author: BARROW, Justice.

text:
    CAGE BROTHERS et al., Appellants, v. Joe B. CAGE et al., Appellees.
    No. 14266.
    Court of Civil Appeals of Texas. San Antonio.
    July 22, 1964.
    Rehearing Denied Sept. 9, 1964.

      House, Mercer, House & Brock, San Antonio, for appellants.
    , Foster, Lewis, Langley & Onion, Pat H. Gardner, San Antonio, for appellees.
   BARROW, Justice.

Joe B. Cage, d/b/a Cage Construction Company, brought this suit against Cage Brothers, a partnership composed of the Estate of Tom C. Cage, Deceased, William N. Allan and Wilson J. Seldon, and San Pedro Equipmeht Company, to recover on an implied contract for rental of construction equipment owned by Cage Construction Co., for damages for conversion of a D-8 bulldozer, and for title to a No. 14 maintainer. Cage Brothers and San Pedro Equipment Co. filed a cross-action against Joe B.. Cage and joined as cross-defendant John A. Demauri, superintendent of Cage Construction Co., wherein Cage Brothers sought an accounting from Cage Construction Co. San Pedro Equipment Co. was a corporation owned by the partners of Cage Bros, to purchase and hold its construction equipment It was asserted by the cross-action that San Pedro Equipment Co. had purchased the bulldozer and maintainer from Holt Equipment Co., and it sought possession and the rental value of the maintainer.

After a jury trial, judgment was rendered whereby Joe B. Cage recovered from Cage Bros, the sum of $8,783.76, being the rental value of his equipment used by Cage Bros., less a set-off due Cage Bros, on' its accounting claim. Joe B. Cage was further granted judgment against Cage Bros, and San Pedro Equipment Co., jointly and severally, for $19,789.84, being the market value of the bulldozer on February 7, 1961, with interest from that date to date of judgment, less a set-off for the sums paid or obligated by San Pedro Equipment Co. to Holt on these machines. Joe B. Cage recovered title and right of possession to the maintainer. San Pedro Equipment Co. was awarded title and right of possession to the bulldozer. Cage Bros., San Pedro Equipment Co. and Joe B. Cage have appealed from this judgment.

Cage Construction Co. and Cage Bros, were both primarily in the road construction business. Joe B. Cage was a nephew of Tom C. Cage, senior partner of Cage Bros., and operated as an “affiliated operator” under Cage Bros. Under this arrangement, an affiliated operator (there were six associated with Cage Bros.) secured permission from Cage Bros, to bid on a construction job. The affiliated operator prepared a worksheet to arrive at an estimate of cost of the job. This worksheet was examined by Cage Bros, and if approved by them, the bid, as prepared or adjusted, was submitted to the bidding authority in the name of Cage Bros. If the bid was awarded, the affiliated operator was designated by Cage Bros, as the area superintendent and his company performed the work as employees of Cage Bros. On some jobs, Cage Bros, did all the preliminary work on the bid and requested the operator to do all or a part of the work as employees of Cage Bros. Cage Bros, furnished the money and handled the payroll, equipment payments, purchased the materials, and supplied the bond required by the State. All bookkeeping was done by Cage Bros. At the conclusion of the job, Cage Bros, received 5% of the gross price and credited the affiliated operator’s account with the remaining profit or loss on the job.

This arrangement, although very informal and predicated largely upon a personal relationship between the affiliated operators and Tom C. Cage, worked to the mutual satisfaction of all, and Joe B. Cage operated as an affiliated operator from 1954 until November 20, 1961. Tom C. Cage died on November 10, 1961, and shortly thereafter a controversy arose between Joe B. Cage and the surviving partners of Cage Bros., which led to this suit.

This appeal relates primarily to the provisions of the judgment relative to the D-8 bulldozer and No. 14 maintainer. The informal arrangement between Cage Bros, and the affiliated operators for the purchase, payment and use of the heavy construction equipment created problems of ownership and rights incident thereto. When an affiliated operator needed a piece of equipment, he first secured approval of the purchase by Cage Bros. It was then ordered by the operator, but the payments were made by Cage Bros., and either charged to a particular job then being performed by the affiliated operator or to his drawing account. Cage Bros, frequently shifted its own equipment, as well as that of the affiliated operators, from job to job in order to utilize the best use of equipment and avoid unnecessary duplication of equipment among Cage Bros, and the affiliated operators. Where equipment was shifted, Cage Bros, would charge or credit the individual operators for rent of this loaned equipment.

On August 31, 1959, Joe B. Cage secured the bulldozer and maintainer in controversy from Holt Equipment Co. A printed form titled “Purchaser’s Order,” which is in the form of a purchase and sell agreement, was executed by Holt and Joe B. Cage for each machine. These agreements provided for purchase of the bulldozer for $39,955.00 by payment of $2,000.00 on delivery, and of the maintainer for $24,929.00 by payment of $1,150.00 on delivery. On each form was inserted the provision: “Guar. 6 mos. rentals at $2000 ($1150 on the maintainer) /mo. 1st payment due at date of delivery. Usual Cage Bros, interest to apply.”

In accordance with the customary practice of purchase by Cage Brothers’ affiliated operators, Holt billed Cage Bros, each month for the payments and they were timely paid on behalf of Joe B. Cage through February, 1961, and charged to his account. No further payments were made, and on May 15, 1961, San Pedro Equipment Co., without the knowledge of Joe B. Cage, paid, or obligated itself to pay, the balance due on these two machines and received a bill of sale to each from Holt. Joe B. Cage did not learn of this transaction until November 20, 1961.

The maintainer remained in the custody of Joe B. Cage and no demand was made for it by San Pedro Equipment Co., Cage Bros, or Holt. On February 7, 1961, Cage Bros, shifted the bulldozer, which was not then needed by Joe B. Cage, to Galveston, where Mr. Montgomery, another affiliated operator, was performing a job and needed a bulldozer. Monthly rental on the machine was charged against Mr. Montgomery’s account, but was not credited to Joe B. Cage. When Joe B. Cage needed and requested this bulldozer, Cage Bros., with the apparent acquiescence of Joe B. Cage, declined to return the machine from Galveston where it was still in use, and instead sent one of their own bulldozers to Joe B. Cage. After the Galveston job was completed, the D-8 bulldozer remained under the control of ■Cage Bros.

Cage Bros, assert that, as a matter of law, the “Purchase Order” of August 31, 1959, executed by Joe B. Cage and Holt, provided only for rental contracts, which terminated for non-payment of rent. Therefore, it is asserted that on May 15, 1961, Joe B. Cage had no interest in the two machines. In support thereof, Cage Bros, cite Purity Creamery Co. v. Hays, Tex.Civ.App., 4 S.W.2d 1056, no writ hist. It was there held there was no evidence to support the trial court’s judgment that a contract very ■similar to that executed by Joe B. Cage, was a sale. The judgment was reversed and the cause remanded after the reviewing court found that all evidence established ta rental contract.

Here, however, there is ample evidence to support the finding by the jury that the agreement between Holt and Joe B. Cage gave him an option to purchase the machines. A Holt official testified that the machines would not have been rented at this rate for six months, and that they intended to sell the machines to Joe B. Cage. There was never any discussion between Holt and Joe B. Cage in regard to terminating this contract, and it is seen that by February, 1961, the purchase price of the machines had been substantially paid. Holt did not make any demand on Joe B. Cage for the unpaid monthly payments. Cage Bros, received credit on the purchase price for all monthly payments. The jury found that the agreement of May 15, 1961, between Holt and San Pedro Equipment Co., was for San Pedro to succeed to all the rights of Joe B. Cage under his option contract.

It is our opinion that Joe B. Cage had an- equitable interest in the machines at the time San Pedro Equipment Co., without his knowledge or permission, succeeded to his rights. Grabes v. Fawcett, Tex.Civ.App., 307 S.W.2d 311, no writ hist.; Hart v. Meadows, Tex.Civ.App., 302 S.W. 2d 448, writ ref., n. r. e., 50 T.J.2d, Sales, § 69. An absolute, unqualified ownership is not required to maintain an action for conversion. Bradley v. McKenzie, Tex.Civ. App., 226 S.W.2d 458, no writ hist.; 14 T.J.2d, Conversion, § 3.

We see no error in the trial court’s action in granting Joe B. Cage judgment for title to the maintainer and allowing Cage Bros, and San Pedro a set-off for the amount they had paid or were obligated to pay Holt on this maintainer.

Cage Bros, and San Pedro had exclusive control and use of the bulldozer after February 7, 1961. The trial court therefore properly granted Joe B. Cage judgment for the market value of the bulldozer on February 7, 1961, with a set-off being allowed Cage Bros, and San Pedro for their payments or obligations on same. Commercial Credit Corp. v. Flores, Tex. Civ.App., 345 S.W.2d 432, writ ref. n. r. e.; Morriss v. Knepper, Tex.Civ.App., 10 S.W. 2d 1012, no writ hist. There was no error in excluding from this set-off the amount paid Holt for modifications made on the bulldozer at the request of Cage Bros, after February 7, 1961. The trial court properly exercised its discretion in denying Joe B. Cage recovery of the rental value of the bulldozer in view of the relationship of the parties.

Joe B. Cage is entitled to prejudgment interest on this market value. Commercial Credit Corp. v. Flores, supra. It is our opinion, however, that the set-off allowed Cage Bros, and San Pedro should be taken before the computation of interest, in that the judgment of the trial court permits Joe B. Cage to recover interest on money paid or obligated to be paid by San Pedro. This would be an unjust enrichment.

In September, 1960, Cage Bros, secured the bid for construction of twenty-six miles of highway known as the Aransas-Refugio County Job and Joe B. Cage was named area superintendent of this job. All of Joe B. Cage’s equipment was used on this job and" it was necessary to supplement his equipment with a substantial amount belonging to Cage Bros. Cage Bros, asserted that this job was bid on behalf of Joe B. Cage as an affiliated operator and they sought an accounting on this basis. Joe B. Cage asserted that this was a Cage Bros, job and that Tom C. Cage had placed him in charge and directed him to use Joe B. Cage’s men and equipment. He testified that Tom C. Cage said he would pay for this use. The jury resolved this dispute in favor of Joe B. Cage, and the trial court granted Joe B. Cage judgment for the reasonable rental value of the equipment used on the job.

Cage Bros, assert on this appeal that Joe B. Cage is only entitled to recover his equipment payments, since he testified that he had been paid in this manner on other jobs. There was no evidence, however, that he had agreed to be so compensated on this occasion. There was testimony from Joe B. Cage that Tom C. Cage agreed to pay him for the use of the equipment, but the amount was not discussed. In this situation Joe B. Cage was properly permitted to recover on an implied contract for the reasonable rental value of this equipment. Meier v. Murphy, Tex.Civ. App., 207 S.W.2d 947, writ ref., n. r. e.; 17 A C.J.S., Contracts, § 363. Cage Bros, and San Pedro were not harmed by the trial court’s action in not permitting interest on either the rental value of the equipment or on the set-off allowed against same by reason of the amount owed Cage Bros, by Joe B. Cage on an open account.

We have considered Cage Brothers’ points which complain of the submission of Question No. 10 in the Charge of the Court. This issue was raised by the pleadings and evidence and the court did not err in the submission of this element of conversion. Further, there was no error in taxing the costs against Cage Bros, and San Pedro Equipment Co. under the judgment of the court.

The judgment of the trial court is reformed by deleting the recovery of prejudgment interest in the amount of $3,220.-00 and providing in lieu thereof that Joe B. Cage recover of and from Cage Bros, and San Pedro Equipment Co., jointly and severally, the sum of $16,569.84, with interest thereon at the rate of 6% per annum from February 7, 1961, until paid. In all other respects the judgment of the trial court is affirmed. The costs of this appeal are taxed two-thirds against Cage Bros, and San Pedro Equipment Co., jointly and severally, and one-third against Joe B. Cage.

      . JURY YERDICT:
      1. At the time -work commenced on the Aransas-Refugio County Job, it had been agreed by , Joe B, Cage and Cage Brothers to be a Cage Brothers’ job.
      2. Tom C. Cage told Joe B. Cage to put his equipment on the job.-
      3. At the time Joe B. Cage furnished his equipment for use on the Aransas-Refugio job, Joe B. Cage expected to be compensated by Cage Brothers for the use of such equipment.
      4. At the time Joe B. Cage furnished his equipment on the job Tom C. Cage knew, or reasonably should have known, that Joe B. Cage expected to be compensated for the use of such equipment.
      5.- ■ The reasonable rental value of JoeB. Cage’s equipment used on the job was $89,726.00.
      '6. Joe B. Cage and Joe Crowe agreed, at or before the time the No. 14 maintainer and the D-8 bulldozer were delivered to Joe B. Cage by Holt Equipment Co. that Joe B. Cage would have the option to purchase the same.
      7.Joe Crowe was authorized to enter into that agreement on behalf of Holt Equipment Company.
      8. Said agreement was still in effect immediately prior to the transaction between Holt Equipment Co. and San Pedro Equipment Co. on May 15, 1961.
      9. Holt Equipment Co. and San Pedro Equipment Co. agreed on May 15, 1961, that San Pedro Equipment Co. would succeed to all of the rights of Joe B. Cage under the contracts between Holt Equipment Co. and Joe B. Cage relating to the D-8 bulldozer and the No. 14 maintainer.
      10. At the time William Allan requested Joe B. Cage to let C. Montgomery use the D-8 bulldozer, Cage Bros, intended to take such D-8 bulldozer for its own use and benefit.
      11. The reasonable market value of the D-8 bulldozer on Eeb. 7, 1961, was $28,000.00.
      12. The reasonable rental value of the D-8 bulldozer from Eeb. 7, 1961, to the present date is $25,400.00.
      13. The decline in value, by reason of depreciation, of the D-8 bulldozer from Eeb. 7, 1961, is $17,980.00.
      14. The reasonable rental value of the Caterpillar No. 14 motor grader from May 15, 1961, to date is $14,700.00.


source: Caselaw Access Project

author: WILLIAMS, Justice.

license: Public Domain

text:
    TEXAS EMPLOYERS INSURANCE ASSOCIATION, Appellant, v. H. D. HOOVER, Jr., by N/F, Appellee.
    No. 16363.
    Court of Civil Appeals of Texas. Dallas.
    July 10, 1964.
    Rehearing Denied Sept. 26, 1964.
    Henderson & Bryant, Sherman, for appellant.
    Peery & Wilson, Kearby Peery, Wichita Falls, for appellee.
   WILLIAMS, Justice.

This appeal is from a judgment in a workmen’s compensation case wherein H. D. Hoover, Jr. was awarded total and permanent disability benefits, payable in a lump sum, as a result of an injury admittedly sustained by him in the course of his employment for T. & O. Drilling Company, on June 26, 1962 in Grayson County. Appellant inveighs against this judgment primarily on the proposition that the jury’s finding of permanent incapacity is either without support in the evidence or is so contrary to the great weight and preponderance of the evidence as to be manifestly wrong. Finding no merit in appellant’s points, we affirm the judgment.

This case is another in a series of appeals that have been presented in recent years to this court, as well as other appellate courts of Texas, in which the insurance carrier has seriously sought to strike down a jury finding of permanent disability where the injured workman produced no medical testimony incorporating an opinion relating to permanency of the injury but relies solely upon lay testimony from which the jury may reasonably infer that the injuries will be permanent. On two occasions within the past year we have had occasion to reannounce the rule, which we believe to be now well established in Texas Jurisprudence, that permanent disability may reasonably be inferred from circumstantial evidence produced by lay witnesses and this is true even though such evidence is contradicted by the testimony of medical experts. Travelers Ins. Co. v. Wade, Tex. Civ.App., 373 S.W.2d 881, err. ref. n. r. e., and Travelers Ins. Co. v. Arnold, Tex. Civ.App., 378 S.W.2d 78, no wr. hist. In those cases we had occasion to set forth numerous authorities which we deemed controlling and which we believe to apply to the instant appeal.

Since appellant has advanced “no evidence” and “insufficient evidence” points directed to the special issue relating to permanency of appellee’s injuries, we are required to review this record in the light of the landmark rules pronounced by our Supreme Court in In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660. Having done so we have arrived at the conclusion that the facts in the instant appeal are not such as would cause us to deviate from the rule announced in the cases cited above.

A summarization of essential antecedent facts is necessary. Appellee, H. D. Hoover, Jr., a twenty-year-old youth, was employed by T. & O. Drilling Company to work on a drilling rig. On June 26, 1962 he, and other fellow employees, were standing on the drilling rig putting two sections of the rig together. He became overbalanced and fell backward a distance of twelve to fifteen feet, striking the ground on his head and neck. He was carried by ambulance to the hospital at Gainesville where he remained twenty-nine days under the care of Dr. McLeroy. During that time he was also seen by a Dr. Powell and a Dr. Lee. While in the hospital he was placed in traction for two days and then put in a body cast for twenty-four days, such cast extending from his hips to the base of his neck. Following that he was fitted with a back brace, which he continued to wear at time of trial. At the time he was discharged from the hospital he was having trouble with the lower part of his back. The trouble in his neck lasted only about six weeks, and' he hasn’t had any' trouble .with that since then. His back and “tail bone” hurt in the lower part of his back, more in the right side. He said: “It hurts not too bad all time, but it hurts some all the time. A right smart of activity seems to make it hurt worse, such as working around the yard or in the garden for a few minutes.” In addition to the doctors named he also saw Dr. Pauly in Dallas and a Dr. Cassidy in Oklahoma City. He was also placed in the rehabilitation center in Dallas for a week where he was given a series of exercises. At the time of the trial he was still under the care of and seeing Dr. McLeroy about once a month. Dr. McLeroy gives him a prescription for pills to take for his pain and also to allow him to sleep whenever his back is bothering him a lot. He still wears a back brace, consisting of light steel stays extending from his buttocks to the upper part of his shoulder. He does not wear the brace all of the time but does wear it whenever he has any activity or whenever he drives or rides in the car for any distance. He testified that he had tried to do work in his garden and in the yard and also do some work on his car, but that this work was limited due to pain. He complained that any strenuous movement or activity caused him to have pain in the lower part of his back. He said that he felt like in his present condition that he could not go out and get a job and work as a derrick man, which was the work he was doing at the time he was injured. He still takes various kinds of pills for pain and to allow him to sleep. When asked whether he had shown any improvement he testified: “I think I feel about the same.”

Plaintiff’s mother testified that she observes a difference in the physical appearance of her son now than it was before he fell off the derrick; that he can’t get up like he did, and has difficulty with his right leg. She said that she had observed him practically every day during the year between the time of his injury- and the trial of the case and that she does not think that he is much better than he was when he first got out of the hospital.

It is undisputed that appellee was examined, at the request of the appellant insurance carrier, by Doctors McLeroy, Pauly and Lee. He was examined by Dr. Cassidy of Oklahoma City at the request of his own attorney. None of these doctors testified at the trial of the case.

In addition to lay testimony the hospital records relating to appellee’s period of hospitalization following the injury were admitted in- evidence, by agreement. One x-ray report, contained in these .records, states:

- ' “Studies of the cervical and lumbar ' spine and pelvic AP reveal starting' with the cervical spine an appearance of spondylolisthesis of Cl over C2. The adointoid process of C2 is displaced backwards relatively speaking dangerously near to the aspiratory center in the pons.
“A study of the lumbar spine reveals a transverse fracture of the inferior process of the pars-articularis of L4 on the left, also we note oblique curving fracture running through the first portion of the sacrum on the left.”
Another x-ray report states:
“Low Back Series. These studies show no significant departure from the normal alignment and configuration of the bony components of the lumbar and sacral spine. There is highly suggestive evidence of a spondylosis involving the inferior articulating processes of L4 seen in the lateral study, but unequivocal evidence of such an injury is lacking in the AP view of the spine.”

When we view this evidence, together with the record as a whole, we cannot say, as contended by appellant, that there is no evidence to justify the submission to, or the answer of, the jury, of the issue relating to the permanency of appel-lee’s injuries. Neither can we say that this testimony, when viewed as a whole, is so contrary to the great weight and preponderance of the evidence as to be manifestly wrong and unjust. As so aptly stated by Chief Justice Dixon of this court in Travelers Ins. Co. v. Wade, supra, “It would serve no useful purpose if we were to say that had we been sitting as a jury in this case we might have made a different answer to Special Issue No. S [permanent disability] than that actually made by the jury.” Also as Justice Bateman said in Travelers Ins. Co. v. Arnold, supra, the jury had the right to believe all of appellee’s testimony and, observing what they could of his physical condition in the court room, to conclude that he was totally disabled and that such incapacity was permanent. Appellant’s first four points are overruled.

Appellant’s fifth and sixth points complain of the rendition of a judgment for a lump sum because of “no evidence” and “insufficient evidence” to justify such jury finding. Again we have reviewed the testimony on this point in the light of the authority set forth above, and find that the points must be overruled. Without detailing the testimony it is sufficient for us to state that we have found ample evidence to> support the jury’s finding that manifest hardship and injustice would result unless compensation benefits should be paid to ap-pellee in a lump sum, rather than in weekly payments.

The judgment of the trial court is affirmed.

Affirmed.


author: POPE, Justice.

text:
    Richard F. SCHWARZ, Appellant, v. STRAUS-FRANK COMPANY, Appellee.
    No. 14272.
    Court of Civil Appeals of Texas. San Antonio.
    July 8, 1964.
    Rehearing Denied Sept. 2, 1964.

      Morriss, Morriss, Boatwright & Lewis,. San Antonio, for appellant
    Lang, Byrd, Cross, Ladon & Oppenheimer, Stephen Lang, Neill Boldrick, Jr., Sans Antonio, for appellee.
   POPE, Justice.

This is a suit on a note between the-maker and payee. Plaintiff, Straus-Frank: Company, sued and recovered judgment oni a verdict against Richard F. Schwarz for-an unpaid balance of $6,653, interest and’, attorney’s fees. Defendant appealed and', contends that his plea of want of consideration was not submitted to the jury, that he-was entitled to an issue and finding on his; defense that he made the note on condition-that all payments would be made out of certain specific funds, and that the issue inquiring about his own authority as department manager for Straus-Frank Company-was too restricted. We affirm the judgment.

Straus-Frank is a wholesale supply business. From early 1957 to May, 1960, defendant was manager of its electrical supply department. Defendant learned about-a possible sale of some aluminum tubing to-a customer, Regera Industries, and discussed this with Mr. Straus, his superior.. Regera Industries made metal lawn furniture but its credit was weak, and it was a-, cash customer, according to all the evidence. In November of 1957 defendant ordered two truckloads of the metal tubing-for delivery to the Straus-Frank warehouse. It would then be sold to Regera iru small quantities for cash. While the shipment was in transit, Schwarz, by telegram,, diverted the shipment direct to Regera Industries. He did not report this to his-superior who did not learn of it until 1959:. An inventory taken at the end of 1958 showed that the tubing was located on the east wall of the department managed by. defendant. It never was there. Regera Industries was not successful, and in the early part of 1959 made an assignment for the benefit of creditors.' It never made a payment on the tubing. Defendant, while serving as manager for Straus-Frank, the supplier, was also the President, or an officer, of Regera Industries, the customer. After Regera Industries fell into financial difficulties, defendant and David Straus discussed the matter, and defendant consented to a new invoice which billed him for all the tubing. Defendant then made his claim against Regera Industries and received one liquidating' dividend which he turned over to Straus-Frank to apply on the debt. On November 11, 1959, defendant made his promissory note to Straus-Frank for the ■ amount of the tubing.

Defendant, on appeal, reasons that he did not buy nor receive the tubing, that at all times the debt was that of Regera,-Industries, and that his-note was for a debt of a third person. He argues that the trial, court failed to submit an issue on want of - consideration. The court did, however, ■ submit an issue inquiring if defendant, ■ Schwarz, had express or implied authority from Straus to consign the two loads-'of tubing to Regera Industries, and the jury found that he did not. This finding that defendant violated his principal’s instructions fixed a personal liability upon him. Kerr v. Cotton, 23 Tex. 411; Taylor v. Jones, Tex.Civ.App., 244.S.W.2d 371; Hobby v. King Trailer Co., Tex.Civ.App.,, 273 S.W. 650; Eagle Indemnity Co. v. Cherry, 5 Cir., 182 F.2d 298. Schwarz, therefore, in giving’-his noté for the amount of the tubing was not merely assuming an Obligation of Regera Industries, he was giving-a note to cover his own liability resulting' front -his unauthorized consignment. This is consideration, § 25, Art. 5933, Vernon’s Ann.Civ.St. Shaw v. McShane, Tex.Com. App.,, 50 S.W.2d 278; Fidelity & Deposit Co. of Maryland v. Risien, Tex.Civ.App., 248 S.W. 1105. Defendant has a point that, though this may be a cprrect* theory of law, plaintiff did not plead breach of duty by the agent, as consideration. We find no objection to the issue that, it was not pleaded.

Defendant pleaded that he made the note to Straus-Frank but that he delivered it on express condition that payment would be made from two sources only. Those sources were the liquidating dividends from Regera Industries, and his own year-end bonus that he might earn as manager of the electrical department for Straús-Frank. The trial court refused defendant’s requested issue on the defense of conditional delivery, overruled his objection to an issue which conditionally submitted substantially the same issue he requested, and then rendered judgment, although the issue submitted was not answered by the jury. The trial court, from these several rulings, held as a matter of law that the defense was not valid. The court correctly ruled.

There is a difference between paro.l agreements which show a delivery, of a note on condition, and parol agreements which show understandings about payment of a. note that is operative. Under Section 16, Article 5932, delivery on condition may be proved by parol. In that situation, the. note never,, becomes operative. Helmke v. Prasifka, Tex.Civ.App., 17 S.W.2d 463. As in Kuper v. Schmidt, 161 Tex. 189, 338 S.W.d 948, the'' claimed collateral agreement 'relates to payment and not delivery. 'The'note had effect and could not be varied or added to by parol. ' '

Defendant • also contends that the issue which inquired about his authority as manager was too restricted. The court asked whether defendant, Schwarz, when he delivered and consigned the metal tubing to Regera Industries, had authority, either express jor implied, from David Stráus. De-fendafot'- argues that the, .issue, should not1 have limited his powers to those given by. David Straus only, but should have inquired whether he had authority from Straus-Frank Company. Our search of the record shows that Regera Industries was always a cash customer and that it had never been extended credit. The record shows that defendant spoke of Straus as his “superior.” He was president of Straus-Frank Company. He was the one, and the only one, with whom defendant discussed delivery to Regera. After it was discovered that the tubing was not in the Straus-Frank warehouse and Regera was unable to pay for the tubing, it was Straus with whom defendant talked. The only evidence to which our attention is invited of defendant’s discussion with any other officer of the company was the Secretary-Treasurer, and those discussions related to the note only, not to defendant’s original authority to make delivery direct and on credit to Re-gera. Under this record, the submission was not too limited.

The judgment is affirmed.


text:
    Charles L. CAMPBELL et al., Appellants, v. F. A. DREIER et al., Appellees.
    No. 14262.
    Court of Civil Appeals of Texas. San Antonio.
    July 15, 1964.
    Rehearing Denied Sept. 9, 1964.

      E. R. Criss, Houston, Bert Kirk, Cuero, Garrett, Hodges & Stahala, Fort Worth, Lang, Byrd, Cross, Ladon & Oppenheimer, San Antonio, for appellant.
    Guittard & Henderson, Victoria, Crain & Crain, Cuero, for appellee.
   POPE, Justice.

Claud B. Hamill filed this interpleader suit to determine whether two term royalty deeds had terminated, and tendered all disputed royalty payments into court. Owners of the reversionary interest in the term royalties, Edmund and Fritz Dreier, urged and the trial court held, that the royalty deeds had terminated because there was no actual production on the critical dates as required by the terms of the deeds. Two questions are presented: (1) In the case of a term royalty deed which terminated on April 6, 1959, and another which terminated on March 29, 1960, if there was no paying production on the described lands, neither of which royalty deeds mentioned shut-in royalty; did the payment of shut-in royalty, as permitted by an overlying lease, preserve the term royalty deeds ? (2) Eight original co-tenants jointly granted two term royalty deeds to a described 541-acre tract, but expressly reserved executive rights. Neither royalty deed mentioned pooling with lands •outside the described tract. The original owners later voluntarily partitioned the tract, and the separate owners then made leases which authorized pooling. Did actual production outside the described tract, but on lands pooled with a part of that tract, preserve the royalty deeds as to the entire tract? We answer both questions in the negative and affirm the judgment.

On October 6, 1943, F. C. Dreier and his •three sons, Edmund, Fritz and Henry, joined by their wives, executed a term roy.alty deed to Charles L. Campbell and conveyed one-half of the royalty “in and under ■the following described tract of land” (describing the Dreier tract by metes and bounds). The deed would become null and void “in case there is no paying production on said land on October 6, 1958, and for six months thereafter, * * On March 29, 1945, the same members of the Dreier family conveyed to R. F. Scheig one-fourth • of their royalty “from the following described lands” (describing the Dreier tract by metes and bounds). The Scheig deed would become null and void “IF at the expiration of said 15 years from date hereof, ■ oil, gas or other minerals, or either of them, is not being produced or mined from said land * * The royalty deeds required ■production on April 6, 1959, in the case of the Campbell royalty deed, and production on March 29, 1960, in the case of the Scheig royalty deed, and the production must be from the described land.

All of the Dreier grantors expressly reserved executive rights in both their royalty deeds to Campbell and Scheig. On July 1, 1946, the three brothers and their wives appear to be the equal fee owners of the entire tract, subject to the term royalty conveyances. On that date, the three brothers, Edmund, Fritz and Henry, joined by their wives, exchanged warranty deeds to effect a partition of their land into three equal 180)4 acre tracts. Edmund then owned the tract on the west, Fritz the one in the middle, and Henry the one on the east. Later, Edmund made an oil and gas lease to his separate tract, and by the lease he authorized a pooling unit of 320 acres. Fritz and Henry also made separate oil and gas leases covering their tracts, and by amendments they also authorized 320-acre units. These leases were made by each brother and his wife, acting independently of the other brothers and their wives. They were made at different times and on different terms.

On July 27, 1959, a gas well was completed on the western tract partitioned to Edmund. The tract had been pooled with a part of Fritz’s middle tract. The well completion date was too late to preserve the Campbell royalty deed, but was before March 29, 1960, and in time to save the Scheig royalty deed, if there was “production” within the meaning of that grant. Under the facts there was not production, as ruled by the trial court. The well was shut in after completion and remained shut in until January, 1962, when for two weeks it produced fuel for other drilling purposes. It was again shut in until April, 1962, since which time it has actually produced. Another well was completed on May 27, 1959, but it too was shut in until April, 1962. There was no actual production from it until after the termination date for both of the royalty deeds. The lease permitted shut-in royalty payments, which were paid to the Scheig royalty owners up to the time of actual production.

The word “production” as used in a term royalty deed means actual production. Holchak v. Clark, Tex.Civ.App., 284 S.W.2d 399. If shutin royalty is relied upon as substitute production applicable to the royalty deed, provision for it must be found in the royalty deed and not in the overlying lease. This Court stated in Sellers v. Breidenbach, 300 S.W.2d 178: “The parties could have placed in their royalty deed a shut-in gas well provision, if they had desired to do so, hut we find no such provision in this deed.” Archer County v. Webb, 161 Tex. 210, 338 S.W.2d 435; Midwest Oil Corp. v. Mengers, Tex.Civ.App., 372 S.W.2d 247; Investors Royalty Co. v. Childrens Hospital Medical Center, Tex.Civ.App., 364 S.W.2d 779; Union Producing Co. v. Scott, D.C., 173 F.Supp. 361, affirmed, 5 Cir., 267 F.2d 469, 470.

The royalty owners have not pointed us to any additional grant which enlarged their original royalty deeds. After the separate leases were made of the partitioned lands, the lessee obtained ratifications of the leases from each of the royalty claimants. The ratifications from the royalty owners were ratifications of the leases but they did not change the royalty deeds. Any enlargement of the grant to the royalty owners must, come, not from the royalty owners but from the other direction — from the mineral fee owner.

A third well was actually producing gas in time to preserve both royalty deeds but it was located outside the Dreier tract described in the royalty deeds. It commenced actual production on March 16,. 1959. It was located 330 feet north of Henry Dreier’s tract and was in a unit authorized by Henry’s lease, \yhich unit embraced some of Henry’s tract. Henry does, not resist the claims by the royalty owners, that the term royalty deeds are still in force-Edmund and Fritz do resist, and they argue that production from a well located off the Dreier lands described in the royalty-deeds, is not production “on said land” or “from said land” as required by the deeds.. The phrase “from said land,” in its ordinary meaning, is the same as “from wells located on said land.” Southland Royalty Co. v. Humble Oil and Refining Co., 151 Tex. 324,. 249 S.W.2d 914. At no time has there beem production from a well located on any part of the Dreier lands.

Every precedent which we have-cited in support of the rule that the actual, production requirements of a royalty deed', may not be altered or enlarged by the shut-in provisions of an overlying lease, could’ logically be cited for the rule that lease-provisions which authorize production from' a well off the Dreier lands but on a tract, pooled with those lands do not alter the-terms of a royalty deed which contains no-such provision.

The royalty claimants, realizing: that the royalty deeds have no pooling provisions, seek to find within the voluntary partition of the Dreier tract some grant of' implied powers to each owner of the partitioned shares, not merely to pool, but to alter the terminating event expressed in the royalty deeds. The two term royalty deeds, to Campbell and Scheig were jointly executed by four Dreiers and their wives.. They granted non-participating -royalty and reserved executive rights in the 'entire 541-acre tract. The royalty claimants state their proposition in this manner: “The Dreier partition of July 1, 1946; vested in Henry, as the fee owner, the right to execute the Henry Dreier Lease with pooling and constructive production clauses agreeable to the owners of the royalties under his land. By said partition and their warranty deed, Fritz and Edmund authorized Henry to execute said lease with pooling and constructive- production clauses agreeable to the Campbell royalty claimants.”

The proposition states too much because it confuses two powers. Henry’s power to lease and to make'provision for a pooling unit in his lease is one power. A power to alter the terms of an outstanding royalty deed with respect to its requirements about the place of production is a different power. If a partition operates to alter the terms of a royalty deed in this particular, the terms of the written royalty deed would be of little meaning. One could never know the terms of a royalty deed if its terms, though measured out in clear words, yet depend upon the exercise of executive rights in a multitude of different ways.

The partition of the Dreier tract neither enlarged nor diminished the rights of the outstanding royalty owners. When the three Dreier brothers partitioned the 541-acre Dreier tract, they divided the property so that each would have exclusive use and occupancy and the right to dispose of his localized share as he saw fit, and as his own land. Hamilton v. Hamilton, 154 Tex. 511, 280 S.W.2d 588, 593. Before the partition, Henry owned an undivided one-third of 541 acres burdened by two term royalty grants. After the partition, he owned 1801/3 acres in fee, but still burdened with the same two term royalty grants which the partition neither reduced nor enlarged upon. Before the partition, the powers of ownership were undivided; after the partition those powers were separated and followed the ownership of the separate tracts.

The reservation of “executive-'rights” followed by a partition did not’ alter or change the rights of royalty owners under the outstanding term royalty deeds.. This case well ilhistrates the ordinary meaning of the term “executive rights.” The estate which was conveyed to Campbell and Schéig was a royalty and not á mineral interest. There was a reservation of “executive rights,” which means the exclusive right to make a lease. As explained by 2 Williams and Meyers, Sec. 338: “The mineral estate had all the rights, powers, privileges and immunities after the transfer of the royalty that it had before, save one, — the right to receive all royalty on production from the land. Remaining in the grantor, therefore, is the exclusive power to lease theretofore enjoyed by him. This power, called the executive right, is an incident of mineral fee ownership, and it is not transferred by the royalty grant. There is no need to find some special classification for the executive right after transfer of a royalty any more than there is need to classify it before the royalty transfer.” See W. Randolph Elliott, The Executive Right, 42 Tex.L.Rev. 865. In other words, the original grantors retained as an incident to their mineral fee ownership, the power to lease whether expressly reserved or not. This power is an incident of the mineral fee ownership whether christened or not. Giving these incidents of fee ownership a name should not confuse the problem. Whether denominated “executive powers” or not, the powers of ownership follow the mineral fee and pass upon succession, transfer, death, devise and partition of the mineral estate. Miller v. Gahagan, Tex.Civ.App., 316 S.W.2d 160; De Busk v. Cosden Petroleum Corp., Tex.Civ. App., 262 S.W.2d 767; Miller v. Speed, Tex.Civ.App., 248 S.W.2d 250, 259 S.W.2d 235. We do not have in this case a situation of a separation of executive rights from ownership of the mineral fee. The principles of agency are not involved. Willson v. Superior Oil Company, Tex.Civ.App., 274 S.W.2d 947.

We overrule the contention that Edmund and Fritz ratified the Henry Dreier lease and therefore forfeited their right to claim a termination of the term royalty deeds. The royalty claimants failed in their proof of ratification. Edmund and Fritz did not join in the execution of the Henry Dreier lease, nor its amendment which authorized the unit outside the Dreier lands. They did not ratify the lease, its amendment, nor the pooling unit. They refused to sign a division order which recognized the continuing rights of the term royalty claimants. They stood upon the term royalty deeds as written.

The royalty claimants make a final argument. They urge that Henry in executing the lease owed a duty to the royalty owners. This is true. Schlittler v. Smith, 128-Tex. 628, 101 S.W.2d 543; Jones, NonParticipating Royalty, 26 Tex.L.Rev. 569,. 574. Whether that duty would justify pooling with non-Dreier lands is questionable. Brown v. Smith, 141 Tex. 425, 174 S.W.2d 43; Nugent v. Freeman, Tex.Civ.App., 306-S.W.2d 167. The existence of a duty to-protect the royalty owners does not, however, mean that an owner or holder of executive rights has the additional and new power-to change the terms of oustanding royalty-deeds.

In our opinion both of the term royalty-deeds have terminated, and the judgment of the trial court is affirmed.

      . “It is further agreed that Grantee shall have no interest in any bonus money received by the Grantor in any future lease or leases given on said land, and that it shall not be necessary for the Grantee to join in any such lease or leases so made; That Grantee shall receive under such lease or leases one-sixteenth part of all oil, gas and other minerals taken and saved under any such lease or leases, and he shall receive the same out of the royalty provided for in such lease or leases, but Grantee shall have no part in the annual rentals paid to keep such lease • or leases in force until drilling is be;gun.”

      . “And it is further understood and agreed that not withstanding the Grantee does not by these presents require any right to participate in the making of future oil and gas mining leases on the portion of said lands not at this date under lease, nor of participating in the making of future leases, should any existing or future leases for any reason become cancelled or forfeited, nor of participating in the bonus or bonuses which Grantor herein shall receive for any future lease, nor of participating in any rental to be paid for the privilege of deferring the commencement of a well under any lease, now or hereafter;”


author: DAVIS, Commissioner.

text:
    Beatrice COLLINS, Appellant, v. INLAND GAS CORPORATION et al., Appellees.
    Court of Appeals of Kentucky.
    March 20, 1964.
    Rehearing Denied Oct. 16, 1964.
    Scott Collins, Prestonsburg, Earl Cooper, Salyersville, for appellant.
    Gray, Woods & Cooper, Ashland, Paul C. Combs, Prestonsburg, for appellees.
   DAVIS, Commissioner.

This appeal from the Magoffin Circuit Court presents the question of distribution of royalties arising from two producing gas wells. The original gas and oil lease embraced one 200-acre tract. The tract was partitioned into five parcels after the execution of the lease. Appellant now owns three of the separate parcels; appellee Cooley owns the other two parcels. The gas wells are located on the property owned by Cooley. Cooley contends that he is entitled to all of the royalties from the two wells, but appellant contends that the royalties should be apportioned between appellant and Cooley in the same ratio their respective acreages bear to the entire acreage of the original tract. Appellant offered alternative pleas that if apportionment should not be granted, then the lessee gas company should be required to drill an offset well on the surface of appellant’s land, or, failing that, then the lease should be cancelled insofar as it relates to appellant’s lands. The trial court entered judgment alloting all of the royalties to Cooley, adjudging that the gas company was not required to drill any offset well on appellant’s land, and refusing to cancel the lease as to appellant’s land.

By written lease dated February 26, 1923, John E. Stephens and Mary Stephens, husband and wife, granted oil and gas rights to Henry S. Chapman, covering the entire tract owned by grantors. By mesne conveyances appellee Inland Gas Corporation became, and is, the lessee holding under that original lease. The lease was for a term of five years “and as long thereafter as oil or gas or either of them is produced * * * by lessee, his successors or assigns.” The lease expressly binds all parties in interest who succeed to the rights of lessor or lessee in any manner. The lessor is assured as royalty “one-eighth part of the proceeds of all the oil saved and sold” of that produced on the premises, and $300 per year for the gas from each well where gas only is found.

John and Mary Stephens, the lessors and owners of the 200-acre tract, were the parents of five children. By four separate deeds, each bearing date August 23, 1924, they conveyed forty acres apiece to four of their five children. Each of these deeds recites a consideration of $200 and love and affection. Significantly, each of the deeds also contains the following language:

“The first parties reserving the oil and gas and to tend some of the tenable (sic) land on this tract or parcel of land when necessary for his support * * * At the death of the first parties the oil and gas shall fall to the owners of the land.” (Emphasis added)

A fifth deed to the remaining child of John and Mary Stephens was dated April 11, 1925, and contained the same language just quoted. The reason prompting the delay in the execution and delivery of the fifth deed is not disclosed by the record, nor does it appear significant.

It is noteworthy that the deed to Will Press Stephens (one of the five children), dated August 23, 1924, contains the following expression:

“The first parties excepting the home place where there is a new building going up during their life time, then at their death the house falls to the second party.” (Emphasis added)

The precise time the two gas wells were drilled is not made clear from the record before us. It appears reasonably certain that neither of the wells was drilled until after the partition of the 200 acres among the five children. It is certain that the prescribed royalties from the gas wells were promptly paid to John and Mary Stephens while they both lived, and thereafter the payments were received by Mary Stephens until her death. Meanwhile, the appellant, Collins, has become the owner of three of the five 40-acre tracts, and appellee Cooley owns the other two, and upon which are located the same two gas wells.

The appellant urges that the principles enunciated in McIntire’s Adm’r v. Bond, 227 Ky. 607, 13 S.W.2d 772, 64 A.L.R. 630, support an apportionment of the royalties on an acreage basis. Appellee Cooley insists that Mclntire, supra, is unsound and that the rule of Hurst v. Paken Oil Co., 287 Ky. 257, 152 S.W.2d 981, must control. Other decisions touching upon the issue and which the parties discuss include: Keystone Gas Co. v. Allen, 227 Ky. 801, 14 S.W. 2d 155; Hammond v. Hammond, 292 Ky. 659, 167 S.W.2d 865; Stratton v. Kentucky and West Va. Gas Co., 298 Ky. 651, 183 S.W.2d 817; and Hurst v. Kentucky Oil & Distributing Corp., Ky., 255 S.W.2d 467. Further research of the interesting legal principle here raised may be had by reference to 3A Summers, Oil & Gas, § 608, and Thornton, Oil & Gas, Vol. 2, § 373.

In general, it may be said that the Mcln-tire rule provides for apportionment of royalties on an acreage basis when a tract covered by lease has been subdivided without mention of the royalties to accrue under it. The Hurst case, without expressly overruling Mclntire, reaches opposite result. In Hurst it was written that under circumstances similar to those at bar “each owner is entitled to the oil and gas produced on his tract and to the royalties * * * arising from * * * oil and gas produced * * * on such tract, provided, there is no reservation of the mineral rights in the deed.” In Stratton v. Kentucky & West Va. Gas Co., supra, we cited McIntire and Hurst as jointly supporting the proposition that apportionment of royalties according to surface acreage would be automatic unless there had been “a division of the minerals under the divided tract.”

It is not necessary to undertake reconciliation of Mclntire and Hurst in this case. Rather, we seek the construction of the Stephens deeds looking toward determination of the intention of the grantors. It may not be doubted that equality among the five Stephens children was the prime intention of the granting Stephens parents. Each child received forty acres; each deed recited an identical consideration; and each contained the same language relating to the “falling” of the oil and gas. Apart from the normally assumed equality of treatment of children, these deeds fairly shout of the grantors’ intention to treat the five children alike. As noted in many decisions, including Combs v. Hounshell, Ky., 347 S.W.2d 550, and Riley v. Riley, Ky., 266 S.W.2d 109, we are fully committed to that deed construction to effect the intention of the parties as it can be gathered from the language as a whole.

The granting Stephens parents retained a life estate in the oil and gas; the oil and gas were subj ect to the lease; such royalties as should arise from those minerals were payable to the Stephens parents during their lives. It seems clear that the plain intent of the grantors was that each child should succeed to an equal share in what the grantors had. As to the surface of the five tracts, there was no postponement of enjoyment; as to the oil and gas, the enjoyment was postponed so long as either of the grantors lived. The parents, during their lives, received the royalties from the two gas wells involved here. It may not be supposed that they attributed the royalties to any particular portion of the 200-acre tract. The right to the royalties was an incident of the ownership of the 200 acres — as a whole — not as to any specific portion. So, upon the termination of the life estates, the right to the royalties “falls” to the owners of the land in exactly the same manner. The owner of each tract succeeded to a proportionate right to share in the royalties. The successors in title to those five children, appellant and appellee Cooley, succeed to the rights of the children. Thus, the appellant, as owner of three of the five tracts, is entitled to 3/5ths of the royalties, and appellee Cooley is entitled to 2/Sths thereof. The contrary declaration of rights by the trial court is erroneous.

This conclusion makes it unnecessary to consider the alternate pleas of appellant for an offset well or cancellation of the lease as to her tracts.

The judgment is reversed for entry of judgment declaring the rights of the parties consistently with this opinion.


author: WILLIAMS, Judge.

text:
    Henry W. CREEKMORE, Appellant, v. WORKMEN’S COMPENSATION BOARD et al., Appellees.
    Court of Appeals of Kentucky.
    May 8, 1964.
    Rehearing Denied Oct. 16, 1964.

      Earl S. Wilson, E. F. Schaeffer, Jr., Kin-caid, Wilson & Trimble, Lexington, John G. O’Hara, Williamsburg, for appellant.
    James M. Graves, William P. Swain, Boehl, Stopher, Graves & Deindoerfer, Louisville, for appellees.
   WILLIAMS, Judge.

The appellant H. W. Creekmore was denied a claim for Workmen’s Compensation benefits by the Workmen’s Compensation Board. A judgment of the Jefferson Circuit Court affirming the order of the Board is the subject of this appeal.

The appellant’s injuries were occasioned by an assault by a customer in a tavern in which appellant was employed as bartender. The sole question on appeal is whether the assault arose out of and in the course of appellant’s employment.

The Board found that appellant was the head bartender at Moore’s Grill, which is a tavern where eggs are sold as a side line. On the night of the altercation several customers had been teasing appellant about a sign behind the bar showing the price of eggs. The sign was erroneous and gave the impression that the eggs were being offered for sale at a ridiculous price. Shortly before midnight, Chester Cox came into the bar and joined the others in “ribbing” appellant. The Board quotes appellant’s testimony concerning what happened then as follows:

“Q. Now, after he (Cox) came in what happened?
“A. Well, he picked up the conversation that they were carrying on, started kidding me about it. And I don’t know, he just kept at it and I got just a little bit aggravated, see, by being constantly kidded about the price. I didn’t put it on there. He said something, I don’t know what it was. I gave him an answer. He says to me, ‘You are awfully smart tonight.’ I says, ‘Chester, I am just as smart as you are.’ You want me to go on with it?
“Q. Yes, go ahead.
“A. I said, ‘Chester, I am just as smart as you are.’ He says, ‘Let’s go outside and get this settled.’ I went outside with him and stopped on the porch — ”

After they went outside a fight ensued and appellant was severely injured.

The Board decided that the altercation did not arise out of and in the course of appellant’s employment. It found that appellant broke the continuity of his employment when he left his job of bartending to go outside to determine who was “smartest.” It follows that the altercation was voluntarily assumed by appellant when he went outside to settle any differences which had become personal in nature.

Appellant insists that the facts substantiate his claim that he was acting within the scope of his employment. But the sole function of the Court is to determine whether the record contains evidence of substance to support the findings of the Board, and not to determine the weight to be given the evidence. H. H. Waegner & Co. v. Moock, 303 Ky. 222, 197 S.W.2d 254 (1946); Applegate v. Hord, Ky., 373 S.W. 2d 430 (1963).

In the case of Hall v. Clark, Ky., 360 S.W.2d 140 (1962), we held that an altercation, which resulted in the fatal shooting of an employee by a fellow worker, arose out of and in the course of the employment because it stemmed from ill will that originated in the employment. In the present case we have a situation where the Board found the appellant left his employment on a private venture. His duties did not require him to take offense at teasing by his customers, or to go outside and settle the question of who had the superior mentality. There is evidence of substance to sustain the Board’s finding that appellant was engaged in a personal altercation. Consequently, the finding will not be disturbed.

Judgment affirmed.

PALMORE, J., dissents on the ground that in his judgment the altercation arose out of and in the course of appellant’s employment.


author: CLAY, Commissioner.

text:
    Edgar C. WALKER et al., Appellants, v. Clarence M. KEITH, Appellee.
    Court of Appeals of Kentucky.
    June 26, 1964.
    Rehearing Denied Oct. 16, 1964.

      G. D. Milliken, Jr., Marshall Funk, Bowling Green, for appellants.
    Joe B. Orr, Bell, Orr & Reynolds, Bowling Green, for appellee.
   CLAY, Commissioner.

In this declaratory judgment proceeding the plaintiff appellee sought an adjudication that he had effectively exercised an option to extend a lease, and a further determination of the amount of rent to be paid. The relief prayed was granted by the Chancellor. The principal issue is whether the option provision in the lease fixed the rent with sufficient certainty to constitute an enforceable contract between the parties.

In July 1951 appellants, the lessors, leased a small lot to appellee, the lessee, for a 10-year term at a rent of $100 per month. The lessee was given an option to extend the lease for an additional 10-year term, under the same terms and conditions except as to rental. The renewal option provided:

“rental will be fixed in such amount as shall actually be agreed upon by the lessors and the lessee with the monthly rental fixed on the comparative basis of rental values as of the date of the renewal with rental values at this time reflected by the comparative business conditions of the two periods.”

The lessee gave the proper notice to renew but the parties were unable to agree upon the rent. Preliminary court proceedings finally culminated in this lawsuit. Based upon the verdict of an advisory jury, the Chancellor fixed the new rent at $125 per month.

The question before us is whether the quoted provision is so indefinite and uncertain that the parties cannot be held to have agreed upon this essential rental term of the lease. There have been many cases from other jurisdictions passing on somewhat similar lease provisions and the decisions are in hopeless conflict. We have no authoritative Kentucky decision.

At the outset two observations may be made. One is that rental in the ordinary lease is a very uncomplicated item. It involves the number of dollars the lessee will pay. It, or a method of ascertaining it, can be so easily fixed with certainty. From the standpoint of stability in business transactions, it should be so fixed.

Secondly, as an original proposition, uncomplicated by subtle rules of law, the provision we have quoted, on its face, is ambiguous and indefinite. The language used is equivocal. It neither fixes the rent nor furnishes a positive key to its establishment. The terminology is not only confusing but inherently unworkable as a formula.

The above observations should resolve the issue. Unfortunately it is not that simple. Many courts have become intrigued with the possible import of similar language and have interpolated into it' a. binding obligation. The lease renewal option has been treated as something different from an ordinary contract. The law has become woefully complicated. For this reason we consider it necessary and proper to examine this question in depth.

The following basic principles of law are generally accepted:

“It is a necessary requirement in the nature of things that an agreement in order to be binding must be sufficiently definite to enable a court to give it an exact meaning.” Williston on Contracts (3rd Ed.) Vol. 1, section 37 (page 107).
“Like other contracts or agreements for a lease, the provision for a renewal must be certain in order to render it binding and enforceable. Indefiniteness, vagueness, and uncertainty in the terms of such a provision will render it void unless the parties, by their subsequent conduct or acts supplement the covenant and thus remove an alleged uncertainty. The certainty that is required is such as will enable a court to determine what has been agreed upon.” 32 Am.Jur., Landlord and Tenant, section 958 (page 806).
“The terms of an extension or renewal, under an option therefor in a lease, may be left for future determination by a prescribed method, as by future arbitration or appraisal; but merely leaving the terms for future ascertainment, without providing a method for their determination, renders the agreement unenforceable for uncertainty.” 51 C.J.S. Landlord and Tenant 56b (2), page 597.
“A renewal covenant in a lease which leaves the renewal rental to be fixed by future agreement between the parties has generally been held unenforceable and void for uncertainty and indefiniteness. Also, as a general rule, provisions for renewal ■rental ■ dependent upon future valuation of premises without indicating when or how such valuation should be made have been held void for uncertainty and indefiniteness.” 32 Am. Jur., Landlord and Tenant, section 965 (page 810).

Many decisions supporting these principles may be found in 30 A.L.R. 572 ; 68 A.L.R. 157; 166 A.L.R. 1237.

The degree of certainty is the controlling consideration. An example of an' appropriate method by which a non-fixed rental could be determined appears in Jackson v. Pepper Gasoline Co., 280 Ky. 226, 133 S.W.2d 91, 126 A.L.R. 1370. The lessee, who operated an automobile service station, agreed to pay “an amount equal to one cent per gallon of gasoline delivered to said station”. Observing that the parties had created a definite objective standard by which the rent could with certainty be computed, the court upheld the lease as against the contention that it was lacking in mutuality. (The Chancellor cited this case as authoritative on the issue before us, but we do not believe it is. Appellee apparently agrees because he does not even cite the case in his brief.)

On the face of the rent provision, the parties had not agreed upon a rent figure. They left the amount to future determination. If they had agreed upon a specific method of making the determination, such as by computation, the application of a formula, or the decision of an arbitrator, they could be said to have agreed upon whatever rent figure emerged from utilization of the method. This was not done.

It will be observed the rent provision expresses two ideas. The first is that the parties agree to agree. The second is that the future agreement will be based on a comparative adjustment in the light of “business conditions”. We will examine • separately these two concepts and then consider them as a whole.

The lease purports to fix the rent at such an amount as shall “actually he agreed upon”. It should be obvious that an agreement to agree cannot constitute a binding contract. Williston on Contracts (3rd Ed.) Vol. 1, section 45 (page 149); Johnson v. Lowery, Ky., 270 S.W.2d 943; National Bank of Kentucky v. Louisville Trust Co., 6 Cir., 67 F.2d 97.

Slade v. City of Lexington, 141 Ky. 214, 132 S.W. 404, 32 L.R.A., N.S., 201, has been cited as adopting a contrary view. Certain language in that opinion would seem to justify such contention. However, that case involved very unusual features and some of the broad language used was unnecessary to the decision. The parties (being a legislatively created public service corporation and a municipality) had agreed to renew a contract “upon terms as mutually agreed upon”. When the time came for renewal, both parties agreed upon new terms. Thus the contract in this respect was executed. Since the parties had actually complied with all of its provisions, it was properly held valid and binding as of its inception. No question was raised with respect to the enforceability of the contract as between the parties thereto, which is the issue before us. If this case may be construed to hold that an agreement to agree, standing alone, constitutes a binding contract, we believe it unsound.

As said in Williston on Contracts (3rd Ed.) Vol. 1, section 45 (page 149) :

“Although a promise may be sufficiently definite when it contains an option given to the promisor, yet if an essential element is reserved for the future agreement of both parties, the promise gives rise to no legal obligation until such future agreement. Since either party, by the very terms of the agreement, may refuse to agree to anything the other party will agree to, it is impossible for the law to fix any obligation to such a promise.”

We accept this because it is both sensible and basic to the enforcement of a written contract. We applied it in Johnson v. Lowery, Ky., 270 S.W.2d 943, page 946, wherein we said:

“To be enforceable and valid, a contract to enter into a future covenant must specify all material and essential terms and leave nothing to be agreed upon as a result of future negotiations.”

This proposition is not universally accepted as it pertains to renewal options in a lease. Hall v. Weatherford, 32 Ariz. 370, 259 P. 282, 56 A.L.R. 903; Rainwater v. Hobeika, 208 S.C. 433, 38 S.E.2d 495, 166 A.L.R. 1228. We have examined the reasons set forth in those opinions- and do not find them convincing. The view is taken that the renewal option is for the benefit of the lessee; that the parties intended something; and that the lessee should not be deprived of his right to enforce his contract. This reasoning seems to overlook the fact that a party must have an enforceable contract before he has a right 'to enforce it. We wonder if these courts would enforce an original lease in which the rent was not fixed, but agreed to be agreed upon.

Surely there are some limits to to what equity can or should undertake to compel parties in their private affairs to do what the court thinks they should have done. See Slayter v. Pasley, Or., 199 Or. 616, 264 P.2d 444, 449; and dissenting opinion of Judge Weygandt in Moss v. Olson, 148 Ohio 625, 76 N.E.2d 875. In any event, we are not persuaded that renewal options in leases are of such an exceptional character as to justify emasculation of one of the basic rules of contract law. An agreement to agree simply does not fix an enforceable obligation.

As noted, however, the language of the renewal option incorporated a secondary stipulation. Reference was made to “comparative business conditions” which were to play some part in adjusting the new-rental. It is contended this provides the necessary certainty, and we will examine a leading case which lends support to the argument.

In Edwards v. Tobin, 132 Or. 38, 284 P. 562, 68 A.L.R. 152, the court upheld and enforced a lease agreement which provided that the rent should he “determined” at the time of renewal, “said rental to he a reasonable rental under the then existing conditions”. (Our emphasis) Significance was attached to the last quoted language, the court reasoning that since the parties had agreed upon a reasonable rent, the court would hold the parties to the agreement by fixing it

All rents tend to be reasonable. When parties are trying to reach an agreement, however, their ideas or claims of reasonableness may widely differ. In addition, they have a right to bargain. They cannot he said to be in agreement about what is a reasonable rent until they specify a figure or an exact method of determining it. The term “reasonable rent” is itself indefinite and uncertain. Would an original lease for a “reasonable rent” be enforceable by either party? The very purpose of a rental stipulation is to remove this item from an abstract area.

It is true courts often must imply such terms in a contract as “reasonable time” or “reasonable price”. This is done when the parties fail to deal with such matters in an otherwise enforceable contract. Here the parties were undertaking to fix the terms rather than leave them to implication. Our problem is not what the law would imply if the contract did not purport to cover the subject matter, but whether the parties, in removing this material term from the field of implication, have fixed their mutual obligations.

We are seeking what the agreement actually was. When dealing with such a specific item as rent, to be payable in dollars, the area of possible agreement is quite limited. If the parties did not agree upon such an unequivocal item or upon a definite method of ascertaining it, then there is a clear case of nonagreement. The court, in fixing an obligation under a non-agreement, is not enforcing the contract but is binding the parties to something they were patently unable to agree to when writing the contract.

The opinion in the Tobin case, which purportedly was justifying the enforcement of a contractual obligation between the lessor and lessee, shows on its face the court was doing something entirely different. This question was posed in the opinion: “What logical reason is there for equity to refuse to act when the parties themselves fail to agree on the rental?” (Our emphasis) The obvious logical answer is that even equity cannot enforce as a contract a nonagreement. No distortion of words can hide the fact that when the court admits the parties “fail to agree,” then the contract it enforces is one it makes for the parties.

It has been suggested that rent is not a material term of a lease. It is said in the Tobin case: “The method of determining the rent pertains more to form than to substance. It was not the essence of the contract, but was merely incidental and ancillary thereto.” . This seems rather startling. Nothing could be more vital in a lease than the amount of rent. It is the price the lessee agrees to pay and the lessor agrees to accept for the use of the premises. Would a contract to buy a building at a “reasonable price” be enforceable? Would the method of determining the price be a matter of “form” and “incidental and ancillary” to the transaction ? In truth it lies at the heart .of it.- This seems to us as no more than a grammatical means of sweeping the problem under the rug. .It will not do to say that the establishment of the rent agreed upon is not of the essence of a lease contract.

We have examined the Tobin case at length because it exemplifies lines of reasoning adopted 'by some courts to dredge •certainty from uncertainty. Other courts balk at the process. The majority of cases, passing upon the question of whether a renewal option providing that the future rent shall be dependent upon or proportionate to the valuation of the property at the time of renewal, hold that such provision is not sufficiently certain to constitute an enforceable agreement. See cases cited in 30 A.L.R. 579 and 68 A.L.R. 159. The valuation of property and the ascertainment of “comparative business conditions,” which we have under consideration, involve similar uncertainties.

A case construing language closely approximating that in the lease before us is Beal v. Dill, 173 Kan. 879, 252 P.2d 931. The option to extend the lease provided: “said rental shall be subject to reasonable adjustment, up or down, depending upon general business conditions then existing.” The Kansas Supreme Court, purporting to follow what it deemed the “majority rule” (and citing numerous authorities), held this language was too indefinite to be enforceable.

The opposite conclusion on similar language was reached in Greene v. Leeper, 193 Tenn. 153, 245 S.W.2d 181. The option provided for: “a rental to be agreed on according to business conditions at that time.” The court, declaring that “rental can be determined with reasonable certainty by disinterested parties,” adjudged this was an enforceable provision. The court indicated in the opinion that real estate experts would have no difficulty in fixing the rental agreed upon. The trouble is the parties did not agree to leave the matter to disinterested parties or real estate experts, and it is a false assumption that there will be no differences of opinion.

A similar renewal option was enforced in Fuller v. Michigan National Bank, 342 Mich. 92, 68 N.W.2d 771. In that case the language was “at a rent to be agreed upon, dependent on then existing conditions, * * *”. The court treated the problem as one involving an ambiguity. Synonyms for the word “ambiguous” are: indeterminate, indefinite, unsettled. This dubiosity is of course what makes it clear the parties had failed to reach an agreement.

We do not think our problem can be solved by determining which is the “majority” rule and which is the “minority” rule. We are inclined, however, to adhere to a sound basic principle of contract law unless there are impelling reasons to depart from it, particularly so when the practical problems involved in such departure are so manifest. Let us briefly examine those practical problems.

What the law requires is an adequate key to a mutual agreement. If “comparative business conditions” afforded sufficient certainty, we might possibly surmount the obstacle of the unenforceable agreement to agree. This term, however is very broad indeed. Did the parties have in mind local conditions, national conditions, or conditions affecting the lessee’s particular business?

That a controversy, rather than a mutual agreement, exists on this very question is established in this case. One of the substantial issues on appeal is whether the Chancellor properly admitted in evidence the consumer price index of the United States Labor Department. At the trial the lessor was attempting to prove the change in local conditions and the lessee sought to prove changes in national conditions. Their minds to this day have never met on a criterion to determine the rent. It is pure fiction to say the court, in deciding upon some figure, is enforcing something the parties agreed to.

One aspect of this problem seems to have been overlooked by courts which have extended themselves to fix the rent and enforce the contract. This is the Statute of Frauds. The purpose of requiring a writing to evidence an agreement is to assure certainty of the essential terms thereof and to avoid controversy and litigation. See 49 Am.Jur., Statute of Frauds, section 313 (page 629); section 353 (page 663); section 354 (page 664). This very case is living proof of the difficulties encountered when a court undertakes to supply a missing essential term of a contract.

i In the first place, when the parties failed to enter into a new agreement as the renewal option provided, their rights were no longer fixed by the contract. The determination of what they were was automatically shifted to the courtroom. There the court must determine the scope of relevant evidence to establish that certainty which obviously cannot be culled from the contract. Thereupon extensive proof must be taken concerning business conditions, valuations of property, and reasonable rentals. Serious controversies develop concerning the admissibility of evidence on the issue of whether “business conditions” referred to in the lease are those on the local or national level, or are those particularly affecting the lessee’s business. An advisory jury is impanelled to express its opinion as to the proper rental figure. The judge then must decide whether the jury verdict conforms to the proof and to his concept of equity. On appeal the appellate court must examine alleged errors in the trial. Assuming some error in the trial (which appears likely on this record), the case may be reversed and the whole process begun anew. All of this time we are piously clinging to a concept that the contract itself fixed the rent with some degree of certainty.

We realize that litigation is oft times inevitable and courts should not shrink from the solution of difficult problems. On the other hand, courts should not expend their powers to establish contract rights which the parties, with an opportunity to do so, have failed to define. As said in Morrison v. Rossingnol, 5 Cal. 64, quoted in 30 A.L.R. at page 579:

“A court of equity is always chary of its power to decree specific performance, and will withhold the exercise of its jurisdiction in that respect, ■unless there is such a degree of certainty in the terms of the contract as will enable it at one view to do complete equity.”

That cannot be done in this case.

Stipulations such as the one before us have been the source of interminable litigation. Courts are called upon not to enforce an agreement or to determine what the agreement was, but to write their own concept of what would constitute a proper one. Why this paternalistic task should be undertaken is difficult to understand when the parties could so easily provide any number of workable methods by which rents could be adjusted. As a practical matter, courts sometimes must assert their right not to be imposed upon. This thought was thus summed up in Slayter v. Pasley, Or., 264 P.2d 444, page 449:

“We should be hesitant about completing an apparently legally incomplete agreement made between persons sui juris enjoying freedom of contract and dealing at arms’ length by arbitrarily interpolating into it our concept of the parties’ intent merely to validate what would otherwise be an invalid instrument, lest we inadvertently commit them to an ostensible agreement which, in fact, is contrary to the deliberate design of all of them. It is a dangerous doctrine when examined in the light of reason. Judicial paternalism of this character should be as obnoxious to courts as is legislation by judicial fiat. Both import a quality of jural ego and superiority not consonant with long-accepted ideas of legistic propriety under a democratic form of government. If, however, we follow the urgings of the lessee in the instant matter, we will thereby establish a precedent which will open the door to repeated opportunities to do that which, in principle, courts should not do and, in any event, are not adequately equipped to do.”

We think the basic principle of contract law that requires substantial certainty as to the material terms upon which the minds of the parties have met is a sound one and should be adhered to. A renewal option stands on the same footing as any other contract right. Rent is a material term of a lease. If the parties do not fix it with reasonable certainty, it is not the business of courts to do so.

The renewal provision before us was fatally defective in failing to specify either an agreed rental or an agreed method by which it could be fixed with certainty. Because of the lack of agreement, the lessee’s option right was illusory. The Chancellor erred in undertaking to enforce it.

The judgment is reversed.


author: MONTGOMERY, Judge.

text:
    Thomas A. WHELAN, Appellant, v. Clarence E. VAN NATTA, Doing Business as Van Natta Grocery, Appellee.
    Court of Appeals of Kentucky.
    June 26, 1964.
    Keliearing Denied Oct. 16, 1964.
    Harry L. Hargadon, Jr., Louisville, for appellant.
    R. I. McIntosh, Louisville, for appellee.
   MONTGOMERY, Judge.

Thomas A. Whelan sued Clarence E. Van Natta, doing business as Van Natta Grocery, for damages resulting from injuries sustained when he fell into an open stair well in the floor of Van Natta’s grocery. Whelan appeals from a judgment in favor of Van Natta. He contends that he was an invitee on the premises and was entitled to be warned of the danger and that he was not contributorily negligent.

Appellee conducted a grocery in a converted house in Louisville. The partitions had been removed. A wall divided the front part of the building from a storage room in the rear. A doorway connected the two rooms.

At about 8 a. m. on March 20, 1961, appellant arrived at the store to purchase cigarettes. He had traded there regularly for the past ten years. Appellant made his purchase and then inquired of appellee about a box for his son. Appellee was busy behind the counter. He replied, “Go back in the back room. You will find some back there.”

Appellant went to the rear of the store and opened the door to the storage room. The room was dark so appellant paused to allow his eyes to become accustomed to the darkness. He testified that he did not see a light cord and did not look for one. There was a light in the room but it was so situated that if turned on it might not have illuminated the stair well. Across the room and above the stair well there was a window, through which little light filtered because of paint or dirt.

After appellant’s eyes had adjusted to the darkness, he saw a box. On reaching down to pick it up, he discovered it was full. Appellant then walked about twelve or fifteen feet toward the window and fell into an unseen stair well, sustaining his injuries.

The stair well was located beyond a large walk-in refrigerator as appellant approached it. The opening extended a foot or two beyond the refrigerator and into the ten or twelve-foot corridor or walkway leading past the refrigerator.

Appellant said that he never before had been in the storage room. Appellee testified that appellant had been in the room on two or three occasions; that he did not warn appellant of the existence of the stair well; that the storage room light had been on that morning when he had opened the safe located in the room; and that he could not say whether the light was still on at the time of appellant’s fall.

The trial court held that appellant was a licensee at the time of his fall to whom appellee owed no duty to provide a safe place, save and except to have abstained from doing any intentional or willful act endangering his safety or knowingly letting appellant run upon a hidden peril. Ockerman v. Faulkner’s Garage, Inc., Ky., 261 S.W.2d 296. Appellant contends that he entered the store on business with appel-lee and thus had the status of an invitee and that he still occupied this status when he fell and was injured. The question is': “Did the status of appellant change from invitee to licensee after he made his purchase and went into the storage room to obtain the box?” The status of appellant determines the degree of responsibility of appellee.

Pertinent discussion of the scope of the invitation is contained in Torts, Restatement of the Law, Second, Chapter 13, Section 332, page 67, as follows:

“The possessor of land is subject to liability to another as an invitee only for harm sustained while he is on the land within the scope of his invitation. Thus an invitee ceases to be an invitee after the expiration of a reasonable time within which to accomplish the purpose for wlr~h he is invited to enter, or to remain. Whether at the expiration of that time he becomes a trespasser or a licensee will depend upon whether the possessor does or does not consent to his remaining on the land.
“Likewise, the visitor has the status of an invitee only while he is on the part of the land to which his invitation extends — or in other words, the part of the land upon which the possessor gives him reason to believe that his presence is desired for the purpose for which he has come. In determining the area included within the invitation, the purpose for which the land is held open, or the particular business purpose for which the invitation is extended, is of great importance. *
******
“If the invitee goes outside of the area of his invitation, he becomes a trespasser or a licensee, depending upon whether he goes there without the consent of the possessor, or with such consent. Thus one who goes into a shop which occupies part of a building, the rest of which is used as the possessor’s residence, is a trespasser if he goes into the residential part of the premises without the shopkeeper’s consent; but he is a licensee if the shopkeeper permits him to go to the bathroom, or invites him to pay a social call.”

Lerman Brothers v. Lewis, 277 Ky. 334, 126 S.W.2d 461, is an example of the principle stated as applied to similar facts. There, a customer who went into a store for the purpose of doing some shopping and, with permission, proceeded to an alteration room reserved for employees in search of a particular saleswoman and who, upon entering therein, fell down a stairway, was held to be a licensee who was required to take the premises as she found them, and, hence, the storekeeper was not liable for her injuries. For other examples of exceeding or abusing license or invita-ation see Smith v. Trimble, 111 Ky. 861, 64 S.W. 915, 23 Ky.Law Rep. 1206; Commonwealth v. Henderson’s Guardian, 245 Ky. 328, 53 S.W.2d 694.

Further, appellant was contribu-torily negligent, in that he did not turn on the light that was available, nor did he look for the light, and proceeded to look for the box in a darkened room after realizing that he could not see well in the room. Johnson v. Paducah Laundry Co., 122 Ky. 369, 92 S.W. 330, 5 L.R.A.,N.S., 733; Tempest v. Richardson, 5 Utah, 2d 174, 299 P.2d 124. One who enters darkness, realizing his difficulty in seeing, assumes the risk of unseen hazards that could be seen with the aid of light. Stellar v. Sclarenco, 249 Ky. 325, 60 S.W.2d 946; Forman v. Silver, Ky., 313 S.W.2d 420. Similarly, one who walks ahead without seeing what normally should be seen or without looking assumes the risk of unseen peril. Entwistle v. Carrier Conveyor Corporation, Ky., 284 S.W. 2d 820; Humbert v. Audubon Country Club, Ky., 313 S.W.2d 405; Pease v. Nichols, Ky., 316 S.W.2d 849.

Judgment affirmed.


text:
    Norman A. CHAMBLISS, Jr., Appellant, v. Charles D. LEWIS and Mae Lewis, Appellees.
    Court of Appeals of Kentucky.
    June 6, 1964.
    Rehearing Denied Oct. 16, 1964.

      Allen P. Cubbage, Cubbage & Cubbage, Leitchfield, Robert C. Jackson, Brandenburg, for appellant.
    J. Henry Gibson and Paul Miller, Gibson & Miller, Hardinsburg, for appellees.
   , B. ROBERT STIVERS, Special Commissioner.

Norman Chambliss, Jr. is appealing from a judgment of the Breckinridge Circuit Court awarding Charles D. Lewis $10,000.00 for personal injuries and $1,492.57 medical expenses and Mae Lewis $5,000.00 for personal injuries and $759.01 medical expenses.

The only real issue for this court’s determination is whether the lower court erred in not sustaining the appellant defendant’s motion to peremptorily instruct fhe jury to find for the appellant on the ground that the appellee-plaintiff Charles D. Lewis was negligent as a matter of law in the operation of his motor vehicle and his negligence was the sole cause of the accident.

This accident occurred at the intersection of Kentucky Highways 261 and 105. Highway 261 is a through, blacktop highway running east and west. Highway 105 is a gravel road running north and south with a stop sign at the intersection.

Charles D. Lewis was driving his automobile on Highway 105 with his wife, Mae Lewis, and Mrs. Roosevelt Duke as passengers. He testified that he came to a stop at the intersection, placed his automobile in low gear and pulled up a slight incline to the edge of the black-top. He then looked in both directions, seeing nothing to his right but observing a car coming from 400 to 1000 feet to his left. He assumed that he had time to cross. About the time that his front wheels reached the graveled portion on the other side of the black-top highway, the appellant’s car collided with the left side of his automobile causing severe injuries to both him and his wife. His evidence revealed that it was difficult to see to his left because of a slight incline and growing weeds which blocked his view in the direction of the approaching automobile.

Roosevelt Duke, the husband of the passenger in the Lewis car, testified that he had crossed the highway in his automobile ahead of the Lewis automobile and at that time he observed the Chambliss car about one mile away. He drove approximately 200 yards from the intersection, at which time he looked in his rear view mirror and saw the Lewis car at the far edge of the black-top. He then glanced to his left and saw the Chambliss automobile 200 or 300 yards from the intersection and traveling at an estimated speed of 70 to 75 miles per hour. Duke then got out of his truck and again saw the car within 200 or 300 yards of the intersection but neither saw the accident or heard the collision.

The appellant’s evidence is as follows: He was proceeding in an easterly direction on Highway 261 at approximately 45 to 50 miles per hour when he first saw the Lewis car on Highway 105 approaching the intersection. When he reached a point within approximately 100 feet of the intersection the Lewis car, without stopping, proceeded to cross in front of him. He hit the brakes, cut to the left, slid 74 feet and collided with the left side of the Lewis automobile.

There were three witnesses, traveling west on Highway 261 a short distance from the intersection, who saw the Lewis car proceed across Highway 261 without stopping, and the ensuing accident. All three testified that there was nothing unusual about the speed of the Chambliss car that drew their specific attention. One of them testified that the Chambliss car was approximately 100 feet away when the Lewis car arrived at the intersection. From this testimony and the facts it is evident that Lewis did not have time to cross the highway safely.

KRS 189.330(4) requires a motorist entering a main highway from a secondary road to stop and not proceed if an approaching car is so close as to constitute an immediate hazard. Couch v. Hensley, Ky., 305 S.W.2d 765.

Under the circumstances Chambliss could assume that Lewis would conform to the law and remain where he was until the way was reasonably clear and could act upon that assumption in determining his own manner of using the road. Vaughn v. Jones, Ky., 257 S.W.2d 583.

In the case at bar, Lewis saw the approaching automobile and moved onto the highway in view of the known danger. It appears that Lewis assumed the risk in trying to cross the highway knowing that a collision could result. With the car so near, whether Lewis stopped or didn’t stop, he should have yielded the right-of-way by not proceeding onto the highway in the face of the known approaching automobile. Couch v. Hensley (supra) and Vaughn v. Jones (supra). Lewis testified that he clearly saw the Chambliss car but thought that he had time to cross the road. This assumption, coupled with the fact that a collision did result, is conclusive that Lewis was negligent.

It is our opinion that under circumstances such as in this case, where the approaching car on the arterial highway was in view for an unlimited distance, the speed of the approaching car cannot be considered to be a causative factor. From the standpoint of physics, the cause is simply that the two vehicles are attempting to occupy the intersection at the same moment. However, from the standpoint of law, the reason (excessive speed or otherwise) why the car on the arterial highway happens to be in the intersection at that moment is immaterial, if the fact that it would be there at that moment was reasonably observable to the driver of the car on the inferior highway, because then the latter driver has the duty not to be in the intersection at that moment. The negligence of Lewis in the instant case was the sole cause of the accident. Therefore the court should have directed a verdict for Chambliss as against both Charles Lewis and Mae Lewis.

It is recommended that the judgment be reversed.

The opinion is approved and the judgment reversed with directions that if upon another trial the evidence is substantially the same, a verdict shall be directed for the defendant.