author: JACKSON, J.

text:
    WICHITA VALLEY RY. CO. v. MARSHALL.
    No. 3549.
    Court of Civil Appeals of Texas. Amarillo.
    Feb. 14, 1931.
    Rehearing Denied March 11, 1931.
    Cooinbes & Andrews, of Stamford, and Thompson & Barwise, of Fort Worth, for appellant.
    W. D. Wilson, of Spur, for appellee.
   JACKSON, J.

This suit was instituted in the district court of Dickens county, Tex., on March 5, 1930, by the plaintiff, W. P. Marshall, to recover damages alleged to have been caused to his land by the defendant, the Wichita Valley Railway .Company.

The plaintiff alleges that he is the owner of the -N.W. ¼ of survey No. 107, block 1, in Dickens' county, Texas. That Wilson creek rises about ten miles north of his land, flows in a southerly direction, crosses the eastern part of survey No. 191 and the southwest corner of survey No. 10⅞ located immediately east of survey No. 191, and enters his quarter section, which lies immediately south of No. 192, near the northwest corner of said quarter section, continuos through the west side thereof aud empties into Duck creek near the southwest corner of said survey No. 167.

That the defendant owns and operates a line of railway which traverses survey 191 and crosses Wilson créele on said survey at a point about one-half mile in a northerly 'direction from plaintiff’s land. That, in building the railroad across Wilson creek, an 'embankment about fifteen feet in height was erected across said creek upon which the railroad track is placed, and that this embankment impounded on the north side thereof water which at all times' is from one to fifteen feet in depth and constitutes a late covering about one hundred and twenty-five acres. That no culverts or sluices were constructed for the water to pass through or under said embankment, but tho water was impounded for the use and benefit of the de- • fendant. That about April, 1925, a large part of said embankment was washed away, but was rebuilt in 1927 for the purpose of impounding water in the lake for the use and benefit of the defendant, and no openings were left through or under the embankment for the water to escape and e'ontinue its natural flow down Wilson creek across plaintiff’s land into Duck creek. That plaintiff’s land is twelve to fifteen feet lower than the surface of the water in the lake, and said water seeps and percolates through the embankment or dam and passes down Wilson creek onto plaintiff’s land to such an extent that the channel of said creek is continually filled with water, and plaintiff’s cultivated dands for a considerable distance on either Iside of the creek have been kept wet until the soil has become water-logged. That the Iwater dissolves and absorbs gyp, alkali, and other mineral substances in the embankment and the ground through which it seeps, and has impregnated ifiaintiff’s land with mineral substances to such an extent as to destroy the •soil, kill the trees and vegetation thereon, and render the land wholly unfit for cultivation and worthless for any purpose. That prior to tho time the railway embankment was washed away, the seepage and percolation of the water from the land was not sufficient to injure plaintiff's land, but since tbe rebuilding of tbe embankment, and within two years prior to the filing of this suit, said seepage and percolation from the lake has So water-soaked and impregnated plaintiff’s land with mineral substances that it will not produce crops or vegetation of any kind and has become worthless and without value for any purpose. That the value of about twenty acres of plaintiff’s land has been destroyed, and tbe value of some additional ten acres has been damaged. That plaintiff's said land was very rich and productive and was of the reasonable market value of $100 per acre before it was so damaged and destroyed.

That plaintiff has been damaged in the sum of §2,500 as the direct and proximate result of keeping his land wet and water-soaked und impregnated with mineral substances by :he seepage and percolation of the water from said lake onto and under his land, for all of which he sues.

On September 10, 1930, the defendant answered by general demurrer, special exceptions, and general denial, pleaded the two years’ statute of limitation, and alleged as a defense that, at the time the embankment was constructed, tbe Swensons were the owners of tho property adjoining tho dam and also the property now claimed by tbe plaintiff, and by a contract in writing tbe Swen-sons agreed that the embankment could be constructed and the water impounded, all of which was known to the plaintiff at the time he purchased his property, and that his said land is subject to the terms and conditions of said contract, for which reason plaintiff is not entitled to recover.

The plaintiff, in a supplemental petition, pleaded a general denial to the defendant's answer.

In response to special issues submitted by the court the jury found, in substance, that, within the two years immediately preceding March 0, 1930, the water impounded in tho lake by the embankment of the railroad percolated through said embankment onto and under plaintiff’s land; that within said two years the plaintiff’s land was injured by said water; that the percolation of said water onto and under plaintiffs land within the said two years prior to March 5, 1930, was the proximate cause of plaintiff’s damages; that within said two years the value of .twelve acres of plaintiff’s land was wholly and permanently destroyed by the water, and that the value of plaintiff's land So destroyed, immediately prior to the damage thereof, was $70’ per acre.

On these findings, judgment was rendered in favor of the plaintiff against the defendant in the sum of $S40, with interest from tho date thereof at the rate of 6 per cent, per annum and costs of suit, from which judgment this appeal is prosecuted.

The appellant challenges as error the action of the trial court in excluding, upon objection, the written agreement between it and tbe Swensons, because tho evidence shows that appellee bought his property with notice of appellant’s right under the contract, to construct the embankment without culverts and sluices, and he is bound by the terms of said contract.

The written contract which the appellant sought to introduce discloses that the railway company leased for tank or reservoir purposes'-certain lands located on survey 191 and survey 294, block 1, all of which is described by metes and bounds. That the railway company agreed to maintain and keep said embankment in complete order, and that the Swensons were to use water from the lake for their cattle without charge. This written contract nowhere mentions-nr. .río-scribes" auñeüee’s lancL The uncontroverted record discloses that appellee’s land is on survey 167 and is approximately one-hal£_mile south of the emtoifignentjmcQake. Tho ap-pellee 'testified that, while ho knew of the embankment and l-;ko. he had no actual notice of the provisions of the contractrasfiTSat he was advised by his lawyer that the ab-straet disclosed a gppd'iitfejto bis grantor at tbe time'he purchased.the.land.

In our opinion, plaintiff’s land was not burdened or incumbered by tlie rights held by appellant under the contract for the maintenance of the lake on the land described in the contract. While it authorized the construction of the dam without culverts or sluices, it obligated the appellant to maintain and keep the embankment in complete order, and contained no express provision relieving it of damages and no implied provision that it would not be responsible for damages sustained by lands not described in the contract.

The appellee wag not required to allege and prove that the appellant was negligent in the construction or maintenance of the dam. Texas & P. Ry. Co. v. Frazer (Tex. Civ. App.) 182 S. W. 1161, and authorities cited.

The written contract, although recorded in the deed records of Dickens county, Tex., at the time appellee purchased his land, was not constructive notice to appellee, because the "repsrfation of alTTnstrument carries notice of its contents only to those hound to search the record for such instrument. Leonard v. Benfford Lumber Co., 110 Tex. 83, 216 S. W. 382, and authorities cited.

.j’ The written contract sought to be introduced constituted no part of plaintiff's chain of title, and he was not required to search the record -for any instrument not included in his chain of title, and not required to take notice of any instrument on the record which did not. constitute any part of his- chain of title. White et al. v. McGregor et al., 92 Tex. 558, 50 S. W. 564, 71 Am. St. Rep. 875.

The fact that he acquired the land after the embankment was constructed would not defeat his right to recover. St. Louis & S. W. Ry. Co. of Texas v. Clayton, 51 Tex. Civ. App. 512, 118 S. W. 218.

Appellant also urges as error the action of the trial court in excluding certain deeds which disclose that the N.W. ¼ of survey 167, block 1, involved in this controversy, was acquired from' the Swensons by F. W. West. That he conveyed the land to W. T. Wilson, who conveyed it to the appellee, but none of these instruments mention or refer to the written contract between the Swensons and appellant or the lands described in said contract, and what we have heretofore said disposes of these assignments.

The appellant challenges as error the action of the trial court in refusing to direct a verdict in its behalf, because the testimony discloses that appellee’s cause of action, if any he had, was barred by the .two-year statute of limitation (Rev. St. 1925, art. 5526).

The uncontroverted testimony shows that appellee made good crops on the land he claims was destroyed, in the years 1926 and 1927, and that said land was not damaged by becoming water-soaked or impregnated with minerals until the year 192S.. That in the years 1928 and 1929, notwithstanding he planted crops on the land, the seed planted did not germinate because -of the water-soaked and impregnated condition of the soil.

Under this record, the appellant was authorized to construct the embankment, and its act in so doing was lawful, and appellee ■could make no complaint and maintain no suit for injury until he sustained damages.

“When an act is in itself lawful as to the person who bases an action on injuries subsequently accruing from, and consequent upon, the act, it is held that the cause of action does not accrue until the injury is sustained.” Houston Water-Works v. Kennedy, 70 Tex. 233, 8 S. W. 36, 37.

The .appellant’s embankment was not built on appellee's land, and his injury did not result from the construction of the embankment, hut from the percolation and seeping of the water through the embankment by which his land was water-logged and impregnated with mineral, and his cause of action did not arise until he was damaged.

“In actions in the nature of a nuisance in which there has been no actual invasion of plaintiff’s land, as a general rule, the first right of action does not arise until some injury has been suffered, no matter when the cause of injury occurred.” Trinity Portland Cement Co. v. Horton et al. (Tex. Civ. App.) 214 S. W. 510, 511; St. Louis, S. W. Ry. Co. of Texas v. Clayton, supra ; Southwestern Portland Cement Co. et al. v. Kezer (Tex. Civ. App.) 174 S. W. 661 (writ refused); Missouri, K. & T. Ry. Co. v. Anderson (Tex. Civ. App.) 194 S. W. 662; Howard et al. v. North Texas Compress & Warehouse Co. (Tex. Civ. App.) 238 S. W. 282; Wichita County Water Improvement District No. 1 v. McGrath (Tex. Civ. App.) 31 S.W.(2d) 457.

In view of the instructions of the court on limitation, these authorities, in our opinion, also dispose of appellant's assignments in which it presents as error the action of the trial court in refusing to give certain requested issues on the question of limitation.

The appellant challenges as error the action of the trial court in refusing to submit to the jury its special issue as to whether the injury or damage to appellee’s land was contributed to by water from sources other than seepage or percolation through appellant’s dam.

•The appellant, having pleaded general denial, was authorized to show that appellee’s damage' was attributable to causes independent of any of its acts. San Antonio & A. P. Ry. Co. v. Gurley, 37 Tex. Civ. App. 283, 83 S. W. 842, 844.

The testimony shows that the railroad embankment was built across Wilson creek in 1909; that it washed out in 1925 and was reconstructed in January, 1926. That said creek ran through appellee's hind and emptied into Duck'creek near the southwest corner of survey No. 1G7. That in 1011 the water overflowed the banks of Duck creek and backed up into Wilson creek, and, when it receded, left a sand bar at the mouth of Wilson creek that impeded the flow of the water from Wilson creek into Duck creek. That at irregular intervals thereafter, up to and including' the year 1930, Duck creek overflowed its banks, and appellee’s land was covered with the flood waters therefrom, which would remain on his land one to two days at a time. That the overflow from Duck creek deposited on plaintiff’s land sediment which had largely filled up Wilson creek and changed the channel thereof into a wide slough or lake. That the land that appellee claims to have been damaged was largely built up of such sediment.

There is testimony to the effect that there is gyp land all over that immediate country; that the water from Duck creek contains gyp or mineral, and, when appellee’s land was overflowed thereby, the water deposited gyp or alkali thereon. That appellee’s hind has always contained gyp. That other lands in that vicinity close to Duck creek had 'been impregnated with gyp and mineral.

In Taylor v. S. A. & A. P. Ry. Co. 36 Tex. Civ. App. 658, 83 S. W. 738, 746, the court says: “There being testimony that appellant’s land was sometimes overflowed by the waters from Pond creek, and appellant not being entitled to any damage caused by sucli overflows, if tliere was damage caused by waters deflected from their natural course through the negligence of defendant, in connection with the overflows from Pond creek, defendant would not be liable for more than the proportionate damage caused by its negligence.”

In San Antonio & A. P. Ry. Co. v. Gurley, supra, the court says: “The plaintiff’s petition only complains of the waters from Bull Hide creek. There, is some evidence in the record tending to show that the overflows from the Brazos river during the time complained of may have been in part a cause of the plaintiff’s damages. Or, in other words, that it was not solely the waters from Bull Hide creek, but the overflows therefrom, in connection with the overflow from the Brazos, caused the damages. The charge of the court did not expressly present to the jury the right of the defendant to have considered what effect in part the waters from the Brazos might have had in producing injury to the rental value of the land. If some of the damages could he traced to the overflows from the Brazos, the appellant could not be held responsible, as it was not pleaded nor proven that the faulty construction of the railway caused the water from the Brazos to flow over the plaintiff’s land.” Houston & T. C. Ry. Co. v. Hanson (Tex. Civ. App.) 227 S. W. 375.

This assignment is sustained.

The appellant attacks as error the action of the trial court in refusing to submit its requested issue to have the jury determine whether or not the damage, if any, to plaintiff’s'land was temporary and such as could be remedied by drainage, because such issue was presented by the pleadings and the evidence.

The uncontroverted testimony is that ap-pellee’s land could be drained at a very slight expense. That 1930 was a very dry year. That the seepage from the lake of appellant was not as much as it had been in preceding years and appellee’s land had partially dried out. That while no crop of any kind was planted by appellee, the land which he claims to have been destroyed was covered with sunflowers higher than a man’s head. There is also testimony to the effect that there was a growth of mesquite bn said land, and that during the years 192S and 1929 the land did not grow any kind of vegetation.

There is also testimony to the effect that plaintiff planted his land on the east side of Wilson creek (which is a part of the land in controversy) in alfalfa in the year 191S. That water escaping through a pipe in the dam caused the soil to become so wet and water-soaked that the alfalfa was killed. That appellee sued appellant for damages on account of the destruction of his alfalfa by the water from the lake, and in 1922 a settlement was had between them and the pipe removed from the dam.

Mr. IV. T. Wilson, a witness for the plaintiff, testified: ‘Lit the time Mr. Dooley called my attention to the outcropping of gyp I don't believe I had noticed it at that time. Up to that time I had not noticed any outcroppings on Mr. Marshall’s place. The first thing I knew of it hurting down there was some alfalfa. That was when Mr. Marshall brought the suit. You could pull up the stalks and all of the roots would be rotten.”

The testimony also shows that, after ap-pellee’s alfalfa had been destroyed and the pipe was removed from, the dam, the land continued to grow good crops until 192S. The appellee himself testified, in substance, that if the spillway to the lake was fixed, and the water did not seep through the dam, he did not think it would injure him any more.

The testimony tends to show that, because 1930 was a dry year, less water from the lake reached appellee’s land than in either of the years from 1926 to 1929, inclusive. That in 1930 weeds, sunflowers, and mesquite grew on appellee's land. That the portion of Ms land in controversy lying on the east side of the creek where his alfalfa was killed was, in 1922, to some extent impregnated with mineral, in addition to being water-soaked. That after the pipe was removed, and the land relieved from the water flowing through it, said land produced good crops until 1928. This evidence, together with other facts and circumstances in the record, we think, presents an issite as to whether the draining of the land would remedy .or improve its condition. If draining the land would remedy its condition, then the damage thereto is temporary and not permanent, and appellant was entitled to have such issue determined by the jury.

Eor the errors discussed, the judgment is reversed, and the cause remanded.


source: Caselaw Access Project

author: SELLERS, J.

license: Public Domain

text:
    LEWIS et al. v. SAYLORS.
    No. 3999.
    Court of Civil Appeals of Texas. Texarkana.
    March 12, 1931.
    E. A. Landman, of Athens, for appellants.
    Bishop & Holland, of Athens, for appellee.
   SELLERS, J.

This suit was instituted by the plaintiff against the defendants in trespass to try title, and plaintiff also pleaded title by the five and.ten year statutes of limitation. Tho defendants answered by a plea of not guilty, and also alleged certain facts to show that plaintiff never purchased tho interest of certain of the defendants, and also that the instruments executed by them were void and conveyed no title as to part of tho defendants.

The case was tried to a jury, and, after all the testimony of plaintiffs and defendants had been developed and both sides had rested their case, tlie court instructed the jury to return a verdict in favor of plaintiff. And on the verdict of the jury the court entered judgment for plaintiff for the title of tho land sued for, from which judgment defendants have appealed.

The defendants are Mrs. S. J. Lewis and her ten children, all of whom are now of age. Two of the children filed disclaimers.

It appears from the record that the husband of Sirs. S. J. Lewis died in 1906, and in 1910 Sirs. Lewis duly qualified as community survivor of the estate, and the three tracts of land here involved were all a part of the community estate of Sirs. Lewis and her deceased husband. On February 10, 3917, Mrs. Lewis, joined by" seven of the heirs, executed a deed to the plaintiff for one of the tracts of land involved, same being the fifteen-acre tract. This deed was recorded in the deed record of Henderson county on September 13, 1917. On September 3, 1917, Mrs. S. J. Lewis executed to plaintiff a deed to another tract of land involved, same being ten. acres of land, which deed was also recorded in the deed record of Henderson county on September 13, 1917. January 12, 1917, Sirs. S. J. Lewis, joined by five of the heirs, executed a bond for title to plaintiff to the third tract of land involved in this case, same being'thirty acres of land. This instrument was duly recorded on the same date that the others were recorded. Plaintiff and defendants lived neighbors, only a few hundred yards between their homes, at the time the deeds were executed and continuously .up until the filing of this suit. At the time the above instruments were executed a surveyor was employed who ran the lines and made the field notes to the land. The tracts of land involved joined other tracts of land owned by plaintiff upon which he lived at the time. Plaintiff immediately constructed fences on the line established by the surveyor and went into possession of all three tracts of land, and has held continuous peaceful and adverse possession, occupying and cultivating the premises until the institution of this suit, paying all taxes on tlie land without any notice of any adverse claim until 1930, when two of the heirs of Mrs. Lewis undertook to convey some of the royalty to certain minerals under the lands, at which time plaintiff brought this suit.

The above facts being undisputed, we are of the opinion that plaintiff clearly established title to all three tracts of land under the ten-year statute of limitation (Rev. St. 1925, art. 5510), and there was no error by the court in directing the jury to return a verdict in favor of plaintiff.

It is insisted by defendants in their brief that the ten-year statute of limitation has not run against all the defendants for the reason that ten years have not expired since some of them reached their majority. From the facts developed- upon the trial, this would seem to be true, but the pleadings of defendants do not make the infancy of any of the defendants an issue; and, in the absence of pleadings, infancy will be waived. Any pleading seeking to avoid a plea setting up the statute -of limitation should state such facts as show the statute could not have run. Krause et al. v. Hardin et al. (Tex. Civ. App.) 222 S. W. 310.

The various assignments of defendants attacking the validity of the instruments above referred to will not be discussed, for the reason that their validity could in no way affect plaintiff’s title by the ten-year statute of limitation. Actual possession and cultivation of the land in controversy is all that was necessary to start the running of the ten-year statute of limitation, whether the possessor had any deed to the land or not

. The judgment of the trial court is affirmed.


author: BARCUS, J.

text:
    BEALL v. BARSCH et al.
    No. 1029.
    Court of Civil Appeals of Texas. Waco.
    March 19, 1931.
    Rehearing Denied April 9, 1931.
    T. R. Means, of Gatesville, for appellant.
    R. B. Cross, of Gatesville, for appellees.
   BARCUS, J.

Appellant filed this suit alleging that appel-lees were threatening to dam up Dodd creek and to so terrace their land as to cause the water to flow from their land to his. He asked for an injunction restraining appel-lees from doing either of said acts.

The trial court in chambers, without a hearing, granted a temporary injunction, and the cause came on regularly for trial on the merits. Appellees filed ⅞ sworn answer, specifically denying all of the material allegations contained in appellant’s petition and pleaded affirmatively that they had not threatened to do any of the acts complained of by appellant and had not attempted to do any of said acts and had no intention of doing any of the acts of which complaint was made. The cause was tried to the court and resulted in judgment dissolving the temporary injunction, and the court refused to grant a permanenflnjunction. The trial court filed his findings of fact and conclusions of law. A statement of facts agreed to by all parties is filed with the record.

Appellant contends that the trial court committed error in failing to file additional findings of fact. We overrule this proposition. The record shows that the trial court filed findings of fact and then, at the reguest of appellant, filed additional findings of fact, and upon a second request being made for additional findings, same was refused. We think the findings as made were sufficient. It is not necessary for the trial court to state the evidence on which he bases his findings of fact. All the law requires is that he prepare and file same.

Appellant further contends that the trial court erroneously refused to grant him a permanent injunction. We overrule this assignment. The granting of writs of injunction is largely in the discretion o'f the trial court, and unless that discretion is abused, the appellate courts will not disturb same. Simon v. Nance (Tex. Civ. App.) 142 S. W. 661 (error refused); Miller v. Dickinson (Tex. Civ. App.) 236 S. W. 1014; Herman v. Forrest (Tex. Civ. App.) 294 S. W. 624.

The record shows that appellant and appellees Gus Barsch owned adjoining tracts of land and that Dodd creek flows from ap-pellee’s land across appellants. In 1922, a difference arose between said land owners with reference to keeping Dodd creek and one or more of its tributaries open, and the matter was submitted to and settled by arbitration. Dodd creek had washed deeper by reason of the rains and appellant had dug a ditch along his line near the dividing fence between him and appellee. In the spring of 1930, appel-lee Ctto Barsch, the son of Gus Barsch, and who was a tenant working his father’s land, asked George Weigand, the son-in-law of appellant who was working appellant’s land as a tenant, if it would be satisfactory for him (Otto Barsch) to place a wire netting in the bottom of said creek in order to prevent same from washing any deeper, and also asked if it w"ould be alright for him to fix his father’s land so that same would, during excessive rains, drain into the ditch that had been dug near the dividing fence on appellant’s land. Mr. Weigand stated to Otto Barsch that he did not have authority to giv.e such permission, but would ask appellant, his father-in-law. He communicated said request, and appellant sent word back that he would not give his permission to -have either of said things done. Appellant testified that he never had any further communication with either of the appellees and that neither of them ever suggested that they would disregard his decision or that they would in any way attempt to interfere with the flow of the water in Dodd creek or construct any drains that would carry the water into the ditch on appellant’s land. Each of the appellees testified positively that they had no intention of in any way interfering with the flow of the water in Dodd creek or of turning any water onto appellant’s land and that they had not in any way attempted so to do. We think the trial court under the testimony correctly held that appellees were not threatening to injure appellant and that appellant, in the absence of an affirmative showing of impending danger, was not entitled to injunctive relief. Elder v. Highsmith (Tex. Civ. App.) 10 S.W.(2d) 736, par. 3; Wright v. Wright (Tex. Civ. App.) 278 S. W. 925, par. 2; 32 C. J. p. 327, § 540, and authorities cited in notes thereto.

We have examined each of appellant’s assignments of error, and propositions and same are overruled.

The judgment of the trial court is affirmed.


author: RANDOLPH, J.

text:
    JACKSON v. OLIVER C. STEELE MFG. CO.
    No. 3576.
    Court of Civil Appeals of Texas. Amarillo.
    March 25, 1931.
    Rehearing Denied April 15, 1931.

      Bonner, Bonner & Childress, of Wichita-Falls, for appellant.
    Kilgore & Rogers, of Wichita Falls, for ap-pellee.
   RANDOLPH, J.

J. L. Jackson, Jr., as trustee in bankruptcy, brought this suit in the district court of Wichita county, Tex., against Oliver C. Steele, doing business under the name and style of Oliver C. Steele Manufacturing Company, to recover the sum of $4,600 paid to-him upon a debt owing to said Steele, which debt was in the sum of $17,000. An instructed verdict in favor of the defendant was returned by the jury, and judgment rendered in his favor by the trial court. Appeal was taken therefrom by plaintiff to this court.

The evidence clearly shows that the Wichita School -Supply Company, a corporation, was adjudged a bankrupt; that the plaintiff was duly appointed trustee in said bankruptcy proceedings, and that within four months prior to such bankruptcy the president of said bankrupt corporation paid to the defendant the sum of $4,500 in cash. The plaintiff claims in his petition that this payment was void as being a preference of creditors.

The Bankruptcy Act, § 60 (USCA, title 11, § 96), provides as to preference of creditors, as follows:

“(a) A person shall be deemed to have given a preference if, being insolvent, 'he has, within four months before the filing of the petition, or after the filing of the petition and before the adjudication, procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class. Where the preference consists in a transfer, such period of four months shall not expire until four months after the date of the recording or registering of the transfer, if by law such recording or registering is required.

“(b) If a bankrupt shall have procured or suffered a judgment to be entered against him in favor of any person or have made a transfer of any of his property, and if, at the time of the transfer, or of the entry of the judgment, or of the recording or registering of the transfer if by law recording or registering thereof is required, and being within four months before the filing of the petition in bankruptcy or after the filing thereof and before the adjudication, the bankrupt be insolvent and the judgment or transfer then operate as a preference, and the person receiving it or to be benefited thereby, or his agent acting therein, shall then have reasonable cause to believe that the enforcement of such judgment or transfer would effect a preference, it shall be voidable by the trustee and he may recover the property or its value from such person. And for the purpose of such recovery any court of bankruptcy, as hereinbefore defined, and any State court which would have had jurisdiction if bankruptcy had not intervened, shall have concurrent jurisdiction.

“(e) If a creditor has been preferred, and afterwards in good faith gives the debtor further credit without security of any kind for property which becomes a part of the debtor’s estates, the amount of such new credit remaining unpaid at the time of the adjudication in bankruptcy may be set off against the amount which would otherwise be recoverable from him.

“(d) If a debtor shall, directly or indirectly, in contemplation of the filing of a petition by or against him, pay money or transfer property bo an attorney and counselor at law, solicitor in equity, or proctor in admiralty for services to be rendered, the transaction shall be reexamined by the court on petition of the trustee or any creditor and shall only be held valid to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the trustee for the benefit of the estate.”

Under the provisions of this section, in order that the trustee may recover property or money paid to a creditor as a preference, it must appear that the payment was made when the party who made it was insolvent; was made within four months of the bankruptcy; in procuring or suffering a judgment to be entered against himself or making a transfer of his property to a creditor; the effect of which will be to enable one creditor to obtain a greater percentage of his debt than any other creditor of the same class. Such a preference is voidable at the instance of the trustee, if the person receiving it, or to be benefited thereby, has reasonable cause to believe that the enforcement of the judgment or transfer will result in a preference. If any of these elements is wanting, a preference cannot be set aside if otherwise valid under the state law. The burden of proof of existence of the essential elements of a transfer is upon the trustee seeking ito avoid it. Collier on Bankruptcy. (13th Ed.) p. 1248.

There is a question presented here which controls in the disposition of the case and renders unnecessary the discussion of .the other questions presented by this appeal.

Subdivision (a) of section 96 requires that, even if all the conditions of payment of property or money to the creditor be complied, with, yet the burden is upon the trustee to prove that the receipt by the creditor of the preference payment “will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class.” (Emphasis ours.)

“It is not necessary that other creditors of the same class actually shall have received the same proportions, in order to exonerate from- the charge of preference, if enough is left to give them the same proportion.” 4 Remington on Bankruptcy, 697, § 1812.

“It is essential to a recovery in eases of this kind that the effect of the payment was to enable one creditor to obtain a greater percentage of his debt than other creditors of the same class.” Id.

The primary purposes of subdivisions (a) and (b) of this section is to secure equality of distribution among creditors of the same class. In re Bloch (C. C. A. N. Y. 1905) 142 F. 674, 676, 15 A. B. R. 748; Dulany v. Morse (D. C. 1913) 39 App. D. C. 525; Utah Association of Credit Men v. Boyle Furn. Co. (1913) 43 Utah, 523, 136 P. 572.

“Any transfer of the bankrupt’s property, made or effected within four months before the filing of the petition in bankruptcy, and while the bankrupt was insolvent, will under subdivision (a) of this section [section 96], be deemed to be-a preference, if,the effect of such transfer is such as to enable any one of the bankrupt’s creditors to obtain a greater percentage of his debt than any other of such creditors of the same class.” 11 USCA p. 345, and citing very many authorities.

“The test of the classification of creditors for the purpose of determining whether an alleged preference will enable the one receiving it to receive more than other creditors of the same class, is the percentage of their claims which they are entitled to draw out of the estate of the bankrupt.” 7 C. J. 163.

We have carefully gone over the statement of facts in this case, and find no'classification introduced in evidence. Neither do we find that the bankruptcy court entered such classification order. The evidence shows that there were quite a number of accounts paid in full, some paid in part, and a number not paid, but there is no satisfactory proof of any classified accounts being paid which would • enable the trial court or this court to determine whether or not -the defendant, by accepting the payment of the $4,500 in money within the four -months, had obtained a greater percentage of his debt than any other creditor of the same class.

For that reason, we affirm the judgment of the trial court.


text:
    MORRISON v. MORRISON.
    No. 1051.
    Court of Civil Appeals of Texas. Waco.
    April 2, 1931.
    Crane & Hartwell, of Raymondville, for appellant.
    Mark Smith, of Waxahachie, for appellee.
   BARCUS, J.

On April 22, 1930, appellee instituted this suit against appellant for a divorce and for the care and custody of their seven year old girl. Appelleé alleged statutory grounds showing the district court of Ellis county had jurisdiction and facts that, if true, authorized the trial court to grant him a divorce and award him the custody of the child. Appellant filed pleas in abatement. She made no answer to appellee’s suit for a divorce and the custody of the child. For pleas in abatement, she alleged the district court of Ellis county had no jurisdiction to hear and determine the case. First, she alleged that while she had not lived in Willacy county for six months next preceding said date, she had on February 20, 1930, filed suit for a divorce against appellee in the district court of said county and had in said suit asked for the custody and control of their child, and that -she had prayed for and obtained in said suit a temporary writ of injunction against appellee restraining him from interfering with her care, custody, and control of said child 'during the pendency of said suit. Second, she alleged that appellee had not been a resident citizen of Ellis county six months prior to the time he filed his suit for a divorce. The cause was tried to the court, and he overruled the pleas in abatement and granted appellee a divorce and the care and custody of the child, giving appellant the right to see and visit the child at all reasonable times.

There is no statement of facts nor findings of fact, none having been requested, filed with the record. Since it was necessary for the trial court to hear evidence in order to determine its jurisdiction and since it overruled the pleas in abatement and granted the divorce, in the absence of a statement of fact or findings of fact, it will -be presumed the trial court had sufficient evidence before it to show that it had jurisdiction of the parties and to support the judgment. Gohlman, Lester & Co. v. Griffith (Tex. Com. App.) 245 S. W. 233; Saunders v. Saunders (Tex. Civ. App.) 293 S. W. 899; Cleveland v. Ward, 116 Tex. 1, 285 S. W. 1063; Street v. J. I. Case Threshing Machine Co. (Tex. Civ. App.) 188 S. W. 725 (error ref.). In Cleveland v. Ward, supra, 116 Tex. 1, 285 S. W. column 1, page 1072, the Supreme Court specifically held that it was necessary to both seasonably allege and prove the pendency of another suit before a trial court would be authorized to sustain a plea in abatement by reason of the pendency of said suit. In Street v. J. I. Case Threshing Machine Co., supra, the court announced the same doctrine. While appellant attached to her pleas alleged copies of the pleadings filed in the district court of Collin county and Willacy county, there is nothing in the record to show that either of said suits were pending at the time this suit was tried in June, 1930. In her petition for a divorce filed in Willacy county, appellant alleged specifically that she had not been a resident of said county for six months. Our statutes provide, and our courts uniformly hold, that in order for a party to maintain a suit for a divorce, he must both allege and prove residence in the state for twelve months and in the county for six months next preceding the time of exhibiting his petition for a divorce. Article 4631, Revised Statutes; Lawler v. Lawler (Tex. Civ. App.) 15 S.W.(2d) 684, and authorities there cited.

Whether one spouse can file a suit in a district court against the other for the care and custody of their child prior to the time he can maintain a suit in said court for a divorce and thereby confer exclusive jurisdiction upon said court over said child, or whether another district court which has jurisdiction can, in a divorce suit thereafter filed by the other spouse, grant the divorce and award the child to the father or mother as it thinks wise as provided by article 4639 of the Revised Statutes, are questions not necessary, for us to, and we do not, determine.

Appellant’s assignments of error and propositions are all overruled.

The judgment of the trial court is affirmed.


text:
    FIRST NAT. BANK OF LOCKNEY v. LIVESAY.
    No. 3567.
    Court of Civil Appeals of Texas. Amarillo.
    March 18, 1931.
    Rehearing Denied April 15, 1931.
    L. C. Penry, of Fort Worth, for appellant.
    Joiner & Cook, of Plainview, for appellees.
   RANDOLPH, J.

This suit was originally instituted by Flor-iday J. Livesay and the heirs of J. T. Live-say, deceased, seeking to recover on two $1,000 policies of insurance on the life of J. T. Livesay, issued to the First National Bank of Lockney, Tex., as beneficiary, by the Plain-view Mutual Life Insurance Association of Plainview, Tex. Subsequently, by leave of court, E'. O. Livesay, temporary administrator of tbe estate of J. T. Livesay, was substituted as plaintiff and tbe original plaintiffs were thereupon dismissed from tbe suit.

On trial before tbe court without a jury, judgment was rendered in favor of said E. (J. Livesay, administrator, aforesaid, for tbe sum of $1,940, with interest from date of judgment at 6 per cent, per annum, as against the defendant Plainview Mutual Life Insurance Association and that tbe bank take nothing on its cross-action against said defendant insurance association, and also rendered judgment in favor of tbe Plainview Mutual Life Insurance Association against tbe defendant bank for tbe sum of $940 with interest.

Erom this judgment tbe First National Bank of Lockney, Tex., has appealed to this court.

J. T. livesay was indebted to tbe defendant bank in the sum of $2,789 on a note dated at Lockney, Tex., February 21, 1927, due March 10, 1927, payable to the order of defendant bank and bearing interest from maturity until paid. There is an agreement upon tbe following as facts by tbe parties hereto: It is admitted that there were two insurance policies issued on the life of J. T. Live-say by the defendant insurance company, payable to tbe defendant First National Bank, of Lockney, each of said policies being in tbe sum of $1,000, issued before Livesay died and valid and in force at tbe time of bis death. It is also admitted that one of these policies of $l,000i has been- paid by tbe defendant insurance company to the defendant bank. It is further agreed that there was no proof as to whether J. T. Livesay knew anything about the insurance or not at the time the policies were issued and that the insured Livesay died the 11th of May,' 1930. E. G. Livesay has qualified as temporary administrator of the estate of J. T. Livesay, deceased, and the court ordered and directed that E. G. Livesay prosecute this suit.

It is agreed that the policy that has been paid was in group 3 and that it was paid before any notice of any claim by the heirs was given on the 1st of July, 1930. It is admitted that the defendant bank paid the premiums amounting to $60, and that there is another $1,000 in the hands of the Plainview Mutual Life. Insurance Association of Plainview, subject to the orders ef the trial court to be entered in this cause.

At the time of the issuance of the two policies there was an amount in excess of the amount of same owing to the defendant bank.

As stated, there is no evidence to show that the policies were taken out with the knowledge or consent of the insured, and it is also admitted that the insured is now deceased and that on March 2, 1927, the deceased was given a discharge in bankruptcy prior to his death. The record also shows that subsequent to J. T. Livesay’s bankruptcy, he made the following payments on the note to the bank, to wit: 3 — A—27, $5; 4 — 16—27, $125; 1 — 13—28, $12.50; 1 — 16—28, $25.

The question for our decision is: Did the bank have an insurable interest in the life of J, T. Livesay at the time it took out the insurance policies?

The appellee contends that as the deceased, prior to the issuance of the insurance policies, had filed his voluntary petition in bankruptcy and later had been discharged in bankruptcy, he was not a debtor of the bank, because he had listed the note in his bankruptcy schedules and was discharged from the debt. Hence, the bank had no insurable interest in his life, as the note had never been renewed in writing. As sustaining their theory of the case, they cite Kruegel v. Murphy & Bolanz (Tex. Civ. App.) 177 S. W. 1018, 1019; Armstrong v. Neblett (Tex. Civ. App.) 19 S.W.(2d) 362; Price v. Knights of Honor, 4 S. W. 633; Cheeves v. Anders, 87 Tex. 287, 28 S. W. 274, 47 Am. St. Rep. 107; Warnock v. Davis, 104 U. S. 775, 779, 26 L. Ed. 924; Northwestern Mutual Life v. Whiteselle (Tex. Civ. App.) 188 S. W. 22.

In the ease of Kruegel v. Murphy & Bolanz, supra, it is held by the' Dallas court that the discharge in bankruptcy satisfied the judgment against the bankrupt. This holding is evidently not intended to declare that the debt was thereby paid, for the court limits the extent of the same by the further holding that as a consequence Kruegel had no legal right to have process' issued for its enforcement.

In the Armstrong Case the Fort Worth court was passing upon the question of the sufficiency of a promise to pay the debt which had been discharged and did not attempt to decide the question here at issue.

The Price Case simple holds that in Texas the assignment by one of an insurance policy upon his own life to his cousin, who lived with him as an adult male member of his family and was dependent upon the insured for employment and support, upon an agreement by the assignee to pay the assessments necessary to keep the policy in force, is void as being- to one who has no insurable interest in the life of the insured and as being against public policy.

In the Cheeves Case, the Supreme Court holds that a partner havng obtained a policy of insurance upon his life, payable to himself and his partner or their administrators and assigns, the premium on which was paid out of the partnership assets and afterwards, on the dissolution of the partnership, conveyed all his interest to the firm property to his partner, and then died, the continuing partner, having no Interest In the life of the insured at the time of the latter’s death, cannot recover on the policy as against the estate of the insured.

In the Warnock Case, the Supreme Court of the United States holds that a policy on the life of a person is not assignable to one with no insurable interest in the life of the deceased and defines insurable interest as follows: “It is not easy to define with precision what will in all cases constitute an insurable Interest, so as to take the contract out of the class of wager policies. It may be stated generally, however, to be such an interest, arising from the relations of the party obtaining the insurance, either as creditor of or surety for the assured, or from the ties of blood or marriage to him, as will Justify a reasonable expectation of advantage or benefit from the continuance of his life. It is not necessary that the expectation of advantage or benefit should be always capable of pecuniary estimation; for a parent has an insurable interest in the life of his child, and a child in the life of Ms parent, a husband in the life of Ms wife, and a wife in the life of her husband. The natural affection in cases of this kind is considered as more powerful—as operating more efficaciously—to protect the life of the insured than any other consideration. But in all cases there must be a reasonable ground, founded upon the relations of the parties to each other, either pecuniary or of blood or affinity, to expect some benefit or advantage from the continuance of the life of the assured. Otherwise the contract is a mere wager, by which the party taking the policy is directly interested in the early death of the assured. Such policies have a tendency to create a desire for the event. They are, therefore, independently of any statute on the subject, condemned, as being against public policy.”

In the Whiteselle Case, the Texarkana court holds that a wife, named as a beneficiary in a policy, after divorce has no insurable interest in her former husband’s life.

The solution of the question before us depends upon the relationship existing between the bank and the deceased—whether or not the bank had a pecuniary interest in the continuance of the life of the insured. As we see it, there is no question of the right to a legal enforcement of the bank’s claim, but a moral obligation on the part of the insured to pay a debt which had not been paid, which the insured had recognized by repeated payments on the debt owed to the bank, made after his discharge in bankruptcy. That the debt has not been paid, but is simply unenforceable, is the almost unanimous holding of the decisions of the courts of the various states of the United States and of the Supreme Court of the United States.

Black on Bankruptcy, Hornbook Second Edition, § 300, lays down the rule: “If a particular debt was provable in bankruptcy and not within the excepted classes, the discharge in bankruptcy bars any further legal proceedings for its collection. But does not extinguish the debt so as to render it incapable of renewal, nor does, it relieve the debtor of a moral obligation to pay the unsatisfied balance.” “It is settled, however, that a discharge, while releasing the bankrupt from legal liability to pay a debt that was provable in the bankruptcy, leaves him under a moral obligation that is sufficient to support a new promise to pay the debt. * * * The theory is that the discharge destroys the remedy, but not the indebtedness. * * * ” Zavelo v. Reeves, 227 U. S. 625, 33 S. Ct. 365, 367, 57 L. Ed. 676.

It is apparent, therefore, that the debt continues to exist after the discharge of the bankrupt and that the debtor is under a moral obligation to pay it For this reason, if a creditor sues a debtor who has been discharged in bankruptcy and the debtor fails to plead such discharge .as a defense, judgment will be rendered against him. Coffee v. Ball, 49 Tex. 16; Manwarring v. Kouns, 35 Tex. 173.

A promise to pay a debt which is barred by limitation is based on a sufficient consideration because of the moral obligation resting upon the debtor to pay it. Burnham, etc., Co. v. McMichael, 6 Tex. Civ. App. 496, 26 S. W. 887, writ denied; Goldfrank, etc., Co. v. Young, 64 Tex. 432; Howard v. Windom, 86 Tex. 560, 26 S. W. 483; Building & Loan Association v. Goforth, 94 Tex. 259, 264, 59 S. W. 871.

This being the rule applicable to debts barred by limitation or discharged by bankruptcy proceedings, we do not see why the moral oligation should not furnish such a pecuniary relationship as to create between the debtor and the creditor such a moral obligation as would furnish an insurable interest to the creditor in the life of the debtor. Especially is this true where the debtor has shown repeatedly, by making payments on the debt after his discharge in bankruptcy, that he recognized the moral obligation to pay the debt. Having received from the debt- or such recognition of his moral obligation, there can be no reason for the creditor to think that the debtor would not continue to feel the weight of such moral obligation to pay. Hence, there was a vital pecuniary relationship between them.

We have been unable to find a case in the Texas Reports passing upon the particular point herein involved, but the decisions below cited apparently settle the matter in favor of the defendant bank’s contention.

In the case of Conn. Mutual Life Insurance Co. v. Schaefer, 94 U. S. 457, 460, 24 L. Ed. 251, 253, the United States Supreme Court says: “It is well settled that a man has an insurable interest in his own' life, and that of his wife and children; a woman in the life of her husband; and the creditor in the life of his debtor. * * * And in cases where the insurance is effected merely by way of indemnity, as where a creditor insures the' life of his debtor, for the purpose of securing his debt, the amount of insurable interest is the amount of the debt.”

A moral obligation is sufficient to give the creditor an insurable interest in the life of the debtor. Manhattan Life Insurance Co. v. Hennessy (C. C. A.) 99 F. 64.

“The discharge in bankruptcy did not destroy the moral obligation of the debtor to pay his debt. * * * The discharge when granted operates to cut off the creditor’s remedy for the enforcement of his debt by judgment and execution as fully as the statute of limitations. And the nature of either of the two defenses does ’ not suggest any distinction between them, so far as they may affect the question of an insurable interest in a creditor, after the right to interpose such a defense has arisen in favor of the debtor.” Ferguson v. Mass. Mutual Life Insurance Co., 32 Hun, 306.

These being the facts and this being the rule, the trial court erred in rendering judgment for the plaintiff. The judgment of the trial court is therefore reversed and is here rendered that the plaintiff take nothing by his suit and that the defendant bank have judgment for the sum of $1,000 against the defendant Plainview Mutual Life Insurance Association of Plainview, Tex., that the Plainview Mutual Life Insurance Association take nothing as against the defendant bank, and that all costs be taxed against E. G. Livesay, administrator.


author: WILLSON, O. J.

text:
    AGUA DULCE SUPPLY CO. et al. v. CHAPMAN MILLING CO.
    No. 3986.
    Court of Civil Appeals of Texas. Texarkana.
    March 19, 1931.

      Perkins & Floyd, of Alice, for appellants.
    J. F. Holt, of Sherman, for appellee.
   WILLSON, O. J.

(after stating the case as above).

It appeared the milling company was entitled to maintain its suit in Grayson county, so far as it was against the supply company, notwithstanding the domicile of the latter was in Nueces county, because it (the supply company) had contracted in writing to perform its obligation to the milling company in said Grayson county. Whether the milling company had a right also to maintain the suit in Grayson county so far as it was against Yakey and Mrazek, depended upon whether they were jointly liable with the supply company on the contract between it and the milling company. Stephens v. Bank (Tex. Civ. App.) 146 S. W. 620; Cerf v. Mings (Tex. Civ. App.) 15 S.W.(2d) 91; Danciger v. Smith (Tex. Civ. App.) 229 S. W. 909; McCauley v. McElroy (Tex. Civ. App.) 199 S. W. 317; Galveston Dry Goods Co. v. Mitchell (Tex. Civ. App.) 171 S. W. 278; India Tire & Rubber Co. v. Murphy (Tex. Civ. App.) 6 S. W(2d) 141; Wool Growers Central Storage Co. v. Edwards (Tex. Civ. App.) 10 S.W.(2d) 577.

It is plain they were not so liable, for neither of them was a party to that contract. So, if Yakey and Mrazek were liable at all to the milling company, it must have been by force of article 7091, R. S. 1925, providing for the forfeiture of a corporation’s right to transact business in this state if. it fails to pay the franchise tax for which it is liable, and providing further as follows:

“Each director and officer of any corporation whose right to do business within this State shall be so forfeited shall, as to any and'all debts of such corporation which may be created or incurred, with his knowledge, approval and consent, within this State, after-such forfeiture by any such directors or officers, and before the revival of the right of such corporation to do business, be deemed and held liable thereon in the same manner and to the same extent as if such directors and officers of such corporation were partners.”

It will be noted that it was indispensable to the existence of a cause of action in favor'of the milling company against Yakey and Mrazek under that statute that they should have been officers or directors of the supply company at the time the cause of action against it arose and that they should have known, approved, and consented to the transaction forming the basis of such cause of action.

It is not pretended there was any evidence that Yakey and Mrazek were in that attitude, other than that showing they were named as directors of the supply company in the charter issued to it March 25, 1927. It is argued that it might be inferred from that fact, there being no evidence they ever ceased to be such directors, that they continued to be and were such directors November 28, 1928, and afterwards, when the supply company purchased the goods, and that it might be inferred, further, from the fact that they were such directors and from the fact that it was their duty as such to know about such purchases, that they did know, approve, and consent thereto. As by the terms of article 1304, subdivision 5, R. S. 1925, the persons named in a charter were directors only for one year, and as by the terms of article 1323 of said statutes, a corporation was required to elect directors annually, we do not think a presumption that Yakey and Mrazek continued to be directors of the supply company after the expiration of a year from the date of that company’s charter was permissible.

As we view the matter, there was no evidence showing a cause of action to have existed in the milling company’s favor against Taliey and Mrazek, and it plainly appeared, therefore, they were not necessary parties to its suit against the supply company.

The judgment will be reversed, and the cause remanded, with instructions to the court below to transfer the suit, so far as it is against Takey and Mrazek, to Nueces county for trial.


author: BAUGH, J.

text:
    BILLUPS v. GALLANT et ux.
    No. 7530.
    Court of Civil Appeals of Texas. Austin.
    Feb. 5, 1931.
    Rehearing Granted in Part and in Part Overruled March 4, 1931.
    Baker & Parish, of Ballinger, for appellant.
    Crager & Dickey, of Ballinger, for appel-lees.
   BAUGH, J.

Appellant sued appellees in trespass to try title and for damages to ISO acres of land in Runnels county, Tex. Appellees filed a cross-action seeking cancellation and rescission of. a contract of sale of said land between appellant and R. I-I. Gallant, dated November 1, 1923, and to recover from Billups the amount paid by appellees as purchase money for said land under said contract. The case was tried to a jury upon special issues, and upon their findings Judgment was rendered in favor of appellant for said land; in favor of appellees against appellant for $1,403.76; and establishing and foreclosing an equitable lien in their favor on said land. From this Judgment Billups has appealed.

The following facts appear: The contract in question provided that R. H. Gallant was to pay Billups for said land $4,250, payable one-half of the proceeds from sale of the crops raised thereon each year. Upon payment by Gallant of as much as $500, Billups was to execute and deliver to him a warranty deed, at which time Gallant was to execute a vendor’s lien note for the balance of the purchase price, secured by a deed of trust on the land, due on or before 10 years after date, payable from one-half of the proceeds of the sale of the crops each year. Gallant was to pay all taxes on said land subsequent to 1924, and was to give each year a mortgage on said crops to secure all such payments. Gallant went into possession of the premises in November, 1923. During 1924,' he paid .Billups $890.86 in addition to $100 paid him in November, 1923. The Jury found that he then demanded of Billups a deed which Bill-ups failed furnish him. On October 30, 1925, R. H. Gallant was adjudged insane and sent to a state hospital. Payments of one-half the proceeds of crops raised on said place were continued by his wife as follows: In 1925, $967.60; in 1926, $310.54; and in 1927, $173.92. No payments were made in 1928 nor in 1929, though the Gallants continued to occupy and farm said premises, and remained in possession of same up to the time of the trial.

Appellant brings 44 assignments of error upon which 41 propositions are based. We shall not undertake to consider all of them, but confine ourselves to a discussion of what we consider the controlling questions presented.

First of these is that appellees, in their cross-action, having sought equitable relief in an equitable proceeding, must offer by pleading and in fact to do equity, and that they failed to do so.

If appellees had'filed an independent suit for cancellation and rescission of said contract, that being an equitable proceeding, it would have been incumbent upon them to offer to do full equity in the premises. That is, to surrender the premises to Billups and to tender the fair valúe of their use of same during their period of occupancy. Cecil v. Henry (Tex. Civ. App.) 93 S. W. 216; Frede v. Luck (Tex. Civ. App.) 9 S.W.(2d) 180; 27 R. C. L. 655. Such a suit is different in character from a suit in trespass to try title, the latter being a legal remedy. Haskins v. Wallet, 63 Tex. 213; 7 Tex. Jur. 885. While appellees’ cross-action did seek a cancellation of the contract, neither the pleadings nor the proof met the requirements of such an equitable proceeding. The record conclusively shows that neither of said parties had fully complied with the terms of said contract; and that both had in effect abandoned it before the filing of this suit. The suit therefore retained its original character as an action in trespass with a cross-action for damages. Hutchison v. Hamilton (Tex. Civ. App.) 223 S. W. 864; Black on Rescission and Cancellation, vol. 1, p. 3; 7 Tex. Jur. 886. Not only is this true, but appellant repudiated the contract himself and sought to recover the land and the rental value thereof as damages without offer to credit appellees with the amounts paid him thereon. He is therefore in no position to demand that they offer to do equity, nor to complain of their failure to do so.

While much of appellant’s brief is devoted to contentions based upon the assumption that this is in effect a suit by appellees for cancellation and rescission of said contract, the case was not so tried nor the judgment so rendered. Appellant was awarded title and possession of said land. Bach of the parties had pleaded a breach of said contract by the other. The jury found that appellant had breached same by failure to execute and deliver to Gallant upon demand a deed to the land after Gallant had paid the $500 in 1924. Appellees were then entitled to a deed upon compliance with their part of the contract, that is, execution of vendor’s lien note and deed of trust. They could then have compelled specific performance of the contract, or sued for damages for breach therepf. They appear, however, to have waived that provision of the contract by continuing in possession of land and continuing their payments of one-half of the proceeds of the sale of the crops up to the year 1928. The only issues submitted to the jury relative to any breach of said contract by appellees were found in favor of appellees. Legal title to the land in Billups being admitted, the only controverted issues remaining were those of damages arising from breach of said contract, and the case was so tried below. The rules governing actions for cancellation and rescission consequently do not apply.

The amounts paid by appellees to Bill-ups on the purchase price of said land and the dates of such payments are admitted. Appellees sought to recover .these payments. They had derived from the possession, use, and cultivation of said land, and used for themselves, during the years 1924, 1925, 1926, and 1927, more than they had paid Billups, and had paid him nothing for the use of the premises during 1928 and 1929. Billups was entitled, therefore, to offset against the amounts paid him as purchase money the reasonable value of the use of said premises during the time same were used and occupied by appellees. This would be the reasonable rental value of same. Such value for each of said years was submitted to and found by tbe jury. Their findings thereon as to the year& 1924, 1925, 1926, and 1927 are supported by the evidence. We find no competent testimony, however, to support their finding's for the years 1928 and 1929. The jury found such value for the year 1928 to be $200, and for 1929 to be $175. Billups testified that the value of such use for each year was $500. There was no testimony whatever as to the value of the crops raised by appellees on said lands during those two years. R. H. Gallant did testify, over objection of appellant, that he was not a competent witness, that the rental value of such land was $1 or $1.50 an acre. He also testified as to other material facts in issue, being offered as a witness by his own attorneys. His testimony as to rental values was obviously, we think, the basis of the jury’s finding of such values for the years 1928 and 1929j

It is undisputed that said R. H. Gallant was adjudged insane in October, 1925, and again on October 30, 1928, and was sent to a state hospital for the insane shortly thereafter, where he was an inmate on February 12, 1929, at which time the trial court appointed E. C. Dickey an attorney, as his guardian ad litem. It does not appear at whose request such appointment was made. Trial hereof was had on February 20, 1929, eight days after such appointment, at which time Gallant appeared and testified as a witness. There is nothing to show how or when he had been discharged from the state hospital, whether by parole or otherwise, or that he had regained his sanity. Under these circumstances it was clearly incumbent upon those offering him as a witness to show that he had regained his sanity. The presumption, in the absence of proof to the contrary, was that his mental condition, admittedly unsound on February 12th, was still unsound on February 20th, rendering his testimony inadmissible. Rowan v. Hodges (Tex. Civ. App.) 175 S. W. 847, 848; National Surety Co. v. Landers (Tex. Civ. App.) 235 S. W. 275, 277; West Lumber Co. v. Henderson (Tex. Civ. App.) 238 S. W. 710; Id. (Tex. Com. App.) 252 S. W. 1044.

Appellant also complains of the item of interest allowed by the trial court on the payments made by appellees to Billups. The aggregate amounts of all of these payments was $2,343.02, the specific amount sued for. The court awarded appellees interest thereon from the dates of the respective payments at the rate of 6- per cent, per annum, amounting to $606.14. From the aggregate of the sums paid, plus the interest, was deducted the sum of $1,545, the total rental value of said lands as found by the jury, and judgment rendered for appellees against appellant for the difference — $1,403.76. No interest was allowed to Billups on the rental values found.

Neither in their pleadings nor in the prayer for relief did appellees anywhere ask for a recovery of interest. There seems to be some confusion in the cases as to whether a prayer for general relief, when the facts on which damages are sought are undisputed, places that element of damage in issue so as to authorize judgment for same. West Lumber Co. v. Henderson (Tex. Com. App.) 252 S. W. 1044, 1046, and St. Louis Southwestern Railway Co. v. Seale et al. (Tex. Com. App.) 267 S. W. 676, seemingly hold that it does not, and that failure to ask for interest amounts to a waiver of same. However, Lee v. Boutwell, 44 Tex. 151, and Ewing v. Foley, 115 Tex. 222, 280 S. W. 499, 44 A. L. R. 627, as construed by this court in Texas Power Corp. v. Kuehler, 34 S.W.(2d) 381, would indicate the contrary.

In view of these matters, and the reversal of this case on other grounds, appellees can amend their pleadings in’ this respect and so eliminate this issue. Hence we deem it unnecessary to pass upon the issue here. In any event, if appellees be allowed interest on the amounts paid by them, the trial court should also have allowed appellant interest on the amounts he was entitled to offset thereon for the use of said 'premises, from the dates these sums were due.

We are also of the opinion that the proffered testimony of O. L. Parish, an attorney, as to his conversation with, and the advice given to, Mrs. R. H. Gallant in January, 1926, in the presence of Billups, was admissible. At that time R. H. Gallant was in the state hospital for the insane. He was incapable of performing his contract. His wife was not a party to it. Billups had pleaded and testified that he had always been ready and willing to execute the deed when Gallant, or some one for him, was in a position to legally execute the notes and deed of trust. Mrs. Gallant testified that she and her husband had demanded a deed in 1925, 1926, and 1927, at times when R. H. Gallant was sane. The proffered testimony related to the legal steps necessary to be taken by her to carry out the contract of her husband, then insane. Such steps were never taken by her. Each party had charged the other with breach of the contract. Their efforts in January, 1926, following payment in the fall of 1925, when R. I-I. Gallant was then insane, of $967.60, to legally carry out the contract, was a circumstance tending to show waiver of failure of Billups to make a deed theretofore, and an effort on his part then to carry out his contract. Testimony therefore of legal advice to Mrs. Gallant as to how she could perform the contract, and her failure' to take such steps, was, we think, admissible on the question of her good faith and of her credibility; and on the issue of breach of said contract by Billups.

It was not error to award appellees an equitable lien on the land in question. Whatever they were entitled to recover was for purchase money paid by them under contract of purchase of said land. They were entitled to have such lien fixed to secure such repayment. Galbraith v. Reeves, 82 Tex. 357, 18 S.W. 696; Ross v. Haynes (Tex. Civ. App.) 196 S. W. 364.

The foregoing in the main disposes of the questions raised by appellant. We have not adverted to some other objections to testimony, but they need not recur upon another trial. For the errors pointed out the judgment of the trial court is reversed, and the cause remanded for another trial.

Reversed and remanded.

On Motion for Rehearing.

In our opinion we stated that a guardian ad litem was appointed for R. H. Gallant on February 12, 1929, at which time he was an inmate of a state hospital for the insane, and that trial was had eight days later, at which time he testified. This statement is incorrect. Trial was had February 20, 1930, one year and eight days after appointment of his guardian ad litem. We make this correction, but it does not change the force nor effect of the established rule of decisions announced. That is, that appellant having been shown to be insane, the presumption obtains that that condition continues, in the absence of a showing to the contrary. Our former opinion is corrected to this extent. In all other respects appellees’ motion for rehearing is overruled.

Granted in part and in part overruled.


author: LEVY, J.

text:
    TEXARKANA MOTOR CO. v. BRASHEARS.
    No. 3976.
    Court of Civil Appeals of Texas. Texarkana.
    March 20, 1931.
    Rehearing Denied March 20, 1931.

      E. Harold Beck and E. E. Keeney, both of Texarkana, for appellant.
    Elmer L. Lincoln, of Texarkana, for ap-pellee.
   LEVY, J.

(after stating the case as above).

The plaintiff was allowed to testify over the objection of the appellant, in substance, that while the automobile in evidence was in the shop of the Dilby Auto Company undergoing repairs, he (plaintiff) obtained information through Joe Speers, the mechanic, that the automobile “was of the 1925 model, a defective model, defective in the oiling system, and not properly distributing oil, and at a speed exceeding thirty-five miles the connecting rod did not equally distribute oil and would inevitably burn out.” Appellant insists such evidence was hearsay and the objection to- its introduction should have been sustained. Although giving the particular defects pointed out, yet the witness was merely undertaking to state when and the circumstances under which he gained his knowledge about the condition of the automobile. In that view there was no legal objection to the evidence. Assuming, however, there was technical error in admitting the evidence, such error must be regarded as harmless when tested by the record as a whole. Rule 62a. The witness Speers in testifying himself gave the very evidence'about the automobile as is complained of in the bill of exception. Other witnesses also testified to the facts reproduced by the plaintiff in this -testimony. And the court did not submit to the jury for finding upon any issue of whether or not the appellant represented that the automobile was of the particular model of 1925 and would hold up at the speed as described by the plaintiff and the other witnesses.

The appellant pleaded in bar of the suit the statute of limitation of two years, and insists that the plea should have been sustained. It is the settled rule in this state that the statute of limitation begins to run from the time when and only when the fraud is discovered, unless in the exercise of reasonable diligence it might have been sooner discovered. Bass v. James, 83 Tex. 110, 18 S. W. 336; Port Arthur Rice Milling Co. v. Rice Mills, 105 Tex. 514, 143 S. W. 926, 148 S. W. 283, 150 S. W. 884, 152 S. W. 629. This rule really means that when the statute of limitation is pleaded in bar of the action and the evidence on the part of the defendant goes to show that the bar of the statute applies, then and in that event there devolves upon the plaintiff in the action the burden to produce evidence showing when he first discovered the fraud and the circumstances of discovery, so that the court may see he did not discover the fraud until less than the statutory time before the commencement of the suit and by due diligence such fraud could not have been found out sooner. Raley v. D. Sullivan & Co. (Tex. Com. App.) 207 S. W. 906; Clement v. Clement, 44 Tex. Civ. App. 574, 99 S. W. 138. In the absence of such evidence by the plaintiff in the action, the prima facie evidence of the defendant,’ that the bar of the statute applies, would stand as conclusive. But when the plaintiff in the action has produced evidence of the kind stated, then the prima facie evidence of the defendant, that the bar of the statute applies, would not stand as conclusive. In such circumstances there would have to be determined by the court or the jury upon the -whole evidence, the fundamental question of whether or not the action was barred by the statute of limitation. Unless it was as a fact barred, as tested by the rule applied in fraud cases, the defense of limitation could not prevail. Looking to the facts in the present case, it is believed the court was not authorized to hold, as a pure matter of law, that the cause of action was barred. The evidence fully raised the issue of matters avoiding limitation, which the jury should have determined in the first instance, taking the case out of the operation of the statute. Therefore, the point made by the appellant would be controlled in this record by the ruling in the cases of Ormsby v. Ratcliffe, 117 Tex. 242, 1 S.W.(2d) 1084, and Jones v. Baldwin (Tex. Com. App.) 23 S.W.(2d) 308. The rulings in these cases require an affirmative defense to be submitted to the jury or be conclusively deemed as waived. And the statute of limitation in bar of an action is classed as an affirmative defense, specially to be pleaded. 37 C. J. p. 1213, § 718; 2 Jones on Evidence, § 194; Cunningham v. Frandtzen, 26 Tex. 34; and other cases.

The appellant specially points out that in the judgment the appellee was awarded a recovery in the total sum of $800, consisting of the items of $500, which was the difference between what appellee parted with and what he received, and of $300 which was the total sum subsequently expended by the appellee in replacing connecting rods which had been burned out. The point in view, in effect, urged by the appellant is that having elected to keep the automobile notwithstanding the false representations, the appellee cannot recover as damages the $300 expenditure he made on it. It-is quite correct, as asserted by the appellant, that in fraudulent sales the rule measuring the damages is fixed according to the election of remedies by the purchaser. 27 C. J. p. 18, § 128. The rule is thus stated: The defrauded party may rescind the transaction and return the property and receive back all the money or property which he has parted with and the damages which have proximately resulted from the fraud, or the defrauded party may suffer the transaction to stand and recover pecuniary damages as compensation. 2 Pomeroy, Eq. Juris. (4th Ed.) § 872. And in keeping with this rule the courts of this state have expressly held that in an action, as here, brought purely for the declared purpose of damages, as redress by a purchaser who has been induced to make the purchase, the purchaser will be awarded in payment the difference between the value of what he parted with and that received in exchange. George v. Hess, 100 Tex. 44, 93 S. W. 107, 8 L. R. A. (N. S.) 804, 123 Am. St. Rep. 772, 15 Ann. Gas. 456; Greenwood v. Pierce, 58 Tex. 130; Moore v. Beakley (Tex. Com. App.) 215 S. W. 957; Thrasher v. Walsh (Tex. Civ. App.) 228 S. W. 961; Medley v. Lamb (Tex. Civ. App.) 223 S. W. 1048; B. & H. Motor Co. v. Tucker (Tex. Civ. App.) 299 S. W. 949. Special damages in addition to the above general damages are allowable to the defrauded purchaser only when arising out of special circumstances or exigencies peculiar to the particular case. Routh v. Caron, 64 Tex. 289; Beckwith v. Powers (Tex. Civ. App.) 157 S. W. 177; Spencer v. Womack (Tex. Civ. App.) 274 S. W. 175; and similar cases. Such special or similar circumstances or exigencies aré not presented by the instant case being considered. And the expenses incurred by the defrauded party which are not the proximate consequence of the fraud, or which do not necessarily involve a loss, are not such special damages as are recoverable in addition to the general damage. Greenwood v. Pierce, 58 Tex. 130; Wimple v. Patterson (Tex. Civ. App.) 117 S. W. 1034; Linnartz v. Lawrie (Tex. Civ. App.) 192 S. W. 789; Chatham Machinery Co. v. Smith (Tex. Civ. App.) 44 S. W. 592; and other similar cases. The following quotation from Krause v. Busacker, 105 Wis. 350, 81 N. W. 406, 407, illustrates the ground which would deny the recovery of the expenses paid:

“Upon no theory, however, can it be held that the plaintiff is entitled to recover the $450 which he spent in improving the mill property before he found out the true condition of the dam. Possibly, had there been a rescission of the sale, such outlays might have been proper elements of damage; but there was no rescission. The plaintiff elected to keep the property, never attempting to rescind the sale, but bringing his action for damages, and thus affirming the transaction.Thus it is clear that the expenditures for improvements were expenditures made upon his own property, and that he necessarily had the benefit of them.”

These latter cases above in the light of the evidence would govern and control the expenses here claimed. Looking to the evidence and the jury verdict, the appellee expended $300 for “replacing burned out connecting rods, due solely to defects in the lubricating system.” The rods, it appears, became “burned out” after the purchase of the automobile while it was being driven at the speed of thirty-five miles an hour. The appellee discovered the faulty oiling system while the repairs were being made. It appears that after the purchase the car ran several months without a breakdown when the speed did not exceed twenty-five or thirty miles an hour. There was unfitness of the automobile for driving at a speed above 25 or 30 miles an hour. In fixing the “cash market value” of the automobile at $300 “at the time the auto? mobile was sold by the plaintiff to the defendant,” the jury necessarily considered that such automobile when driven at a speed at from twenty-five to thirty miles an hour was not worthless and was serviceable and was a go-tag concern in the condition it then was although the oiling system was faulty. Subsequent expenditures in evidence was then beneficial to the appellee and voluntarily incurred on his own property. Such enhanced value was computed in the $500 item. As a consequence of the facts the contention of appellant will be sustained, and the recovery of the $300 denied.

We have reached the conclusion, after careful consideration of all the remaining assignments of error, that they should be overruled. The judgment is accordingly modified so as to deny recovery for the $300, and to allow recovery for the $500 only, and as so modified, to be in all things affirmed. Cost of appeal will be taxed against the appellee.


author: WILLSON, C. J.

text:
    JOHNSON v. CHAPMAN MILLING CO.
    No. 3992.
    Court of Civil Appeals of Texas. Texarkana.
    March 19, 1931.
    Warren, Lasseter & Warren, of Tyler, for appellant.
    Webb & Webb, of Sherman, for appellee.
   WILLSON, C. J.

(after stating the case as above).

The facts of this case are not materially different from those of Patty-Joiner & Eubank Co. v. Cummins (Tex. Civ. App.) 59 S. W. 297, Id., 93 Tex. 598, 57 S. W. 566, decided by Texas courts, and International Shoe Co. v. Pinkus, 173 Ark. 316, 292 S. W. 996, decided by Arkansas courts, where it was held, in effect, that an assignment under a state statute by an insolvent debtor of his property for the benefit of his creditors who accepted thereunder was valid, “except as against proceedings seasonably taken under the National Bankruptcy Act.” In the Pinkus Case a writ of error was granted by the United States Supreme Court (278 U. S. 261, 49 S. Ct. 108, 110, 73 L. Ed. 318), which reversed the judgment of the Arkansas Supreme Court, holding that in enacting the Bankruptcy Act (11 USCA § 1 et seq.) “Congress [quoting! did not intend to give insolvent debtors seeking discharge, or their creditors seeking to collect claims, choice between the relief provided by the Bankruptcy Act and that specified in state insolvency laws.” “States,” the court added, “may not pass or enforce laws to interfere with or complement the Bankruptcy Act or to provide-additional or auxiliary regulations.”

It may be, as argued by appellant, that the Texas Assignment Law (title 12, R. S. 1925) ⅛ not an “insolvent law” in the sense the Arkansas statute was, but it cannot be doubted, we think, that the effect of holding it to have been operative in the insolvent debtor’s (Beasley’s) favor would have been to have given him “choice between the relief provided by the Bankruptcy Act and that specified” in the Texas statute, a thing the federal Supreme Court said should not be done; and, further, would be to “complement the Bankruptcy Act or to provide additional or auxiliary regulations,” which that court held a state could not do.

As we view the matter, giving effect, as he was bound to, to the ruling in the Pinkus Case, the trial court could not have held otherwise than he did, and this court, also hound as it is to respect that ruling, cannot do otherwise than affirm the judgment.