and Jorge Garza, d/b/a Vir Warehouse Company; Albert Anzaldua d/b/a Andy’s Custom Bonded Warehouse; Francisco C. Gonzalez and Ceasar Salinas, d/b/a G & S Bonded Warehouse; Sam Leland Glass, Sam Glass Pate and Olin Earl Brashear, Jr., partners, d/b/a King Mart Export Company; Alfonso Casso, Raul Casso, Raul Casso, Jr., and Mrs. Alfredo San Martin, partners, d/b/a Border Bonded Warehouse; and Halem Ayoub and Sam Wardy, partners, d/b/a Ayoub & Wardy.


source: Caselaw Access Project

author: MASSEY, Chief Justice.

license: Public Domain

text:
    EMPIRE STEEL CORPORATION OF TEXAS, Appellant, v. OMNI STEEL CORPORATION, Appellee.
    No. 16514.
    Court of Civil Appeals of Texas. Port Worth.
    April 17, 1964.
    Rehearing Denied May 15, 1964.

      Martin, Moore & Tackett, Arthur Lee Moore and Elvin E. Tackett, Fort Worth, for appellant.
    McGown, Godfrey, Logan & Decker, John W. McMackin and Warren W. Ship-man, III, Fort Worth, for appellee.
   MASSEY, Chief Justice.

Important identities to be kept in mind to understand the factual background of this case are: Empire Steel Corporation of Texas, hereinafter termed Empire; Omni International Corporation, .hereinafter termed Omni International; Westland Steel Products Company, Inc., hereinafter termed Westland; and Omni Steel Corporation, hereinafter termed Omni Steel.

Empire is and was at all material times á financially substantial corporation. Its voting shareholders aré Jacob Gachtnan and his two sons, Dan Gachman and Leon Gachman. At all material times Dan Gach-man was the President of Empire. ■

In 1959 Tacob, Dan and Leon Gachman created Westland, a $1,000 corporation for the purpose of” entering into a joint venture with another, or others, for the sale of foreign steel in California. Dan Gach-man'was-at all ;material times the President of Westland. He, Jacob and Leon own the stock in Westland in the same proportion as they own stock in Empire. Leon Gachman is or was Vice President of both corporations. " .

- About the timé Westland was incorporated, Omni Steel was incorporated for $1,000. It was and is a creature o.f Omni International and its officers and shareholders. - It^ was created^_for The mjrpose of enteringTntrra-jomt venture with West-land lorTKe sale of .foreign steel .in California. Essentially, the plan of operation-of-the joint venture called for Omni Steel to keep its products supplied on premises provided by Westland, ready and available for marketing by Westland, which in turn had the duty of such marketing, with a SO-SO division of profits, if any, and a like responsibility for losses, if any.

As applied to the joint venture of the parties, handled by and under contract as made between Omni Steel and Westland, a great deal of money was involved, and property of considerable value was in the hands of Westland with title thereto in Om-ni Steel. Each corporation having been incorporated for $1,000, it is readily understandable that each of these corporations wanted to protect itself and its contractual rights as against the other through some arrangement where, in the event of a claim, the liability of the corporation against which the claim was made would not be a mere $1,000 in respect to its capitalization.

„ The arrangement agreed upon was for ‘Omni International to “guarantee” the ob- ! ligations of its creature corporation, Omni 1 Steel, to Westland, — and for Empire to “guarantee” the obligations of its creature i corporation, Westland, to Omni Steel.

Matters for understanding involve the reciprocal obligations of Omni Steel and Westland under the contract these corporations made with each other, and also involve the reciprocal obligations of Omni International and Empire in the “guarantees” each executed with relation to the responsibility of each for its subsidiary corporation.

We will first endeavor to explain the contract between Omni Steel and West-land, quoting therefrom as might be indicated.

In the contract executed June 16, 1959, Westland agreed to act as the exclusive factor for sale of Omni Steel’s certain products, with Omni Steel agreeing that Westland should be such exclusive factor. Omni Steel agreed to supply and Westland agreed to receive and store the products, establish a sales office and furnish sales, clerical help and advertising as required for the sale thereof. Westland was left free to sell the products at whatever price it desired, except that it should not make any sale resulting in a loss without Omni Steel’s written consent. Westland was permitted to deliver title and possession to purchasers, even on terms of certain credit latitude, and accountability resulting therefrom was prescribed. Proceeds from sales, whether by cash or otherwise, were to be kept separate from the funds, etc., of Westland (as its business might consist apart from the joint venture of the parties) and handling and accounting procedure therefor was prescribed. A definition and explanation of what should be meant by “gross profits” from the joint venture was set forth as follows: “As full and complete compensation for your services as Factor in selling the steel products hereunder, you shall be entitled to receive a quarterly commission equal to fifty percent (50%) of the quarterly gross profits derived from said sales; provided, however, that in the event that a gross loss results from said sales, you shall bear fifty percent (50%) of said loss.” Provision was made for termination of the contract by Omni Steel in the event of default in any of the agreements or conditions thereon on the part of Westland, with right of Omni Steel to enter upon Westland’s premises and take charge of property to which it held title, etc.

In paragraph 19 of the contract it was provided as follows: “Any dispute or controversy between us arising out of or in connection with this agreement shall be determined by arbitration in New York City in accordance with the rules then obtaining of the American Arbitration Association, and judgment upon any award may be entered in any court of competent jurisdiction.”

There was a letter amendment of the agreement, dated June 17, 1959, but its provisions have no effect to be noticed in con-’ nection with this case.

It is evident from the record that correspondence followed the execution of the contract of June 16, 1959, in which the Vice President of Omni International stated his desire for Empire’s guaranty instrument, — and in one instance set out the form suggested for Empire to use, it being indicated that it was the parties’ understanding that Empire’s guaranty would be unconditional. The language set out was: “In consideration of the Guarantee by Omni International Corporation of the performance by Omni Steel Corporation of all terms, provisions and conditions of Letter Contract, dated June 16, 1959, * *

There was considerable delay in obtaining action by Empire. It is obvious from the record that the Gachmans believed Empire’s guaranty should be limited. They also believed there should be some conditions placed upon its liability. In so far as this might be concerned and/or the fact that some conditions actually were provided in the instrument of guaranty, such is immaterial to the questions posed by the appeal. Ultimately, on February 13, 1960, Empire, through its execution and delivery by Dan Gachman, afforded Omni International and Omni Steel a guaranty satisfactory to and accepted by them. There is no question but that Omni International’s acceptance was expressed and complete.

The material portions of the guaranty provided as follows: “In consideration of the Guarantee by Omni International Corporation of the performance by Omni Steel ■Corporation of all terms, provisions and conditions of Letter Contract, dated June 16, 1959, between Westland Steel Products Co., Inc. and Omni Steel Corporation, as amended by Memorandum, dated June 17, 1959, reference to both of which is herein had and made to the same extent and effect as if copied at length herein, Empire Steel Corporation of Texas, a Texas corporation, hereby agrees only as follows:

“1. In the event Westland Steel Products Co., Inc. fails or refuses to pay or cause to be paid to Omni Steel Corporation its share (50%) of the gross losses of the mill depot joint venture operation contemplated and covered by the aforesaid Letter Agreement, * * * Empire Steel Corporation of Texas agrees to pay to Omni Steel Corporation up to, but not more than, Fifty Thousand ($50,000.00) Dollars of such share (50%) of Westland Steel Products Co., Inc. of the gross losses then or at any time so remaining unpaid but otherwise due and payable by Westland Steel Products Co., Inc. to Omni Steel Corporation.”

The joint enterprise failed. Omni Steel recovered such part of its property as it could. Under the contract it had with Westland it resorted to arbitration procedure in the State of New York in order to determine the extent of Westland’s liability under the contract of June 16, 1959, under the provisions of rules of the American Arbitration Association. The liability of Westland to Omni Steel was, under such procedure, established at $61,360.47. The arbitration decree was entered on December 27, 1961. A judgment thereof was entered in a New York court. No part thereof was recoverable or recovered from Westland. Omni Steel made demand for $50,000 of Empire under its guaranty. Empire failed and refused to pay. Omni Steel then entered its suit in the district court of Tarrant County, Texas to recover said amount, plus interest.

Omni Steel moved for partial summary judgment, objective of which was to establish the fact that Westland’s monetary liability to Omni Steel was $61,360.47 dating from December 27, 1961, and, as applied thereto, Empire was obligated to Omni Steel in the sum of $50,000, plus interest thereon from Décember 27, 1961 (if there was legal liability on its part to Omni Steel under the guaranty instrument of February 13, 1960). The trial court granted the partial summary judgment.

The case on existence of Empire’s liability to Omni Steel was begun as a trial before a jury. At the close of the evidence the case was withdrawn from the jury and a judgment was entered in favor of Omni Steel against Empire for $50,000, plus interest from December 27, 1961. From that judgment Empire appealed.

Judgment affirmed.

Empire advanced the Statute of Frauds, as a defense to the liability sought to be imposed, in its plea that there was failure of consideration for its guaranty obligation. In that connection we believe that requirements of the Statute of Frauds were satisfied, and, even without any additional memorandum, etc., signed by Omni International, the guaranty instrument in and of itself (in view of Omni International’s acceptance aforementioned) became fully qualified as a contract wherein Omni International became obligated within the provisions of the Statute of Frauds. The essential ingredient of “mutuality of remedies” was supplied by Omni International’s acceptance. Clegg v. Brannan, 1921, 111 Tex. 367, 234 S.W. 1076; Restatement of the Law, Contracts, § 211, “A Memorandum Signed by Only One Party”; 18 Tex.Dig., “Frauds, Statute of”, Anno. “(Signature of Memorandum) — Sufficiency of signature by one party only, in general”; 26 Tex.Jur.2d, p. 259, “Frauds, Statute of”, § 98, “The Consideration”. The authority last cited primarily relates to real estate transactions where the consideration therefor is itself subject to the Statute of Frauds, but also stands for the proposition (p. 260) that the consideration for a promise to pay another’s debt or to answer for another’s default or miscarriage need not be shown in writing or evidenced by a memorandum, but may be established by parol, in the event such consideration should not itself fall within the provisions of the Statute.

It is to be kept in mind that the consideration in question was a stated one, and that it was required by the Statute of Frauds to qualify as a written obligation of Omni International. We have said that the requirements were fulfilled by acceptance in this instance. Whether this is so is a question of law. 13 Tex.Jur.2d 148, “Contracts”, § 29, “(Sufficiency of acceptance) — Determination of sufficiency of acceptance”. There was here no question of fact for determination by the jury as a prerequisite to the determination as a matter of law by the trial court that there was a sufficiency of acceptance.

Additionally, we find there is written evidence, uncontradicted, of Omni International’s agreement to be bound in respect to the matter of obligation on its part in accordance with the recitation as applied thereto in the guaranty instrument executed by Empire. Therefore, were this a requirement which would be prerequisite to Omni Steel’s establishing legality of consideration in respect to any demonstration that there was a “mutuality of remedies,” in the reciprocal obligations of Omni International and Empire, we hold that ir is established by the record that such requirement was fulfilled.

In our examination of the oral testimony of Dan Gachman, an officer of both Empire and Westland at all material times, endowed with all essential authority in respect to the entire transaction, or to all of the several transactions, — we find nothing contradictory of Omni Steel’s factual evidence making out its prima facie case. Were Gachman’s testimony viewed as contradictory, it would, of necessity, be treated as having been inserted in the record in violation of the Parol Evidence Rule. It is not to be doubted that Omni International’s consideration, stated as the reciprocal guaranty of Omni International, would be a consideration which would be contractual in nature, — a statement creative of some change in legal relations and in particular as creative of a contingent liability on the part of Omni International, —which, when taken into consideration with the written contract between Omni Steel and Westland, clearly appears to have been intended as an all-embracing expression of the transaction. It follows, under the Rule, that proof of further executory consideration was not necessary. Contradictory oral evidence was not admissible to impeach such, expression, and if admitted should not be considered to have any weight. Of such character would be Gachman’s testimony and even when we tentatively view the same as contradictory of Omni Steel’s prima facie case. It therefore would be properly disregarded in any eveitt.

i As applied 'to the case under examination we have at this stage of our inquiry established that there was a valid and binding contractual obligation on the part of Empire under which it owes the duty recited in the guaranty and the contract between Omni Steel and Westland, — unless, /as asserted by another group of contentions, the obligation on its part was ultra vires as applied to the purposes for which it was incorporated, — and, as beyond the scope of its authority, is unenforceable for such reason.

The Texas Business Corporation Act became effective on September 6, 1955. Empire adopted the same, as is by law provided, on September 26,-1957. It was therefore applicable at the time Empire executed the guaranty with which we are here concerned. . Art. 2.04, V'.A-T.S., '“Defense of Ultra Vires”, .provides. in part: “A; Lack of capacity of a corporation shall never be made the basis of any claim or defense at law or in equity.- B. No act of a cor7 poratiom * * * shall be invalid by reason of the fact that such act' * * * was beyond the scope of the purpose or purposes of -the corporation as expressed in its articles of incorporation * * Thereafter, in the body of the section, exceptions are stated, — but as applied to suits against the corporation, other than in certain instances not here applicable, there is no exception.

Empire’s counsel argues that the Legislature did not 'intend that the inhibition of the foregoing sections should-have application to guaranties executed by.. corporations where to do so would be ultra, vires. We do not pass upon the validity of such contention as applied to anyone bringing a suit against such a corporation on its guaranty other than by a third party, i. e., one who is not a shareholder, but rather one who has entered into contractual relationship with the corporation in good faith and pursuant to commercial activity, and who seeks to recover on the corporation’s contractual obligation. As to such a person we hold that the Act inhibits presentation of the defense of ultra vires.

From our discussion it is evident that Empire’s contractual obligation is valid and enforceable against its ultra vires contention. We therefore proceed to the matter of the liability that Omni Steel seeks to-establish.

In connection with the New York arbitration proceeding initiated against Westland by Omni Steel, Empire (as well as Westland) was given notice of every step of the proceedings and that Westland’s share of the losses would be thereby determined. Empire was given an opportunity to defend. It notified Omni Steel that it elected not to defend. We have heretofore -noted that pursuant thereto West-land’s share of the losses -was determined to be $61,360.47. Omni Steel obtained an arbitration award against Westland for that sum. Pursuant- to provision of the joint venture contract a New York judgment was entered upon the award.

As heretofore reported, Omni Steel brought motion in the instant suit for a partial summary judgment by which the coux-t would decree that Empire was bound by the New York determination of West-land’s liability to Omni Steel. Motion was sustained and a decree to such effect was entered. This facet of Omni Steel’s case against Empire was treated as having been determined at the time the trial was begun-before the jury. By points of error on its appeal Empire complains of the propriety of the court’s granting the motion, and also-of the .force and effect thereafter given to-such antecedent action.

The effect of the granting of Omni Steel’s motion for summary judgment was to relieve it from any burden of proving that Westland had failed to make good losses under the joint venture contract and the fact and amount of such loss as it owed to Omni Steel. Empire contends that it was Omni Steel’s burden, never discharged, .to make proof that the loss which Empire guaranteed was actually sustained.

It is Empire’s contention that since its guaranty was limited to $50,000, that since it did not sign the joint venture of Omni Steel and Westland and was not a party thereto, and that since it furthermore agreed “only” to be liable for a proportion of the gross losses contemplated and covered by the contract of Westland and Omni Steel (remaining unpaid but otherwise due and payable by Westland to Omni Steel), it did not adopt nor become bound and obligated to abide by the result of the arbitration proceedings in New York which, con-cededly, was binding upon Westland. Stated another way, Empire claims that in the establishment of the amount of its monetary liability Omni Steel necessarily carried the burden of introducing original proof of the gross losses for which Westland was liable to Omni Steel under the contract of those parties.

Empire ‘correctly states a rule of law, citing language from North Texas Nat. Bank v. Thompson, 1929 (Tex.Civ.App., Dallas), 23 S.W.2d 494, 498, affirmed by Commission of Appeals, 37 S.W.2d 735, as follows: * ' * the-- rule of strictissimi juris cannot- mean more than this, that where doubt and uncertainty exists as to the meaning of a contract, rendering it susceptible to two interpretations', one favorable to the surety or guarantor the other unfavorable, the former interpretation will be adopted.” ■ '

Empire advances the theory that even upon an assumption that the New York proceedings under arbitration would be binding upon a surety as to the issues litigated therein, they would not be binding upon a guarantor, and that since Empiré was a guarantor rather than a surety it would not be bound. Empire suggests distinctions between a surety and a guarantor, the primary one being the comment in some decisions that a surety is liable on the same contract as the principal obligor, while a guarantor has made a separate contract.

We are of the opinion that the rule governing the effect of a judgment against the principal obligor is applicable in both surety and guaranty cases. There is no distinction to be made between the liability of one properly denominated a surety and one properly denominated a guarantor where the material question is the conclusive' effect of a judgment against a principal debtor. Williston on Contracts, Rev.Ed., Vol. 4, pp. 3481, 3484—3485, “Contracts of Suretyship”, § 1211, “Suretyship defined”; Corbin on Contracts, Vol. 6A, p. 670, § 1495, “Common Types of Aleatory Commercial Bargains—Suretyship”, footnote 57. "

We believe it must be presumed that by making 'specific reference in the guaranty instrument to Westland’s losses under the contract, which contract contained the arbitration provisions, Empire intended to and did obligate itself that the losses be determined in the manner therein stated. Omni Steel cites language from Walton v. Washington County Hospital Ass’n, 1940 (Ct. of App., Maryland), 13 A.2d 627, 629, as follows: *. * *‘ In thé present case the parties considered the eventuality of foreclosure; it .is," therefore, logical to presume that they intended to allow the result of foreclosure to determine the amount of liability.” . .

■ Furthermore, we believe that .equity ■ as well as law has application to the instant question. The- principal Officers and the shareholders of the corporation whose debt was .guaranteed and those of the guarantor corporation were -the same. ■ It would in our opinion be unconscionable for such persons to approve the arbitration provisions •through the offices of the corporation .whose debt was guaranteed and then hold that they were not bound, through the offices of the corporate guarantor, to act upon the provisions upon the occurrence of the contingency guaranteed.

Had the proceedings against Westland, whereby the amount of its liability to Omni Steel was established, occurred pursuant to litigation rather than arbitration, there is no doubt that Empire would have been bound by a judgment therein had it been notified thereof and afforded an opportunity to defend the suit. Latimer v. Texas & N. O. R. Co., 1933 (Tex.Civ.App., Beaumont), 56 S.W.2d 933, error refused. See also 38 C.J.S. Guaranty § 90, Conclusiveness of Adjudication in Prior Action, p. 1262; State Bank of Blue Island v. Benzing, 1943, 383 Ill. 40, 48 N.E.2d 333, 340; Bowditch v. E. T. Slattery Co., 1928, 263 Mass. 496, 161 N.E. 878, 888; Lake County For Use and Benefit of Baxley v. Massachusetts Bonding & Insurance Co., 1935, (CCA 5th), 75 F.2d 6. We hold that Empire is similarly bound under the circumstances existent in this instance.

We believe it necessarily follows, from what we have hereinabove held, that December 27, 1961 was the proper date from which Omni Steel was entitled to have interest computed under the trial court’s adjudication of Empire’s liability at $50,000, the maximum under its guaranty. Such was the date on which Westland’s share of the losses under the joint venture contract was established by arbitration. Interest on an indebtedness created by written contract begins to run when the indebtedness is due and payable. Vernon’s Ann. Tex. St., Art. 5070, “Legal rate applicable.”

On and after the aforesaid date, December 27, 1961, the amount for which Empire stood responsible under its guaranty was liquidated. The amount due and owing from Westland to Omni Steel was fixed and certain and stood adjudicated as against Westland; and, by reason of Empire’s guaranty to the extent of $50,000 (an amount within the total liability of West-land) stood, under quasi-adjudication, as likewise adjudicated. There was nothing in the nature of a question of the amount of liability, either Westland’s or Empire’s, which left any latitude for finding, as by the finder of fact, the extent of monetary liability.

The trial court should have removed the case from the consideration of the jury and entered judgment in behalf of Omni Steel and against Empire for the contractual sum of $50,000, plus interest thereon from the date it became due and owing, December 27, 1961. This the trial court did.

Judgment is affirmed.


author: TIREY, Justice.

text:
    Robert V. OAKLEY, Appellant, v. ARMSTRONG TRANSFER & STORAGE CO., Appellee.
    No. 4228.
    Court of Civil Appeals of Texas. Waco.
    May 7, 1964.
    Rehearing Denied May 28, 1964.

      Folley, Snodgrass, Calhoun & Kolius,, Amarillo, for appellant.
    Simpson, Adkins, Fullingim & Hankins,. Richard E. Stokes, Jr., Amarillo, for ap-pellee.
   TIREY, Justice.

Appellee grounded its action on two-written contracts executed by it and appellant. These contracts were executed, contemporaneously on the 28th day of December, 1957; one was designated as “Tractor Lease Agreement,” and, among other things, it provided that appellee had leased One-International 1957 Truck Tractor to-appellant for a term of 27 months, beginning the 1st day of December, 1958, and! ending the 1st day of’April, 1961. This instrument bound the'appellant to pay the-sum of $7,984.46 payable in installments beginning February 1, 1958, the first 26 being for $300.00 each, and the last, the 27th, being for $184.46. This contract also provided that title to the property shall remain in the lessor until all payments stipulated have been paid. It further provided that lessee agreed .to pay, or have it charged to his account, all maintenance, identification, insurance, licenses, taxes, fees, permits and other operating expense. It also provided for cancellation of each of the contracts by lessor or by lessee. The other contract was designated as “Van Operator-Driver Contract,” and in this contract Oakley, appellant; was designated as the contractor. Pertinent to this discussion the contract had the.following provisions :

“HAULING 3
“The CONTRACTOR will devote said tractor exclusively to the service of the COMPANY in the transportation of goods, wares and. merchandise, loading and unloading the same and delivering to destination in the fulfillment and in compliance with the duties, responsibilities and obligations of the COMPANY as an agent- of ALLIED VAN LINES, INC. and in accordance with shipping contracts or bills of lading of ALLIED VAN LINES,-INC. with the consignors o'r.consignees, and in connection therewith comply with all of the By-Laws, Rules and Regulations, Drivers’ Manual and instructions of ALLIED VAN LINES, INC. - all- the .rules' and -regulations and instructions of the COMPANY.
í{í íjí. 2f£ ijt s}s
“CHARGES 19
“The COMPANY may charge to the CONTRACTOR’S ACCOUNT ■any and all expense incurred by the COMPANY for the express benefits of the CONTRACTOR.”

These contracts further provided in effect that Oakley would become an independent contractor, and in these contracts Oakley contracted to do certain work for appellant at stipulated prices.

Trial was had without the aid of a jury and in the decree the court found that plaintiff was entitled to recover from the defendant the sum of $5,591.22, and also the title and possession of the truck and decreed accordingly and fixed interest charges at 6% per annum from the date of the judgment.

The judgment is assailed on what defendant designates as three points. They are to the effect that the Court erred: (1) In admitting parol evidence. showing a modification of a written contract, in that it allowed parol evidence of a ■ new contract between the parties; (2) In awarding title to the truck to Armstrong Transfer & Storage Company, because the truck was a part of the exempt property of Oakley, the purchaser, and was not subject to forced sale for -the payment of debts; (3) In awarding the trucking company judgment against Oakley, because the evidence introduced was insufficient to show that Oakley was indebted to the trucking company in the sum of $9,091.22. We overrule each of the foregoing points for reasons hereinafter briefly stated. '

First of all, appellant did not request any findings of fact and conclusions of law, and none were. filed. ,. Under this state of the record it is our duty to affirm the judgment of the trial court -if it can.be upheld, on any legal theory, that finds.support in the evidence. Bishop v. Bishop, 359 S.W.2d 869, (Sup.Ct.), point 3. See Rule. 296, Texas Rules of Civil Procedure, and cases there cited. In Munn v. Riggs, Tex. Civ.App., 257 S.W.2d 714, we find this state-, ment: _ . '

“The rule is well established -that unless findings are filed by the trial court, the appellate court must presume ’that- the trial c.ourt correctly found all fact is-: sues having support in the evidence in favor of its judgment rendered.”

Under the contract evidencing the lease of the truck to Oakley he was obligated to make truck payments and other operating expenses from January 1, 1958, and evidence was tendered to the effect that Oakley defaulted in payments on the truck and some of the other payments relating to expense money advanced to him by the trucking company, and under the written lease contract the trucking company had a right to sequester the truck. Evidence was tendered to the effect that after the trucking company converted the truck, it sued for the full debt under the tractor and van operator contract. On the evidence tendered the court awarded judgment for the full amount of the debt, including all payments owing on the tractor and the van operator charges, totaling $9,091.22, but credited the market value of the truck to Oakley as damages for conversion for the sum of $3500.00, that sum being the highest value placed on the truck by any witness at the time it was converted, and rendered judgment in favor of Armstrong for the balance of $5,591.22. We think there are two separate theories supporting the admission of the testimony complained of in appellant’s point 1. The general nature of the challenged evidence was proof that either at the time of the contract, or thereafter, the parties agreed that title to the truck would not pass until all sums due under the truck lease contract and the van operator contract were paid in full. We think the evidence was admissible apart from any consideration of the parol evidence rule or any agreement by Oakley, because the van operator contract (which was a written contract between the parties) and the tractor lease agreement are both silent concerning the application of payments to be made thereunder. There was no requirement in either contract for separate accounts for the two items, and, this being true, Armstrong was justified in establishing a single account for expenses advanced and payments due under the contracts between the parties. According to Turpén, the auditor for the trucking company, the account was handled under one accounting system. Under the foregoing conditions Oakley never specified that income turned .over by him to the trucking company was to be credited to the tractor contract, and the trucking company was free to make any application of the payments by Oakley that it chose. The rule is:

“When the debtor makes a payment without exercising his right to direct its application, the creditor may appropriate it to any debts due from the debtor he chooses, provided he does not make an application that is inequitable and unjust to the debtor”.

(This rule has never been changed). See 44 Tex.Jur.2d, Payment, Sec. 40, and cases there cited. See also Bitter v. Bexar County, 11 S.W.2d 163, (Tex.Com.App.) pt. 6; Munn v. Riggs, Tex.Civ.App., 257 S.W.2d 714, points (5, 7) ; also Foxworth-Galbraith Lumber Co. v. Southwestern Contracting Corporation, Tex.Civ.App., 165 S.W.2d 221, (w. o. m.), pt. 8. In this cause it is without dispute that the trucking company was making advances to Oakley in addition to taking care of his expenses of operating the truck; so, under these conditions, it was not inequitable for the trucking company to apply the payments made by Oakley (absent directions by Oakley) to the advances made and the expenses of operating the truck. We think the foregoing undisputed factual situation distinguishes this case from the rule applied in Jamison v. Alvarado Compress & Warehouse Company,, 45 Tex.Civ.App. 263, 99 S.W. 1053, because in that case we find this statement:

“When, as in this case, there is a continuous account consisting of many items, if no application of payments is made by either party, they will be applied according to the priority of time.”

In Pyle v. Byrne, Tex.Civ.App., 331 S.W.2d 507, (n. r. e.), points (2, 3), we find this statement:

“There is an entire absence of evidence that the appellant directed the manner in which payments and credits should be applied to the account, *

In Aetna Casualty & Surety Co. v. Hawn Lumber Co., 128 Tex. 296, 97 S.W.2d 460, there was no evidence that the creditor had made any application of the payments. It is our view that the factual situation pointed out in the foregoing cases distinguished each of them from the application of the rule we have previously stated as controlling, because in the case at bar there is ample evidence in the record that the creditor applied the payments to the charges other than truck payments. Most of the evidence complained of by appellant is consistent with the theory that the trucking company informed Oakley that it would apply payments first, to advances made and expenses incurred by him in operating the truck, and then to the tractor payments. In fact, there is testimony by Turpén, the auditor, that Oakley knew of this application. Our view of Oakley’s testimony is that the Court, in consideration thereof, had the right to infer that Oakley knew that the payments would go to advances and expenses of operation prior to the payment on the truck. He testified in part:

“Q. * * * you deny the understanding that you were going to have to pay the back expenses and advances before the tractor was yours?
“A. Well, Mr. Turpén didn’t read that to me.
“Q. You knew that, though?
“A. Yes, I knew it had to be paid back and I was trying to pay it back.”

There is an absence of evidence to the effect that Oakley, at any time, directed application of the payments. Needless to say the foregoing testimony is sufficient to support an implied finding by the trial court that the trucking company applied all payments to advances made and to expenses of operation prior to the truck payments. Such an application has support in reason, because Armstrong would naturally wish to apply them first to the unsecured charges under the operation contracts, and then to the truck, which was the only security for the extensive advances to Oakley. As stated above, the creditor may make such an application of payments, and it may be proved by the circumstances in any case. See 44 Tex.Jur.2d, Payment, Sec. 40. That leads us to say that the evidence of this application by Armstrong was admissible whether Oakley agreed to it or not, and does not vary the contracts, because they were silent on the application of the payments to be made.

In the second place, the parol evidence rule has no application to subsequent payments. See 2 McCormick and Ray, Texas Law of Evidence, Sec. 1671 (2d Ed. 1956). See cases there cited. There is evidence in the record that Oakley agreed, after the execution of the written contract, that all payments would have to be made before the truck became his. Turpén so testified, and Oakley, in his testimony, at one time admitted it. However, Turpen’s testimony is sufficient to support the implied findings of the trial court that this agreement was made. But, appellant asserts that there was no new consideration for the agreement. If appellant’s position were correct he must assume from this agreement that the written contract required application of payments by him to the tractor contract first, or at least application in some manner other than to the tractor contract last. Otherwise, the oral agreement would not vary or contradict the written contract and the parol evidence rule would not apply since both contracts are silent as to how the payments should he made and applied. Appellant does not tell us his theory of the application of the payments. Since the record is without dispute that appellant was delinquent in his payments on both the truck and the advances made to him for the operation of his truck, the consideration was a forbearance of the trucking company to sue or to terminate the contracts. But appellant contends that there was insufficient or no evidence to establish an indebtedness of $9,-091.22 owing by Oakley to the trucking company. We overrule this contention. It is our view that there is ample evidence in the record to show that Oakley owed Armstrong a total of $9,091.22. There was likewise evidence to the effect that $7,984.46 represented the unpaid rental charges. The •difference of $1106.76 represents charges made to Oakley’s account under the Van -Operator-Driver Contract. Turpén testified to the effect that all charges shown on plaintiff’s exhibits 2-6 were made under the Van Operator-Driver Contract and its •attachments. Therefore, this testimony was received by the court under a written contract. This Van Operator-Driver Contract allowed Armstrong to charge items to Oakley’s account. This is shown in the plaintiff’s exhibit 1, paragraph 19, and the same 'is true as does the Tractor Lease Agree-ment as shown by paragraph 3. Turpén testified specifically that Oakley owed Arm•strong $9,091.22, and Oakley never challenged any item charged to his account as being unauthorized by the terms of the contract. That leads us to say that we think there was ample evidence for the trial court to find that Oakley owed the trucking company $9,091.22 for the tractor payments, and other charges under the written contracts. It was from this figure that the court deducted the fair market value of the truck ($3500.00) as damages for conversion to reach the final judgment of $5,591.22.

We find no error in the judgment, and it is affirmed.


author: HUGHES, Justice.

text:
    TEXAS STATE AFL-CIO, Appellant, v. S. Perry BROWN, Chairman, Texas Employment Commission, et al., Appellees.
    No. 11179.
    Court of Civil Appeals of Texas. Austin.
    April 29, 1964.
    Rehearing Denied May 20, 1964.

      Sam Houston Clinton, Jr., Austin, for appellant.
    Waggoner Carr, Atty. Gen., Paul R. Robertson and Edward R. Moffett, Asst. Attys. Gen., Austin, for appellees.
   HUGHES, Justice.

Texas State AFL-CIO, a voluntary unincorporated association of local labor unions throughout the State of Texas which are made up of working men and women who are residents of the State of Texas, originally sued the Texas Employment Commission and its members the Honorable S. Perry Brown, Chairman, Plonorable J. J. (Jake) Pickle and Honorable J. E. (Ed) Lyles, Commissioners and Henry Rothell, J. W. Burcham, Herman E. McKinney and C. M. Turlington, employes of the Commission for a declaratory judgment and injunctive relief.

Appellant non-suited as to the Commission and upon its motion made under Rule 358, Texas Rules Civil Procedure, W. S Birdwell, Jr., who has succeeded the Hon. J. J. Pickle (resigned) as a member of the Texas Employment Commission has been substituted for Mr. Pickle as a party to this appeal.

Appellant alleged that the persons sued were obligated to comply with and not to violate either the letter or spirit of the laws of the State of Texas. We quote in full all of its charging allegations:

“However, contrary to the laws of the State of Texas, beginning on a date in 1962, unknown to the Plaintiff hut well known to the Defendants, they did use their respective official position to secure, or attempt to secure, special privileges or exemptions for certain persons or group of persons and did undertake by direct communication to promote the introduction and passage of proposed legislation by the Legislature and did contact directly or indirectly members of the Texas Legislature on. behalf of such other persons or group of persons in relation to proposed legislation making amendments to the Texas Unemployment Compensa-, tion Act.
“5.
“Specifically, on such date and thereafter, the Defendants, as Commissioners and employees of the Texas Employment Commission and while at their respective places of employment and during their normal working hours and while on the payroll and drawing wages from the Texas Employment Commission, on behalf of employers of the State of Texas, did research, discuss, confer, propose, and draft certain proposed amendments to the Texas Unemployment Compensation Act relating to benefit provisions. These acts were either required by or acquiesced in by the Defendant Commissioners. Each and all of said proposed amendments relating to benefit provisions show on their face to be in the interest of employers covered by the Texas Unemployment Compensation Act and detrimental to the interests of employees and working men and women of the State of Texas who are or might become claimants for benefits under the Texas Unemployment Compensation Act. Thereafter, one or more of the Defendants made available to employers or their representatives the proposed amendments to the Texas Unemployment Compensation Act thus formulated and such amendments were subsequently introduced in bill form in the House of Representatives and in the Senate of the Legislature of the State of Texas.
“6.
“As an employer covered by the Act, the Plaintiff pays contributions into the Unemployment Compensation Fund based upon wages earned by its covered employees. As such employer and also as a ‘mouthpiece’ of the hundreds of thousands of working men and women in the State of Texas who belong to labor organizations, Plaintiff objects to the activities of Defendants as employees of the Texas Employmént Commission and says that the same are in violation of the spirit, if not the letter, of the laws of the State of Texas pertaining to State employees in such matters, for which the Plaintiff has no adequate remedy at law. Therefore, the Plaintiff seeks injunctive relief against such acts and conduct.”

Upon a non-jury trial, judgment was rendered denying appellant any rélief.,

The Legislature in creating the Texas Unemployment Compensation Commission provided that it should consist of three members, one of whom should .be a representative of labor, one of whom should be a representative of employers, and one of whom should be impartial and represent the public generally. 5221b-8, Vernon’s Ann.Tex.St.

Mr. Pickle, while on the Commission, wa.? the representative of employers.

Art. 5221b-9, id, provides, in part, that it is the duty of the Commission to administer the Texas Unemployment Compensation Act and that “it shall have power and authority to adopt, amend, or rescind such rules and regulations, to employ such persons, make such expenditures, require such reports, make such investigations, and take such other action as it deems necessary or suitable to that end.” Such Article also enjoined the Commission to submit an annual report of its operations to the Governor and to make such recommendations for amendments to the Act as the Commission might deem proper. Also the Commission was charged with the duty of promptly informing' the Governor when it believed that a change in contribution or benefit rates would become necessary to protect the solvency of the benefit fund.

It will be noted that while in the pleadings of appellant it refers to itself as a taxpaying employer and as spokesman for labor organization members it complains only of acts which it conceives to be detrimental to employes. It makes no charge that any members or employe of the Commission has done any act calculated to harm employers.

The evidence follows the pleadings. It has for its sole purpose the attempt to prove that the activities of Mr. Pickle were beneficial to employers and detrimental to employes. Mr. Pickle was extremely active in representing the interests of employers. He held meetings throughout the State, accompanied by State employes who were technical experts in relation to the Act, which were attended only by employers. He sent out news letters to employers pertaining to problems and matters connected with administration of the Act. He interested himself in the preparation and passage of legislation favorable to employers under the Act. There is no question but that Mr. Pickle took his position as employer representative on the Commission seriously and that he was an assiduous partisan in behalf of employers. We quote some of the language in appellant’s brief which is typical of the charges they make:

“That Pickle, Rothell, et al, by researching, discussing, conferring proposing and drafting proposed amendments to the Act relating to benefit provisions (which clearly are to the benefit of the employers in that extended and onerous disqualifications and restricted eligibility standards imposed on claimants would result in lesser amounts of benefit wages charges made against the account of such employers and concomitant lower contribution rates) were using their positions to secure special privileges for employers seems evident.
“Pickle obviously thought so for he stated and reiterated that the proposals, in bill form, were ‘introduced by friends of management,’ were ‘generally backed by employers’ and reprimanded employers for not contacting their legislators to get ‘corrective legislation.’
“Rothell, Burcham and McKinney knew so for each was present at one or more of Pickle’s employer meetings where employers made the suggestions.
“Employers thought so for their representatives caused Pickle to raise many of the questions in the first place, then made suggestions at meetings held by Pickle, and through their representatives on employers advisory council reviewed the proposals once they were in report form and backed them in bill form by testifying in support of them before legislative committees.”

We do not understand that appellant complains of the activities of either of the other Commissioners although it does object to their passiveness. It does complain that some of the employes of the Commission accompanied Mr. Pickle to employer meetings. We do not consider the work of these employes on such trips as separate from the activities in which Mr. Pickle was engaged.. The propriety of what they did was the responsibility of Mr. Pickle, not theirs.

The injunctive relief here sought is incidental to the main purpose of the suit which is for a declaratory judgment. A proceeding for a declaratory judgment must be based on an actual, real, bona fide, and justiciable controversy. 19 Tex.Jur.2d, p. 147.

It is doubtful that a real genuine, justiciable controversy is shown to exist in this case between appellant, as an employer, and the Commission, its members •and employes. Every act of which appellant complains or with which it finds fault Is beneficial to it as an employer. It seems to us, very far fetched that a justiciable ■controversy could be generated by a benefit ■conferred rather than by a wrong committed or anticipated. A declaratory judgment by us in this case, where no employe is present, and is sought to be represented ■only by an employer, would not, or at least in our opinion should not, bind employes who are not present.

If an adjudication here would not authoritatively determine the matter presented then it should not be made. See California Products, Inc. v. Puretex Lemon Juice, Inc., 160 Tex. 586, 334 S.W.2d 780, Art. 2524-1, Sec. 6, V.A.T.S. In Sec. 11 of Art. 2524-1, id, it is provided that “When ■declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding.” See also Southern Traffic Bureau v. Thompson, 232 S.W.2d 742, San Antonio Civil Appeals, writ ref., n. r. e., where declaratory judgment relief was denied because of the absence of an interested party.

When we consider appellant’s capacity as spokesman for absent employes we encounter serious difficulties. We are cognizant of Arts. 6133-35, V.A.T.S. which provide, in part, that an unincorporated association doing business in this State may sue or be sued without joining its members and that a judgment rendered in such suit shall be binding on the members as if they were individually parties to the suit.

In San Antonio Fire Fighters’ Local Union No. 84 v. Bell, 223 S.W. 506, San Antonio Civil Appeals, writ ref., it was held that a local voluntary union labor organization could not maintain a suit against the Mayor of San Antonio and others seeking to prevent them from destroying the union and from intimidating and discharging its members the Court saying with regard to these statutes: “The very language of the. statute seems to imply that the company or association can sue or be sued only about property rights, for it limits the right to those companies 'doing business in the state/ showing an intent to confine such suits to matters of business. There is no allegation in the petition of any property right of the association that was threatened by the mayor and commissioners, but from the petition it clearly appears that no right is threatened, except that of the individual member, in which the company or association had no property right whatever.”

No property rights of appellant as spokesman for employes are involved in this suit. The only property rights involved, if any, belong to employes entitled to benefits under the Act, none of whom are parties.

We are also aware of Rule 28, Texas Rules Civil Procedure, which provides, in part, that an unincorporated association may sue or be sued in its “assumed or common name for the purpose of enforcing for or against it a substantive right.” In construing this rule the Court in Dillard v. Smith, 146 Tex. 227, 205 S.W.2d 366, held that it was “not intended to change the substantive rights of the owner's of a business operated under an assumed name. The effect of the rule is simply that such owners may now be sued under the trade or assumed name of the business as well as in their individual ñames.” The Court gave this illustration: “To illustrate, under Rule 28 it is proper to sue in the name of ‘Dyer Hardware &, Furniture Co., owned * * * by S. B. Dyer [Cole v. Dyer Hardware Co., Tex.Civ.App., 77 S.W.2d 286,]’ instead of suing in the name of ‘S. B. Dyer, doing business under the name of Dyer Hardware & Furniture Company,’ as was required in Cole v. Dyer Hardware Co., supra.

In Atkinson v. Thompson, 311 S.W.2d 250, Houston Civil Appeals, writ ref., n. r. e., it was stated'that, “Rule 28, Texas Rules Civil Procedure, is not unlike Article 6133. It authorizes -suits in the firm name against persons doing business under’ an assumed name. However, this has been held to be purely procedural,” citing Dillard v. Smith, supra.

. Another rule applicable to declaratory judgment..relief is that it will not be granted where,-the facts upon which the relief is sought are subject to mutation and change. California Products Co. v. Puretex Lemon Juice, Inc., 160 Tex. 586, 334 S.W.2d 780.

The activities of one member of the Commission- are in controversy.here. These activities were certainly subject to change, although Mr. Pickle stated he would continue the practices under attack. There is no intimation, of course, what the policy of the new Commissioner will be.

In view of the pleadings, evidence, authorities, and change in the personnel of the Commission it is doubtful whether we should render a declaratory judgment. We have, however, concluded to resolve this-doubt in favor of our jurisdiction and in the exercise of our discretion to briefly state our view'of the law questions before us.

The law does not require all members of the Commission to be impartial, this attribute is only demanded of the public representative. Art. 5221b-8. This statute authorizes one Commissioner to be a representative of labor and another to be a representative of employers. The meaning of the word “representative” is manifold, but generally its meaning is that of “being, or acting as, the agent for another, esp. through delegated authority.” Webster’s Dictionary, 2d ed. Hence, Mr. Pickle could, within the range of his statutory authority, do for employers what they could do for themselves it being a maxim of agency that “he who acts through another acts for himself.” 2 Tex.Jur.2d, p. 438.

It is our opinion that all of the acts and conduct of Mr. Pickle fairly fall .within the legitimate scope of his authority as a representative of employers.

We do not, of course, hold that any member of the Commission may properly indulge in arbitrary, capricious or unlawful conduct.

There is only one activity of Mr. Pickle which we believe deserves specific mention.

The Trial Court found that appellees did not promote the introduction and passage of legislation by the Legislature relating to the Unemployment Act favorable to employers.

Assuming that there is .evidence sufficient to support a finding of fact contrary to the finding of the Court we are nevertheless of the opinion that such conduct is not unlawful but is within the legitimate scope of the Commissioner who is a representative of employers. A Commissioner may expound, expostulate, exhort, about and upon and convince and convert everyone to his point of view regarding defects in the unemployment law but if his voice is not heard by the lawmakers his efforts are wasted. Appellant cites the following provision in the 1963 Appropriation Act as proscribing the expenditure of monies appropriated to the Commission for promoting legislative changes in the Unemployment Compensation Act:

“None of the moneys appropriated by Articles I, II, III, and IV of this Act, regardless of their source or character, shall be used for influencing the outcome of any election, or the passage or defeat of any legislative measure. This prohibition, however, shall not be construed to prevent any official or employee of the State from furnishing to any Member of the Legislature, or to any other State Official or employee or to any citizen, any information or facts pertinent to the official duties and responsibilities of the State agency he represents.”

Ch. 525, p. 1652, Acts 58th Leg., Reg. Sess. 1963.

It is our opinion that this provision does not prohibit members of the Commission from supplying thé Legislature and its members with information relating to and explaining its impact upon proposed amendments to the Unemployment Compensation Act. Such course of action, it seems to us, is well within the exemption contained in the quoted legislative enactment.

It is the statutory duty of the Commission to recommend changes or amendments to the Act. There is no evidence here that the amendments to the Act sponsored by Mr. Pickle were not so sponsored by the Commission. Even if they were not so sponsored it is our opinion that an individual member of the Commission has the duty and responsibility to advocate such amendments to the Act as he may deem proper in his capacity as a representative of labor, employers or the public, or as a dissent to the action of the Commission.

Of course, the same latitude and freedom of action' given the Commissioner who is a representative of employers would be extended to the Commissioner who is a representative of labor as well as to the Commissioner who is a representative of the public.

It is our opinion that the judgment of the Trial Court should be and it is affirmed in accordance with the declarations of law herein contained.

Affirmed.

      . “It is a maxim of the law that wrong without damage does not constitute a good cause of action, as the law furnishes a remedy only for such wrongful acts as result in injury.” 1 Tex.Jur.2d, p. 523. Of course, under declaratory judgment proceedings relief need not wait upon the infliction of injury. 19 Tex.Jur. 2d, p. 149.