author: PARKER, Justice. STEPHENSON, Justice.

text:
    T. E. MOOR & COMPANY, Appellant, v. Paul HARDCASTLE, Appellee.
    No. 6932.
    Court of Civil Appeals of Texas. Beaumont.
    Nov. 2, 1967.
    Rehearing Denied Nov. 29, 1967.

      Keith, Mehaff & Weber, Beaumont, for appellant.
    W. G. Walley, Jr., Beaumont, for ap-pellee.
   PARKER, Justice.

Paul Hardcastle, as plaintiff, brought this declaratory judgment action against Ted E. Moor & Co., a partnership composed of T. E. Moor and Ted E. Moor, Jr., defendants, to declare all parts of a contract dated April 12th, 1961 between Paul Hardcastle and C. T. Smelker & Co. to have terminated and all obligations of Hardcastle to have ended on the date of the death of C. T. Smelker on February 28th, 1964, determining and declaring that the defendants had no rights under such April 12th 1961 contract. Such contract consisted of (a) the employment of Paul Hardcastle by C. T. Smelker & Co. and (b) a non-competing agreement on the part of Hardcastle effective within Jefferson County, Texas for a period of five years after the termination of the employment agreement, and providing “It is mutually agreed and understood that all agreements and covenants herein are severable.” Defendants in their answer contended the employment agreement of Hardcastle terminated on July 1, 1965 when defendants acquired the business and assets of C. T. Smelker & Co., but that the non-competing agreement of Hardcastle was transferred to defendants and is valid, binding and enforceable against plaintiff; that since July 1, 1965 plaintiff has violated his agreement not to compete. Defendants’ by cross action sought a permanent injunction against plaintiff from any manner violating or breaching his agreement not to compete, for their damages and for declaratory judgment in accordance with their contentions.

Trial was to a jury. At the conclusion of the evidence, a joint motion by the parties to withdraw the case from the jury, as there were no fact issues, was granted by the court. Judgment was rendered that the contract between plaintiff, Paul Hard-castle, and C. T. Smelker & Co. is and was not assignable, as a matter of law, that the same terminated on the death of the said C. T. Smelker on the 27th day of February, 1964, and the defendants, Ted E. Moor and Ted E. Moor, Jr., d/b/a T. E. Moor &' Co. have no rights under said contract; and that the cross-plaintiffs T. E. Moor and Ted E. Moor, Jr., d/b/a T. E. Moor & Co. and also as C. T. Smelker & Co. take nothing by their cross action against cross-defendant Paul Hardcastle. The parties will be referred to here as they were in the trial court.

The undisputed evidence shows: That plaintiff, Paul Hardcastle, and his son, Frank Hardcastle, organized and operated the Hardcastle Insurance Agency from 1959 until April 12, 1961. On that date they sold the agency to C. T. Smelker & Co. by written instrument which contained the following provision:

“and the assignors do also hereby covenant and agree that neither of them will do, assist in, or cause to be done anything which would deny, reduce, impair, or endanger the full enjoyment, receipt, and realization by the assignee herein of all future commissions assigned herein and that neither of them will solicit property or casualty insurance from the owners of the policies described above on behalf of themselves of any person, company, or agency other than C. T. Smelker & Co.”

Paul Hardcastle testified that he and his son sold and conveyed to C. T. Smelker & Co. all of the assets of the Hardcastle Insurance Agency, including policies, good will and future commissions. The contract itself is effective to do so.

At the same time on the same date, April 12, 1961, Paul Hardcastle entered into a contract with C. T. Smelker & Co. by which he agreed to: (a) work as an employee of C. T. Smelker & Co. as a property and casualty insurance solicitor, with provisions that Smelker pay Hardcastle for his services, and (b) a non-competing agreement which is as follows:

“This contract shall be in effect from the-day of April, 1961, and remain in effect until it is terminated. It is mutually agreed that this contract may be terminated by either Smelker or Hard-castle upon ten (10) days written notice, in which event Hardcastle’s right to commissions as described herein shall cease, the policies sold by Hardcastle during the existence of this contract shall remain the property of Smelker, and Smelker shall have no further obligations hereunder.
“Hardcastle agrees not to solicit insurance for or on behalf of himself or any person, company, or agency, other than Smelker during the effective period of this contract. Hardcastle also covenants and agrees that in the event of termination of this agreement, as provided herein, for whatsoever reason, he shall not, either directly or indirectly on his own account, or for or on behalf of any person, company, or agency, other than Smelker, record, solicit, or otherwise procure insurance from individuals, partnerships, or corporations within Jefferson County, Texas, for a period of five (5) years after the termination of this contract. Further, Hardcastle agrees during the continuance of this contract and after its termination for the period specified, that he will not directly or indirectly divert or take away or attempt to divert or take away any of the customers, business, or patronage of such customers as are served by Smelker. Smelker shall have the right to enforce these covenants by injunction or other appropriate remedy at law or in equity.
“It is mutually agreed and understood that all agreements and covenants herein are severable and that in the event any of them shall be held to be invalid by any competent court, this contract shall be interpreted as if such invalid agreement or covenant were not contained herein.”

The instruments of April 12, 1961, neither expressly provided for nor prohibited the assignability of either.

It is undisputed that Paul Hardcastle worked under C. T. Smelker until the latter’s death on February 27, 1964. C. T. Smelker & Co. was community property of C. T. Smelker and his wife, Laverne Nelson Smelker. Under the will of C. T. Smelker, Laverne Smelker acquired all of his estate. Laverne Smelker secured a license and operated C. T. Smelker & Co. Paul Hardcastle continued to work for Laverne Smelker under the same terms and provisions of the original employment contract. No new contract was entered into between them. Effective as of July 1, 1965 Laverne Smelker conveyed to T. E. Moor & Co. the insurance business of C. T. Smelker & Co., the assets of the company including good will, the right to do business in the name of C. T. Smelker & Co. for ten years and also transferred to T. E. Moor & Co. “seller’s rights in and to any non-compete agreements by solicitors now or heretofore employed by said agency * * * Plaintiff Paul Hardcastle ceased to be employed by C. T. Smelker & Co. on that date, secured a new license and was employed by Hall & Hall about August 1, 1965 as a commissioned solicitor. Since such date Hardcastle has solicited business from customers he had at the Hardcastle Insurance Agency and at C. T. Smelker & Co. Thus, he caused T. E. Moor & Co. to lose $6,909.00 worth of premiums with the Moors failing to receive in commissions $1,374.90.

The law in this State is well settled that the seller of a business may validly agree not to compete with the purchaser, and an employee may validly agree not to compete with an employer, as long as the restraint imposed is reasonable. The reasonableness of the restrictions in this case are not under attack. T. E. Moor and Ted E. Moor, Jr., d/b/a C. T. Smelker & Co., have never sought to force Paul Hardcastle to work for them but do seek to enforce his agreement not to compete with them for the time and within the area of Jefferson County as agreed upon by Hardcastle and Smelker on April 12, 1961.

Not only by the express terms of the contract is the non-competing agreement to be interpreted separately from the employment agreement, but under the authoritative decisions of the Supreme Court of this State the non-competing agreement is severable, valid, enforceable and assignable under Art. 569, Vernon’s Ann.Civ.St.

In Texas Practice, Vol. 6, Remedies, Injunctions and Other Extraordinary Proceedings by Lowe and Archer, in Sec. 276, pp. 261 and 262, it is stated:

“§ 276. Personal Service and Sale of Business Contracts, Injunction to Enforce
“Ordinarily equity will not enforce a contract for purely personal services. However, in cases where the services are of such unique character that similar services cannot be readily obtained if the contract is breached, equity will take cognizance thereof and injunctive relief against breach of the negative covenants in such contract will be afforded. Also, negative covenants in certain personal service contracts will be enforced by injunction even in the absence of unique and unobtainable qualifications where the employee agrees not to compete within a reasonable time within a limited territory, or where the employee necessarily learns trade secrets of the employer which could be used to the employer’s disadvantage if such competition were permitted. Also similar provisions in contracts for the sale of business and good will may be enforced by injunction.”

Some of the decisions cited in the above section will be discussed hereinafter. In the sale of July 1, 1965 by Laverne Smelker to T. E. Moor & Co., she did not convey any agreement to work but did convey all non-competing agreements. On the question of severability of contracts, Corbin on Contracts at Sec. 1204, states:

“It is. almost universally held that a contract for personal services will not be specifically enforced, either by an affirmative decree or by an injunction. The discussion of negative contracts hereinafter will show that in certain cases express and implied negative promises will be specifically enforced by injunction, even though they are contained in a more extensive contract involving personal service. Even in these cases, however, it will be seen that the injunction is granted for the purpose of preventing an irreparable injury caused by the breach of the negative promise itself, and not for the purpose of indirectly enforcing specifically the affirmative promises to render a personal service.”

And at Sec. 1210, it states:

“Negative promises in reasonable restraint of trade and competition have been enforced by injunction, even though the return promise of the plaintiff was one to render a personal service such as would not be affirmatively enforced. ⅜ * *
“A contract by an employee not to open a shop, business, or profession in direct competition with his employer for a reasonable period of time after leaving his employ has frequently been specifically enforced by injunction. In such cases it makes no difference that the defendant’s leaving was not a breach of contract, or that his services were not unique or his skill extraordinary, or that the employer can easily get an efficient substitute. The purpose of the injunction is not to induce the defendant to continue to service the plaintiff or to prevent injury caused by his leaving the service; it is to prevent him from engaging in unfair competition and stealing away the plaintiff’s customers contrary to his express promise.”

The Texas Supreme Court follows this distinction between covenants for personal services, which are not enforceable by injunction, and covenants not to compete, which are enforceable. Thus, in Mission Independent School Dist. v. Diserens, 144 Tex. 107, 188 S.W.2d 568, 569, 161 A.L.R. 877 (1945), the Supreme Court noted:

"As to the first contention, it is true that chancery courts have refused to grant mandatory injunction specifically enforcing contracts for the performance of personal services. It has been said that this refusal is based in part upon the difficulty of enforcement and of passing judgment upon the quality of performance and in part upon the undesirability of compelling the continuance of personal association after disputes have arisen and confidence and loyalty are gone. And in some cases, it has been observed, the decree would seem like the enforcement of an involuntary servitude. But to the contrary, it has also been pointed out that there may be negative promises in personal service contracts and within certain limits these may be be enforced by injunction. Restatement of the Law, American Law Institute, Volume II of Contracts, Section 379; * * *” 188 S.W.2d 568, 569. (Emphasis supplied)

See Weatherford Oil Tool Company v. Campbell, 161 Tex. 310, 340 S.W.2d 950 (1960).

The reason why such restrictive covenants are enforceable was noted by this court by per curiam opinion in LaRocca v. Howard-Reed Oil Co., 277 S.W.2d 769 (Tex.Civ.App.1955, n. w. h.):

“ * * * Restrictive covenants of this type are obviously entered into for the purpose of protecting the purchaser of the business in the enjoyment of good will of such business previously enjoyed by the seller. Such agreements have been universally upheld by the courts of this state so long as the restraint as to time and area are within reasonable limits * * * (citing Texas cases).”

And again:

“The purpose of such restrictive covenants as the one the parties here entered into was to render effective the good will which the appellee bought from the appellant when he bought him out. Any activity or conduct on the part of the seller of good will which will probably impair or reduce the advantages of purchasing such good will constitutes a breach of the seller’s agreement that he would not engage in the character of business in which he was previously engaged * * *.”

And again in Houston Credit Sales Co. v. English, 139 S.W.2d 163 (Tex.Civ.App.1940, n. w. h.), the appellate court observed:

“Provision in a contract of employment binding the employee to refrain from engaging in a similar or competing business in the same territory and during a reasonable and definite time following the termination of such contract, is a common means of securing to the employer the good will and trade built up as a result of the employment therein promised * *

In Thames v. Rotary Engineering Co., 315 S.W.2d 589 (Tex.Civ.App.1958, wr. ref. n. r. e.), the court said:

“First of all, we do not find any inhibition against the assignment or transfer of this type of covenant or agreement. These are not agreements to work, but are restrictive agreements promising not to compete. It has been held that such are transferrable or assignable as assets. Blaser v. Linen Service Corp. of Texas, Tex.Civ.App., 135 S.W.2d 509; Malakoff Gin Co. V. Riddlesperger, 108 Tex. 273, 192 S.W. 530.”

In this Thames case there is nothing in the opinion to indicate there was an assigna-bility provision in the contract. Reading the foregoing opinion, there can be no question but that this opinion was authoritative as to this holding. The Supreme Court of Texas could not refuse writ of error n. r. e. without approving of this holding.

Here we have Hardcastle accepting the benefit of two contracts and now repudiating the disadvantageous part. This he cannot do. Daniel v. Goesl, 161 Tex. 490, 341 S.W.2d 892 (1960).

Defendants contend the non-competing agreement was validly assigned to them including the chose of action to enforce it. Defendants’ contentions are sustained under the authority of Art. 569, V.A.C.S., and Citizens State Bank of Houston v. O’Leary, 140 Tex. 345, 167 S.W.2d 719 (1942) and opinions cited on page 721, where the court held:

“It is not the policy of the law of this State to favor restraints upon the alienation of property. Our courts have held that any species of property is assignable, and that ‘everything which can be called a debt can be assigned, and the as-signee may recover either in his own name or in that of his assignor.’ In other words, any chose in action may be assigned and suit brought thereon by the equitable holder. Galveston, H. & S. A. R. R. Co. v. Freeman, 57 Tex. 156; Hopkins v. Upshur, 20 Tex. 89, 70 Am. Dec. 375; Lemar v. Garner, 121 Tex. 502, 513, 50 S.W.2d 769; Hoffman et al v. Magnolia Petroleum Co., Tex.Com.App., 273 S.W. 828; Dittman v. Model Baking Co., Tex.Com.App., 271 S.W. 75; 5 Texjur., p. 7, § 6.
“The Legislature has provided that, ‘The obligee or assignee of any written instrument not negotiable by the law merchant, may by assignment transfer all his interest therein to another.’ Article 569, Vernon’s Annotated Civil Statutes. Also see Reef v. Mills Novelty Co., 126 Tex. 380, 89 S.W.2d 210.”

Although there is no writ history in Wells v. Powers, 354 S.W.2d 651, on page 653, (Tex.Civ.App.1962), there it was held that a noncompeting agreement was assignable:

“Art. 569, Vernon’s Ann.Civ.St.: ‘The obligee or assignee of any written instrument not negotiable by the law merchant, may by assignment transfer all his interest therein to another.’ This provision is obviously all-inclusive on its face, excluding only from its operation contracts in matters of personal trust and skill.” * * * “There being nothing in the contract indicating any intention of the parties that it should not be assigned, we are bound by the ruling of Central Power and Light Co. v. Purvis, Tex.Civ.App., 67 S.W.2d 1086, writ, ref., where in a similar situation the restrictive covenant was held assignable;”

The non-competing agreement, definite as to time and area, is to be construed with the sale of Hardcastles to C. T. Smelker. It is assignable, considered by itself or in connection with the sale. In Carpenter v. Southern Properties, 299 S.W. 440 (Tex.Civ.App.1927, wr. of error refused, November 22, 1927), it was directly held that in construing a sale in one instrument with a non-competing agreement after termination of employment in another instrument, that the non-competing agreement was valid, that the two instruments written and executed at the same time constituted one contract although the court refused to enforce the valid agreement not to compete because the employer had breached the employment contract. In the instant case there was no breach of the employment contract. Further, the non-competing agreement is severable from the employment agreement by the express agreement of the parties. The non-competing agreement and the sale by the Hardcastles are to be construed together, thereby consummating the purpose of conveying good will effectively to C. T. Smelker & Co. Veal v. Thomason, 138 Tex. 341, 159 S.W.2d 472, 475 (1942).

Each and all of defendants’ points of error are sustained to the extent that this court holds:

(1) The employment of Paul Hardcastle terminated on July 1, 1965, not upon the death of C. T. Smelker.
(2) The non-competing agreement between Paul Hardcastle and C. T. Smelker & Co. is valid and was assignable under Art. 569, V.A.C.S. Between defendants as assignees of C. T. Smelker & Co. and plaintiff it is valid, binding and enforceable by defendants for five years after July 1, 1965.
(3) Defendants are entitled to a permanent injunction restraining Paul Hard-castle from competing with defendants and from violating the non-compete agreement.

The judgment of the trial court is reversed and judgment rendered for defendants in accordance with the above holdings.

STEPHENSON, Justice.

I respectfully dissent. The law is clear in this state that reasonable covenants not to compete are enforceable. If there had been no sale of the insurance agency by Mrs. Smelker and this action had been brought by her, injunctive relief would be in order. The only real problem arose upon the sale by Mrs. Smelker to defendants, with an attempted assignment of “sellers rights in and to any non-compete agreements.” In the agreement made by plaintiff and C. T. Smelker & Company in which plaintiff agreed not to compete, there was no provision made for assignment. There is not a single case in this state in which it has been held, that in the absence of ratification, an agreement in an employment contract not to compete could be assigned unless the agreement provided it could be assigned. The law on this point is clearly stated in the opinion of Justice Pope, in Texas Shop Towel v. Haire, Tex.Civ.App., 246 S.W.2d 482 as follows:

“Where an employee makes a contract restricting his right to compete, and pro>-vides further that the contract is assignable, an employer may assign the contract. Those are cases in which the employee, not the employer, has controlled his future rights. (Cases cited).
“But, because an owner of a business-may require from his employee a covenant not to compete; it does not follow that he can transfer the covenant to a buyer without the consent of the employee. ‘An executory contract for personal services cannot be assigned by the employer, unless the employee assents to> the substitution of the assignee as employer.’ (Cases cited).”

In my opinion this assignment would not be permitted by the cases construing Article 569 V.A.C.S. In Southern Community Gas Co. v. Houston Natural Gas Corp., Tex.Civ.App, 197 S.W.2d 488, it is held that under this statute, all contracts, whether negotiable or not, are assignable with certain exceptions. That two well recognized exceptions are contracts establishing a personal relation and contracts providing for credit between the parties. I have concluded that the employment contract in this case established a personal relation between the parties and provided for credit. Such contract gave either party the right to terminate it upon ten days written notice, which demonstrated that plaintiff was imposing a confidence and trust in C. T. Smelker which gave Smelker practically unlimited control over plaintiff’s ability to make a livelihood. Such contract also provided that Smelker agreed to extend credit to and carry on its books the accounts receivable of persons, partnerships and corporations to whom plaintiff has sold insurance, after the effective date of such contract, for a period of sixty days, which time could be extended by mutual agreement. See Oak Cliff Ice Delivery Co. v. Peterson, Tex.Civ.App, 300 S.W. 107.

The case of Thames v. Rotary Engineering Co, Tex.Civ.App, 315 S.W.2d 589 is cited in the majority opinion as authority for the proposition that employment contracts with covenants not to compete are assignable. The situation is entirely different from that of this instant case. In the Thames case, the employment contracts were made with a partnership, from which various members withdrew and one died but none were added. Later the partnership assets were conveyed to a corporation made up of the surviving partners.- The court had this to say:

“It does not appear that any additional burden or hazard was cast upon the appellants (employers) or either of them, by the various changes * * *. By their continuing to work, without any apparent change in their contractual relations, we also believe that appellants acquiesced and consented to such changes by virtue of their continuing to accept their salaries and perform the services required.”

There was no acquiescence or ratification in the instant case, as plaintiff did not return to work after the sale was made.

Even though it is stated in the majority opinion that plaintiff testified the sale included goodwill, I do not think this was the clear import of such testimony. The question was asked on cross examination:

“Q. Now, Mr. Hardcastle, of course, this contract, when you sold your agency, you sold all the assets, the good will and the list of customers and policies.”

The Court overruled the objection that the instrument spoke for itself was the best evidence. Plaintiff gave this answer:

A. “We just sold our agency.”

A careful reading of the contract of sale from Plaintiff to C. T. Smelker Company does not indicate to me that goodwill was an asset included. There is no mention of goodwill and no right given to do business under the Hardcastle name. There appears to be only a sale of all of the right, title and interest in future commission to be derived from certain insurance policies. Furthermore, no mention is made in the sale as to any time limit nor area limit within which plaintiff agreed not to solicit insurance from the owner of the policies mentioned.

The majority opinion cites two cases as authority for holding there was a valid assignment of the covenant not to compete. These cases are Citizens State Bank of Houston v. O’Leary, 140 Tex. 345, 167 S.W.2d 719, and Wells v. Powers, Tex.Civ.App., 354 S.W.2d 651. It is noted that neither of these cases involved employment contracts and therefore could not be in conflict with the law set forth in the Texas Shop Towel v. Haire case, supra, and Oak Cliff Ice Delivery Co. v. Peterson case, supra.

I would affirm the judgment of the trial court.


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    Richard French KESSLER et al., Appellants, v. TEXAS EMPLOYERS’ INSURANCE ASSOCIATION, Appellee.
    No. 4187.
    Court of Civil Appeals of Texas. Eastland.
    Oct. 20, 1967.
    Rehearing Denied Nov. 17, 1967.

      Scarborough, Black, Tarpley & Scarborough, Beverly Tarpley, Abilene, for appellants.
    McMahon, Smart, Sprain, Wilson & Camp, John Camp, Abilene, for appellee.
   PER CURIAM.

The judgment entered herein on September 22, 1967 is set aside and the original opinion withdrawn and this opinion will be substituted for the original.

Charles O. Kessler was killed in the course of his employment by Springer Drilling Company. He was survived by a wife and three minor children, namely, Richard French Kessler, Charles David Kessler and Constance Ann Kessler. His widow was not the mother of the children and not a party to this litigation. Annabelle Eskelson is the mother of the children. She was appointed guardian of their estate by an order of the Probate Court of Taylor County. Her application alleged that she and the children resided in California.

The order appointing Mrs. Eskelson guardian, which appears to be regular on its face, contains the following provision:

•“* * * and it appearing to the Court and the Court being satisfied after due hearing — , that said minors have no lawful guardian of their estates, that the said Annabelle Eskelson is the mother of said minors and is not disqualified from accepting letters of guardianship and is entitled to be appointed guardian of their estates, that it will be to the benefit and interest of the minors if she be appointed guardian, and that their property rights will be protected if she is appointed, and that this Court has jurisdiction * * * ”

Certified copies of an order authorizing the guardian to settle the minors’ compensation claim against the Insurance Company were filed with the Industrial Accident Board and Texas Employers’ Insurance Association. The Board entered an award ordering the Association to pay:

“ * * * the duly appointed, qualified and legal guardian of Richard French Kessler, Charles David Kessler and Constance Ann Kessler, Minors, $5,572.37 in accrued and lump sum payments of compensation, as approved by the Order of the Probate Judge.”

The Association appealed and filed its petition in the District Court of Stonewall County and tendered the amount of the award into court. The guardian filed a cross action asking for judgment for the amount of the award plus penalty and attorney’s fees. The guardian’s motion for a summary judgment was overruled and the Association’s motion for summary judgment was granted and the court ordered:

“ * * * that the defendants, Richard French Kessler, Charles David Kessler and Constance Ann Kessler, minors, do have and recover of and from the plaintiff Texas Employers’ Insurance Association, the sum of FIVE THOUSAND FIVE HUNDRED EIGHTY-TWO AND 74/100 ($5,582.74) DOLLARS, in equal proportions; and that the plaintiff, Texas Employers’ Insurance Association be and it is hereby relieved of and discharged from any further liability to the minor defendants — ” “It is further ORDERED, ADJUDGED and DECREED by tne Court that the Award of the Industrial Accident Board of the State of Texas dated April 22, 1966, in said Board No. E-60084, styled Charles O. Kessler, deceased, employee vs. Springer Drilling Company, employer, Texas Employers’ Insurance Association, insurance carrier, insofar only as it orders payment to the duly appointed, qualified and legal guardian of Richard French Kessler, Charles David Kessler, and Constance Ann Kessler, minors, be and the same is hereby set aside and held for naught.
It appearing that the plaintiff has heretofore deposited the sums awarded the minor defendants into the registry of the Court:
It is ORDERED that no execution issue against the plaintiff on this judgment.”

The children, acting through their guardian, have appealed. She contends the court erred in holding the order appointing her guardian was void and subject to collateral attack.

Section 124(a) of Texas Probate Code, V.A.T.S. provides for the appointment of a non-resident guardian for non-resident minors. It provides that a non-resident of the State may be appointed guardian of their non-resident ward’s estate situated in Texas provided that such person had been previously appointed in some other State and provided his application for appointment as guardian in Texas be accompanied by a transcript of the proceedings of the foreign State. The Association contends this is the applicable provision which the guardian did not follow and, therefore, the order of appointment is void and subject to collateral attack. It also contends it is entitled to attack the order of appointment collaterally because it was not a party to the Probate proceedings.

We agree with the guardian’s contention that her appointment is not void and is not subject to collateral attack. Subsection (b) of Section 124 of Texas Probate Code is as follows:

“(b) Domestic Guardian of Non-Resident
When a non-resident minor or incompetent owns property in this State, guardianship of such estate may be granted when it is made to appear that a necessity exists therefor, in like manner as if such minor or incompetent resided in this State. The court making the grant of such guardianship shall be in the county in which the principal estate of the ward is situated, and said court shall take all such action and make all such orders with respect to the estate of the ward, for the maintenance, support and care, or the education, if necessary, of the ward, out of the proceeds of such ward’s estate, in like manner as if the ward were a resident of this State, and guardianship of the person and estate of the ward had been granted by said court, and the ward had been sent abroad by the court for education or treatment. In the event there be a qualified non-resident guardian of such estate, who later desires to qualify in this State, as hereinabove set out, such nonresident guardian may do so, and it shall be grounds for closing the resident guardianship.”

Section four of the Probate Code provides that the County Court shall have general jurisdiction of a Probate Court and Section 109 provides that the surviving parent is the natural guardian and entitled to be appointed guardian of her children’s estate.

The Association relies on Freeman v. Freeman, 160 Tex. 148, 327 S.W.2d 428, (Sup.Ct., 1959). The court in concluding that a default judgment was void said:

“Generally speaking, a judgment rendered by a legally constituted and organized court having jurisdiction over the subject matter of and the parties to a suit will be held valid, Clayton v. Hurt, 88 Tex. 595, 32 S.W. 876, 877; Martin v. Sheppard, 145 Tex. 639, 201 S.W.2d 810, 812, unless the particular judgment is one which the court had no power to render. State v. Ferguson, 133 Tex. 60, 125 S.W.2d 272; Cline v. Niblo, 117 Tex. 474, 8 S.W.2d 633, 66 A.L.R. 916; State Board of Insurance v. Betts, Tex., [158 Tex. 612,] 315 S.W.2d 279. Judgments are void for lack of power in courts to render them when they are rendered contrary to constitutional or valid statutory prohibition or outside limiting constitutional or statutory authority. State v. Ferguson, supra; Cline v. Niblo, supra; State Board of Insurance v. Betts, supra. They are not void when rendered in violation of statutory provision which is merely directory, Simmons v. Arnim, 110 Tex. 309, 220 S.W. 66; 25 Tex.Jur. 735-736, Judgments, § 276, or for purely procedural irregularity. 25 Tex.Jur. 809-812, Judgments, § 308.”

The judgment appointing Mrs. Es-kelson guardian was rendered by a legally constituted court having jurisdiction over the subject matter and the parties. The judgment is void only if rendered contrary to valid statutory prohibition or outside statutory authority.

“When a judgment is assailed collaterally on the theory that the court had no jurisdiction over the subject matter, either by reason of the nonexistence of the facts prerequisite to its taking cognizance or by reason of quantitative or territorial limitations on its powers, every reasonable presumption in favor of the court’s authority will be indulged.” 34 Tex.Jur.2d p. 356.
“Every reasonable presumption will be indulged in support of a judgment valid on its face that is assailed collaterally. And so long as the record affords a basis for any such presumption the attack cannot prevail.” 34 Tex.Jur.2d p. 350.

In State Board of Insurance v. Betts, 158 Tex. 612, 315 S.W.2d 279, cited by the Supreme Court in Freeman, the Honorable Charles O. Betts, District Judge of Travis County, appointed a receiver contrary to a provision of Article 21.28 of the Insurance Code, V.A.T.S. which provided:

“Whenever under the law of this State a court of competent jurisdiction finds that a receiver should take charge of the assets of an insurer domiciled in this State, the liquidator designated by the Board of Insurance Commissioners as hereinafter provided for shall be such receiver.”

Betts contended that unless the word “shall” used in the statute be given a permissive rather than a mandatory meaning the statute would be unconstitutional as an infringement upon the judicial power. The Supreme Court held that said section was not directory and was not unconstitutional and the appointment of a receiver was void because made in contravention of a valid statutory enactment. Betts is not in point and not controlling in the instant case because Judge Betts did not follow the mandatory provision of the statute which commanded him to appoint a particular receiver. There is nothing in subsection (b) which prohibits appointment of a nonresident guardian of non-resident minors. When this section is read in the light of the authorities on construction of statutes and the presumption in favor of the court’s authority to make such appointment, we are compelled to hold that the appointment of Mrs. Eskelson, as guardian, was not void and the Association had no right to make a collateral attack on such judgment.

In Gayle v. Alexander, Tex.Civ.App., 75 S.W.2d 706, (no writ history), the court said:

“A mandatory provision in a statute is one, the omission to follow which renders the proceeding to which it relates illegal and void, while a directory provision is one, the observance of which is not necessary to the validity of the proceeding. A statute may be mandatory in some respects and directory in others. 59 C.J., p. 1072 § 630; Carrier v. Comstock, 108 Ark. 515, 159 S.W. 1097, par. 2; Hocking Power Co. v. Harrison, 20 Ohio App. 135, 153 N.E. 155, 156, par. 1; Deibert v. Rhodes, 291 Pa. 550, 140 A. 515, 516, 517, pars. 2, 3, and 4. There is no universal rule or absolute test by which directory provisions in a statute may in all circumstances be distinguished from those which are mandatory, but in the determination of this question, as every other question of statutory construction, the prime object is to ascertain the legislative intent from a consideration of the entire statute, its nature, its object, and the consequences that would result from construing it one way or the other. Words of permissive character may be given a mandatory significance to effect the legislative intent. On the other hand, the language of a statute, however mandatory in form, may be deemed directory whenever the legislative purpose can best be carried out by such construction.”

We hold that the order appointing Mrs. Eskelson guardian was not rendered contrary to any statutory prohibition or outside statutory authority.

The Honorable Gus M. Hodges writing on the subject of “Collateral Attacks on Judgments”, Texas Law Review, Vol. 41, No. 2, page 163 said:

“Only serious jurisdictional errors are available for a successful collateral attack. A much larger scope of evidence is permitted in a direct attack than in a collateral attack. Evidence outside of the record and of any other kind otherwise admissible is permitted. Facts reflected ii. the record may be disproved and contradicted by evidence from sources other than the record. On collateral attack only the record may be considered; no extrinsic evidence is appropriate. Indeed, recitals in the judgment may not be contradicted by other parts of the record.”

Considering only the recitals in the order appointing Mrs. Eskelson guardian, we could logically conclude that the appointment was made under subsection (a) of Section 124. In a collateral attack the recitals in the judgment cannot be contradicted by other parts of the record, therefore, the order is not void.

The guardian contends the court erred in holding that the suit filed by ap-pellee constituted an appeal from the award of the Industrial Accident Board. She also contends the court erred in holding that she was not entitled to penalty and attorney’s fees. We cannot agree with these contentions.

After the Board made its final award, the Association timely filed its petition in the District Court of Stonewall County which stated “this petitioner appeals the award of the Board for the sole purpose of having assurance that the Probate Court of Taylor County had the authority first to approve the lump sum settlement, and second, to appoint a non-resident as a guardian of non-resident minors.”

In McClure v. Georgia Casualty Company, 251 S.W. 800, (Tex.Com.Apps. 1923), the court said:

“The award of the Board in this case never became enforceable because defendant in error gave notice that it was not willing to be bound thereby and brought suit to set the same aside and prosecuted said suit to final judgment. When suit is brought to set aside an award, the trial is de novo. The claimant’s right to compensation is put in issue and retried. If the claimant recovers compensation, he is entitled to enforce not the former order of the Board, but the judgment rendered by the court in such suit. Plaintiff in error was not entitled to recover either liquidated damages or attorney’s fees.”

By timely filing with the Board notice that it would not abide by its final ruling and decision and by timely filing suit in Stonewall County the Association appealed as provided for in Section 5, of Article 8307.

The judgment is reversed and the cause is remanded for a trial on the merits.


author: MOORE, Justice.

text:
    R. E. CROSBY et ux., Appellants, v. Margarett Mott DAVIS et al., Appellees.
    No. 296.
    Court of Civil Appeals of Texas. Tyler.
    Nov. 2, 1967.
    Rehearing Denied Nov. 30, 1967.

      R. E. McDaniel, Winnie, for appellants.
    Musslewhite & Musslewhite, Lufkin, B. F. Whitworth, Jasper, for appellees.
   MOORE, Justice.

This is a trespass to try title suit. Appellants, R. E. Crosby and wife, filed this suit against appellees, Margarett Mott Davis, the surviving widow of Perry Mott, deceased, and the surviving heirs of Perry Mott for title and possession of 23⅜ acres of land in San Augustine County, Texas. Appellees answered by a general denial and a plea of not guilty. Trial was had before a jury. At the conclusion of appellants’ evidence, appellees made a motion for an instructed verdict on the ground that appellants’ evidence failed to show title in them. The court granted appellees’ motion and directed a verdict in their favor. Judgment was accordingly entered against appellants from which they have perfected this appeal.

Appellants contend that the judgment must be reversed because they introduced sufficient evidence to make out a prima fa-cie case showing title, and the court erred in instructing a verdict against them. We disagree with appellants’ contention and affirm the judgment of the trial court.

The record shows that the parties stipulated and agreed that R. E. Mott was the common source of title. Appellants sought to establish title out of the common source by two separate chains of title. First, appellants sought to establish title by (1) a deed from R. E. Mott and wife to Harrell Mixon and wife, dated January 6, 1940, and (2) by a deed from the Mixons to appellants dated April 7, 1952. Secondly, appellants sought to establish title based upon (1) a deed from R. E. Mott to Perry Mott dated November 9, 1925, and (2) by offering evidence of a lost deed from Perry Mott to appellants’ predecessors in title, Harrell Mixon and wife. Appellants’ contentions with respect to each claim of title will be discussed in that order.

With respect to the appellants’ first contention, appellees say that appellants acquired no title under this chain of title because the deed from R. E. Mott, the common source, to Harrell Mixon and wife was void in that the description of the land was fatally defective. The deed from R. E. Mott to the Mixons recited in part, as follows:

“KNOW ALL MEN BY THESE PRESENTS: That I, R. E. Mott and Susie Mott of the County of San Augustine, State of Texas, for and in consideration of the sum of One Hundred ($100.00) Dollars to_paid as follows: Have Granted, Sold and Conveyed, and by these presents do Grant, Sell and Convey unto the said Harrell Mixon and Hazel Mixon, his wife, of the County of San Augustine, State of Texas, all that certain tract of land on Peter Galloway Survey, containing 23⅜ acres more or less, Same laying on the west side of CaddeU Creek.” (Emphasis supplied).

Nowhere does the instrument identify the State or County in which the land is situated.

According to the testimony introduced by appellants, R. E. Mott and wife owned no other land situated in San Augustine County. The undisputed evidence reflects, however, that there was more than 23⅜ acres of land lying west of Caddell Creek.

In 19 T.J.2d, Sec. 123, page 422, it is stated:

“A deed is void as a conveyance if it fails to furnish the means of determining with reasonable certainty the land intended to be conveyed by it. * * *”

Upon examining the foregoing description contained in the deed, it becomes obvious that the description does not, within itself, contain a sufficient description identifying the location of the land. Nor does the deed contain any reference therein to any other existing writing for further description and identification of the land. In other words, the deed contains no “nucleus” or “key” (such as “our land”), to which extraneous evidence may be directly tied to determine the identity of the land sought to be conveyed. Therefore, parol testimony showing this was the only land owned by grantors was not admissible to show the identity and location of the land. The description in the deed being wholly insufficient to identify the land, the deed was void under the statute of frauds. Arts. 3995 and 1288, Vernon’s Ann.Civ.St.; Smith v. Sorelle, 126 Tex. 353, 87 S.W.2d 703; Skinner v. Noland, 154 Tex. 615, 281 S.W.2d 332; Jones v. Mid-States Homes, 163 Tex. 229, 356 S.W.2d 923; Cole v. Citizens First National Bank (Tex.Civ.App.), 364 S.W.2d 746.

Appellants contend secondly that even though such deed was void, they established another chain of title because the evidence shows R. E. Mott, the common source, executed a deed to Perry Mott dated November 9, 1925, and the proof offered by them shows a conveyance by a lost deed from Perry Mott to their predecessors in title, Harrell Mixon and wife. In this connection, the record reveals that during the course of appellants’ evidence, appellees introduced in evidence a deed from R. E. Mott to Perry Mott. The deed described the 23 acre tract by metes and bounds identical to that set forth in appellants’ petition. The effect of this deed, it being prior in time to the deed from R. E. Mott to Harrell Mixon and wife, was to show superior title in appellees. Appellants made no objection to the introduction of the deed, nor did they re-offer the same in their own behalf. Ordinarily, in determining the propriety of an instructed verdict, the court is confined to a consideration of the evidence offered by the plaintiff only, and must disregard that offered by the defendant. Ainsworth v. Ruemke (Tex.Civ.App.), 205 S.W.2d 647, (n.r.e.). However, in this instance, the record shows that appellants relied upon such deed by offering evidence of a lost deed from Perry Mott to Harrell Mixon and wife, appellants’ predecessors in title. Consequently, in viewing the evidence in a light most favorable to appellants, we are required to consider the deed as evidence in appellants’ behalf. As stated, the deed, being prior in time, would constitute proof of superior title in appellees unless appellants’ subsequent proof was sufficient to establish a lost deed from Perry Mott to the Mixons. In an attempt to prove the alleged lost deed, appellants called as their only witness thereto, Mrs. Hazel Morton, the former wife of Harrell Mixon. She testified that at some undisclosed time after she and her husband had obtained the deed from R. E. Mott, they obtained a deed from Perry Mott; that the deed from Perry Mott described the same land they bought from R. E. Mott, and described the same land they conveyed to appellants, R. E. Crosby and wife. She testified that the deed was signed by Perry Mott and was destroyed on December 12, 1947 when her home burned. His testimony further shows that she and Harrell Mixon were divorced in 1958 and that at the time of the trial, he was living in Houston, Texas. She gave no testimony as to why she and her husband found it necessary to acquire the additional deed from Perry Mott. Nor did she offer any testimony as to the consideration for the deed. She did not state where or when the transaction took place or whether the deed was acknowledged or whether it had been recorded in the Deed Records of San Augustine County. She testified that the only use she and her husband had made of the land was to cut timber from the land on two or three occasions. She did not state the dates nor the amount of the timber cut. Although the evidence shows that the Mixons lived in the same community with Perry Mott for several years, there is nothing in the evidence to show that they ever discussed their claim of ownership with him or brought home notice to him that they were making a claim thereto.

Appellee, Mrs. Margarett Mott Davis, testified that R. E. Mott and Perry Mott were brothers and that within about two years after the time her husband purchased the land in question, R. E. Mott and his wife moved from the land sometime in 1929 or 1930. She testified that since such time, the land had not been occupied; that the land in question was situated approximately three or four miles from where she and her husband had lived and that she did not know anyone was asserting ownership of the land until this suit was filed. She also testified that her husband had paid some taxes on the land but she did not think he paid any taxes thereon since sometime in the 1930s; that she did not pay any taxes after his death; that prior to his death, her husband cut timber and posts from the land on several occasions, and since his death in 1956, she had been on the land several times but had not cut any timber or made any use thereof.

Appellant R. E. Crosby testified that the only use which he had made of the land subsequent to his purchase from the Mixons in 1952 was for hunting and camping; that the land was just “out in the woods.” There is no evidence in the record showing a reputation of ownership in the community.

Appellants contend that the foregoing facts are sufficient to prove the existence of the deed by circumstantial evidence or to invoke the presumption that such deed existed.

Proof of a lost deed may be made by circumstantial or presumptive evidence. Miller v. Fleming, 149 Tex. 368, 233 S.W.2d 571; Smith v. Taylor (Tex.Civ.App.), 197 S.W.2d 851 (n.r.e.); Price v. Humble Oil & Refining Company (Tex.Civ.App.), 152 S. W.2d 804. The authorities draw no distinction between proof of a deed by circumstantial evidence and proof of circumstances from which the execution of an ancient instrument may be presumed. Price v. Humble Oil & Refining Company, supra, citing cases. Proof of circumstances of a long asserted and open claim, either by possession or other acts of dominion and control adverse to that of apparent ownership, together with the latter’s non-claim and acquiescence, is usually held to be sufficient to show a transmutation of title, whether there is evidence of the existence of a lost deed or not. Hutchison v. Massie (Tex.Civ.App.), 226 S.W. 695; Magee v. Paul, 110 Tex. 470, 221 S.W. 254; Masterson v. Harris County Houston Ship Channel Nav. Dist. (Tex.Com.App.), 15 S.W.2d 1011, 67 A.L.R. 1324; Smith v. Taylor (Tex.Civ.App.), 197 S.W.2d 851; Price v. Humble Oil & Refining Company, supra.

The rule was stated thusly in the early case of Mills v. Herndon, 60 Tex. 353, 357:

“Where a party, under a lost or destroyed deed, has exercised acts of ownership and control under it, after a great lapse of time strict proof is not required to establish its existence, contents 'and subsequent loss. Berry v. Jourden [Jourdan], 11 Rich. (S.C.) L., 67; Lewis v. Baird, 3 McLean, 56 [Fed.Cas.No.8,316]. But where the party claiming under such lost or destroyed deed has permitted a great lapse of time without asserting ownership and control over the property, before he can have title to the land, duly authenticated by written evidence, set aside or vacated on the assumption of the previous lost deed, he must adduce clear proof, not only of the existence and execution of the purported deed, but also so much of its contents as will enable the court to determine the character of the instrument. Metcalf v. Van Benthuysen, 3 Comst. (N.Y.), 424.”

As stated, the evidence shows that the alleged lost deed was executed on some undisclosed date after November 9, 1925. There is no evidence showing that either the alleged grantees or appellants ever took possession of the land or asserted a long, continuous, open and notorious claim thereto. In the absence of such circumstances, obviously, there could be no acquiescence by the record owner, Perry Mott. The fact that the Mixons may have occasionally cut some undisclosed amount of timber therefrom would not constitute such a continuous, open and notorious claim of ownership as to place the apparent owner on notice of their claim. White v. Daniel (Tex.Civ.App.), 391 S.W.2d 176. Neither would the fact that appellants occasionally camped or hunted upon the land be sufficient to show a long, continuous and notorious claim of ownership. 2 T.J.2d, Section 71, page 148.

As we view it, the circumstantial or presumptive proof fails to establish a lost deed constituting a muniment of title.

In the absence of any proof showing the existence of the deed either by circumstantial evidence or presumption of grant, appellants could recover only by showing the actual existence and execution of the lost deed, together with so much of its contents as would enable the court to determine the extent of the instrument and to be able to render judgment establishing it as a mu-niment of title. Mills v. Herndon, supra.

When parol proof of the existence, execution, and contents of a lost deed is offered as the only evidence thereto, the witness must have seen it and read it, and be able to speak pointedly and clearly of its tenor and contents and to state whether it, conveyed a fee simple, a life estate, or term for years, and whether it, in fact, was executed by the grantor. It should show all the contents of the deed, not literally, but substantially. Hutchison v. Massie, supra, citing Dagley v. Black, 197 Ill. 53, 64 N.E. 275, and Edwards v. Noyes, 65 N.Y. 125, 127. See also Keil v. Wilson, 47 N.M. 43, 133 P.2d 705, 148 A.L.R. 397. Anything less would not constitute evidence of sufficient probative force to support the submission of an issue thereon, and would have a tendency to lead to evil practices which it was the object of the statute of frauds to prevent. Silverman v. Ponce (Tex.Civ.App.), 268 S.W. 497.

In light of the foregoing authorities, it appears to us that the proof offered by appellants fails to establish the contents of the instrument or to show that the same was in fact a deed duly executed by Perry Mott. Only one witness, Mrs. Hazel Morton, testified as to having seen the alleged deed. She did not testify that she had ever read the instrument. Nor did she give any of the circumstances surrounding the transaction or state the reason why she and her husband found it necessary to acquire the additional deed to the property. The evidence fails to show that she ever had any legal training or that she was in any way qualified to express an opinion that the instrument was in fact a deed of conveyance. The evidence further shows Mrs. Morton was no doubt an interested witness because when her husband subsequently conveyed to appellants, they warranted the title. Nowhere in her testimony does she undertake to describe the instrument other than to express an opinion that it was a deed conveying the same land she and her husband purchased from R. E. Mott and the same land conveyed by them to appellant and was signed by R. E. Mott.

It is the well settled rule that a party claiming under a lost deed is required to prove the execution thereof as at common law. Anderson v. Walker (Tex.Civ.App.), 156 S.W.2d 990; 37 Tex.Jur.2d, Sec. 11, p. 482.

Proof of execution may be shown by a witness who was present and saw the grantor sign the instrument or by the testimony of a witness showing that he was acquainted with the grantor’s signature and that the signature affixed to the instrument was genuine.

The rule is stated thusly in Abeel v. Weil (Tex.Com.App.), 115 Tex. 490, 283 S.W. 769, 771:

* * * Before a witness is qualified, or, in other words, competent, to testify to his opinion or belief that a particular signature presented to him is the genuine signature of another, such witness must be acquainted with the signature or handwriting of such other person. Such, acquaintance is not presumed, but must be shown by evidence. Mapes v. Leal’s Heirs, 27 Tex. [345,] 346, 348, 349; Hanley v. Gandy, 28 Tex. 211, 213, 214, 91 Am.Dec. 315; Haynie v. State 2 Tex.App. 168, 171; 1 Wigmore on Evidence, p. 1109, § 693, and page 1054, § 654; 11 R.C.L. p. 620, § 41; 1 Greenleaf on Evidence, 577, 22 C.J. § 1161, p. 943, and authorities cited in note 43. The burden of showing that the witness is qualified or competent is on the party offering his testimony. 1 Wigmore on Evidence, p. 1054, § 654. * * * ”

The testimony of appellants’ witness, Mrs. Morton, fails to show that she was present and saw Perry Mott execute the instrument. Nor does her testimony show that she was acquainted with his signature and that the signature on the deed was genuine. Her statement or opinion that the deed was signed by Perry Mott would not therefore amount to competent evidence of the genuineness of his signature.

Consequently, her testimony was not of sufficient probative force to establish the execution of a deed from Perry Mott to the Mixons.

Appellants having failed to establish any title to the land in question, the remaining assignments become immaterial. Shaw v. Nunn (Tex.Civ.App.), 59 S.W.2d 357.

The judgment of the trial court is affirmed.


author: McDONALD, Chief Justice.

text:
    ED HANOVER TRAILERS, INC., et al., Appellants, v. HANOVER MANUFACTURING COMPANY, Inc., et al., Appellees.
    No. 4594.
    Court of Civil Appeals of Texas. Waco.
    Sept. 28, 1967.
    Rehearing Denied Nov. 2, 1967.

      Dyche, Wheat, Thornton & Wright, Houston, Coulter Hoppess, W. C. Davis, Bryan, for appellants.
    Fillmore & Fillmore, H. Dustin Fillmore, Schenk & Wesbrooks, Perry Wes-brooks, Wichita Falls, for appellees.
   OPINION

McDONALD, Chief Justice.

This is an appeal by defendants Ed Hanover Trailers, Inc., Edward Hanover, D. A. McBride, and J. D. Cowsar, from a judgment against them for $2500 actual and $5,000 exemplary damages for plaintiffs’ loss of goodwill solely by reason of defendants’ use of the tradename Ed Hanover Trailers, Inc.; and from permanent injunction enjoining defendants from using the name “Hanover” in connection with trailers manufactured or sold by them.

Plaintiffs Hanover Mfg. Co., Inc. and Ruble Langston sued defendants Ed Hanover Trailers, Inc.; Edward Hanover, J. D. Cowsar and D. H. McBride, alleging that defendants conspired to enter into unfair competition with plaintiffs; and that defendants fraudulently appropriated the goodwill of plaintiff and the trade name of “Hanover” in connection with the manufacture and sale of trailers. Plaintiffs prayed for damages, and for injunction against defendants’ use of the name “Hanover” in defendants’ business of manufacturing and selling trailers.

Trial was to a jury which found:

1) The corporate name of defendant is so similar to that of plaintiff that the public may be expected to mistakenly deal with one corporation when intending to deal with the other.
2) The slogan “Hanover Trailer” prior to 22 September 1964 acquired a secondary meaning in the trailer business of plaintiff Hanover Mfg. Co., Inc.
3) Use of defendant’s name, Ed Hanover Trailers, Inc. is made intentionally by defendants, partly for the purpose of retaining for defendant corporation a portion of the goodwill acquired by and belonging to plaintiff Hanover Mfg. Co., Inc.
4) Use of defendant’s name, Ed Hanover Trailers, Inc. is made intentionally by defendants in expectation that the public would deal with one corporation when intending to deal with the other.
5) Plaintiff Hanover Mfg. Co. Inc., prior to 22 September 1964, relied on the slogan “Hanover Trailers” as a part of its sales promotion and goodwill.
6) Defendant’s use of trade name Ed Hanover Trailers, Inc. is detrimental to plaintiffs Hanover Mfg. Co., Inc. and Ruble Langston, in the conduct of their trailer business.
7) Edward Hanover, Cowsar and McBride conspired to use the trade name Ed Hanover Trailers, Inc., partly to appropriate a portion of the goodwill of plaintiff Hanover Mfg. Co., Inc.
8) Such conspiracy was a proximate cause of damage to the goodwill of Plaintiff Hanover Mfg. Co., Inc.
9) Defendant Edward Hanover did not use the corporate name Ed Hanover Trailers, Inc., in good faith.
10) Defendants have not done everything reasonably necessary in the conduct of their business, Ed Hanover Trailers, Inc., to distinguish it from plaintiff, Hanover Mfg. Co., Inc.
11,12) Plaintiffs have suffered damages by diminution of goodwill solely by reason of use by defendants of name Ed Hanover Trailers, Inc., in amount of $2500.
13) Defendants should pay exemplary damages for appropriation of the goodwill of plaintiff as follows:
McBride $1666; Hanover $1666; Cowsar $1668; Ed Hanover Trailers, Inc., $2500.

The trial court entered judgment for plaintiffs for $2500. actual damages, $5,000. exemplary damages (1/3 each against McBride, Hanover and Cowsar) ; (disregarded the exemplary damage award against Ed Hanover Trailers, Inc. of $2500); and entered permanent induction against defendants’ use of name “Hanover” in any way in connection with their manufacture or sale of trailers; ordered defendants to immediately effect a change of corporate name to eliminate “Hanover” therefrom; (and provided that defendant Edward Hanover may use his personal name as he chooses, except in connection with the trailer business).

Defendants appeal on 28 points, contending:

1) The injunction is contrary to law because there is no evidence that defendant Edward Hanover conveyed to plaintiffs the exclusive use of his name.
2) The trial court erred in rendering a money judgment for actual and/or exemplary damages.
3) There is no evidence, or insufficient evidence, to support the answers to Issues 1, 2, 3, 7, 8, 9, 10, 11, 12 and 13, and such answers are against the great preponderance of the evidence.

Edward Hanover was a welder and had made and sold stock trailers in Bryan from 1955. He operated as “Ed Hanover Trailers”, and for a time as “Lifesavers Trailers, Inc.” On February 11, 1963 defendant Hanover, plaintiff Langston, and others organized plaintiff corporation — Hanover Mfg. Co., Inc. to build and sell trailers. Langston owned some acreage on Highway 190 and built a building to house the operation of the corporation, which he rented to the corporation. Edward Hanover became President of the corporation and was in charge of building of the trailers. Langs-ton became Chairman of the Board of Directors, but was not an officer or employee of the corporation. Langston and Hanover both personally endorsed certain loans made by a bank to the corporation. Cowsar was a stockholder and officer, and McBride was an employee of the corporation.

From February 11, 1963 to August 22, 1964 Hanover Mfg. Co. Inc. advertised “Hanover Trailers” extensively in newspapers, magazines, and by circulars.

In choosing the name of the corporation, the incorporators recognized that Edward Hanover had a reputation for building trailers and wanted to use the name Hanover for the value that it had. Hanover consented to the use of his name in the corporate name. Langston acquired 51% of the stock, Hanover 37½%; and the balance was acquired by Cowsar and others. The trailers made and sold were not patentable, and are similar to trailers made by a number of other builders. Hanover Mfg. Co., Inc. had some financial troubles and some dissension arose among the stockholders and officers. In August, 1964 plaintiff Langston made a buy-sell proposition to Hanover and other minority stockholders. On August 22, 1964 Langston, as Party of the First Part, entered into a contract with Hanover, Cowsar (and 3 minority stockholders) as Parties of the Second Part, whereby Langston agreed to pay the Parties of the Second Part $10,000., and secure the release of Edward Hanover as a guarantor on a $25,000. note owed by the corporation at a Bryan bank; and Parties of the Second Part (Hanover, Cow-sar, et al) agreed to:

“deliver to First Party all of the assets of Hanover Mfg. Co., including but not limited to, all physical properties, machinery, tools * * * goodwill * * * intending hereby to convey to said First Party * * * everything connected with or pertaining to said business * *.
“Second Parties agree to sell, transfer and assign to First Party all shares of stock owned or claimed by each and every one of said Second Parties. * *
* * * provided however, that this is not to be construed as a non competition agreement, and Second Parties may, collectively or individually, engage in any competitive enterprise. * * * ”

Thereafter, on October 30, 1964, Hanover and Cowsar formed the “Ed Hanover Trailers, Inc.”, acquired a charter in such name, and set up the business of manufacturing and selling trailers across the highway from plaintiff, Hanover Manufacturing Co., Inc. McBride thereafter came to work for defendant corporation. There was confusion in the delivery of mail between “Hanover Mfg. Co., Inc.” and “Ed Hanover Trailers, Inc.”; and “Ed Hanover Trailers, Inc.” sold some trailers to former customers of “Hanover Mfg. Co., Inc.”

Plaintiff Langston admitted that he knew when he bought defendant Ed Hanover’s stock and entered the August 22, 1964 contract, that Ed Hanover planned to go into the business of manufacturing and selling trailers in Bryan, and he had no objection to Ed Hanover and the others so doing, “just so long as they did not use the name ‘Hanover’.”

Plaintiff Hanover Mfg. Co., Inc., has the right to use the name “Hanover”, but the question here presented is, does it have the exclusive right to use such name, as against Edward Hanover, whose personal name it is, and who reserved the right in the 22 August, 1964 contract, to enter the trailer business in competition with plaintiffs?

A person has the right to use his own name in his own business, either alone, or in connection with others, as in a partnership or in a corporation, in the absence of fraud, contract or estoppel. Goidl v. Advance Neckwear Co., Inc., Tex., 123 S.W.2d 865, 866; Carson v. Harris, Tex.Civ.App. (nre) 242 S.W.2d 777. Thus the defendants can use the name of “Hanover” in the trailer business unless Edward Hanover contracted such right away, or unless under the facts defendants have been guilty of a fraud in connection with such use, or is estopped.

Edward Hanover sold his stock and his interest in the “goodwill” of Hanover Mfg. Co., Inc. to plaintiff Langston. The sale of the goodwill of a business does not involve an obligation upon 'the vendor to refrain from entering into a competing enterprise under his own name. Dutcher v. Harker, Mo.App., 377 S.W.2d 140; Ralph Bros. Furniture v. Ralph, 338 Pa. 360, 12 A.2d 573, 575. And here Edward Hanover reserved the right to enter into a competitive enterprise with plaintiffs.

It is assumed that no one intends to part with the right to use his own name in the absence of express language to that effect. It must be clearly shown that it was his intention to part with his right to use his own name. Carson v. Harris, supra.

We think Edward Hanover did not convey to plaintiffs the exclusive right to the use of his name, and therefore had the right to use his name “Ed Hanover” in the competitive trailer enterprise which he reserved the right to enter into. This he could do, either alone or in a corporation. Goidl v. Advance Neckwear Co., supra.

Defendants’ contention 1 is sustained. The injunction enjoining defendants from using the name “Hanover” in connection with trailers manufactured and sold by them, is dissolved.

The jury found that defendants’ use of the name Ed Hanover Trailers, Inc. was made partially to retain for defendant corporation a portion of the goodwill belonging to plaintiffs; that defendants conspired to use the name Ed Hanover Trailers, Inc. to appropriate a portion of the goodwill of plaintiffs; that use of the name Ed Hanover Trailers, Inc. was not in good faith solely for personal identification; and that defendants had not done everything reasonably necessary to distinguish their business from plaintiffs’.

The jury further found that plaintiffs were damaged $2500. “for loss of goodwill solely by reason of defendants’ use of the trade name Ed Hanover Trailers, Inc., as a direct and proximate result of the use of said trade name.”; and the jury assessed exemplary damages.

Counsel for plaintiffs stated in oral argument that he could not conceive of a situation in which Ed Hanover could use his name in the trailer business without misleading the public.

“Every man has the absolute right to use his own name in his business, even though he may thereby interfere with and injure the business of another bearing the same name; provided he does not resort to any artifice, or do any act calculated to mislead the public as to the identity of the establishment, and to produce injury to the other beyond that which results from the similarity of the names." Goidl v. Advance Neckwear Co., supra.

From the foregoing, it is apparent that any misleading of the public or injury from the similarity of the name solely, is not compensable.

Since the defendants had the right to use the name “Ed Hanover Trailers, Inc.” in the conduct of their trailer business, any damage resulting “solely” by reason of the use of the trade name “Ed Hanover Trailers, Inc.”, is damnum absque injuria.

And we think the evidence insufficient to support the answers to Issues 12 and 13, and that such answers are against the overwhelming weight and preponderance of the evidence. Contention 2 is sustained, as is contention 3, as applicable to Issues 12 and 13. We think the trial court erred in rendering a money judgment for plaintiff for actual or exemplary damages.

Moreover, it appears from the charge and the submission of the damage issues, that the case was tried on the wrong theory.

Reversed and remanded.


author: BARROW, Chief Justice.

text:
    William C. KING, Jr., Appellant, v. Jan T. NEWMAN, Guardian of William C. King, III, et vir, Appellees.
    No. 14619.
    Court of Civil Appeals of Texas. San Antonio.
    Oct. 11, 1967.
    Trueheart, McMillan, Russell & Hoffman, San Antonio, for appellant.
    Lang, Cross, Ladon, Oppenheimer & Rosenberg, San Antonio, for appellees.
   BARROW, Chief Justice.

This is a suit brought by the mother and stepfather on behalf of a seven-year-old boy to change his name from William C. King, III, to John Tracy Newman. His natural father intervened and contested the change. After a non-jury trial, judgment was entered granting the application. The trial court did order appellees to correct baptismal and other records to show appellant as the boy’s father and provided specific visitation rights. The basic question to be resolved is, under what circumstances, if any, may the trial court change a child’s name over the objection of its natural father.

Appellant, William C. King, Jr., and ap-pellee Jan Tinsley Newman were divorced on May 22, 1961, and the custody of their two-year-old son, who is referred to herein as “Trey” as he was called by all parties, was awarded to his mother, with appellant having the right to reasonable visitation. On August 22, 1961, Jan was married to ap-pellee Harry E. Newman, and Trey has made his home with the Newmans continuously since that time. A daughter and a son were subsequently born to the New-mans. The record conclusively demonstrates that there is a very close family relationship among the Newmans and the three children living in the home, with no distinction whatsoever made between Trey and his half sister and half brother. Harry E. Newman has treated Trey as' his son and the boy has reciprocated with love and respect. Furthermore, the parents of Harry have treated Trey as their grandchild, and have created a substantial trust for him along with their other grandchildren.

On the other hand, the record establishes a desire on the part of appellant to preserve his parental relationship with his son. He has made the support payments as ordered by the trial court, including an increase granted in 1962, and has reasonably utilized the visitation rights granted him by the court. There is no finding of any misconduct or neglect on his part. Appellant’s mother and other members of the family love Trey and are proud of him. Appellant’s family name is well and favorably known in this community.

It is apparent from the record and, in fact, the Newmans both testified that they desire the full responsibility of Trey to the total exclusion of his natural father. They testified that since their marriage Trey has been known under the surname of Newman. Obviously, a child of his tender years could not do this without the active assistance and encouragement of the New-mans. In 1963, Trey was baptized in the Episcopal Church under the name of “John Tracy Newman,” with Harry E. Newman designated as the father. In 1964, he was enrolled in the kindergarten as “John Tracy Newman,” again with Harry listed as his father. In 1965 he was enrolled in the first grade in the same manner, and it was not until near the end of the school year that Trey’s teacher knew of his natural father. His playmates refer to him as “Trey Newman.” The records of Trey’s doctor were changed by Mrs. Jan Newman to reflect the name “Trey Newman.” All of this was done without the knowledge or consent of appellant or any court.

In October, 1966, Mrs. Jan Newman contacted appellant with the request that he consent to the adoption of Trey by Harry. When appellant refused, she informed him of the above-mentioned changes in Trey’s identity. Appellant immediately verified this with the Church and school, and requested the proper authorities in each instance to correct their records to show that he is the natural father of Trey. Shortly thereafter appellees brought this suit on behalf of Trey and refused appellant his visitation rights.

The right of a custodial mother to change the surname of a minor after she remarries has been the subject of frequent judicial consideration throughout the United States. In 53 A.L.R.2d 914, is a comprehensive review of the authorities under the annotation “Rights and remedies of parents inter se with respect to the names of their children.” The general rule is stated as follows: “The courts have generally recognized that the father, who is ordinarily the objecting party, has a protectible interest in having his child bear the parental surname in accordance with the usual custom, even though the mother may have been awarded custody of the child. So, a change of name will not be authorized against the father’s objection, merely to save the mother and child minor inconvenience or embarrassment. However, where the child’s substantial interests require a change of name, as where the fa-, ther’s misconduct has been such as to justify a forfeiture of his rights or where his name is positively deleterious to the child, the change may be permitted.”

Art. 5929, Vernon’s Ann.Civ.St., authorizes the district court to change the name of a minor upon application being made by the guardian or next friend “if the facts alleged and proven satisfy him that such change will be for the benefit and interest of the minor.” It has been held that the burden is on applicant under this statute to prove by evidence satisfactory to the court that the change would be for the benefit and interests of the minor. Plass v. Leithold, 381 S.W.2d 580 (Tex.Civ.App.—Dallas 1964, no writ); Ex parte Taylor, 322 S.W.2d 309 (Tex.Civ.App.—El Paso 1959, no writ). Under these authorities, the action of the trial court should be upheld in the absence of a showing of an abuse of discretion.

The trial court held that although appellant has a protectible interest in having his child bear his name, this interest and his desire is secondary to the best interest of the child. The court concluded that upon full and satisfactory evidence the best interests of the child are served by granting the application changing his two given names as well as his surname.

Under his first two points appellant urges that this conclusion was an abuse of discretion in that it was not in the best interests of the child to alienate him from his natural father. Further, it is urged, under his third point, that such action is in violation of his rights under the Constitution in that his tie with the child could only be forfeited by misconduct or unfitness. Under appellant’s fourth point he urges that the boy’s constitutional rights were violated by this action. Under the fifth point he urges that the. trial court erred in changing the name because it amounted to a reward of appellees’ actions in falsifying the name and parentage of the child so as to constitute a fraud on the child, appellant and the courts.

These points are all somewhat interrelated and therefore will be considered together. The basic problem is related to the conflict between the protectible interest of the parent, or “natural right rule,” and the “best interest rule,” which is present in much child custody litigation. Insofar as custody is concerned, the Texas Supreme Court has adopted this position: The best interest of the child is the main consideration, regardless of the relative rights of the contesting parties. The law will presume that the natural parents are the ones best qualified to serve those interests, but the third party can rebut this presumption by proving that the natural parent is morally unfit to have custody or that, for other reasons, the best interest of the child demands that his custody be awarded to the third party. Herrera v. Herrera, 409 S.W.2d 395 (Tex.Sup.1966); Hendricks v. Curry, 401 S.W.2d 796 (Tex.Sup.1966); Mumma v. Aguirre, 364 S.W.2d 220 (Tex.Sup.1963); 19 Baylor Law Rev. 299.

Inasmuch as this application for change of name of the minor presents somewhat the same problem involving the future of this young boy, the trial court properly considered the best interest of the child rather than the father’s right as the primary consideration. This did not violate any of the father’s constitutional rights. It should not be overlooked, however, that all courts considering the question have held that the best interest of a child is usually not served if the change of name contributes to a further estrangement from his father who desires to preserve the parental relationship. Plass v. Leithold, supra; Mark v. Kahn (Mass.), 131 N.E.2d 758, 53 A.L.R.2d 908; In re Shipley, 26 Misc.2d 204, 205 N.Y.S.2d 581; Degerberg v. McCormick, 41 Del.Ch. 46, 187 A.2d 436; Reed v. Reed (Okl.), 338 P.2d 350; Marshall v. Marshall, 230 Miss. 719, 93 So.2d 822; 65 C.J.S. Names § 11(2).

The trial court’s conclusion that the best interests of the child are served by granting this application is based upon the finding of fact that the child has established his identity under the name of “John Tracy Newman” and that it would be humiliating, embarrassing, confusing, and, in all reasonable probability, disruptive of harmony in his home life for him to go under a different name from the other members of his family, and, further, that in all reasonable medical probability the impact of changing his name now might have a detrimental effect on his personality as he grows older.

At the time of the trial, Trey was about seven and a half years of age. For over five years, he had lived in and been identified as a member of the Newman family in a close relationship. All the testimony establishes that the Newman family is a very fine Christian family and that Trey has become an integral part of it. There is nothing in the record to show why his two given names were changed, other than to sever all identity with his natural father. In any event, the undisputed evidence is that all persons know him as “Trey Newman.” The pediatrician, who has treated Trey since birth, testified that it might be detrimental to “change” his name back to King, since Trey has established his identity with this family unit. A clinical psychologist, who was employed by the Newmans in December, 1966, for the purpose of giving expert testimony in this case, expressed the same opinion.

It is true, as urged by appellant, that this identity was built up largely as a result of the actions of the boy’s mother in improperly identifying him at home, at school and even on his baptismal record. Yet, as was said in Mumma v. Aguirre, supra, 364 S.W.2d p. 221, “ * * * our courts do not normally concern themselves with the righteousness of claims to custody of children; their paramount concern is with the best interests of the children.”

This action serves to demonstrate that the child’s best interests required the appointment of a guardian ad litem to represent him. He is not old enough to understand the serious consequences involved in this change of name. We cannot conceive a seven-year-old child telling his natural father that he did not want to go under his father’s name, without receiving encouragement and suggestion from adults in a position of influence over him. Notwithstanding the sincerity and purpose of his mother and stepfather in bringing this suit, it is obvious that there is a possible conflict between the best interests of this child and that of the Newmans. They admittedly are interested in severing all ties between the child and his natural father. This is conclusively shown not only by their admissions at this trial but also by their action in changing even his given names without reason. Certainly, the child would have little to gain in a personal vendetta between his natural parents. Despite the testimony of the medical experts as to the desirability of severing all ties with a natural father who had not forfeited his rights, our law still presumes to the contrary. In this situation, the Newmans were not proper next friends for the minor plaintiff and the trial court should have appointed a guardian ad litem on behalf of said minor child.

Rule 173, Texas Rules of Civil Procedure, provides that when a minor is represented by a next friend or guardian who appears to the court to have an interest adverse to such minor, the court shall appoint a guardian ad litem for such minor. This rule has been held to be mandatory. King v. Payne, 156 Tex. 105, 292 S.W.2d 331, 335 (1956); Wallis v. Stuart, 92 Tex. 568, 50 S.W. 567 (1899); Jaynes v. Lee, 306 S.W.2d 182 (Tex.Civ.App.—Texarkana 1957, no writ); McDonald, Texas Civil Practice, § 3.09.3. See also “P” v. Dept. of Health, 200 Misc. 1090, 107 N.Y.S.2d 586. In Cooper v. Liverman, 406 S.W.2d 927, 931 (Tex.Civ.App.—Texarkana 1966, no writ) the Court held that fathers of minors who had adverse interests to said minors were not proper next friends. In remanding the case, the Court said: “We hold that under such circumstances, even though the matter was not called to the attention of the trial court, that nevertheless a guardian ad litem should have been appointed to represent the interests of said minors.”

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

      . See Gunn v. Cavanaugh, 391 S.W.2d 723 (Tex.Sup.1966).


text:
    FROST NATIONAL BANK, Trustee, Appellant, v. ALAMO NATIONAL BANK, Appellee.
    No. 14620.
    Court of Civil Appeals of Texas. San Antonio.
    Oct. 25, 1967.

      Earle Cobb, Jr., San Antonio, for appellant.
    Matthews, Nowlin, Macfarlane & Barrett, Houston & Thompson, Craig L. Austin, San Antonio, for appellee.
   BARROW, Chief Justice.

Appellant brought this suit as Trustee of the Estate of Jack Ammann, Deceased, to recover damages from appellee for inducing Geotechnics and Resources, Inc., to breach a contract with the Ammann Estate not to mortgage a Map File as long as certain promissory notes executed by Geotechnics to the Ammann Estate were outstanding. The trial court entered a take-nothing judgment after a jury trial.

Appellant, hereinafter sometimes referred to as Frost, complains of the trial court’s errors in overruling its objections to the special issues submitted to the jury and in improperly defining words accompanying these issues. It also urges that the trial court erred in not granting appellant’s motion for instructed verdict, but if issues were to be submitted, the court should have given those requested by appellant. By counter-points, appellee urges that its motion for instructed verdict should have been granted under the legal concepts of res judicata by action of the Bankruptcy Court, exclusiveness of remedy, and that appellant’s rights under the restrictive covenant were terminated upon renewal of the original notes.

On November 8, 1961, an agreement was executed between Mrs. Dorothy Lee Am-mann, Independent Executrix of the Jack Ammann Estate, and Geotechnics whereby Mrs. Ammann agreed to sell Geotechnics 101,068 shares of the common stock of Jack Ammann', Inc. As part of the consideration therefor, Geotechnics executed a note in the amount of $50,000, payable without interest on or before 13 months after the closing date, and another note in the principal sum of $300,000, with interest at 6% payable in monthly installments of $2,531.57, secured by a deed of trust lien on the property known as 931 Broadway, San Antonio, which was the principal place of business of Jack Ammann, Inc. It was further agreed that while any balance remained due on either of these notes neither Geotechnics nor Jack Ammann, Inc., should encumber the stock of negatives owned by Jack Am-mann, Inc., commonly referred to as the Map File. Any violation of this negative covenant without the written consent of the holder of these notes gave the holder the option to accelerate the balance due on same.

On the same date, a plan to merge Geo-technics & Resources, Inc., a New York corporation, and Jack Ammann, Inc., a Texas corporation, was submitted and subsequently adopted by the stockholders of both corporations, with the surviving corporation known as Geotechnics & Resources, Inc. Prior to this merger, both companies were engaged in the business of making aerial photographs and preparing maps, etc., from these photographs. The Map File consisted of negatives from which photographs were printed upon order from customers, primarily oil companies and governmental agencies.

On February 1, 1963, the two promissory notes were renewed and surrendered, by agreement of Geotechnics and the Ammann Estate, and a single new note in the principal sum of $335,711.40 was executed. This note, payable in monthly installments of $2,531.57, was secured by a deed of trust on the Broadway real estate. On March 35, 1963, the assets of the Ammann Estate, including this renewal note, were transferred to the Frost National Bank as Trustee under the will of Jack Ammann.

By January, 1963, Geotechnics was in financial difficulty and had secured a line of credit with appellee, hereinafter referred to as Alamo. In the beginning, sufficient credit was obtained on the security of its accounts receivable. Its financial condition gradually worsened and these accounts were not sufficient to cover all money needed. On January 31, 1963, a chattel mortgage on the Map File was given by Geotechnics to Alamo as security for a loan of $100,000.

The financial condition of Geotechnics continued to deteriorate and in April, 1963, it was forced to arrange for Mr. Rollins King to guarantee a $100,000 loan made by Alamo. Mr. Neill Boldrick, attorney for Mr. King, learned of the restrictive covenant regarding the Map File in a conversation with Mr. Horner, a Frost trust officer who was handling the Ammann Estate. Mr. Boldrick immediately advised Mr. Parker, the Alamo officer in charge of Geotechnics’ account, who advised Geotechnics officers that they must contact Frost to secure a waiver of this acceleration right if Alamo was to continue to finance Geotechnics.

On May 9, 1963, the Trust Committee of Frost met and, after discussion of Geo-technics’ chattel mortgage of the Map File to Alamo contrary to the restrictive covenant, decided not to accelerate the note “at the present time.” The representatives of Geotechnics communicated this information to Mr. Parker. On May 10, 1963, Alamo took a second chattel mortgage on the Map File to secure past and future indebtedness of Geotechnics to Alamo. The amount owed by Geotechnics to Alamo at that time is not clearly shown in the record, although it was obviously substantial. This mortgage was recorded on May 17, 1963. Alamo continued to make loans to Geotechnics until Geotechnics was forced into bankruptcy in October, 1963. In the meantime, Geotech-nics kept up the monthly payments owed the Ammann Estate on the renewal note.

In the bankruptcy proceedings, Alamo asserted a claim in the amount of $429,167.75, secured in part by the two chattel mortgages on the Map File. This claim was contested by the employees of Geotechnics and also the Internal Revenue Service asserted its tax lien was superior. Frost did not oppose the claim of Alamo to this security. The Bankruptcy Court allowed Alamo’s secured claim, and the proceeds from the sale of the Map File in the amount of $155,100 were paid to Alamo by order dated September 11, 1964.

Frost submitted a claim as a secured creditor, in which it asserted total indebtedness of $333,056.38, plus attorney’s fee of 10%, secured only by the deed of trust on the Broadway property. After sale of the real estate, the balance of Frost’s claim, which was stipulated to be $141,650, was allowed as an unsecured claim. The percentage of distribution to unsecured creditors was 11.72%. On May 27, 1966, an order was entered closing the bankruptcy case of Geotechnics. This suit was filed on January 29, 1965, seeking a first lien on the Map File or damages of $156,000.

The trial court did not err in overruling appellant’s motion for an instructed verdict and rendering a take-nothing judgment upon the jury verdict. Appellant urges that the undisputed evidence establishes that Alamo induced Geotechnics to mortgage the Map File and if it had not done so Frost would have recovered as a general creditor its pro rata part of the sum realized from the sale of the Map File.

The jury found in response to Question No. 1, that Alamo did not have actual knowledge of the negative covenant prior to January 31, 1963. Appellant timely objected and now urges three objections to the submission of this issue: (1) the issue required a finding of “actual knowledge,” whereas only “actual notice” was required; (2) the chattel mortgage was void because Alamo failed to comply with the Bulk Sales Act, Art. 4000, Vernon’s Ann.Civ.St., Rep.Acts 1965, 59th Leg., Ch. 721, Eff. June 30,- 1966; (3) the evidence establishes as a matter of law that Alamo had notice of the negative covenant.

(1) Inasmuch as the crux of a tort action for wrongfully inducing another party to breach his contract is knowledge of the contract, the trial court correctly required a finding of “actual knowledge” by Alamo and refused Frost’s requested definitions of “actual notice.” In Lytle v. Galveston, H. & S. A. R. Co., 100 Tex. 292, 99 S.W. 396 (1907), the Supreme Court recognized that one who willfully and without legal justification or excuse interferes so as to bring about a breach of a contract between others is guilty of an actionable wrong. The Courts have uniformly recognized that the conduct necessary to support a cause of action for interference must be willful and intentional. Raymond v. Yarrington, 96 Tex. 443, 72 S.W. 580, 73 S.W. 800 (1903); Davis v. Freeman, 347 S.W.2d 650 (Tex.Civ.App.—Dallas 1961, no writ); Cooper v. Steen, 318 S.W.2d 750 (Tex.Civ.App.—Dallas 1958, no writ); Yarber v. Iglehart, 264 S.W.2d 474 (Tex.Civ.App.—Dallas 1954, no writ); 33 Tex.Jur.2d, Interference, § 4; 86 C.J.S. Torts § 44; 26 A.L.R.2d 1127.

(2) The Map File consisted of a group of photographic negatives. If a customer desired a map of a particular area, this negative was used to reproduce a photograph of the area. This photograph was sold to the customer and the negative remained in the file. Photographic negatives are not a “stock of goods, wares or merchandise daily exposed to sale” as described in Art. 4000, supra, and the Bulk Sales Law has no application to the mortgage of this Map File. It follows that the trial court did not err in refusing to admit evidence of the Texas or New York Bulk Sales Laws, or in refusing to submit issues of negligence based on Alamo’s failure to comply with same.

(3) Mr. Parker testified that he had no knowledge of the negative covenant until Mr. Boldrick advised him in April or May, 1963, of its existence. This testimony is corroborated by his prompt action in contacting Geotechnics and requiring its officers to check with the Frost Bank trust officers as to whether or not the Bank would accelerate the note. A copy of the merger agreement was found in Geotechnics’ file at Alamo, although there is no evidence establishing how or when it got into this file. Furthermore, Mr. Parker, as a personal stockholder in Ammann, Inc., probably received a copy of the merger agreement, as one was sent to each stockholder along with a letter from the president of Ammann, Inc. Mr. Parker did not deny receiving these instruments, but said if he did, he paid no attention to the details set forth in the merger agreement other than the outline contained in the president’s letter which recommended the merger. We cannot say that this evidence establishes as a matter of law that Alamo had actual knowledge of the negative covenant prior to the execution of the chattel mortgage on the Map File on January 31, 1963.

The trial court did not err in submitting Question No. 1, and there is sufficient evidence to support the jury’s finding that Alamo did not have actual knowledge of the negative covenant when it took the chattel mortgage on the Map File. Question No. 4 inquired if Alamo on or about January 31, 1963, induced a breach of the negative covenant in the sales contract between Geotechnics and the Ammann Estate. Although this issue was not conditioned upon an affirmative finding to Question No. 1, obviously Alamo could not have induced Geotechnics to breach the negative covenant if it was not aware of same. Any error in the definition of inducement given in connection with Question No. 4 would therefore be harmless.

On May 10, 1963, Alamo took a second chattel mortgage from Geotechnics on the'. Map File, and the evidence is undisputed that prior to this time it had actual knowledge of the negative covenant. Alamo urges, however, that Frost is estopped from asserting any complaint to Alamo’s action in taking this second chattel mortgage because of the jury’s findings on Questions Nos. 2 and 3.

Question No. 2 inquired as to whether Frost represented, on or about May 9, 1963, that it would not accelerate the note of Geotechnics at the present time prior to Alamo having made additional loans and extending additional credits to Geotechnics. Although this issue appears to be undisputed, we cannot say that reversible error is shown by the giving of same. Rule 434, Texas Rules of Civil Procedure. Question No. 3, which was predicated upon an affirmative answer to No. 2, inquired as to whether Alamo relied upon such representation in making additional loans and extending additional credits to Geotechnics after having received the chattel mortgage on the Map File executed May 10, 1963. The minutes of the May 9, 1963, meeting of Frost Bank Trust Committee state that after discussing the fact that Geotechnics had recently mortgaged the Map File to Alamo to secure further advances of cash to the company in violation of the negative covenant, the Committee decided “not to accelerate the note of Geotechnics at the present time because of this breach of the covenant in the sales contract.”

Mr. Parker testified that after Mr. Bol-drick had advised him of the negative covenant, he immediately contacted Geo-technics’ officials in New York, and shortly thereafter they came to San Antonio. Mr. Parker told them Geotechnics would have to contact Frost, because if Frost accelerated the note and foreclosed the real estate, Geotechnics would be out of business as a practical matter. On the morning of the Frost Trust Committee meeting, Mr. Horner discussed the Alamo loans with Mr. Parker for the purpose of reporting to the Committee. The action of the Trust Committee was communicated to Alamo by Geotechnics.

It was to the definite advantage of the Ammann Estate that Geotechnics stay in business, and it is undisputed that five monthly payments were made on the note prior to the company’s being placed in involuntary bankruptcy. The second chattel mortgage was placed of record on May 17, 1963. The record shows that Alamo continued to advance funds to Geotech-nics until the bankruptcy action. At no time prior to filing this suit did Frost ever question Alamo’s action in acquiring the chattel mortgages on the Map File or the validity of same. In the bankruptcy proceeding, Frost sought security only from its real estate lien.

The evidence is sufficient to raise a fact issue that Alamo relied on the action of the Frost Trust Committee in not accelerating the note on May 9, 1963, for Geotechnics’ breach of the negative covenant. Frost urges that its resolution that it would not accelerate the note “at the present time” was not a misrepresentation and therefore there can be no estoppel. The record is conclusive that Alamo had Geotechnics contact Frost for the specific purpose of ascertaining if Frost would exercise its right of accelerating the note. Frost knew of the precarious financial condition of Geotechnics and that an acceleration of its $300,000 note would undoubtedly cause Geotechnics to collapse. It further knew that Alamo was financing Geotech-nics and would continue to do so if the note was not accelerated. Frost could reasonably anticipate that additional security would be required for this extensive credit.

Although Frost’s action in not accelerating the note “at the present time” obviously left open the right to accelerate the note at some future time, it did not do so. Under all the circumstances, we cannot say as a matter of law that this failure to accelerate on May 9, 1963, did not mislead Alamo into taking the second mortgage on the Map File and continuing to advance credit to Geotechnics.

In Petroleum Anchor Equipment, Inc. v. Tyra, Sup., 419 S.W.2d 829, 833 (1967), the Supreme Court restated the applicable rule as follows: “While a party may be estopped to assert his legal rights against another when his conduct misleads such other to his detriment, and the misleading conduct may consist of a failure to act when there is a duty to act, Johnson v. Sovereign Camp W.O.W., 125 Tex. 329, 83 S.W.2d 605 (1935); Burnett v. Atteberry, 105 Tex. 119, 145 S.W. 582 (1912), the party asserting an estoppel must establish that he relied on the misleading conduct to his detriment. Concord Oil Co. v. Alco Oil and Gas Corp., 387 S.W.2d 635 (Tex.Sup.1965); Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929 (1952).”

In our case there is a jury finding that Alamo relied upon Frost’s conduct and made additional loans and extended additional credits to Geotechnics. Therefore, Frost is now estopped from complaining of Alamo’s action in securing the second chattel mortgage from Geotechnics.

The trial court properly entered a take-nothing judgment under these findings of the jury. The judgment of the trial court is affirmed.

      . The jury returned a verdict substantially as follows:
      1. On or before January 81, 1963, Alamo, by and through its duly authorized agents or officers DID NOT have actual knowledge of the negative covenant.
      2. On or about May 9, 1963, Frost represented that it would not “accelerate the note of Geotechnics at the present time,” prior to Alamo having made additional loans and extending credits to Geotechnics.
      3. Alamo relied upon such representation in making additional loans and extending additional credits to Geotechnics after having received the May 10, 1963, chattel mortgage from Geotechnics covering the Map File.
      4. On or about January 31, 1963, Alamo, by and through its duly authorized agents or officers, DID NOT induce, or contribute to induce a breach of the negative covenant in the contract between Geotechnics and the Ammann Estate.
      5. Damage issue conditionally submitted on No. 4, and unanswered.