author: L-EYY, J.

text:
    FRANKLIN FIRE INS. CO. OF PHILADELPHIA v. ORR.
    No. 3956.
    Court of Civil Appeals of Texas. Texarkana.
    Feb. 13, 1931.
    Rehearing Denied Feb. 26, 1931.

      Thompson, Knight, Baker & Harris, of Dallas, for appellant.
    Joe Hughes and H. H. Taylor, both of Tex-arkana, for appellee.
   L-EYY, J.

(after stating the case as above).

The first and second assignments of error are considered together as raising the same point. By the first assignment of error, the complaint is made of the refusal of the court to give the appellant’s requested peremptory instruction to the jury to return a verdict in its favor. By the second assignment of error, the complaint is made of submitting to the jury for finding of the reasonable cash value of the property destroyed by fire at the time and place of the fire. As appears in the statement of facts, the insured testified by deposition, besides other matters, as- follows: “I had my household goods insured in the Franklin Fire Insurance Company of Philadelphia for $1,000.00. The list and the description of the furniture stated in the proof of loss and the value thereof is true and correct to the best of my knowledge and belief. Proof of loss herewith attached and marked ‘Exhibit A.’ *’

The proof of loss referred to by the insured showed a full list of property with description and value, for instance: “One player piano, $450.00, one bedroom suite, $125.00, one dining-room suite, $150.00, one gas range, $100.00.” The list contained a further description than above set out of all the property insured with the quantity and cash value of each item. Some confusion seemingly arises as to the “proof of loss” referred to by the insured because the court first sustained objection to the written proof of loss and did not permit it to be considered as “determining the value of the property destroyed by fire.” The court at the time stated that'“proof of the value will have to be shown in a different way,” evidently meaning that, in the absence of further evidence, the instrument itself could not be regarded as sufficient proof of value. After this ruling, though, the insured was further asked to state if the “proof of loss and the value thereof was-true and correct.” The objections to the question were all overruled by the court, and the insured was permitted to answer that the loss and value in the proof of loss was correct. The latter ruling was intended to have the effect to authorize the jury to consider the written proof of loss in connection with the oral evidence in determining the value of the property at time of the fire. In this view, the question for decision would be whether or not there is any competent evidence of loss and value for the jury to consider. As appears, the insured, in her evidence as given above, was fairly endeavoring to state the kind of property, the quantity, and the cash value of the same, as insured' and when destroyed by fire, with the aid and use of the written memoranda. The written instrument was produced, and she knew that the facts were correctly stated therein and when the facts were fresh in her memory. If at the time when an entry of aggregate quantities and values was made the witness knew it was correct, it is difficult to say why it is not at least as reliable as is the memory of the witness. Such is the ordinary memory that few witnesses would be able to testify as to quantities, sums, and values if they were not permitted to refer to proper writings or documents which they knew to be correct when made. It is believed there was competent prima facie evidence at least of loss and value, and the assignments of error must be overruled. Republic F. Insurance Co. v. Weide, 14 Wall. 375; 20 L. Ed. 894.

By the third assignment of error it is contended that the court erred in overruling the plea in abatement. It is pointed out that the proof of loss was not in compliance with the requirements of the policy.. Although the proof of loss was made 118 days after the tire occurred, and not within 91 days thereafter, as provided in the policy, yet tlife trial court’s conclusion must be upheld, as supported by evidence, that the circumstances were such as to excuse the delay. The insured was absent in another state and was entirely ignorant of the fire and loss. Sun Mut. Insurance Co. v. Mattingly, 77 Tex. 162, 13 S. W. 1016; 33 C. J. § 663, p. 15. But the objection principally urged by appellant was that the proof of loss as made was inadequate as such as having too few of the features required by the policy. This contention must depend upon whether or not, in view of all the special facts, there was a substantial compliance with the information called for by the policy. The insured was asked by the interrogatories of the policy tc> state her knowledge and belief as to the origin and time of the fire, and she answered giving the “time” of the fire as being “on or about August 19, 1929.” According to the undisputed evidence, the insured was in California and had no knowledge or information as to the “origin” of the fire. She was asked to state her interest and that of “all others” in the property, and she answered that all the property was “my individual property.” She was asked to state the cash value of each item with the amount of the loss, and in answer she set out a full list of the property, quantity and value. She further answered that the property listed “was destroyed by fire.” She answered that the company carrying her insurance was the “Franklin Fire Insurance of Philadelphia.” She was asked to state, and she answered, “by whom and for what purposes” the several parts of the building were occupied. The oral evidence offered showed without dispute that the facts stated in the proof of loss were true and were all the facts existing. It was not contemplated by the policy that the insured should go further and negative conditions sought to he inquired into when such conditions are shown without dispute did not in fact exist. It is believed that the proof of loss was a substantial compliance with the requirements of the policy and was not inadequate as such.

By the fourth assignment of error, complaint is made of admitting a copy of a letter in evidence which the insured had written to the appellant company. ' The letter related to the proof of loss. The original, rather than the copy, may be regarded as better evidence, but the contents of the letter were immaterial, and reversible error may not be predicated upon the court’s ruling.

The judgment is affirmed.


source: Caselaw Access Project

author: WALKER, J.

license: Public Domain

text:
    GUARDIAN TRUST CO. v. STUDDERT.
    No. 2030.
    Court of Civil Appeals of Texas. Beaumont.
    Feb. 12, 1931.
    Rehearing Denied March 18, 1931.

      Baker, Botts, Parker & Garwood, of Hous ton, for appellant.
    Andrews, Streetman, Logue & Mobley, of Houston, for appellee.
   WALKER, J.

On August 17, 1907, appellee, James H. Studdert, executed and delivered to H. Hamilton his promissory note as follows:

“$26,250/00
“Houston, Texas, Aug. 17th, 1907.
“Five years after date, I promise to pay to H. Hamilton or order the sum of twenty-six thousand two hundred and fifty no/100 dollars, at Houston, Texas, for value received, with interest at the rate of six per cent per annum from date.
“This note is given in payment for one hundred and fifty shares of the capital stock of the Houston lee & Brewing Company this day bought from H. Hamilton, and to secure the payment of the same, certificates of the capital stock of the Houston Ice and Brewing Company for one hundred and fifty shares are hereto attached.
“The dividends earned by this stock attached hereto shall be and are payable to H. Hamilton and are to be credited on this note.
“[Signed] J. H. Studdert.”.

On the same day Mr. Hamilton executed and delivered to appellee his contract, as follows:

“The State of Texas, County of Harris.
“Be it known hereby that I have sold James Studdert, my .faithful employee and true friend, 150 shares of the stock of the Houston Ice & Brewing Co. @ $175.00 per share, $26,250.00, or for the total sum of twenty-six thousand two hundred and fifty dollars as evidenced by his note for the said sum of $26,250.00 payable to my order, due five years after date.
“I hand this to Mr.-Studdert to witness my acknowledgment that I hold his note; and my agreement that I require that all dividends that may be paid upon the said 150 shares of stock shall be paid to me for the .full five years unless the dividends should sooner liquidate the amount of his note; and to further witness my agreement that I look to the dividends upon the stock to pay out the note and if the same is not paid by the dividends within 5 years then in that event Mr. Studdert may pay me the balance that may remain due at the end of the 5 years, or maturity of the note, in cash or Mr. Stud-dert may surrender the stock to me and I will accept the same in full payment of the note and surrender the said note to Mr. Stud-dert cancelled and receipted in full, just as Mr. Studdert may elect.
“I further acknowledge that to the note of Mr. Studdert herein mentioned there is attached certificates of the stock of the Houston Ice & Brewing Company for one hundred and fifty shares.
“Houston, Texas, Aug. 17th, 1907.
“[Signed] H. Hamilton.
“Witness at request of Mr. Hamilton.
“[Signed] R. L. Autrey.”

Beginning with October 31, 1907, and continuing to August 20, 1914, practically all of the stock mentioned in this contract was carried on the books in Mr. Hamilton’s name and all dividends on this stock were paid to Mr. Hamilton and charged to him on the books of the Houston Ice & Brewing Company. On the 22d day of June, 1913, appellee paid $1,000 in cash to Mr. Hamilton. On January 5, 1909, a stock certificate for 9⅞ shares was issued to appellee on his contract; on February 29, 1911, another certificate for 25 shares was issued and delivered to him. On or about the 20th day of August, 1914, Mr. Hamilton surrendered to appellee liis note with the dividend statement indorsed thereon showing excess dividends collected on the stock in the language of. the indorsement as written on the note, “Balance due Studdert $11,582.91.” On the 19th day of October, 1914, the balance of the stock was issued and delivered to Studdert and' from that date all future dividends on the stock were paid to appellee. Mr. Hamilton died on August 5, 1922, and appellant duly qualified as executor of his will, having been named such by the terms of the will. After the death of Hamilton and the qualification of appellant as his executor, appellee, claiming that Hamilton was.due him a balance of excess dividends, in the sum of $20,859.95 collected by Hamilton prior to the settlement of 1914, presented his claim for that sum to appellant as executor, which claim was in all respects refused. Thereupon, appellee instituted this suit to recover his claim.

In addition to alleging the execution of the note and contract set out above, and the collection of all dividends on the stock by Hamilton to August 20, 1914, and the payment by. him to Hamilton on the 22d day of June, 1913, of the $1,000, .which he alleged was paid as a credit on the note, he further alleged, in substance, quoting from ‘appellant’s brief:

“That the relations between appellee and Hamilton were at such time and for many years prior thereto of the most friendly and confidential nature.”
“That subsequent to August 20, 1914, ap-pellee .and Hamilton caused a check to be made of the dividends paid to Hamilton and it was then found that the note had been overpaid and that Hamilton had in his hands a large sum of money so overpaid. That Hamilton thereupon delivered the stock to appellee and stated to appellee that whenever he desired to have the money the amount would be definitely ascertained and promptly paid, pending which it would be safely kept for appellee. That having confidence in said Hamilton appellee never made any request or demand for said sum of money prior to the death of Hamilton, which occurred August 5, 1922.”
“That prior to the maturity of the note the dividend paid to Hamilton had overpaid the note by the sum of $359.95 and thereafter Hamilton received the additional sum of $20,-500.00, making a total of $20,859.95 which Hamilton was obligated to pay. That after the death of Hamilton and the qualification of appellant as Executor and Trustee, to wit, August 1, 1923, appellee made demand for the payment of this sum, which was refused. Prayer was for judgment for $20,859.95 with interest at 6% per annum after August 1, 1923.”

A theory of appellee’s petition was that Hamilton, after the settlement of 1914, held the excess dividends in trust for appellee from the date of that settlement to the time of his death. Appellant summarizes its answer as follows:

“1. A general demurrer.
“2. A special exception based on the statutes of limitation.
“3. A special exception based on laches and stale demand, due to the death of Hamilton and long lapse of time.
“4. A general demurrer.
“5. A plea of limitation under the two and four years statutes.
“6. A plea of laches and stale demand, based on long lapse of time and the death of Hamilton. '
“7. A special plea to the effect that the facts were sufficient to establish (a) accord and satisfaction, (b) a conclusive presumption that any sums which may have been due by Hamilton to appellee had been paid, and (c) that appellee had waived all rights and was estopped to claim that he had not been paid.”

On conclusion of the evidence, appellant filed its motion for _ an instructed verdict, which was overruled; whereupon the following special issues were submitted to the jury, answered as indicated:

“Special Issue No. 1.
“Did H. Hamilton receive any-dividends from the stock sold by him to James H. Stud-dert? If so, please state the dates and amounts in dollars and cents.”

Answer: “Yes. Oct. 31, 1907, $1500.00; July 20, 1908, $1500.00; Aug. 31, 1908, $1500.-00; May 15, 1909, $3750.00; Nov. 26, 1909, $3750.00; Feb. 16, 1910, $1650.00; Aug. 31, 1910, $6,000.00; July 25, 1911, $7500.00; Jan. 15, 1912, $1875.00; Mar. 4 or 14, 1912, $2250.-00; Nov. 30, 1912, $1500.00; July 9, 1913, $3750.00; Sept. 9, 1913, $3750.00; May 25, 1914, $7500.00; Aug. 20, 1914, $3000.00.”

“Special Issue No. 2.
“Of the dividends, if any, received by H. Hamilton, on the 150 shares of stock sold by him to Studdert, did the said Hamilton pay any part thereof to said Studdert in any manner other than by applying the same to the satisfaction of the principal and interest on Studdert’s note to Hamilton?”

Answer: “Yes. $9150.00.”

“Special Issue No. 3.
“At the time that the certificate for 115½ shares of stock was delivered by Hamilton to Studdert, did Studdert waive any claim that he had to any dividends that might have been collected by Hamilton in excess of the amount due for the stock.”

Answer: “He did not.”

“Special Issue No. 4.
“Did Studdert accept the figures endorsed on the back of the note by Autrey as a true and correct statement of the amount lie claimed to be due him by Hamilton?”

Answer: “He did.”

Judgment was entered in appellee’s favor for the amount found by the jury to he due1 him, with interest. ■

In view of the disposition we are making of this case, it is not necessary to review and discuss in detail the following propositions advanced by appellant: (a) Appellee failed to prove that the balance stated on the note as the amount due him by Hamilton was unpaid; (b) under the undisputed facts surrounding and explaining the settlement of 1914, the relations between appellee and Hamilton were' reduced to “an account stated”; (c) the contract and agreement between ap-pellee and Hamilton did not create án express trust as of date August 17, 1907, appellant’s contention being “that the transaction amounted only to an. executory agreement, and the equitable title to the stock did not vest in appellee at the time of the execution of the instrument”; (d) the $1,000 paid on June 22, 1913, as an independent item of recovery was barred by limitation. If we understood appellant correctly, this proposition (d) was abandoned on oral argument. It is sufficient to say that the evidence supports the jury’s answer on all issues submitted. The settlement of 1914 did not reduce the relations between appellee and Hamilton to “an account stated,” as that term is used in the law of this state. The contract, in our judgment, did create an express trust as of date August 17, 1907. We summarily overrule these propositions, believing they are not sound, without discussing them further, because they are immaterial upon the theories on which we are reversing and rendering the judgment of the lower court in favor of appellant.

Appellant’s remaining propositions are, in our judgment, decisive of this appeal, and are as follows: (a) The 1914 settlement between Mr. Hamilton and appellee, by which Mr. Hamilton canceled and surrendered the note and issued the stock to appellee, fully performed and terminated the trust under which Mr. Hamilton had collected the dividends, and as a result the relations between the parties, subsequent to the settlement, were that of debtor and creditor; (b) or, if a trust relation did exist, it was nothing more than a constructive trust. We think both these propositions are sound, from which it follows that appellee’s cause of action had long been barred by limitation at the time this suit was instituted.

We wall first consider the proposition that the trust, created by the agreement of August 17, 1914, and the conduct of the parties, following the expiration of the five-year period named in that agreement, was terminated by the settlement of 1914. This proposition presents two theories of the law:

(a) Mr. Hamilton tendered the settlement of 1914 upon the figures indorsed upon. the note, with the written statement that he was due that sum to appellee, and, as part of the settlement, canceled and surrendered the note and delivered to appellee his stock. The issue raised by appellee receiving his canceled note with the indorsement thereon was thus submitted to the jury: “Did Studdert accept the figures endorsed .on the back of the note by Autrey as a true and correct statement of the amount he claimed to be due him by Hamilton?” To which the jury answered: “He did.” This was an affirmative finding by the jury that appellee himself construed this final agreement as the creation of the relation of debtor and creditor between him and Mr. Hamilton. We say this because the jury found, not that appellee accepted this settlement as a correct statement of the amount Mr. Hamilton was holding in trust for him, hut as a correct statement of the amount “due him by Hamilton.” As we construe- the record, the issue was clearly raised that Mr. Hamilton dealt with appellee as his creditor and not as his trustee. We say this because, in surrendering appellee his note, he did so with the statement indorsed thereon, “Balance due Studdert $11,582.91.” Had he intended to hold this in trust, he could and would probably have used language appropriate to a trust relation. No witness testified to any language ever used by Mr. Hamilton, after this' settlement, to the effect that he was holding any money in trust for appellee, but only that he was, quoting the witness Autrey, “indebted” to appellee. Mr. Autrey testified: “After the note had been surrendered to Studdert Mr. Hamilton mentioned owing Mr. Studdert inonby several times; that is, owing him for the excess due him for dividends collected over the amount that Mr. Studdert owed Mr. Hamilton — that is, that he had over-collected his indebtedness, and that because of that he was indebted to Studdert.”

We think it is a reasonable construction of the testimony quoted to say that the parties themselves intended that the settlement of 1914 should create between them the relation of debtor and creditor and that this issue was foreclosed by the answer to question No. 4. Certainly no one would deny that a trustee and his beneficiary, dealing with an express or resulting trust of the nature shown by these facts, can change the trust relation to that of debtor and creditor. When that is done the contract thereby created is within the statute of limitation. Thus it is said in Bogert on Trusts, p. 554: “When the relation of trustee' and cestui que trust changes' to that of debtor and creditor, obviously the statute of limitations applicable to contract claims will control,”

What we hare said is not a forced construction of the language of the witness Autrey nor of the indorsement on the note at the time it was delivered to appellee, nor of the finding of the jury in answer to question No. 4. There is a clear legal distinction between “debts” and “trusts.” This distinction was sharply drawn in Thornburg v. Buck, 13 Ind. App. 445, 41 N. E. 85, where, deciding the issue and defining the distinction, the court says, as brought forward in 2 Words and Phrases, First Series, p. 1885: “ ‘Debt,’ as used in the by-laws of a banking corporation, declaring that the bank reserves a lien upon all stock issued to and held by any stockholder for the security of any debt owing in any form to said bank by such stockholder, whether the same is due or not, is to be construed to include unpaid subscriptions on such stock, though no call has been made for the payment thereof.”

This distinction is thus .defined by Bogert, page 16:

“The trust is distinguished from a debt in that—
“(a) The trust involves specific subject matter, whereas the debt does not;
“(b) The trustee’s obligations are equitable, while the debtor’s are legal;
“(C) The trustee occupies a fiduciary relation, but the debtor does not.”

As the language of the evidence and of is* sue No. 4 was clearly the language of “debt,” as distinguished from “trusts,” we believe it should be so construed.

(b) On another theory we think the settlement of ,1514 terminated the trust relation between the parties and created between them the relation of debtor and creditor, as a matter of law. The original contract created an express trust which was to run for five years, but, as no settlement was requested or tendered at the expiration of that period, for the purpose of this argument, we agree with ap-pellee that limitation did not begin to run on expiration of-the five-year period. This concession has support in Jones v. Home Saving Bank, 118 Mich. 155, 76 N. W. 322, 324, 74 Am. St. Rep. 377, where the court said: “The mere fact that money due the cestui que trust is allowed by him to remain in the hands of the trustee does not change the nature of the debt, and, until an accounting was had or demanded, the statute of limitations did not run. 2 Perry, Trusts, p. 513, § 863, and cases cited; Frank v. Morley’s Estate, 106 Mich. 635, 64 N. W. 577. Judgment affirmed. The other justices concurred.”

On this concession the intent of the parties in making the written contract was that Mr. Hamilton should hold the stock and all dividends until the dividends collected paid the note and he was ready to tender appellee a settlement on the dividends and cancel his note and surrender to him his stock or until appellee demanded a settlement. The time of the settlement was left to Hamilton to be tendered when, in his judgment, the purposes of the trust' had been executed or when requested by appellee. Hamilton exercised his judgment in this matter, and tendered the settlement in 1914, canceling appellee’s note and surrendering to him the stock. The dura-1 tion of the original trust, as thus extended by the conduct of the parties, was not expressly fixed by contract, but was impliedly fixed at a time within which the purposes of the trust could and should be executed. Under the settlement of 1914 every purpose of the original trust was discharged. What was the effect of that settlement of the trust? On this issue Bogert says: “Although a settlor may not have expressly stated the trust term, or measured it by lives, years, or similar standards', he may impliedly have fixed the duration of the trust by his statement of its purpose. 'It is rudimentary law that a trust will last no longer than necessary for the accomplishment of its purpose. If the settlor has not otherwise fixed the end of the trust, he will be deemed to have intended that it should last till the trust purpose was attained.”

In Kohtz v. Eldred, 208 Ill. 60, 69 N. E. 900, 903, it was said: “Where a testator by his will creates a trust and fixes the duration | thereof, his direction will, if not in violation of the rule against perpetuities, be given effect and the trust will continue for the time indicated; but where a testator does not specifically indicate the time for which the trust is to continue, his intention must, if possible, be determined from the entire will. Where the evident purpose of a trust is the accomplishment of a particular object, the trust will terminate so soon as that object has been accomplished.”

When the settlement was tendered and ae-. cepted, of course the parties could have, expressly or impliedly, created a new trust. This new trust would have been independent of the trust that had been terminated by the settlement of 1914. Such a trust could be established only by the express'language of the parties or result therefrom. Admittedly nothing was said about a new trust. Thep we have only the conduct of the parties, which consisted of nothing more than the fact that Hamilton did not offer to pay to appellee the balance of the excess dividends left in his possession and appellee did not ask that they be paid to him.

As no new trust was created by £he settlement of 1914, the proposition is simply this: Where the trustee tenders a settlement to his beneficiary, which the beneficiary accepts, and as a result of the’ settlement the purposes of the trust have been discharged, but the trustee does not pay over to his beneficiary nor does the beneficiary ask for the payment of the balance of the trust fund, is this balance held as a trust fund not within the statute of limitations, or is it held as money liad and received within the bar of the statute?

It is settled law, as we understand the law, that, where an account has been rendered or settlement had or demanded on the expiration of the trust, limitation begins to run from the date of settlement or demand for settlement. In Gilmore v. Ham, 142 N. Y. 1, 36 N. E. 826, 828, 40 Am. St. Rep. 554, speaking for the court, Mr. Justice Einch said: “In the case of a direct trust the statute will begin to run when it ends, and the trustee has no longer a right to hold the fund or property as such, but is bound to pay it over, or transfer it discharged from the trust.”

Now in this case, when Mr. Hamilton tendered the settlement in 1914, which appellee accepted, he no longer had the right to hold the excess dividends as trustee, and, in fact, did not so hold them, for the trust was fully discharged, and by the settlement he was made liable to suit without any demand for the funds left in his possession.

The following proposition was announced in Mills v. Mills, 115 N. Y. 80, 21 N. E. 714, 715, defining when suit may be institute’d “without any demand” and the operation of the statute of limitations against such a claim: “When money is received by one to and for the use of another, under circumstances that it is his ¿luty at once to pay it over, then an action for money had and received may be« brought to recover it without any demand, and in such a case the statute of limitations begins to run from the day of the receipt of the money.”

While Mr. Hamilton did not receive the sum sued for on the date of the settlement, his right to hold it under the original trust ceased at that time, and, by the settlement, he became liable to suit thereon without demand, as shown by the next case cited. In Finney v. Cochran, 1 Watts & S. (Pa.) 112, 37 Am. Dec. 4501, Finney held certain bonds as collateral security to indemnify him against loss under an express trust. In accordance with the agreement, he converted the bonds into money and satisfied certain demands, as per the trust agreement, but failed to pay over or account to the beneficiary for the surplus. The suit was against Finney to recover this surplus, and on the question of limitation the court said: “The last of the money received by the defendant in discharge of the four bonds mentioned in his first receipt to the plaintiff, was as far back as the 11th of October 1831, something more than eight years anterior to the commencement of this action. The whole of the money received on the three first of these bonds, and a part of that received on the fourth, the defendant, by the terms of the receipt which he gave to the plaintiff for the bonds, had a right to retain to reimburse him for the twelve hundred and twelve dollars and eighty cents, paid in June 1825, in discharge of his endorsement for the ' benefit and accommodation of the plaintiff. But the surplus the defendant was bound and ought to have paid or settled in some way with the plaintiff, without delay, after his' receipt of it. If he neglected or failed to do this, the plaintiff might have brought his action for the recovery of it immediately, for it had become a debt due to the plaintiff, which the defendant was bound to pay him without even a demand being made for it. His right to maintain such action, therefore, accrued at the time the defendant received this surplus; and from that instant the statute of limitations commenced running, so that the six years, the time allowed by the statute for commencing suit, had run some two years and a half before it was commenced.”

The following quotation from Hancock v. Franklin Insurance Co., 114 Mass. 155, is squarely in point on this proposition: “On June 30, 1849, the plaintiff’s intestate gave his note for $5,000 to the defendants, payable in three months, and at the same time pledged with them, as collateral security therefor, a United States bond for $5,000, with interest coupons attached. "The defendants from time to.time collected the coupons and applied the proceeds to the payment of the interest upon the note. In January, 1863, the bond became payable, and the defendants collected it in gold coin. If there had been no difference in value between gold coin and paper currency, the rights of the parties would be plain. It was the duty of the defendants, holding the bond as collateral security, to collect it at its maturity. When collected, the law would apply its proceeds to the payment of the debt, so far as necessary, and the balance would be held by the defendants as money received to the use of the plaintiff. Thayer v. Mann, 19 Pick. [Mass.] 535. The ground taken by the defendants, that the note was outlawed, and therefore that they had the right to treat the collateral as their absolute property, cannot be sustained. They had the right, at any time after the note matured, upon giving notice to the pledgor, to sell the bond and apply the proceeds to the payment of their debt. Gen. Sts. c. 151, §§ 9, 10; Whipple v. Blackington, 97 Mass. 476; Fletcher v. Dickinson, 7 Allen, 23; Washburn v. Pond, 2 Allen, 474; Brown v. Tyler, 8 Gray, 135 [69 Am. Dec. 239]; Hunt v. Nevers, 15 Pick. 500 [26 Am. Dec. 616]. Not having done so, they continued to hold it in trust for the benefit of all parties. The pledgor might avail himself of the statute of limitations as a defence to a suit upon the note. But the statute affects merely the remedy on the note, and does not, on the one hand, defeat the lien of the pledgee upon the property pledged, nor, on the other, enlarge that lien to an absolute title to the property. If, therefore, the note to the defendants was outlawed (which need not be determined), upon the collection of the .bond held as collateral, the proceeds went to the payment of the debt, and the balance was money belonging to the plaintiff, and could be recovered in an action for money had and received. The statute of limitations would begin to run against such action from the time when the defendants received the money." (Italics ours.)

Mills v. Mills, supra, is also interestingly in point. In that case Theodore G. Mills and Hiram P. Mills were brothers. Theodore, being indebted to his brother, gave him a note in the sum of $3,434.63 and conveyed him certain lands. Thereupon Hiram gave to his brother a written contract reciting the fact of the indebtedness and the conveyance of the land to him and agreeing to sell. After paying himself the amount of the note as well as the advances he might make in the way of taxes, insurance, costs, etc., he agreed to turn the surplus over to the said Theodore. All of the lands were sold by Hiram during the lifetime of his brother Theodore, and, in a suit by the widow of Theodore against Hiram, it was alleged that Hiram had received sums of money in excess of the amount of all debts and advances due him and he was sued for the alleged balance of $6,717.27.' Discussing the issue of limitation, the court said: “Long before his brother’s death he [Hiram] had sold all the lands and received more' than sufficient for his reimbursement. After the sale of the ’lands he ceased to be mortgagee. He must be deemed to have sold the lands for the satisfaction of his mortgage, and it was satisfied. So far as he received the proceeds of the sales they were applicable, and must be deemed to have been applied, for his reimbursement. After he had been fully reimbursed, the proceeds of the lands which came to his hands were received by him to and for the use of his brother, and it was his duty at once to pay-over such surplus proceeds to his brother, and upon his failure so to do he was liable without any demand to suit for their recovery.”

In Vernor v. Sullivan & Co. (Tex. Civ. App.) 126 S. W. 641, 646, the surety on a note paid it and thereby became subrogated as between himself and the payee, Sullivan & Co., to the proceeds of a note of a third person held by Sullivan & Co., and as assignee of the surety Vernor acquired the right to such proceeds. Sullivan & Co. collected the note but did not account to Vernor for the same. The suit was by Vernor to recover the proceeds of this note. The defense was limitation. Discussing that issue, the San Antonio Court of Civil Appeals said: “There was no agreement by Sullivans to receive and hold this money as a continuing relation. They were, according to Vernor’s testimony concerning the assignment, to collect and receive it for him. Their duty was to pay it over to Vernor at the time they received it, or to apply it to his credit. No understanding between them was had or contemplated as to their holding this fund in trust for Vernor after it was collected. We cannot perceive, in the circumstances surrounding this transaction, any room for the contention that D. Sullivan & Co. held this fund by a continuing trust for Vernor; on the contrary it clearly was nothing more than a collection of money for Vernor, and payable to him or to his credit as soon as collected.”

.On the same point Boydstun v. Jacobs, 38 Nev. 175, 147 P. 447, 449, said: “Where an act is done by a trustee which purports to be an execution of a trust, he is thenceforth to be regarded as standing at arm’s length from the cestui que trust, who is put to the assertion of his claim at the hazard of being barred by the statute.”

In Clarke v. Boorman, 18 Wall. 493, 509, 21 L. Ed. 904, the Supreme Court of the United States said: . “It may be conceded that, so long as a trustee continues to exercise his powers as trustee in regard to property, that he can be called to an account in regard to that trust. But when he has parted with all control over the property, and has closed up his relation to the trust, and no longer claims or exercises any authority under the trust, the principles which lie at the foundation of all statutes of limitation assert themselves in his favor, and time begins to cover his past transactions with her mantle of repose.”

We think the., authorities cited fully sustain the proposition that the settlement of 1914 terminated the original trust and created between Mr. Hamilton and appellee the rela-tion of debtor and creditor, starting the running of the statute of limitation from that date. With the exception of the Vernor Case, none of the authorities cited are by the courts of this state. However, the law of trusts in Texas is not statutory, but has been evolved from principles of general jurisprudence recognized and enforced by the federal and state courts of the United States. We have found no Texas Case directly in point on the main proposition discussed, and, for the reasons stated, the question should be decided on principles of general jurisprudence. Some of the authorities reviewed were cited by appellant on the proposition that all dividends in excess of the amount due on the note were received by Mr. Hamilton without authority and were held by him from the date of the settlement as money had and received. However, these authorities also directly support the proposition that the settlement of 1914 terminated the original trust relation. We have given most careful consideration to appellee’s authorities, most of which are decisions by the courts of Texas, and have found nothing in any of them conflicting in the least with any conclusion stated by us herein. But we think all authorities cited by both parties to this appeal are in full accord on the proposition that a settlement of a continuing trust whereby the original purposes of the trust are fully discharged terminates the trust, and that, .subsequent to the settlement, the .relation between the parties is merely that of debtor and creditor, or, at the most, a constructive trust.

So we say, if Mr. Hamilton continued to hold the excess dividends after the settlement of 1914, as trustee, the relation was nothing more than a constructive trust. It must be borne in mind that no new trust agreement was created between the parties by the settlement of 1914. After that settlement Mr. Hamilton no longer had any contractual right, express or implied, to hold the excess dividends. It follows, on these facts, that, if a trust relation existed, it was nothing more ♦than a constructive trust which, under the decisions, was within the bar of the statute of limitations from the date that appellee knew of the possession of his money by Mr. Hamilton. He knew that fact from the date of the settlement of 1914. This proposition has support in Dunn v. Dunn, 137 N. C. 533, 50 S. E. 212. In that case a testator, by will, gave $400 to his son in trust for the use and benefit of another son, Benjamin C. Dunn, who was to receive the-interest thereon until his death. At the death of Benjamin C. Dunn, the $400 was to be paid to his two children. The trustee continued to hold the money after the death of Benjamin C. Dunn, and some years later was sued by the two children. Limitation was pleaded, and the court said: “The sole express trust reposed in W. B. Dunn by the will was to hold the fund ‘for the sole use and benefit of Benjamin C. Dunn,’ to receive and pay over the interest to him annually. At the death of the life tenant the express trust terminated. Baker v. McAden, 118 N. C. 744, 24 S. E. 531. The trustee then held the fund simply upon an implied trust to pay over to the plaintiffs, to whom, by the terms of the will, the title to the fund then passed. The trustee was charged with no duty save that imposed by the law to pay over when called on. The statute runs against an implied trust.”

It follows that the judgment of the lower court in favor of appellee should be reversed, and judgment here rendered in favor of appellant, and it is accordingly so ordered.

On Rehearing.

If a trust relation continued after the settlement of 1914, it was of the same nature and character as before the settlement. So we were in error on original submission in our conclusion that, “if Mr. Hamilton continued to hold the excess' dividends after the settlement of 1914 as trustee, the relation was nothing more than a constructive trust.”

Under the theory of law upon which we have based our opinion, the issue of constructive trust was not'in the case. In fairness, however, to appellant, we should say that the issue of constructive trust was advanced as a corollary to the proposition that, in law, the express trust, if there was an express trust, terminated when and as soon as Hamilton collected sufficient dividends to pay the note, and that from that date limitation began to run. As we said in our original opinion, most of the authorities reviewed by us were cited by appellant in support of this proposition. It was in connection with this proposition that the further contention was made that, since the original trust was terminated, if Hamilton continued to collect and hold the excess dividends under a trust relation, it could have no higher dignity than a constructive trust. The proposition thus advanced was supported by the citation of Dunn v. Dunn, cited by us on our theory of constructive trust.

To the extent indicated, appellee’s motion for rehearing is granted, but in all other respects overruled. After giving the most careful consideration to appellee’s written argument and also to his oral argument in support of his motion for rehearing, we cannot escape the conclusion that the settlement of 1914 terminated all trust relations.

Granted in part; overruled in part.


author: PLY, O. J..

text:
    GUARDIAN LOAN & TRUSTEE CO. v. SCHUNKE.
    No. 8590.
    Court of Civil Appeals of Texas. San Antonio.
    Jan. 14, 1931.
    Rehearing Denied March 11, 1931.

      Church & Graves and Meritt Steger, all of San Antonio, for appellant.
    Geo. W. Huntress and Bliss & Dalian, all of San Antonio, for appellee.
   PLY, O. J..

This suit was instituted by Mrs. Schunke against W. O. Gruber, Guardian Loan & Trustee Company, appellant, G. H. Hodgkinson, Cole Y. Bailey, L. P. Canter, and Jack Neal, to recover on a promissory note and to foreclose a lien on certain land. Appellee after-wards sought to restrain the sale of certain improvements on the land, and asked that a receiver be appointed to collect rents on the premises. The injunction was granted and a receiver appointed. This is an appeal from the appointment of a receiver and the refusal to dissolve the temporary injunction:

The trial judge found the following facts, which are not assailed:

“The Plaintiff Mrs. Louise Lemke Schunke, sold and conveyed unto the defendant W. C. Gruber, the land in controversy in this case, being Lots A-2, A-3 and A-4, fronting 155 feet on Dallas Street and 100 feet on Erie Avenue in the City of San Antonio in Bexar County, Texas, on the 8th day of November, 1927, for $4,000.00 in cash and a purchase money note for $14,500.00, bearing interest from date until maturity at the rate of seven per centum (7%) per annum and ten per centum per annum after maturity, stipulating that past due interest shall bear interest at the rate of ten per centum per annum and stipulating ten per centum per annum additional as attorney's fees in case the note should be placed into the hands of an attorney for collection after maturity. This note fell due on or before ten years from date, but provided that if there was any default in the payment of any installment of interest this should, at the option of the holder at once mature said entire note.
“At the same time she took a deed-of trust back to secure the payment of said note.
“The deed contained this provision: ‘The Grantee is given the privilege of removing the improvements now situated on the property herein conveyed.’ But the deed of trust did not contain this provision.
“The property conveyed by the deed and by the deed of trust at the time of said sale and ■ now had on it three five room cottages with a garage for each house.
“The occasion for putting said provision giving the grantee the privilege of removing the improvements on said property was induced by the representation of W. C. Gruber,' the purchaser, that he would put one or more substantial buildings on the property worth a good deal more than the buildings that were then on it in case he concluded to remove the buildings. In other words, the purchaser Gruber, desired to remove the buildings that are now on the property for the purpose of putting more ¡substantial buildings on the property than had been before.
“The purchaser, Gruber, did not exercise his privilege of removing the buildings, and on the 1st day of May, 1929, he, the said Gruber, sold and conveyed the said property unto the defendant, the Guardian Loan & Trustee Company, and in the conveyance unto the said Guardian Loan & Trustee Company, there was nothing said about the grantee having the privilege of removing the buildings then on the property ;• but the Guardian •Loan & Trustee Company did not assume the payment of the lien, it simply taking the property subject to the lien.
“Though the Guardian Loan & Trustee Company had not agreed to assume and pay off any part of the debt against the property, yet it paid one installment of interest when it fell due.
“But on, to wit: the 8th day of May, 1930, both the said Gruber and the said Guardian Loan & Trustee Company made default in the payment of the interest, and, though notified by Mrs. Schunke, they, the said Gruber and the said Guardian Loan & Trustee Company, failed and refused to pay said interest installment.
“Thereupon Mrs. Schunke placed the notes in the hands of an attorney for collection, and on, to-wit: the 19 day of June, 1930, the plaintiff, Mrs. Schunke filed suit seeking to recover of Gruber the amount of said note, principal, interest and attorneys’ fees of ten per centum per annum and to foreclose her lien securing her debt, which was the full amount of the note together with unpaid interest.
“George W. Huntress as Attorney for the said Mrs. Schunke notified the Guardian Loan & Trustee Company that unless the interest on the debt for the property was paid, Mrs. Schunke was going to institute suit to foreclose her lien, and was informed by the said Guardian- Loan & Trustee Company that they were going to remove the improvements on said property.
“Thereupon, the plaintiff Mrs. Schunke filed suit and sued out a writ of injunction, which was granted on a hearing wherein the Guardian Loan & Trustee Company appeared by counsel and resisted the issuance of the writ of injunction on June 27th, 1930, upon the ground that they had a right, by reason of the conveyance to them of the property to remove the improvements which had been granted unto them by virtue of a deed that contained- no such stipulation.
“Afterwards, on the-day of September, 1930, the plaintiff Mrs. Schunke applied for the appointment of a receiver on the ground that the condition of the mortgage had not been complied with and that the property was insufficient to discharge the mortgage debt.
“On the 6th day of October said application for the appointment of a receiver was heard and the said Mrs. Schunke .showed that the property was not worth more than $7,500.00, and the Court finds that said property with the improvements thereon is not worth more than said amount of $7,500.00.”

Testimony was permitted to show that the permission given in the written instrument was induced by a promise to replace the old buildings taken from the land by new structures. Mrs. Schunke and other witnesses were allowed to testify in regard to the improvements without any objection being made or exception taken and reserved. The proposition assailing the admission of the testimony cannot be urged with any degree of propriety in this court, and will be overruled. The oral testimony, although having been admitted without objection, will not be considered, and cannot show that the right to remove the buildings from the land was not in effect. Rawle on Covenants of Title, § 222.

The judiciary of Texas, as a nation and as a state, have considered thousands of land titles, and it is rather astonishing that during all that time the question of covenants of title running with the land has been rarely mentioned. The parties to this suit have cited one case, that of Gulf, C. & S. F. R. Co. v. Smith, 72 Tex. 122, 9 S. W. 865, 2 L. R. A. 281, the facts of which do not make it an authority in this case. In the cited case the railway company had agreed in the deed made to it for right of way, to fence the track if certain circumstances occurred. The court held that this promise to build the fence did not create a covenant of title that would run with the land. The fence was not in existence, and could not create a covenant of title running with the land. We must not confuse, as has been sometimes done, covenants running with the title, with covenants running with the land. If the permissiQn to remove the improvements be a covenant at all, it must be one running with the land and not with the title. The distinction is clearly drawn by Simms on Covenants, pages 19 and 20.

In regard to covenants running with the land, Rawle, in his work on Covenants of Title, § 222, says: “But whatever may have been the agreement between the covenantor and the covenantee as respects the dispensation of the covenants or alteration of the rights which they confer, it has bqen held in New York that an assignee of the land, and consequently of the covenants which run with it, cannot be affected by any equities created at the time the latter were entered into, of which he had no notice. In Suydam v. Jones, [10 Wend. (N. Y.) 180, 25 Am. Dec. 552], premises which were subject to a mortgage were conveyed with covenants of warranty and for quiet enjoyment, and in a suit on these covenants by an assignee of the purchaser, a plea that at the time of the execution of the defendant’s deed it had been agreed that the purchaser should assume and pay the mortgage as part of the consideration was held bad on general demurrer, the court saying, ‘If the covenant passes to the assignee with the land, it cannot be affected by the equities existing between, the original parties, any more than the title to the land itself,’ and that ‘to allow a secret agreement in opposition to the plain import of a covenant running with the land, to control and annul it in the hands of a bona fide assignee, would be a fraud upon such assignee which the law would not tolerate’; and in the subsequent case of Greenvault v. Davis, [4 Hill (N. Y.) 643], this decision was approved, and it was held that although as between covenantor and covenantee the former might, in mitigation of damages, show the consideration to have been actually less than that expressed in the deed, yet such evidence, was inadmissible in an action brought by the assignee of the covenan-tee. So too, where a certain bond was considered to be, in equity, a release of a covenant of warranty, it was held that as there was nothing in the case to show that the purchaser from the .covenantee was apprised of that equitable release, he and those claiming under him could not be deprived of the benefit of the covenant; and the doctrine of these cases has been recently recognized and ap-. plied in others.”

The text, supported by authorities, disposes of any question as to the propriety of testimony in regard to the parol agreement between the vendor and original vendee, and we are of opinion that it could have no effect as to subsequent vendees. The right to remove the improvements was a covenant running with the land and passed to the subsequent vendee.

We are of opinion, therefore, that the temporary injunction should be set aside. The-order as to a receiver to collect the rents is deemed to be called for in the collection of rents.

The order granting an injunction is reversed and the injunction dissolved, and the order appointing the receiver is affirmed. ,


author: WALTHALL, J.

text:
    BEE v. FOWLER.
    No. 2503.
    Court of Civil Appeals of Texas. El Paso.
    March 5, 1931.
    John E. Weeks, of El Paso, for appellant.
    John L. Eowler, of Odessa, for appellee.
   WALTHALL, J.

This case presents an appeal from the order . of the county court of Ector county overruling appellee’s plea of privilege to be sued in El Paso county, the county of his residence, at the time of the filing of the suit. The suit was originally filed in the justice court of Ector county, in which court appellee filed his plea of privilege, which plea was overruled, and an appeal duly prosecuted to the county court, in which court the plea was duly presented, and a controverting plea duly presented. The county court heard the evidence offered on the pleas, and the plea of privilege was overruled, to which ruling appellee excepted and gave notice and perfected this appeal.

Opinion.

This suit was brought by John L. Eowler against Proctor K. Bee, sole owner and operator of the Elite Laundry Truck Line, a freight bus line, operating over the Bank-head highway between El Paso, through Ector county, to Midland.' The suit is on an open account for legal services rendered appellant by appellee, at Odessa, Ector county, in procuring the permit to operate the freight bus line. The evidence offered on the pleas is as follows:

, “Proctor K. Bee, being duly sworn, testified as follows: I formerly lived in Ector County, Texas, while living here I decided ⅛ .put on a truck line between Midland and El Paso, and. employed the plaintiff, John L. Eowler, as my attorney to do the legal work in obtaining a Class A. permit, and he obtained the permit. I began operating the truck line from Midland, Midland County, Texas, to El Paso, El Paso County, Texas, and before the institution of this suit I moved to El Paso, El Paso County, Texas, and was living there at the time this suit was filed, also at the time service was had upon me, and I have lived in El Paso County, Texas, ever since, and live there now. I did not live in Ector County, Texas, any time since this suit was instituted. 'It is true that I operated a truck line by virtue of my permit, and I had a driver on my truck and at the time of the service in this case I was then hauling freight to Odessa, Ector County, Texas, and from Odessa, and collected for the hauling. I am a married man and the head of a family and at the time of the institution of this suit and the service upon me and ever since I have lived in El Paso with my family. The suit was filed upon an open account and there was no written" contract of any nature.
' “John L. Eowler, being duly sworn, testified as follows: I am now and have been for a long time a practicing attorney at Odessa, Ector County, Texas. The defendant, Proctor IÍ. Bee came to me and employed me to obtain for him a Class A permit to run a truck line and haul freight from Midland County, Texas, to El Paso, El Paso County, Texas, and from El Paso, Texas, to Midland, Texas. I did a great deal of work such as getting up the rates, mileages and distances and even went to the railroad agent and in fact I figured out all of his rates and- every thing else pertaining to it. I obtained for him a Class A permit as above stated and at the time of the institution of this suit as well as at the time of the service of same, the defendant Bee was operating a truck and truck line on his daily schedule between El Paso, Texas and Midland, Texas, also hauled freight and delivered the same and collected the freight from various persons in Odessa, Texas, and that I consider Mr. Bee in the operation of his truck line a common carrier for hire, and so believing I brought this suit in Ector County, Texas, on the theory that he was a common carrier for hire and suit could be brought in any county through which he hauled and delivered freight, and further that the services rendered was labor done for the defendant in Ector County, Texas, and I also thought that this would give the Courts of Ector County, Texas, jurisdiction. So far as I know the defendant lives in El Paso and has not lived in Ector County, Texas since the institution of this suit.
“D. Vance Swann,
“County Judge, Ector County, Texas.”

A suit on open account for legal service rendered is not an exception under the venue statute authorizing an • inhabitant of this state to he sued o.ut of the county in which he has his domicile. Appellee relies also upon subdivision 24, of article 1995, of the Statute. That subdivision reads: “Carriers. — Suits arising from damage or loss to any passenger, freight, baggage or other property, by reason of its transportation, or contract in relation thereto, in whole or in part by one or more common carriers or the assignees, lessees, trustees or receivers thereof, operating or doing business as such in this State, or having agents or representatives in this State, may be brought against one or more of those so doing business, in any county where either does business or has an agent or representative.”

It is clear that the suit for legal service is not one arising from damages or loss to any passenger, freight, baggage or other property, by reason of its transportation, or contract in relation thereto.

We feel that a discussion as to purpose of subdivision 24, of the venue statute, is unnecessary.

The case is reversed, and an order is here entered that the case be transferred to the justice court, precinct No. 1, of El Paso county, for trial on the merits.


author: HIGGINS, J.

text:
    GENERAL MOTORS ACCEPTANCE CORPORATION v. FOWLER.
    No. 2506.
    Court of Civil Appeals of Texas. El Paso.
    March 12, 1931.
    Jones, Goldstein, Hardie & Grambling, of El Paso, for plaintiff in error.
    Lea, McGrady, Thomason & Edwards, of El Paso, for defendant in error.
   HIGGINS, J.

The Smith Motor Company sold' and delivered in the state of Pennsylvania to H. R. Thayer an Oldsmobile coach. Thayer executed a conditional sales contract to secure payment of a balance due upon the purchase price of the car. This contract under the law of Texas is regarded as a chattel mortgage.' Article 5489, R. S. It was duly recorded in Pennsylvania, but not in Texas.

The Smith Motor Company assigned the contract to plaintiff in error. Thayer removed the car to Texas without the knowledge of plaintiff in error, and sold the car to the defendant in error, Fowler.

This suit was brought by plaintiff, in error against Fowler to foreclose the mortgage. Fowler pleaded that he was a bona fide purchaser for value.

Upon trial without a jury -foreclosure was denied.

Under the authority of Farmer v. Evans, 111 Tex. 283, 233 S. W. 101, the record of the mortgage in Pennsylvania was insufficient to charge Fowler with notice thereof. Plaintiff in error makes no point in this respect.

The car in question was purchased by Fowler from Thayer for $250 cash, and without actual notice of the mortgage. At that time the car had been driven about 12,000 miles and needed some repairs to place it in first-class condition. At that time the car was of the reasonable market value of $600. Fowler was a used ear dealer in El.Paso, Tex.

At the time Fowler purchased the car, Thayer exhibited a motor vehicle dealer’s registration card issued -by -the Pennsylvania depártment of highway to “Smith Motor Co. 70 W. Maiden St. Washington Wash. Co. Pa.” On the reverse side of such license card was the following in pencil: “No. 17066 Permission granted use to H. R. Thayer Salesman for Smith Motor Co.” Thayer represented to Fowler that he desired to raise some money immediately to pay debts he owed in East Texas, Upon the trial it was agreed that Fowler “purchased from Thayer for value, and without any notice of the plaintiff’s chattel mortgage lien, and in good faith, unless, as a matter of law, the failure of the defendant, Fowler, to make an independent investigation under the facts and circumstances of this sale, was sufficient in itself to keep him from 'being a bona fide purchaser of said automobile.”

In determining the sufficiency of the evidence to put a party upon inquiry and charge him with constructive notice, each case depends upon its own circumstances. Howard v. Kopperl, 74 Tex. 494, 5 S. W. 627. The question ordinarily is one of fact for the determination of the jury under appropriate instructions. Hines v. Perry, 25 Tex. 443; Howard v. Kopperl, supra; Klein v. Dallas, 71 Tex. 280, 8 S. W. 90; College Park, etc., v. Ide & Son, 15 Tex. Civ. App. 273, 40 S. W. 64.

Circumstances, which may merely arouse suspicion in the mind of a reasonably prudent person are generally regarded as insufficient to charge notice. 46 C. J. 548; Wethered’s Adm’r v. Boon, 17 Tex. 143.

We are of the opinion the facts and circumstances surrounding the sale by Thayer to Fowler were insufficient to relieve the question of notice of its character as one of fact and insufficient to charge Fowler, as a matter of law, with constructive notice of plaintiff in error’s mortgage. Thayer was in fact the owner of the car and the explanation given by him to Fowler of his reason for selling was reasonable. The fact that Thayer exhibited to Fowler and surrendered the registration card was calculated ’ to disarm Fowler of doubt as to his right to dispose of the car. For the reasons stated, the finding of the trial court upon the issue of notice is sustained. No other question is presented.

Affirmed.


author: ALEXANDER, J.

text:
    STROUD v. WARD.
    No. 1027.
    Court of Civil Appeals of Texas. Waco.
    Jan. 29, 1931.
    Rehearing Denied March 26, 1931.
    Ira Lawley, of Groesbeck, for appellant'.
    W. W. Mason, of Mexia, and C. S. Bradley, of Groesbeck, for appellee.
   On Motion to Reinstate Appeal and to File Amended Bond.

ALEXANDER, J.

This suit was instituted in the Eighty-Seventh district court of Limestone county by Mrs. Alice P. Ward against J. R. Stroud and T. O. Williams and A. E. Williams to recover a debt and for the cancellation of an oil and gas mining lease. Judgment was for plaintiff against the defendant Stroud for her debt and against all defendants canceling the lease. Defendant Stroud gave notice of appeal and filed a supersedeas bond, payable to Mrs. Alice P. Ward, T. C. Williams, and A. E. Williams. At a former date this court sustained a motion to dismiss the appeal because it was shown that Mrs. Alice P. Ward, the plaintiff in the lower court, died after notice of appeal had been given but before the bond had been filed. The appellant in his motion for rehearing asks the court for permission to file an amended supersedeas bond, payable to tbe temporary administrator of tbe estate of Mrs. Ward and to ber beirs and devisees, naming them. The attorneys who represented Mrs. Ward in the trial court have filed in this court •a motion as amici curise, in which it is urged that the case could not have been brought to this court by appeal in the first instance, and that, by reason thereof, the bond cannot be amended, and, even if it can be amended, the ■court will not have jurisdiction of the cause.

It is the contention of the amici curiae that, where a plaintiff dies after judgment and before the appeal bond is filed, the only method for bringing the case before the Court of Civil Appeals is by writ of error, and that, since the cause could not have been brought before this court by an appeal in the first Instance, the appellant cannot now perfect the appeal by filing an amended appeal bond. We have been unable to find any ease wherein it has been decided whether or not such case can be removed to the Court of Civil Appeals by direct appeal. The case has been ably briefed by counsel on both sides, and they have cited us to no such authority.

By Revised Civil Statutes 1925, art. 2083, it is provided that, if either party dies after the verdict or before judgment, the judgment shall be entered as if both parties were alive.

By Revised Statutes, art. 1850, it is provided that, if a party dies after the appeal bond has been filed and approved, or after the citation in writ of error has been served, the suit shall not abate, but the court shall proceed as though all parties were alive.

By Revised Statutes, art. 2277, it is provided that, in case of the death of any party entitled to an appeal or writ of error, the same may be taken by his executor, administrator, or heirs.

It will be seen, therefore, that the Legislature has not prescribed any method of appeal nor designated who should be the ap-pellees or defendants in error in the event the successful partyin the trial court dies after the judgment in that court and before an appeal bond has been filed and approved or the citation in writ of error served. Saner v. Spivey (Tex. Civ. App.) 230 S. W. 878, 879, at page 883 ; Id. (Tex. Com. App.) 238 S. W. 912. A dissatisfied litigant, however, has the constitutional right to have his case reviewed by the Court of Civil Appeals. Our Supreme Court recognized this defect in our law as early as 1854, but held that such injured party should not be. without his remedy. In the case of Teas v. Robinson, 11 Tex. 774, that court said:

“If the Legislature had provided no mode of bringing up eases, this Court has competent authority to have established such modes, and to have rendered them effectual for that purpose ; and in cases not provided for by statute, it is within the legal powers of the Court, to devise and authorize such appellate process as may be necessary to enforce its own jurisdiction, and secure the rights of parties interested a hearing and a revision of the judgments in this Court. If such were not the case, then there would be no mode, by which judgments in a condition similar to that in which the one before the Court is placed, could be revised. The death of the plaintiff in the judgment, in that event, would have been of signal advantage to his heirs. Their rights to the land would by this act of Divine Providence, be irrevocably established, and those of the defendant irrevocably defeated. Such cannot, legally, be the result of the death of one of' the parties to a judgment. The right of the party against whom judgment is, cannot, from such cause, be ex-' tinguished. If the successful party dies after judgment, his representatives may be summoned and will be required to make their de-fence before the appellate Court, in order that the respective rights of the parties may be determined in the tribunal, which, by law, has the power of final adjudication. This rule of practice is in accordance with the received rules for interpreting statutes to prevent abatements in suits. They are construed liberally to promote the object designed.”

In Tucker v. Anderson, 25 Tex. Supp. 155, the court there held that in such case, where the Legislature had not provided any appropriate means of appealing a case,' the appellate court had authority to establish such modes and to render them effectual for that purpose. Since the above cases were decided, the practice of removing such eases to the appellate court by writ of error has become the well-recognized procedure. Binyon v. Smith, 50 Tex. Civ. App. 398, 112 S. W. 138; Western Union Telegraph Co. v. Wofford, 32 Tex. Civ. App. 427, 72 S. W. 620, 74 S. W. 943; Saner v. Spivey (Tex. Civ. App.) 230 S. W. 878, 879; Simmons v. Fisher, 46 Tex. 130. If the losing party dies before the appeal is perfected, his heirs or legal representatives file the application for writ of error. If the successful party in the lower court dies, his heirs or legal representatives are made defendants in the writ.

We do not find any law, however, that makes the remedy by writ of error exclusive. The same authority that created the right to remove a case to the Court of Civil Appeals by writ of error likewise created the right to so remove such case by appeal. The right of the one is of equal dignity as the other. If the right to remove such case by writ of error, in the event of the death of one of the parties after judgment and before the appeal is perfected, had been created by the Legislature, we might reasonably assume that this remedy was exclusive. But the Legislature has not spoken on the subject. The practice of removing such cases by writ of error grew out of the law of necessity. The courts, recognizing the constitutional right of appeal and realizing that the Legislature had not prescribed the mode of procedure, simply approved the procedure followed in the case as presented, of removing the case by writ of error. No court has ever held that such procedure was exclusive. If the courts, out of necessity, recognized the right to remove the ease by writ of error, we see no valid reason why they should not likewise recognize the right to remove such case by appeal. We perceive no injurious results that would flow therefrom, and it would certainly meet the ends of justice in many cases to permit such relief.

On first presentation it may appear that, if the case is brought up by appeal, this would 'have the effect of making new parties — the heirs or legal representatives of the deceased person — for the first time in the Court of Civil Appeals, whereas, if the case is removed by writ of error, they would be made parties to the suit in the trial court. This difference, however, does not in fact exist. It is true that the petition for writ of error is filed in the lower court, but the trial court takes no action thereon. The petition may be filed after adjournment and while the court is in vacation. The clerk issues the citation in error and the defendants in error do not file their answer in the lower court, but are required to file same in the appellate court. They are therefore never required to enter their appearance in the trial court. Such heirs and legal representatives, when the suit is removed by writ of error, make their appearance in the suit for the first time in the appellate court.

In the case at bar Mrs. Ward was the plaintiff in the lower court. She participated in the trial until after judgment was entered and notice of appeal was given. No-, tice of appeal in the -lower court takes the place of citation in error. Revised Statutes, art. 2253; Western Union Tel. Co. v. O’Keefe, 87 Tex. 423, 28 S. W. 945. The temporary administrator of’ Mrs. Ward’s estate, who is sought to be made a party herein by the filing of the new bond payable to him, is in privy with her. The probate court, in the order appointing him, authorized him- to defend all suits against the estate. Whether such administrator would be charged with notice of the appeal by virtue of the notice of appeal having been given in the trial court .while Mrs. Ward was alive, it is not necessary for us to determine. It has been held that when, under the statute, parties are permitted to file a new appeal bond in the Court of Civil Appeals, through which the rights of parties adversely interested but to whom the former bond was not made, may be affected, the order allowing this to be done may fully protect the rights of such parties by requiring notice to be given to them. First Nat. Bank v. Preston National Bank, 85 Tex. 560, 22 S. W. 579. A notice from this court would be as effective as a citation in error from the clerk of the trial court.

By Revised Statutes, art. 1840, it is provided that, where there is a defect in an appeal bond, the appellate court may allow the same to be amended. A supersedeas bond may likewise be amended. Revised Statutes, art. 2274. It has been held that a liberal rule should be employed in construing these statutes to accomplish the purpose of the Legislature, and that, if the original instrument is a bond at all, the amendment should be allowed. Hugo v. Seffel, 92 Tex. 414, 49 S. W. 369; Williams v. Wiley, 96 Tex. 148, 71 S. W. 12.

The original bond filed in this case was payable to T. C. Williams and B. A. Williams, the appellant’s codefendants, and to Mrs. Alice P. Ward, “and each and all of the other part-ies, plaintiff or defendant, to this suit, whether named herein or not,” and was in every respect sufficient as a supersedeas bond, except that Mrs. Ward, one of the obligees named in the bond, was dead at the time it was filed. It was therefore such bond as could be amended. Newell v. Lafarelle (Tex. Civ. App.) 225 S. W. 853, par. 1, and cases there cited.

Being of the opinion that the suit could properly be removed to this court by an appeal in the first instance, and that the bond is susceptible of being amended, the other heretofore entered dismissing the appeal is set aside, and appellant is granted leave to file the amended supersedeas bond tendered by him in lieu of the original bond heretofore filed by him. The clerk of this court will issue proper notice to David Murphy, the temporary administrator of the estate of Mrs. Alice P. Ward, deceased.


text:
    TOWN OF GRIFFING PARK et al. v. CITY OF PORT ARTHUR et al.
    No. 2057.
    Court of Civil Appeals of Texas. Beaumont.
    Feb. 26, 1931.
    Sonfield & Sonfield, of Beaumont, for appellants.
    Shivers & Baker, of Port Arthur, for ap-pellees.
   WALKER, J.

Appellants were plaintiffs below, and ap-pellees were defendants. The plaintiffs were the town of Griffing Park, a duly incorporated municipal corporation, and its duly elected and qualified mayor and aldermen, suing both in their official capacity and as taxpayers, residing and having real and personal property situated within the corporate limits of the town of Griffing Park. The defendants were the city of Port Arthur and J. W. O’Neal, mayor, E. H. Drunagle and C. B. Moore, commissioners of the city of Port Arthur. The plaintiffs brought this suit to enjoin the city of Port Arthur from annexing and absorbing the town of Griffing Park. This relief was sought on the following allegations:

(a) Prior to and at the time of the act of ’ annexation the town of Griffing Park was a municipal corporation duly incorporated under chapter 11, title 28, R. S. 1925, and was functioning^as such. The boundaries of the town of Griffing Park were specifically pleaded by plaintiffs.

(b) The city of Port Arthur was and is a municipal corporation duly incorporated and existing under and by virtue of a special charter granted it by the Legislature, being chapter 52 of the Acts of the Thirty-Sixth Legislature.

(c) Section 1, chapter 2, of the City Charter, is as follows: “Territory adjoining the corporation limits of the City of Port Arthur, regardless of shape or configuration, may be annexed to said City as follows.” Article 1265, R. S. 1925, is as follows: “Any city having a population of 100,000 and under 150,000 as shown by the preceding Federal census, shall have the power and authority to amend its charter so as to extend its boundary limits by annexing additional territory adjacent and contiguous to such city, where the territory so annexed does not include any incorporated city or town having more than five thousand inhabitants according to the preceding Federal census. Such extension shall be effected in the manner following.” The point was made that this charter provision and the cited article of the general statutes constituted all the grant of power to the city of Port Arthur to annex adjoining territory.

(d) On the 26th of November, 1929, an election was held in the city of Port Arthur and in adjoining territory, in which was included the town of Griffing Park, to determine whether or not the city of Port Arthur should absorb and annex this territory. The election resulted in favor of the annexation, and, by ordinance, the necessary result was declared, and, under authority of the election and the ordinance, the city of Port Arthur was attempting to extend its jurisdiction over the incorporated territory of Griffing Park. No attack was made upon the election or the manner of calling the election, nor upon the ordinance declaring the result of the election. The only attack made by plaintiffs’ petition was that the act of consolidation was absolutely void because without authority of law or color of law. There was no pleading of any irregularity in the steps taken by the city of Port Arthur upon which the act of consolidation must rest. Thus, plaintiffs were attempting to plead a void and not a voidable act.

(e) It was further alleged that the city of Port Arthur did not have a population of 100,,-000 nor of 150,000 at the time of the annexation, but by the census of 1920 its population was only 31,513, and at the time of the annexation was “approximately 50,000.”

(f) It was further alleged that the city of Port Arthur had been a municipal corporation since 1911; that it had issued bonds for various purposes which, at the time of the annexation, had not matured and would not mature for many years; that these bonds amounted to about $4,450,000, bearing interest at 5 per cent; that the city of Port Arthur had voted additional bonds in the sum of $1,-605,000, which it was proposing to sell; that the bonds already sold were binding and legal obligations of the city of Port Arthur and could only be paid by the proceeds of taxes, levied against the property within the corporate limits of the city, and, if the annexation was permitted to stand, plaintiffs’ property would be subject to taxes to pay off these bonds; that the city of Port Arthur was attempting to exercise jurisdiction over the property included within the corporate limits of the town of Griffing Park and to collect taxes against such property as if it were legally a part of the city of Port Arthur; that the dty of Port Arthur, under the act of consolidation, would oust the town of Griffing Park of all the rights vested in it by law as a municipal corporation, seize its property, and abolish its offices, and deprive its duly .qualified officers of their constitutional rights to perform the functions of their offices.

The prayer was for a temporary injunction, enjoining the city of Port Arthur from putting in force its act of annexation and upon trial for permanent relief. A temporary injunction was granted as prayed for.

When the case was called for trial appel-lees presented as their sole defense, as far as the transcript reflects, the following plea in abatement:

“Now comes the defendant, The City of Port Arthur, J. W. O’Neal, Mayor, C. B. Moore and E. H. Druna^le, Commissioners, and respectfully shows to the Court that this suit should be-abated and dismissed, for the following reasons:
“First: This is a suit brought by Griffing Park, as an incorporated town, by L. L. Ab-shire, J. E. Day, E. L. Paxton, T. E. Gregory and Perry LaGrone, as individuals, and is in substance and effect a contest of the election held by the City of Port Arthur annexing said1 territory including the territory known as Griffing Park, and being a suit attacking the legality of the election, and same must be brought on relation of the State and not by individuals, and if defendants are mistaken, and if it is shown that the town of Griffing Park may maintain the suit, then these defendants say that the gentlemen named as plaintiffs, suing in their individual capacity, cannot bring or maintain said suit as individuals, because it is an attack on the legality of an action, and they, as individuals, cannot under the law of Texas so maintain said suit.
“Wherefore, defendants pray that this suit be in all things abated and dismissed, at plaintiffs’ cost.”

In appellees’ brief there are references to other pleadings, but, as no such pleadings are found in the transcript, this appeal must be decided upon the plaintiffs’ petition and upon defendants’ plea in abatement, which constitute all the pleadings reflected by the transcript. Upon trial, the plea in abatement was sustained, and plaintiffs’ suit in all things “abated and dismissed.” No evidence whatever was heard by the court, either in support of the plaintiffs’ petition or the plea in abatement. The judgment of the trial court was simply that plaintiffs, suing in the capacity reflected by their petition, had no right to maintain this suit.

Opinion.

As construed by the trial court, the plea in abatement was given the effect of a general demurrer. The plea confessed as true all the facts alleged by plaintiffs’ petition, and merely challenged the sufficiency of these facts to constitute in law a cause of action in favor of plaintiffs. The following authorities sustain this construction of defendants’ plea in abatement. Breen v. Railway Co., 44 Tex. 302; Cavin v. Hill, 83 Tex. 73, 18 S. W. 323; Price v. Wakeham, 48 Tex. Civ. App. 339, 107 S. W. 132, 133. The judgment of the court rests upon a principle of law now generally recognized by the jurisprudence of this state. This principle was thus stated by Judge Led-dy, speaking for the Commission of Appeals, in Kuhn v. City of Yoakum, 6 S.W.(2d) 91: “The rule has not been deviated from in this state that the validity of an extension of territory of a city or school district’can only be attacked by a direct suit in the nature of a quo warranto by the state, or in a proceeding in which the state is a party.”

Appellants do not question, but concede, the soundness of the rule thus stated. However, they seek to bring their case within the following rule of equal authority in this state, which may be stated as follows: An act of a municipal corporation, wholly beyond its powers and jurisdiction, that is, an act not authorized by law or color of law, is absolutely void and subject to collateral attack by any one whenever and wherever the validity of the act is called in question. The distinction between these two rules was thus recognized by Judge Leddy in the case cited supra: “Plaintiffs in error seek to avoid the operation of this well-settled rule by the contention that the action brought by them is not an attack upon the school district as extended,, but is one to prevent the invasion of private property rights, the assertion being made that the validity of the district is only incidentally involved. It is sought to bring this case within the rule announced by our. Supreme. Court in Parks v. West, 102 Tex. 11, 111 S. W. 726. The distinction between this case and the doctrine laid down in the Parks Case is obvious. There the district had no legal existence not even being a de facto one under the Constitution. Here it is not claimed that the independent school district of the city of Yoakum was not a valid corporate entity clothed with full and complete power to annex the territory involved. It is simply asserted that it has failed to comply with the law governing the annexation of such territory. In the Parks Case the district which attempted to levy a tax against the complaining property owners was. without legal power to act in the premises. Its action was therefore wholly void and subject to collateral attack.”

The only question presented by this appeal is whether or not, on the face of plaintiffs’ petition, they have pleaded facts making the act of annexation absolutely void and not merely voidable, because, if the act was merely voidable, the state was' a necessary party.

Upon a careful review of plaintiffs’ petition, it .is our conclusion that the act of annexation was absolutely void and that the court erred in sustaining the plea in abatement because, on the face of the petition, the city of Port Arthur had no legal power or jurisdiction to annex the -town of Griffing Park either under-its charter or the general statutes or the Constitution. We rest this conclusion upon the following reasons:

The article of the general statutes quoted above is the only article authorizing one municipal corporation to annex another municipal corporation. The reading of this article expressly excludes the city of Port Arthur from its provisions. No provision of the Constitution expressly authorized the annexation. So it follows that neither the general statutes nor the Constitution sustain the annexation by any specific grant of authority.

There being no express authority in the general statutes or the Constitution, then they must be examined for an inferred or implied authority. To infer or imply the power and jurisdiction in the city of Port Arthur to annex the town of Griffing Park, under the provisions of article 1265 or any other provision of the statute, it must appear not only that the annexation of the town of Griffing Park would be convenient, useful, and beneficial to the city of Port Arthur, but also indispensable for the discharge of the obligations and purposes of its corporate existence, Foster v. City of Waco, 113 Tex. 352, 255 S. W. 1104; and this must appear beyond a reasonable doubt, City of Arlington v. Lillard, 116 Tex. 446, 294 S. W. 829. Plaintiffs’ petition affirmatively excludes any necessity for the annexation, and defendants’ plea of abatement raised no issue of necessity.

Nor does the charter of the city of Port Arthur sustain the act of annexation.. In addition to section 1, chapter 2, quoted above, the charter contains the following general provisions, being section 1 of chapter 2 of article 3: “And provided, further, that the specification of particular powers herein authorized shall never be construed as a limitation upon the general powers herein granted, it being intended by this Act to grant and bestow upon the inhabitants of the city of Port Arthur full powers of self government, and it shall have and exercise all powers of municipal government not prohibited by this charter, or by some general laws of the State of Texas, or by the provisions of the Constitution of the State of Texas.” This section in no way enlarges or extends the provisions of section 1, chapter 2. Construing identical language in the charter of the city of Dallas, the Supreme Court, in Southwestern Telegraph & Telephone Co. v. City of Dallas, 104 Tex. 114, 134 S. W. 321, 323, said: “A municipal corporation possesses no power not derived from its charter, therefore the general terms ‘full powers of self-government,’ and ‘all powers of municipal government not prohibited by this charter,’ add nothing to the terms of the charter. We still must look to the charter for the authority to sustain an act done by the corporation. 28 Cyc. 258, B, Powers; City of Brenham v. Water Co., 67 Tex. 542, 4 S. W. 143.”

It follows that the city of Port Arthur must look alone to section 1, chapter 2, to sustain its annexation of the town of Griffing Park. Under the allegation of plaintiffs’ petition, the town of Griffing Park was “territory adjoining” the corporate limits of the city of Port Arthur. On this fact defendants contended below, and so contend here, that section 1, chapter 2, expressly empowered it to annex the town of Griffing Park. This charter provision must be construed in connection with article 1265, supra. By that ar-tide the Legislature undertook to deal specifically with the right of one municipal corporation to annex another municipal corporation. As cities exercise only delegated powers, all acts done by them must find authority in the law of their creation. As we have construed article 1265, it gave the city of Port Arthur no power to annex the town of Grif-fing Park. So under the general, statutes it must be said that the city of Port Arthur was denied the right to annex an adjoining municipal corporation. The most that can be said in favor of the argument of the city of Port Arthur is that a conflict exists between the general language of its charter and the specific language of the general statutes. Where the literal language of one statute conflicts with the literal language of another statute, the rule is that they must be construed together and harmonized, if possible, so as to give effect to each of them. State ex rel. Time Ins. Co. v. Superior Court, 176 Wis. 269, 186 N. W. 748. As directly applicable to the question before us, the following rule is announced by 43 C. J. 118, footnote 42(b): “A statute authorizing in broad and. unlimited terms the annexation of any territory lying adjacent to a city, will be construed in connection with another statute providing for the detachment of territory, so as not to permit the annexation by one city of territory included in another city until such territory is first lawfully detached from the latter city. Wauwatosa v. Milwaukee, 180 Wis. 310, 192. N. W. 982.”

It can also be said that section 1, chapter 2, does not authorize the act of consolidation because the charter of the city of Port Arthur makes no provision for assuming the outstanding debts of an annexed municipal corporation nor for the dissolution of its corporate existence nor for the disposition of its property. Where there is no statute or charter provision providing for these conditions, only the rule of absolute necessity would sustain the courts in reading them into the general statutes or a city charter. Discussing this very point, where the city of Eargo attempted to annex a part of the corporate territory of the village of Eargo, the Supreme Court of North Dakota, in Village of North Eargo v. City of Eargo, 49 N. D. 597, 192 N. W. 977, 982, said: “Our Legislature has provided a method for disconnecting territory from a village. That method was not followed in this case, but another municipal corporation assumes to detach such territory in another manner. * * * We are of the opinion that the Legislature never intended to give a city such power and that such power cannot and should not be implied.”

Sustaining- this conclusion, the court said: “It is legitimate in this connection to take note of the policy of the Legislature of this state in regard to the general question of the division and consolidation of public corporations. The Legislature has, on numerous occasions, provided for the division and consolidation of school districts, townships and counties, and for the annexation of the territory of one such public corporation by another. In every instance, provision has been made by the Legislature for the equalization of indebtedness and property generally in the event of division, annexation, or consolidation. Sections 1312, 13.21, 1327, 4079-4082, 3212-3214, C. L. 1913. No such provision is made in the statutes applicable to corporations of the next higher grade, namely, municipal corporations. It seems to us that this omission to deal with an important and practical aspect of the annexation question is significant and indicative, in connection with other considerations, of the absence of legislative intention to permit one municipal corporation to absorb another or annex a portion of its territory.” (Italics ours.)

Eor the reasons stated, we think the trial court erred in sustaining the plea in abatement. However, it is not to be concluded from anything we have said that defendants are to be denied the right, on a trial on the merits, to controvert plaintiffs’ petition by filing such defensive pleas as they may think necessary to protect their rights.

Reversed and remanded.