author: CLAUDE WILLIAMS, Justice.

text:
    K. G. McDONALD, Appellant, v. REPUBLIC NATIONAL BANK OF DALLAS et al., Appellees.
    No. 16735.
    Court of Civil Appeals of Texas. Dallas.
    June 10, 1966.
    Rehearing Denied July 8, 1966.

      Andress, Woodgate, Richards & Condos, Dallas, for appellant.
    Lane, Savage, Counts & Winn, L. M. Lesh, Locke, Purnell, Boren, Laney & Neely, Robert S. Mizell, Fred Lohmeyer, Golden, Croley, Howell, Johnson & Mizell, Dallas, for appellees.
   CLAUDE WILLIAMS, Justice.

K. G. McDonald brought this action against Republic National Bank of Dallas (hereinafter called Bank) and M. B. Chas-tain alleging multiple theories of recovery of money damages, both actual and exemplary. Primarily, McDonald alleged that Chastain was the record owner of certain mineral interests in and to described tracts of land located in Panola County, Texas but that one-half of each such record interest was held in trust by Chastain for the benefit of McDonald. He further alleged that on January 24, 1957 Chastain borrowed $150,000 from the Bank and delivered to it a deed of trust purporting to cover the entire interest in the various lands. He charged that the Bank either had actual knowledge, or with the exercise of ordinary care could have ascertained knowledge, that he, McDonald, was an owner of one-half interest in and to said lands and mineral interests thereunder, but notwithstanding such knowledge, or availability of such knowledge, the Bank took a lien upon the entire interest, to the detriment of McDonald. Plaintiff also alleged that the Bank permitted Chastain to continue operation of the properties and that such was done in such a manner to misappropriate certain proceeds of production, all to the detriment of McDonald and for which he sought an accounting. As a separate basis of his action against the Bank McDonald claimed that he secured a commitment from the Bank in 1962 to lend him certain sums of money to acquire producing oil properties in the State of Kansas but such Bank later refused to honor the commitment, to his loss and damage.

McDonald specifically pleaded that on December 3, 1962 he executed and delivered to the Bank a certain agreement in writing which the Bank was contending to constitute an accord and satisfaction of any claim or interest of McDonald existing prior thereto. McDonald sought to avoid the legal effect of this instrument by contending that same had been secured from him under duress and fraud so that the same was not effective. He also contended that the terms and provisions of the alleged accord and satisfaction had not been carried out by the Bank so that the same was not' legally effective to bar McDonald’s prior claims.

McDonald prayed for damages, actual, exemplary and compensatory, in the sum of $4,862,248.50.

Chastain answered McDonald’s suit by pleading limitations and also pleading in bar of McDonald’s cause of action the accord and satisfaction of December 3, 1962 as well as a subsequent conveyance from McDonald to Chastain of December 7, 1962 which expressly conveyed to Chastain the proceeds of all oil and gas production from the properties in question. Chastain alleged that McDonald had actual knowledge of the loan from the Bank to Chastain in January 1957 and had acquiesced in said loan and received a portion of the benefits thereof so that McDonald was estopped to assail said transaction.

The Bank, in answer to McDonald’s suit, pleaded a release and satisfaction of all claims existing between McDonald and the Bank by virtue of the December 3, 1962 written agreement, contending that said agreement had been fully performed. It also pleaded that McDonald had knowledge of the 1957 loan and had participated in the fruits and benefits of said loan which resulted in estoppel. It alleged that at the time the loan was made to Chastain, and a deed of trust taken on the properties in question, it had no knowledge of any claimed interest by McDonald nor any limitations on the power of Chastain to convey or transfer the title to such interest.

Both defendants filed a motion for summary judgment with supporting affidavits and depositions. These motions were resisted by McDonald. The trial court sustained the motions for summary judgment of both the Bank and Chastain and rendered judgment that McDonald take nothing by his cause of action against them. The judgment provided, however, that the same was without prejudice to the rights of McDonald against the Bank for an accounting of the monies, if any, due or which may become due to McDonald by the Bank under the terms and provisions of the letter agreement dated December 3, 1962.

From the above judgment appellant McDonald brings this appeal in which, in six points of error, he asserts the existence of at least five issues of fact to support his contention that summary judgment, pursuant to Rule 166-A, Vernon’s Texas Rules of Civil Procedure, is not proper and should be reversed. His points are (1) that “there are genuine disputed issues as to material facts”; (2) that the Bank had notice of McDonald’s undivided interest in the oil and gas leases in issue when it accepted the mortgage from Chastain in 1957; (3) that the Bank refused to honor its commitment to make a loan with reference to the Kansas properties; (4) that the agreement of December 3, 1962 was obtained from him by duress; (5) that since the Bank did not pay the agreed consideration recited in the December 3, 1962 letter agreement, same did not constitute an accord and satisfaction; and (6) that he was entitled to an accounting.

Appellant immediately concedes that his first point is too general to justify our consideration. It is therefore overruled.

Before proceeding to consider the remaining points advanced by appellant we agree with his contention that this being summary judgment proceedings the reviewing court considers the record in the most favorable light against the moving parties, in this instance the appellees, and that all presumptions and reasonable inferences must be indulged in favor of appellant. The burden to conclusively negative the existence of any genuine Issue of fact is upon appellees and if there are any doubts existing concerning the propriety of such motions same must be resolved against them. Great American Reserve Ins. Co. v. San Antonio Plumbing Supply Co., S.Ct., 391 S.W.2d 41, 47. We also approach the problem with sympathetic agreement with the statement of our Supreme Court by stating the real purpose of Rule 166-A, T.R.C.P., in Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929 (quoting from Kaufman v. Blackman, Tex.Civ.App., 239 S.W.2d 422, 428):

“ ‘The underlying purpose of Rule 166-A was elimination of patently un-meritorious claims or untenable defenses; not being intended to deprive litigants of their right to a full hearing on the merits of any real issue of fact.’ ”

Our review of this record convinces us that appellees have sustained their burden of demonstrating the nonexistence of issuable facts as well as the absence of a meritorious claim by McDonald and therefore the action of the trial court in sustaining the motions for summary judgment was correct.

Appellant’s contention, as contained in his point two, that whether the Bank had notice, actual or constructive of his interest in the security when it accepted the deed of trust from Chastain in 1957 is a question of fact which should be resolved by a jury, is lacking in merit for several reasons.

First, the record is entirely devoid of any evidence that the Bank, or any of its officials, knew or had access to knowledge that McDonald claimed any interest in the properties involved in the deed of trust given to the Bank by Chastain in 1957. The record reveals that Chastain represented to the Bank that he owned the interest of record in his name and that title opinions, relied upon by the Bank, demonstrated that Chastain was the owner of the interest which he mortgaged to the Bank.

Second, the record reveals that Chastain had express or implied authority from McDonald to execute the deed of trust in 1957, covering all of the interests standing of record in his name. It was without dispute in the record that McDonald knew that Chastain held record title to the properties and that McDonald acquiesced in Chastain’s actions in entering into agreements with drilling contractors for the drilling of the wells on the properties in question and in entering into gas sales contracts with gas purchasers. The only testimony concerning trust relationship between McDonald and Chastain was with reference to letters between the two and McDonald’s testimony to the effect that Chastain held his interest in trust but there zvere no terms to the trust. In this connection he testified:

“Q. He signed those gas sales contracts and product sales contracts covering your interest?
“A. Yes.
“Q. You say that Mr. Chastain held your interest in his name as trustee?
“A. Yes, sir.
“Q. What were the terms of that trust ?
“A. There was no terms. He merely held it in his name.”

Third, the record is undisputed that McDonald received a portion of the proceeds from the loan which was secured by the deed of trust of January 1957. Numerous exhibits in the record reveal account-ings between McDonald and Chastain which included portions of the loan, together with interest thereon, as well as demonstrating that McDonald took deductions on his income tax returns for interest paid to the Bank on such loan. By virtue of having accepted the benefits of the loan McDonald is estopped to deny that the Bank acquired a valid lien on his claimed interest in the properties. Macedonia Baptist Church v. Farm & Home Savings & Loan Ass’n, Civ.App., 110 S.W.2d 1013; Itasca Roller Mill & Elevator Co. v. Wooten, Civ.App., 246 S.W. 678.

Finally, on February 14, 1961, some four years after the execution of the deed of trust lien, McDonald specifically recognized the lien when he, represented by counsel, received assignments of interest from Chastain, each of same providing:

“Subject to, but not burdened with, payments of balance of deed of trust lien, dated January 25, 1957, recorded in Volume 57, Page 456, Deed of Trust Records, Panola County, Texas.”

Appellant’s point three relates to a rather collateral matter involving an alleged agreement by the Bank to finance McDonald in some oil holdings in the State of Kansas. McDonald attempts to persuade us that there is evidence to the effect that an official of the Bank committed that institution to make him a loan of $1,600,000 for the purpose of purchasing oil holdings in Kansas or, failing that, to say that the Bank agreed to refinance McDonald’s note which he had given to the Pioneer Bank & Trust Company in Shreveport, Louisiana and which was secured by a deed of trust on his interest in the Panola County properties. We have carefully read McDonald’s testimony in the light most favorable to him but fail to find sufficient probative evidence contained therein to create an issue of fact that a binding contract was entered into between McDonald and the Bank. It would, be impractical to attempt to reproduce either all or a substantial portion of the testimony as set forth in McDonald’s deposition but, taken at their face value, and with all proper implications indulged in favor of McDonald, the necessary elements of a binding contract are not shown to exist. McDonald does not attempt to testify as to when such loan was to be made, the rate of interest thereon, the time of payment, or the method of securing the payment, or any other essential facts to constitute a contract.

As to an agreement by the Bank to refinance the Pioneer Bank note such commitment, if it was made, was later satisfied by the written agreement of December 3, 1962 between McDonald and the Bank which will be discussed in connection with a subsequent point. Accordingly, we overrule appellant’s third point of error.

By appellant’s fourth and fifth points of error it is contended that the agreement of December 3, 1962, relied upon by the Bank and Chastain as an accord and satisfaction of claims which McDonald previously had, was executed by McDonald under duress and furthermore, since the Bank did not pay the agreed consideration named in such agreement, such instrument was not effective as a complete accord and satisfaction between the parties. An explanatory statement is required to properly consider these points.

On or about November 27, 1962 McDonald wrote the Bank the following letter:

“November 27, 1962
“Mr. John Scott, Executive Vice President
Republic National Bank of Dallas Dallas, Texas
“Dear Sir:
“As you are aware, I am the owner of a one-fourth oil and gas leasehold interest in the following units situated in Panola County, Texas:
“(1) M. B. Chastain-Robinson Unit No. 1
“(2) M. B. Chastain-Carrie Williamson Unit No. 1
“(3) M. B. Chastain-Rosa Jones Unit No. 2
“(4) M. B. Chastain-A. J. Reed Unit No. 1
“(5) M. B. Chastain-Rosa Jones Unit No. 1
“M. B. Chastain of Shreveport, Louisiana, purported to include my interest in the above units in a deed of trust dated January 25, 1957, executed by him to T. J. Moroney, Trustee for Republic National Bank of Dallas, as security for the payment of a promissory note in the principal sum of $150,000.00, which deed of trust is recorded in Vol. 57, page 456 of the Deed of Trust Records of Panola County, Texas. At the time this deed of trust was executed, you had notice of my interest in these units and acquired no lien upon any of my interest by the execution of such deed of trust.
“For some time now, I have attempted unsuccessfully to obtain a release from you of all of your claim to my interest in these units. However, you have failed to execute the same and I have turned the matter over to Mr. Angus G. Wynne, Sr., attorney of Dallas, and requested him to institute litigation immediately against the Republic National Bank of Dallas.
“The lawsuit being filed by Mr. Wynne, in addition to seeking a judgment decreeing that the Republic National Bank of Dallas has no lien upon my interest in these units, will also ask for the recovery of damages sustained by me as the result of losing a sale of my interest. Also, in view of your claim, Champ-lin Refining Company and Texas Gas Transmission Company continue to hold my runs in suspense and I have been deprived of the use of my money. Because of this, my business and credit have suffered and I will seek to recover damages from you to compensate me for my loss.
“Very truly yours, “/s/ K. G. McDonald “K. c. McDonald
“cc: M. B. Chastain Petroleum Tower Shreveport, Louisiana
Pioneer Bank & Trust Company Shreveport, Louisiana Attn: Mr. Rubert Campbell”

Prior thereto, and on July 2, 1962, McDonald had executed to Pioneer Bank & Trust Company of Shreveport, Louisiana his promissory note in the amount of $26,-000 and had delivered to such bank a deed of trust securing the payment of such note, said lien covering his interest in the properties situated in Panola County, Texas.

On December 3, 1962, a letter was executed by McDonald addressed to the Bank, and accepted by the Bank, as follows:

“December 3, 1962
“Republic National Bank of Dallas Dallas, Texas
“Attention: Mr. John R. Scott Executive Vice President
“Gentlemen:
“The Pioneer Bank & Trust Company of Shreveport, Louisiana, holds my promissory note in the original principal amount of $26,000, dated on or about July 2, 1962. I have taken the position that this note is secured by the properties described in a deed of trust executed by me to a Trustee for the Pioneer Bank & Trust Company,' dated July 2, 1962, covering properties situated in Pan-ola County, Texas. These properties are interests in the properties described in a deed of trust executed by M. B. Chas-tain to T. J. Moroney, Trustee, dated January 25, 1957, recorded in Volume 57, page 455 of the Deed of Trust Records of Panola County, Texas. My $26,000 note to the Pioneer Bank & Trust Company, referred to above is past due and that Bank has published notices to foreclose their deed of trust of July 2, 1962.
“I represent and warrant that I have no defenses, legal or equitable, to the payment of the promissory note of Pioneer Bank & Trust Company, referred to above, and that the balance thereof as of this date, including applicable attorneys’ fees and expenses of posting, is $27,066.26. I further represent and warrant that I have made no conveyances, recorded or unrecorded, legal or equitable, of the interests described in the aforementioned deed of trust to Pioneer Bank & Trust Company and purported to be covered thereby.
“At my request you are purchasing the above-described $26,000 promissory note from Pioneer Bank & Trust Company for a consideration of $27,066.26; and, in consideration of your purchasing such note and preventing the foreclosure sale, I agree that upon demand by you, I will:
“(1) Renew the note purchased by you for a period of 60 days; and
“(2) Will convey such interest as I own in the properties described in the aforementioned deed of trust to such person or party as you may designate within said 60-day period for a cash consideration equal to the then unpaid balance of the promissory note referred to above, or any renewal or extension thereof. Such conveyance shall carry with it all rights to suspended and accrued runs and to contractual interests relating thereto, subject to accrued operating expenses and ad valorem taxes, whether or not now in litigation subject to the following reservation:
“There are presently pending two lawsuits relating to these properties. In one, Champlin Oil & Refining Company is the defendant, and the principal issue is the construction of a gas and/or products sales contract with that company. In the other suit, Fred Whitaker of Carthage, Texas, is claiming a disputed participation in two of the units described in the aforementioned deed of trust. Certain runs are presently in suspense because of this Fred Whitaker litigation. Upon the sale referred to above, I will retain the right to receive the first $30,-000 which may be recovered from the Champlin lawsuit or which may be released from the suspension caused by the Whitaker lawsuit attributable to the interest which I claim to own and which is described in the aforementioned deed of trust.
“In the event you furnish a purchaser of the properties, as aforesaid, you and the undersigned will each mutually release the other from any further liabilities or obligations, save as to mjr warranty of title to the interest being conveyed. My warranty of title shall except any rights you may hold under your deed of trust described above from M. B. Chastain.
“The terms and provisions hereof shall be binding upon you, the undersigned and our respective heirs, personal representatives, successors and assigns.
“If the above represents your understanding of our agreement, please so indicate by signing a copy hereof in the space indicate.
“Yours very truly, “/s/ K. G. McDonald
“ACCEPTED: REPUBLIC NATIONAL BANK OF DALLAS /s/ John R. Scott.”

The record is clear and undisputed that at the time of the execution of the December 3, 1962 letter appellant was represented by Mr. Henry Baer, an attorney of the firm of Wynne & Wynne, of Dallas, Texas.

Thereafter, according to the record, the Bank purchased the $26,000 note of McDonald from Pioneer Bank & Trust Company for $27,066.26 and such Louisiana bank forwarded to the Republic Bank the documents transferring all collateral relating to its loan, including an assignment of the $26,000 note and the deed of trust covering the Panola County properties.

By instrument dated December 7, 1962 McDonald conveyed such interest as he owned in the properties in controversy to appellee Chastain, said document including the statement:

“This assignment covers and includes all proceeds from the sale of production not heretofore actually physically received by assignor, and assignee assumes the payment of all unpaid operating expenses.”

By letter of December 7, 1962 addressed to Chastain McDonald specifically retained the right to receive the first $30,000 which might be recovered from the Champlin lawsuit or release from the suspension caused by the Whitaker lawsuit mentioned in the December 3 letter above. Chastain accepted and agreed to the terms of this letter on December 18, 1962.

The record reveals that the Bank performed its part of the letter agreement by securing a purchaser for the properties and also by purchasing the Pioneer Bank & Trust Company note and lien. By the letter agreement of December 7 with Chastain McDonald had retained the right to receive the proceeds which might be recovered from certain gas runs and a lawsuit pending. Thereafter disputes arose between McDonald and the Bank as to the actual amount he was periodically entitled to receive ■ by virtue of his retained rights. Irrespective of these disputes McDonald continued to be paid and receive funds attributable to his retained interest.

While appellant pleads that he was forced and compelled to execute the December 3, 1962 letter agreement under duress he does not point to any evidence in the record, and we are unable to find any, which would constitute duress under the circumstances surrounding this transaction. Viewing McDonald’s testimony in the most favorable light, all he says is that he was forced and compelled to sign the letter agreement late in the evening on the day before the scheduled foreclosure sale. It is undisputed that the Pioneer Bank & Trust Company of Shreveport owned the note in question and that it was secured by valid deed of trust lien and that the trustee under said deed of trust had posted notice of foreclosure sale as he had the right to do. McDonald, in the letter agreement of December 3, 1962, admitted that the bank held a valid lien on these properties and that he had no defenses, legal or equitable, to the payment of the note which was secured by such lien. Such being true, such action by the Pioneer Bank & Trust Company, as a matter of law, could not possibly constitute duress.

In Ulmer v. Ulmer, 139 Tex. 326, 162 S.W.2d 944, a similar contention of duress was advanced and the court. said:

“All the notes here involved were in the hands of parties who had done the plaintiff no wrong. Such notes were secured by valid liens on this property. The holders of such notes and liens had a perfect right to sell, and Perkins had an equal right to purchase. The notes were past due. Perkins therefore had a perfect right to demand payment, and to threaten foreclosure if his demand was not complied with. A threat to sue on a past due note and to foreclose the lien securing same is neither fraud nor duress. [Citing authorities] Simply stated, it is neither fraud nor duress to purchase a note and lien against property owned by one who is unable to pay same. Furthermore, it is neither fraud nor duress for the purchaser of such a note and lien to threaten to foreclose in order to induce a conveyance of the mortgaged property to him. [Citations omitted.] ‘It is never duress to threaten to do that which a party has a legal right to do, * * ”

In Hall v. Fowler, Civ.App., 389 S.W.2d 730 we had occasion to consider a contention that plaintiff had executed a note for attorneys’ fees under duress. In holding that plaintiff had not created a fact issue by her testimony regarding duress Justice Bateman reiterated the rule that: “ ‘There can be no duress unless there is a threat to do some act which the party threatening has no legal right to do.’ Dale v. Simon, Tex.Com.App., 267 S.W. 467, 470.”

The letter agreement of December 3, 1962 is plain, clear and unambiguous and therefore requires no explanation by parol testimony. The circumstances surrounding the execution of the letter agreement are such as to affirmatively negative the contention of fraud.

At the time the letter agreement was executed appellant-was represented by able counsel, Mr. Henry Baer, a reputable attorney of the Dallas Bar. A similar contention of fraud and duress was advanced in the case of Dial Temp Air Conditioning Co. v. Faulhaber, Civ.App., 340 S.W.2d 82. In disposing of the question of fraud and duress Chief Justice Dixon said:

“It is undisputed that appellee Faul-haber, executed the written release on February 28, 1957, and that in doing so he had the services and advice of his own attorney. At this time he had full knowledge of the claims against appellants, which claims he relies on as a basis for his recovery of this judgment. Therefore, until set aside the release must stand as a bar against appellee’s claim in regard to the fraudulent sale of corporation stock, which claim is the basis of appellee’s suit against appellants.
[Citing authorities.] We think it is significant that no one claims in pleadings or testimony that the release is ambiguous. The case was not tried on that theory.”
“We again call attention that no one in this case claims the release was ambiguous in its terms. The construction and interpretation of the instrument was therefore a question of law for the judge, not a fact question for the jury, 10-A Tex.Jur. 405.”

Accordingly, we hold that the record is devoid of any evidence of probative force which would create an issue of fact on the question of duress or fraud.

As to the issue of proper payment under the letter agreement of December 3, 1962 the trial court, in granting summary judgment specifically provided that such judgment was without prejudice to the rights of appellant against the Bank for an accounting of the monies, if any, due or which may become due to him by the Bank under the terms and provisions of the letter agreement dated December 3, 1962. Accordingly, appellant is in no position to complain now since he has his remedy reserved and may prosecute same should he desire.

In his sixth and final point appellant contends that he is entitled to an accounting of the funds received by the Bank while Chastain was operating the East Texas leases. The complete answer to this point is the accord and satisfaction agreement entered into between McDonald and the Bank on December 3, 1962 and McDonald’s agreement with Chastain of December 7, 1962. We find from the record that such agreements are valid and binding releases between the parties and therefore a bar to McDonald’s claim for further accounting. We find no issue of fact presented and therefore overrule appellant’s sixth point of error.

Having carefully considered all of appellant’s points of error and finding the same to be without merit we overrule the same and affirm the judgment of the trial court.

Affirmed.


source: Caselaw Access Project

author: SHARPE, Justice.

license: Public Domain

text:
    PERMIAN BASIN LIFE INSURANCE COMPANY, Appellant, v. Louis POLASEK, Appellee.
    No. 144.
    Court of Civil Appeals of Texas. Corpus Christi.
    June 16, 1966.

      Raymond D. Wier, Odessa, for appellant.
    Fred C. Auforth, Corpus Christi, for ap-pellee.
   OPINION

SHARPE, Justice.

This appeal is from a judgment rendered after jury trial in favor of appellee, plaintiff below, against appellant, defendant below, in the amount of $4700.00, representing actual damages of $1200.00 and exemplary damages of $3500.00, based upon fraud committed by appellant in the sale of two of appellant’s Advisory Board Investment Certificates, each in the face amount of $600.-00.

Appellee’s recovery was based upon two separate false representations made by appellant’s agent in the year 1955 to the effect (1) that the face value of the certificates could be recovered by their surrender to appellant at any time after five years from their date of purchase, and (2) that appellee was one of the soundest small insurance companies in the state. Special Issues 1-6 related to the first representation and issues 7-12 to the second. In each instance the jury found that the representation was made, was false, was made to induce appellee to purchase, appellee relied on the truth of it, appellee would not have purchased but for the representation and his reliance thereon, and he had a right to rely on it. The jury also found that ap-pellee first knew and should have known the method and manner of repayment of the two certificates on July 18, 1960 (issues 13, 14, 15 and 16); that appellee’s actual damages amounted to $1200.00 (issue 17); that the representations were made with malice (issue 18); and that appellee was entitled to exemplary damages in the amount of $3500.00 (issue 19).

By thirteen points, appellant asserts in substance that the trial court erred as follows: In failing to hold that appellee’s cause of action was barred by the two-year statute of limitations (point 1), and by the four-year statute (point 2); in submitting special issue 7 inquiring whether appellant’s agent represented to appellee that appellant was one of the soundest small insurance companies in the State (point 3), and in refusing to disregard the answer to it (point 4); in disregarding, if it did, the jury findings on special issues 13, 14, 15 and 16 (point 5); in failing to submit certain special issue requested by appellant (points 6, 11 and 12); in submitting special issue 17, the actual damage issue (point 7), and in refusing to disregard the answer to it. (point 8); in submitting special issue 19, the exemplary damage issue (point 9), and. in refusing to disregard the answer to it (point 10); and in refusing to render judgment for appellant based upon waiver, ratification, confirmation and estoppel (point 13).

We have concluded that we must sustain appellant’s point one to the extent that appellee’s cause of action established by the jury answers to special issues 1-6 is barred by limitation; that affirmance of the judgment cannot properly be based upon the remaining findings of the jury; that judgment should not be rendered in favor of appellant ; and that reversal and remand should be ordered.

A cause of action based upon damages for fraud of the kind involved here is governed by the two-year statute of limitations. Art. 5526, Vernon’s Ann. Civ.St. It is the well settled rule in this State that fraud prevents the running of the statute of limitations until it is discovered, or by the exercise of reasonable diligence could have been discovered; and that knowledge of facts that would cause a reasonably prudent person to make inquiry, which if pursued would lead to a discovery of fraud, is in law equivalent to knowledge of the fraud. Wise v. Anderson, 163 Tex. 608, 359 S.W.2d 876 (1962); Ruebeck v. Hunt, 142 Tex. 167, 176 S.W.2d 738, 150 A.L.R. 775 (1944); Quinn v. Press, 135 Tex. 60, 140 S.W.2d 438, 128 A.L.R. 757 (1940); Glenn v. Steele, 141 Tex. 565, 61 S.W.2d 810 (1933); Jenkins v. Kimbro, 380 S.W.2d 189 (Tex.Civ.App.1964, wr. dism.); Lacy v. Carson Manor Hotel, 297 S.W.2d 367 (Tex.Civ.App.1956, wr. ref., n. r. e.).

In our case the false representation by appellant’s agent that the face value of the certificates could be recovered at any time after five years from date of purchase was made in June, 1955. The jury found both that appellee first knew and should have known the manner and method of repayment of the certificates on July 18, 1960. Those findings were largely based upon evidence that a letter written on that date by an attorney for appellant, in reply to one written by appellee, specifically referred appellee to the place in the certificates where the payment provision was set out. A very careful reading of all provisions of the certificates discloses that their face value was not recoverable at any time after five years, but, on the other hand, payment was dependent upon the accumulation of a “special surplus fund account” for that purpose. That fund was never accumulated, and it ultimately appeared that appellant was losing money at all material times. We need not decide whether ap-pellee should have discovered the fraud perpetrated on him prior to July 18, 1960, because it appears, in any event, that on or about that date he was charged with knowledge of facts which if pursued would have lead to discovery of the fraud committed in 1955. Under the jury findings on special issues 13, 14, 15 and 16, appellee’s cause of action for fraud concerning the method and manner of repayment of the certificates was clearly barred by the two-year statute of limitations. The trial court refused to sustain appellee’s motion to disregard such findings and, instead, erroneously rendered judgment on the verdict in favor of ap-pellee.

Appellee argues, in effect, that even if his cause of action established by the jury answers to special issues 1-6 is barred by limitation, nevertheless, that the judgment should be affirmed against appellant based upon the other false representation that appellee was one of the soundest small insurance companies in the State, established by the findings on special issues 7-12. Here appellee says that the evidence conclusively established that he did not discover the falsity of that representation and could not have discovered it by the exercise of reasonable diligence until shortly before he filed suit and that his cause of action based upon it is not barred by limitation. Appellant, on the other hand, says that the evidence was such that reasonable minds could differ on those issues, and, since the alleged fraud relied upon was committed in 1955, the burden was upon appellee to secure jury findings that he did not discover the fraud or by the exercise of reasonable diligence could not have discovered it until less than two years before suit was filed. The evidence strongly supports appellee’s position that he did not actually discover the falsity of the representation that appellee was one of the soundest small insurance companies in the State until February 15, 1964, and he filed suit on March 26, 1964. However, we cannot say that the evidence conclusively established that issue in appellee’s favor or that he could not have discovered the fraud by the exercise of reasonable diligence more than two years prior to filing suit. Ordinarily, what constitutes reasonable diligence to discover fraud is a question of fact for the jury. Ruebeck v. Hunt, 142 Tex. 167, 176 S.W.2d 738, 150 A.L.R. 775 (1944). It appears here that appellee was charged with knowledge on or about July 18, 1960 that appellant had made at least one false representation to him concerning the method and manner of repayment of the certificates. Under all the evidence, it appears that the ultimate fact issues relating to appellant’s plea of limitation, asserted also in connection with the representation and cause of action established by the jury answers to special issues 7-12, were for the jury.

In addition, even if we accept the premise that because appellee established liability on the last-mentioned cause of action and that it was not barred by limitation, we cannot affirm the judgment because of the manner in which the damage issues were submitted. Both damage issues were related to all of the false representations inquired about in the preceding issues. Special issue 17, the actual damage issue, inquired concerning “damages, if any, sustained as a direct result of the defendant’s representations, if any you have so found.” Special issue 18 inquired whether “the representations, if any you have so found, made by the defendant to plaintiff were made with ‘Malice’ ”, as that term was defined in the charge, and the answer to that issue referred to “such representations”. Special issue 19 referred to “wilful misrepresentations, if any you have found.” It thus appears that we are considering a situation in which the damages found by the jury cannot be said to wholly rest upon appellee’s cause of action established by the jury answers to special issues 7-12, relating to the false representation that appellee was one of the soundest small insurance companies in the State. Instead, it appears that the answers to the damage issues were based as well upon the other false representation relating to the method and manner and repayment of the certificates, which cause of action was barred by limitation. The trial court refused to disregard any of the jury findings and rendered judgment upon the entire verdict. We are, therefore, unable to affirm the judgment on the basis suggested by appellee.

Since the judgment must be reversed for the reasons stated, we deem it unnecessary to discuss appellant’s remaining points in detail. None of them present reversible error, and, if they did, would not require that judgment be rendered for appellant. We are here dealing with an erroneous judgment, not one which is error-less. It appears in any event that this is a proper case for remand in the interest of justice. Rule 434, Texas Rules of Civil Procedure. Dahlberg v. Holden, 150 Tex. 179, 238 S.W.2d 699.

The judgment of the trial court will be reversed and the cause remanded for new trial.


author: DIXON, Chief Justice.

text:
    Weldon JAMES, Jr., Appellant, v. James W. BARNETT, d/b/a South East Motors, Appellee.
    No. 16738.
    Court of Civil Appeals of Texas. Dallas.
    June 10, 1966.
    Rehearing Denied July 1, 1966.

      R. L. McSpedden, Dallas, for appellant.
    Esir Tobolowsky, Dallas, for appellee.
   DIXON, Chief Justice.

This is an appeal from a summary judgment in favor of appellee James W. Barnett, who was defendant in the trial court. The judgment was that appellant, plaintiff in the trial court, take nothing by his suit.

On January 18, 1964 appellant Weldon James, Jr., an unmarried minor, twenty years of age, filed suit against appellee, a used car dealer, for rescission of a contract for the purchase of an automobile and for return of the purchase price, $2,700 cash. In his original petition appellant pleaded a tender of return of the car to appellee and appellee’s refusal thereof.

In his amended petition appellant pleaded that while he was still a minor he had sold the car for $2,175 to a third person and the proceeds had been applied to the payment of a mortgage against the car. He had kept the car five months and had made monthly payments on the mortgage totaling $680.72. This sum together with the $2,175 received from the sale of the car paid off the mortgage. Nevertheless, appellant prayed for rescission and for a return to him by appellee of the full amount of the purchase price, $2,700.

In his answer appellee pleaded that appellant had fraudulently represented that he was twenty-one years of age, which he looked to be; that the automobile was a necessary purchased by appellant for use as transportation to and from his employment with Central Freight Lines; that appellant had never made a proper tender of the return of the automobile; that he sold the car after he became twenty-one years of age; that he had ratified the contract; and was estopped to dis-affirm it.

The record discloses that when appellant bought the car he did not have the money to pay for it. However, he had been employed at Central Freight Lines for three years and was earning $70 per week. Arrangements were made with Central Federal Credit Union to lend appellant the full purchase price of the car, $2,700. Appellant signed a note and mortgage in that amount. This information was made known to appellee, who accordingly drew a draft on the Credit Union through a Waco bank for the full purchase price. The draft was paid and the money deposited to appellee’s account. Title papers were made out to appellant as owner, showing the Credit Union as mortgagee.

Appellee bases his motion for summary judgment on two grounds: (1) that appellant admitted he sold the automobile for $2,175, but has not made a tender of the proceeds of said sale either to appel-lee, or into the registry of the court; and (2)appellant never at any time paid to appellee any money or other property for the automobile.

In his two points on appeal appellant says he was under no duty to tender to appellee or into the registry of the court the proceeds of the sale of the automobile, which proceeds were used to pay off the mortgage; and that the money received by appellee in payment of the purchase price of the car was paid by appellant.

In his two counterpoints appellee asserts (1) that appellant was legally obligated to restore the automobile to appellee as a condition precedent to recovery and the sale of the automobile by appellant defeats any recovery as a matter of law; and (2) that upon rescission of a contract by a minor, he can recover only what he parted with, not what another advanced or paid for his benefit; therefore appellant, not having paid any money or anything of value to appellee, as a matter of law, is not entitled to recover.

The burden was on appellee to show that the record presented no material issues of fact. In the record before us appellee has failed to establish conclusively that there are no issues of fact.

There is evidence that at the time appellant purchased the car, at the time he sold it and at the time he filed this suit he 'was a minor.

Though there are exceptions, the general rule is that a minor may repudiate his contract for the purchase of personal property and is entitled to the return of the money he has paid under the contract. Prudential Bldg. & Loan Ass’n v. Shaw, 119 Tex. 228, 26 S.W.2d 168 (Comm.App., opinion adopted); McKnight Chevrolet Co. v. Strahan, 11 S.W.2d 259 (Tex.Civ.App., no writ hist.); Cox v. W. A. Chanslor & Son, 181 S.W. 560 (Tex.Civ.App., no writ hist.); Jones v. State, 31 Tex.Cr.R. 252, 20 S.W. 578; 30 Tex.Jur.2d 678. And this has been held to be the rule even when the minor cannot tender return of the property because he has squandered or dissipated it. Bullock v. Sprowls, 93 Tex. 188, 54 S.W. 661, 47 L.R.A. 326; Uhlmann Grain Co. of Texas v. Wilson, 68 S.W.2d 281 (Tex.Civ.App., error dism.); Rutherford v. Hughes, 228 S.W.2d 909 (no writ hist.); 30 Tex.Jur.2d 691-692, 693.

We think that legally speaking appellant did receive the proceeds resulting from his sale of the automobile. The money was paid to the mortgagee and credited to appellant, thus extinguishing the debt and mortgage. Under the facts developed in connection with appellee’s motion for summary judgment and in the light of the authorities cited above, we hold that appellant’s failure to tender the proceeds to appellee or into the registry of the court did not entitle appellee to a summary judgment.

We do not agree with appellee when he says that he received no money from appellant. The latter borrowed the amount of the purchase price from Central Federal Credit Union, signing a note and mortgage for the loan. The fact that appellee then drew a draft on the Credit Union, which draft was honored, does not make the payment any the less a payment by appellant to appellee.

We sustain appellant’s two points on appeal. Of course, we cannot foresee what additional evidence may be adduced in a full development of the facts at a trial on the merits. Therefore, in reversing this summary judgment we make no holding with reference to appellee’s pleaded defenses of fraud, ratification, and estoppel in a trial on the merits or his defense that the automobile was a necessary for appellant in transporting him to and from his employment. And we withhold any comment concerning appellant’s claim that he is entitled to have the full amount of the purchase price, $2,700, returned to him by appellee.

The judgment of the trial court is reversed and the cause remanded to the trial court for further proceedings.

Reversed and remanded.


author: COLLINGS, Justice.

text:
    Suzanne Cohen LEVIN et al., Appellants, v. Laura FISCH, Appellee.
    No. 4078.
    Court of Civil Appeals of Texas. Eastland.
    June 24, 1966.
    Rehearing Denied July 15, 1966.
    Murfee & Hoover, William L. Durham, Houston, for appellants.
    Ellis F. Morris, Houston, for appellee.
   COLLINGS, Justice.

Laura Fisch brought suit against Suzanne Cohen Levin and Jay Howard Cohen, individually and as independent executors of the estate of Bertha Cohen, deceased. Plaintiff, a sister of the deceased, claimed that she had an interest in said estate under the provisions of the last will and testament of Bertha Cohen. Defendants are the children of Bertha Cohen, deceased. It was stipulated that Bertha Cohen died on November 28, 1959, in Houston, Harris County, Texas, that the last will and testament of Bertha Cohen, dated April 11, 1958, was admitted to probate on January 27, 1960 by the Probate Court of Harris County, Texas, and that the defendants are the duly appointed and acting independent executors of the estate of Bertha Cohen, deceased. Both plaintiff and defendants filed motions for summary judgment urging that no genuine issue as to any material fact existed. Plaintiff contended that under the pleadings, the language of the will, considered with her ex parte affidavit and stipulations, she was entitled to judgment as a matter of law. Defendants contended that they were entitled to judgment, as a matter of law, because the provision of the will relied upon by plaintiff was precatory in nature and not mandatory and amounted, in effect, to only the expression of a wish on the part of the testatrix. The court overruled defendants’ motion for summary judgment, sustained plaintiff’s motion and rendered judgment for the plaintiff. The defendants have appealed.

The will provided for specific bequests to appellants. In addition to the provision for specific bequests, paragraph V of the will, the interpretation of which is here in controversy, is as follows:

“All of my other property of whatsoever nature, real, personal, or mixed, I give, devise and bequeath to my two children, Suzanne Cohen Levin and Jay Howard Cohen, to be divided equally between them so that each shall receive an equal share with the other in said property. It is my desire that each year out of the annual rent proceeds, rents and revenues from such property during such year so received by my said daughter ■ and son they pay to my sister Mrs. Laura Fisch the sum of $2,400.00, provided such net proceeds, rents and revenues, received by them from such property for such year is sufficient to meet such payment. In the event the net revenues from such property for any given year should be insufficient to meet such payment for such year, then the amount of the payment to my said sister for such year should be reduced in the amount of such deficiency. It is my desire that my children continue such payments during the remainder of my said sister’s life time provided that should my sister LAURA FISCH get married, then my said children should not, after the date of such marriage continue such payment. In the event my said sister should marry, then the payment to her during the year of such marriage, should be prorated as of the date of such marriage.”

Appellants present one point of error contending the court erred in overruling appellants’ motion for summary judgment, and in sustaining appellee’s motion for summary judgment and rendering judgment thereon, for the reason that paragraph V of the last will and testament of Bertha Cohen is clearly precatory in nature and not mandatory, and amounts only to a wish on the part of the testatrix and does not express a mandatory bequest to appellee, or devise or bequeath to appellee any interest whatsoever in the estate of Bertha Cohen, deceased, which the appellants, or either of them, either individually or as independent executors, are, as a matter of law required to recognize, honor or pay.

Appellants point out that the testatrix Bertha Cohen unequivocally devised and bequeathed to appellants all of her property not theretofore devised. Appellants contend that the phrase “It is my desire” considered in connection with the language used “within the four corners of the instrument”, is not ambiguous, and should be given its ordinary and natural meaning, and should not be interpreted as a bequest or a mandatory instruction to appellants to pay to her sister, Mrs. Fisch, the $2,400.00 annual payment indicated in the will. Appellants contend that if Bertha Cohen had intended to bestow upon her sister, Laura Fisch, any right to the annual net rents and revenues from the properties which she had previously and unequivocally devised to appellants, she would have directed appellants in their capacity as executors to make such distribution. The word “desire” in its ordinary and primary meaning is precatory, but is often construed when used in a will as directive or mandatory when it clearly appears that such was the intention of the testator from a consideration of the instrument as a whole and the surrounding circumstances.

In support of the judgment appellee relies upon Colton v. Colton, 127 U.S. 300, 8 S.Ct. 1164, 32 L.Ed. 138 (1888). In that case the testator devised and bequeathed to his wife all of his estate, both real and personal, and then continued as follows: “I recommend to her the care and protection of my mother and sister, and request her to make such gift and provision for them as in her judgment will be best.” In discussing the question of whether the above provision was precatory or mandatory the court stated:

“According to its context and manifest use, an expression of desire or wish will often be equivalent to a positive direction, where that is the evident purpose and meaning of the testator. * * * And in such a case as the present, it would be but natural for the testator to suppose that a request, which, in its terms, implied no alternative, addressed to his widow and principal legatee, would be understood and obeyed as strictly as though it were couched in the language of direction and command. * * * ”

The applicable rule in such cases was stated to be as follows:

“The object * * * of a judicial interpretation of a will is to ascertain the intention of the testator, according to the meaning of the words he has used, deduced from a consideration of the whole instrument and a comparison of its various parts in the light of the situation and circumstances which surrounded the testator when the instrument was framed.”

The record in this case which is not disputed shows the following facts and circumstances surrounding the testator when the will was executed. The deceased, Bertha Cohen and the appellee Laura Fisch were sisters. Appellants are the children of Bertha Cohen. On April 11, 1958, when Bertha Cohen executed the will she and Laura Fisch were both widows, approximately fifty years of age. Bertha Cohen owned property of the value of approximately one million dollars, and the value of property owned by Laura Fisch was approximately Twenty-five Thousand Dollars. The appellant Cohen was twenty years of age and appellant Levin was twenty-five years old. Appellants had one year previously inherited from their father property of the approximate value of one million dollars. For two years prior to her death Bertha Cohen paid appellee the sum of $200.00 per month. She also made other gifts to appellee and her daughter of clothing and money. The record shows that appellee was in poor health and unable to work full time, and that her income was approximately $300.00 per month.

Appellants rely principally on Byars v. Byars et al., 143 Tex. 10, 182 S.W.2d 363, (Sup.Ct.1944), in which it was held that the word “request” in its ordinary or natural meaning when used in a will is precatory and not mandatory. Our Supreme Court in that case noted the statement of the rule set out in the Colton case, supra, and then distinguished the facts in the Byars case as follows:

“No facts are presented in this case, as in Colton v. Colton, 127 U.S. 300, 8 S.Ct. 1164, 32 L.Ed. 138, showing the situation of the testator when the will was drawn and the circumstances of the surviving wife and the other persons named, from which the inference might be drawn that the precatory paragraph of the will was intended to be mandatory. There is the single circumstance that the request is by the husband to the surviving wife. * * * 39

In 95 C.J.S. Wills § 602 b the rule which in our opinion is applicable in Texas is stated as follows:

“Whether Precatory or Mandatory. In determining whether particular words are to be construed as precatory or mandatory, the court will look to the expressed intent of the testator, as found from the context of the will and surrounding circumstances; and words which, in their ordinary meaning, are precatory will be construed as mandatory only when it is evident that such was the testator’s intent.”

See also Gilkey v. Chambers, 146 Tex. 355, 207 S.W.2d 70; Bergin v. Bergin, 159 Tex. 83, 315 S.W.2d 943; Cutrer v. Cutrer, 162 Tex. 166, 345 S.W.2d 513, 86 A.L.R.2d 105; Leopold v. Sochat, 303 S.W.2d 840 (Tex.Civ.App., n. r. e. 1957); Hunt v. Hunt, 329 S.W.2d 488 (Tex.Civ.App., no writ history, 1959); Shiels v. Shiels, 109 S.W.2d 1112 (Tex.Civ.App., no writ history, 1937); Words and Phrases, Vol. 12, page 436.

The trial court correctly found that there was no genuine issue of fact in the case. Based upon the rule announced in the above cited cases and authorities it is our opinion that it was the intention of the testatrix that the words of “desire” as used in the will were a positive directive and imposed an obligation on appellants to comply therewith. The provision of the will for the payment to appellee of $2,400.00 annually was set out specifically as well as the desire or direction of the testatrix that such payments should be discontinued in certain specified contingencies. The language in question considered in context and in connection with the language of the will as a whole, and the surrounding facts and circumstances is in our opinion more clearly mandatory than that of the Colton case. The court properly entered summary judgment in favor of appellee, Laura Fisch.

The judgment is affirmed.


author: LANGDON, Justice.

text:
    Frank N. FORTNER et al., Appellants, v. Earl B. JOHNSON, Appellee.
    No. 16726.
    Court of Civil Appeals of Texas. Fort Worth.
    May 20, 1966.
    Rehearing Denied June 17, 1966.

      Burford, Ryburn & Ford, Wayne Pearson and Robert A. Wooldridge, Dallas, for appellant Frank N. Fortner.
    David S. Curtis, Dallas, for appellant Sandra Lee Sample.
    Bradford & Pritchard, and W. A. Prit-chard, Dallas, for appellee.
   OPINION

LANGDON, Justice.

This suit involves notes and assignments. It was tried before a jury.

On September 11, 1961 the appellant, Frank N. Fortner, conveyed to the appellee, Earl B. Johnson, thirty-five (35) acres of land in Dallas County. As part consideration Johnson executed and delivered to Fortner a $73,000.00 first lien note payable to order of the latter. The note bore interest at five (5) per cent per annum. It was payable in seven annual installments of $9,733.28 each, with the first of such installments being due on September 11, 1962 and an eighth and final installment in the amount of $4,867.04 being due on February 11, 1969. The deed of conveyance reserved a vendor’s lien to secure payment of the note and was additionally secured by deed of trust covering the land conveyed.

In March, 1962, Fortner employed J. T. Sample, an attorney, to represent him in a divorce action. Sample admitted he learned about the $73,000.00 note at that time. He testified that he also discussed the note with Fortner in preparation of the latter’s income tax return and that during the latter part of May or early June, 1962, he and Fortner went to Arkansas for the joint purpose of buying some gravel property and that Fortner offered the use of the $73,000.00 note as collateral for a loan if the deal could be worked out.

Fortner testified that (a) he and Sample discussed using the $73,000.00 note for the purpose of borrowing money to purchase the Arkansas property; (b) he accompanied Sample to several prospective lending institutions for this purpose with the note in his possession; (c) later, Sample told him that Baxter Bros, had agreed to loan the full value of the note whereupon he inquired if he should not sign the note over; (d) Sample suggested he wait until they made the loan', he then left the note with Sample with all of his other papers.

Thereafter J. T. Sample negotiated a $54,000.00 loan on behalf of Dalworth Investment Company from Frankfurt’s Texas Investment Corporation (hereinafter called Dalworth and Frankfurt’s, respectively) using the $73,000.00 note as collateral. Sample then prepared two transfer of lien forms, one from Fortner to Dalworth and the second from Dalworth to Frankfurt’s. (Hereinafter referred to as Exhibits 3 and 4, respectively.) The transfer of lien forms contained the following sentence: “This transfer of note and assignment of liens is made and given for collateral purposes to secure repayment of a loan to be made by transferee, repayment of which will render this agreement of transfer and assignment null and void and of no further force or effect, otherwise the same to remain absolute and vested in the named beneficiary of this transfer and assignment.” This sentence will hereinafter be referred to as the controversial sentence. These two forms and the $73,000.00 note were delivered to Frankfurt’s; both transfer of lien forms and the endorsement on the back of the note were purported to be signed by Fortner. Sample also executed a $54,000.00 note and collateral agreement.

Frankfurt’s advanced $25,000.00 to Dal-worth but was unable to raise funds for the balance of the loan.

Sample then negotiated a $55,000.00 loan by Dalworth from W. A. Pritchard, Trustee, using the $73,000.00 note as collateral. The loan was closed July 25,1962, at Frankfurt’s office at which time W. A. Pritchard delivered cashier’s checks to Dalworth for $30,000.00 and to Frankfurt’s for $25,000.-00. Pritchard then received the $73,000.00 note, which was endorsed by Frankfurt’s, the transfer- of lien from Frankfurt’s to W. A. Pritchard, Dalworth’s note for $55,-000.00, the deed of trust executed by ap-pellee Johnson securing the $73,000.00 note, the transfers of liens from Fortner to Dal-worth (Exhibit 3) and Dalworth to Frankfurt’s (Exhibit 4) and miscellaneous other papers.

W. A. Pritchard acted as agent for J & J J Sales Company in making the $55,-000.00 loan and on July 26, 1962, he endorsed the $55,000.00 note and the $73,-000.00 note to it and executed a transfer of lien form to it. He then filed for record the four transfer of lien forms and delivered the other instruments to J & J J Sales Company.

The collateral agreement executed by Pritchard and Dalworth provided that Dal-worth would collect the first payment due by appellee Johnson on the $73,000.00 note. On or about September 10, 1962, Johnson delivered to Dalworth, his check for $13.-013.28 which stated on the front thereof as follows: “9-11-62 payment on note due Frank N. Fortner, & assigned to you, by him: $9,733.28 Interest, in full @ 5% from 10-18-61 thru 9-10-62 — $3,280.00”.

The $13,013.28 check (including the $9,-733.28 annual payment plus $3,280.00 interest) was endorsed to the order of Frank N. Fortner only. The jury found that Fortner endorsed the check. Fortner admitted he received it but denied signing it. He admitted he got $10,000.00 from the proceeds of it. At the same time, Fortner received the note of Dalworth, signed by J. T. Sample, for $63,266.72. This amount represented the difference between the $73,-000.00 note and appellee’s principal payment of $9,733.28 on the note.

On or about July 23, 1963, Fortner wrote a letter to E. B. Jackson. (The envelope was addressed to E. B. Johnson.) The letter, intended for Johnson and demanding that the next payment on the note be made at his lawyer’s office in Las Vegas, was received by the appellee. It was the only letter written by Fortner to the appellee. On or about August 31, 1963, J & J J Sales Company transferred and assigned to ap-pellee Johnson both of said notes (the $73,-000.00 and $55,000.00 notes) and delivered an assignment of lien to appellee. The first payment on the $55,000.00 note executed by Dalworth was due September 11, 1963. No payment was ever made by Dal-worth to the appellee on this note. (Fort-ner admits this in his brief.) The only security appellee had for the payment of the $55,000.00 note was his lien on the $73,-000.00 note.

After Fortner had, by his letter dated July 23, 1963, made demand upon the appel-lee to send him the next payment on the $73,000.00 note the appellee filed this suit on September 11, 1963, the due date of the next annual payment on said note and without waiver of any rights tendered into the registry of the court the $12,896.61 payment then due on the note. The $55,000.00 note of Dalworth being in default, the appellee elected to declare the entire balance due. In this suit against Dalworth, Sample, Fort-ner, and Frankfurt’s, the appellee Johnson sought judgment for his debt (amount due on the $55,000.00 note), interest and attorney’s fees and for foreclosure of his lien on the $73,000.00 note and the funds in the registry of the court which consisted of payments made on the $73,000.00 note during litigation.

Alternatively, appellee sued Frankfurt’s on its warranty of title to the $73,000.00 note. By cross-action Fortner sought return of the $73,000.00 note and the quieting of his title thereto, for title to the funds on deposit in the registry of the court and other relief against appellee. In the alternative appellant sought judgment against Dalworth and Sample for damages in the amount of the balance due on the $73,000.00 note.

On September 11, 1964, while the case was pending, the next payment was due on the $73,000.00 note and the appellee again without waiver of any rights paid $12,409.-95 then due into the registry of the court. Interest in the sum of $716.10 had been earned on the funds in the registry of the court to the date of trial.

J. T. Sample was killed on November 15, 1964, and his daughter and administratrix, Sandra Lee Sample, was substituted in his place. It was established during the trial that Dalworth was the alter ego of J. T. Sample and that at the time of his death, his liabilities exceeded the value of his assets, including the assets of Dalworth.

The case was submitted on twenty-five special issues. Briefly, the issues and the jury’s answers thereto were as follows:

In answer to issues 1, 2, 3 and 4, respectively, the jury found that Fortner had signed the $73,000.00 note, the assignments of liens from Fortner to Dalworth (Exhibit 3) and from Dalworth to Frankfurt’s (Exhibit 4) and the $13,013.28 check representing payment on the note.

Special issues 5 and 8, respectively, inquired as to whether or not Victor Frankfurt, prior to his disbursement of funds in connection with the $54,000.00 loan to Dal-worth, knew that the assignment of the $73,000.00 note and lien from Dalworth to Frankfurt’s (Issue 5) and from Fortner to Dalworth (Issue 8) were given for collateral purposes to secure repayment of a loan to be made transferee, repayment of which will render this agreement of transfer and assignment null and void and of no further force and effect, otherwise the same to remain absolute and vested in the named beneficiary of this transfer and assignment. (Same language as contained in the controversial sentence.) The jury found in answer to each of such issues that Frankfurt had such knowledge.

Issues 6, 7 and 9, 10 following issues 5 and 8, respectively, were conditioned on a “no” answer to 5 and 8 and were thus unanswered.

Special issues 11 and 14 were identical to 5 and 8 except they inquired as to whether or not Pritchard had such knowledge before disbursing funds on the $55,000.00 loan. The jury answered that Pritchard had such knowledge.

Issues 12, 13 and 15, 16, conditioned on a “no” answer to issues 11 and 14, respectively, were unanswered.

Special issue 17 as to Pritchard was identical to 11 and 14 except it related to the assignment from Frankfurt’s to him and contained the language of the controversial sentence as in the above issues. The jury-found that he had such knowledge. In answer to issue 18 the jury found that Prit-chard prior to disbursing funds in connection with the $55,000.00 loan to Dalworth knew that Dalworth’s $54,000.00 note had been paid in full to Frankfurt’s. Issues 19 and 20 conditioned on a “no” answer to issues 17 and 18 were unanswered. The jury in answer to issue 21 found that Fortner first learned of the assignment of the $73,000.00 note to a third party in September, 1962 and to issue 22 that he did not approve of such transfer. It found that at the time Fort-ner received the $63,266.72 note signed by Sample that he knew the $73,000.00 note had been assigned to a third party and in answering issue 24 conditioned on a “yes” answer to 23 that he received the above note from Sample and accepted it in lieu of any claim of ownership to the $73,000.00 note.

The jury found that $29,942.12 was paid on the $73,000.00 note to Fortner and his attorneys.

The court disregarded special issues Nos. 5, 8, 11, 14, 17, 18, 21, 22 and 25 and the answers thereto on the grounds they were not material and entered judgment for the appellee against the estate of Joe Thomas Sample, deceased, and Dalworth for $68,-471.15 plus $5,000.00 attorney’s fees, interest and costs and for foreclosure of the lien against the unpaid balance of the $73,000.00 note and against all of the funds in the registry of the court. Appellee recovered judgment against Fortner declaring the latter had no right, title or interest in the $73,000.00 note, the funds in the registry of the court, nor in the land securing the note. Fortner was given judgment against the estate of Sample and against Dalworth on his plea for alternative relief in the sum of $53,438.05 plus interest of 5 per cent per annum from February 22, 1965. Fortner’s motion for judgment non obstante veredicto and amended motion for new trial were overruled and from such ruling Fortner had perfected his appeal.

The appellant Sandra Lee Sample, temporary administratrix of the estate of Sample, deceased, has likewise appealed. Appellant Fortner by 54 points of error contends that there was no evidence and insufficient evidence to support various assumed findings of the court and the judgment generally and that the court erred in disregarding certain findings and in refusing to disregard other findings, in refusing his requested issues, incorrect submission of other issues and in overruling his motions for judgment non obstante veredicto, and amended motion for new trial.

We affirm.

The primary questions to be determined by this court in so far as the appellee Johnson is concerned are:

(1) Did Fortner sustain his burden of proof in showing a defect in the appellee’s title to the $73,000.00 note?

(2) Did he sustain his burden of proof and secure favorable jury findings to establish that neither Frankfurt’s nor J & J J Sales Company was a holder in due course?

(3) Did Fortner waive any claim or right he may have had in or to the $73,000.00 note by his acceptance of Dalworth’s $63,-266.72 note representing the unpaid balance on the former note when at the time of his acceptance he knew Dalworth had transferred the note to a third party?

The judgment of the trial court is sustainable on the basis of a “no” answer to either of the first two questions or a “yes” answer to the third question and in our opinion the questions should be so answered.

The appellant Fortner’s points on no evidence and insufficient evidence to support the judgment and the presumed findings of the court are of no avail to him under the facts of this case. He had the burden of proof to show a defect in the appellee’s title to the note or in establishing that neither Frankfurt’s nor J & J J Sales Company were holders in due course. He failed to meet this burden.

There is ample evidence in this record to support the findings and judgment of the trial court.

Since this is admittedly a rather complicated and involved fact situation the status of the $55,000.00 note, the $73,000.00 note, and the funds in the registry of the court at the time of trial are here summarized :

(1) The amount owing by Dalworth Investment Company on its $55,000.00 note:

Principal $55,000.00
Interest:
9-11-62 to 9-11-64 11,000.00
9-11-64 to 2-22-65 2,471.15
Total Principal and interest at 2-22-65 $68,471.15
Add:
Reasonable attorney’s fees allowed by the court 5,000.00
$73,471.15
(2) The unpaid balance owing on appellee’s $73,000.00 note:
Original principal $73,000.00
Less 3 annual installments at $9,733.28 29,199.84
Principal balance 9-11-64 $43,800.16
Add 5% interest 9-11-64 to 2-22-65 983.97
Total principal and interest at 2-22-65 $44,784.13
13) The amount on deposit in the registry of the court:
Deposits by appellee:
September 11, 1963 $12,986.61
September 11, 1964 12,409.95
$25,306.56
Interest earned 716.10
Total $26,022.66
The $73,000.00 note in question executed by the appellee Earl B. Johnson contains the following endorsements:
“For value received I hereby sell, transfer, and assign to Dalworth Investment Company the within Note, together with any and all liens on the property securing same, without any recourse on me.
.(Signed): “Frank N. Fortner D. F.
“For Value Received, Dalworth Investment Company does hereby sell, transfer, and assign to Frankfurt’s Texas Investment Corporation the within Note, together with any and all liens on the property securing same, with recourse.
“Dalworth Investment Company
(Signed): “By J. Tom Sample President
“Personally endorsed by J. Tom Sample
“For Value Received we do hereby sell, transfer and assign to W. A. Pritchard, Trustee the within Note together with the Deed of Trust Lien on the property securing same without recourse on us.
“Frankfurt’s Texas Investment Corporation
(Signed): “By Victor Frankfurt Pres.
“For value received, I do hereby sell, transfer and assign unto J & J J Sales Company the within note together with any and all liens on the property securing same without recourse upon me.
(Signed) : “W. A. Pritchard, Trustee
“For value received, J & J J Sales Company does hereby sell, transfer and assign unto Earl B. Johnson the within note together with any and all liens on the property securing same without recourse upon us.
“J & J J Sales Company
(Signed) : “By Janice E. Rains, Partner”

The Negotiable Instruments Act, Article 5934, Vernon’s Ann.Tex.Civ.St., under the heading “Negotiation defined”, states:

“Sec. 30. An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. * * *

“Sec. 31. The indorsement must be written on the instrument itself or upon a paper attached thereto. The signature of the indorser, without additional words, is a sufficient indorsement.

“Sec. 32. The indorsement must be an indorsement of the entire instrument. * *

“Sec. 33. An indorsement may be either special or in blank; and it may also be either restrictive or qualified, or conditional.”

Section 36 of the Act states that an in-dorsement is restrictive which either prohibits the further negotiation of the instrument; or constitutes the indorsee the agent of the indorser; or vests the title in the indorsee in trust for or to the use of some other person; and states that the mere absence of words implying power to negotiate does not make an indorsement restrictive.

An examination of the endorsements on the $73,000.00 note will reflect that (1) the instrument was negotiated by Fortner when he transferred it in such a manner as to constitute his transferee, Dal-worth, the holder thereof; (2) his endorsement was sufficient and was an endorsement of the entire instrument; (3) the endorsement was not restrictive or qualified or conditional. The mere absence of words implying power to negotiate did not make the endorsement restrictive.

Fortner contended in the trial court and now that the title- to the $73,000.00 note was defective and that neither the appellee nor his assignors were holders in due course because of the language of the controversial sentence contained in the two transfer of lien forms.

Fortner plead that he did not endorse the $73,000.00 note, the assignment of lien forms or the $13,013.28 check, and the jury resolved these issues against him. He plead that the note and lien were as collateral to secure the repayment of a loan to be made by Dalworth and then plead as follows: “This defendant would show that Dalworth * * * failed to make such loan and in truth and in fact no such loan was ever contemplated or intended to be made by Dalworth * * * ”; and that since the obligation which the assignment was purported to secure never came into existence and was never intended that such condition relating to the transfer became null and void and of no force and effect simultaneously with the execution of the assignment for the reason the loan was in effect repaid at the moment of execution since no loan was ever made or intended, and Dalworth having no interest in said note or liens could not transfer same. That there was no consideration because no loan was made.

As previously stated the jury found that Fortner did endorse the $73,000.00 note to Dalworth and signed the two transfers of lien forms. (Exhibits 3 and 4). There is no evidence that Fortner did not receive value for this transfer. He only plead and offered evidence that he did not receive a loan from Dalworth. This was undisputed and the court did not err in refusing to submit an issue on it. This is especially true in view of pleadings which stated such a loan was never contemplated or intended. Under Article 5933, V.A.T.S., § 24, it was presumed that he did receive value. He had the burden of proving failure of consideration. Winters v. Langdeau, Tex., 360 S.W.2d 515, 516 (1962).

There was no evidence that Fortner pledged the $73,000.00 note with Dalworth to obtain a loan. He offered it to Sample for the purpose of borrowing money to purchase gravel property in Arkansas. There is no evidence that Sample did not use the money he borrowed on the $73,000.-00 note for this purpose nor that Sample nor Dalworth did not convey to Fortner an interest in said Arkansas property or other property of value. Fortner must have had some reason for assigning the note to Dal-worth since a loan from the latter, according to his pleadings, was not intended nor contemplated. The only reason we can find in the record to explain Fortner's unconditional endorsement and transfer of the note to Dalworth is for purchase of the Arkansas property.

The only evidence from which it could be inferred that Fortner was not fully paid for his note was the fact that on or about September 11, 1962, Sample delivered to him his note for $63,266.72. This note was not referred to in Fortner’s pleadings and when he was asked what explanation Sample gave him on delivery of the note he answered, “It was in payment for something that — on this mess here.”

In the construction of contracts it is essential to ascertain and to give effect, whenever possible, to the real intention of the parties. The insertion of a clause that is inconsistent with such intent will be disregarded as mere surplusage. 13 Tex.Jur.2d pp. 287, 310; Reserve Petroleum Co. v. Harp, 148 Tex. 448, 226 S.W.2d 839 (1950). In view of the pleadings and the testimony it is apparent that the language of the controversial sentence did not express an agreement between Sample and Fortner and should be disregarded as sur-plusage. Fortner’s authorities and argument on pledges are inapplicable.

There was no evidence that the $73,000.00 note was negotiated under any of the circumstances contained in § 55 of Article 5935, V.A.T.S., which will be later discussed.

In the event we are mistaken in concluding that there is no evidence and no finding showing a defect in title to the $73,000.00 note, we will discuss our conclusion that Frankfurt’s and J & J J Sales Company were nevertheless holders in due course.

Article 5935, V.A.T.S., § 52, in defining a holder in due course, states: “A holder in due course is a holder who has taken the instrument under the following conditions:

“1. That it is complete and regular upon its face;

“2. That he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact;

“3. That he took in good faith and for value;

“4. That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.”

The appellant does not contend that Frankfurt’s and Pritchard did not qualify as holders in due course under the first three requirements of § 52, supra. His primary argument on appeal is that they failed to meet the fourth requirement of said section because they knew that the two transfers of lien forms, Exhibits 3 and 4, contained the controversial sentence.

The following sections of Article 5935, V.A.T.S., relate to defects in title to negotiable instruments and notice thereof as affecting the rights of holders:

“Sec. 55. The title of a person who negotiates an instrument is defective within the meaning of this Act when he obtained the instrument, or any signature thereto, by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud.

“Sec. 56. To constitute notice of an infirmity in the instrument or defect in the title of the person negotiating the same, the person to whom it is negotiated must have had actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith.

“Sec. 57. A holder in due course holds the instrument free from any defect of title of prior parties, and free from defenses available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof against all parties liable thereon.

“Sec. 58. In the hands of any holder other than a holder in due course, a negotiable instrument is subject to the same defenses as if it were non-negotiable. But a holder who derives his title through a holder in due course, and who is not himself a party to any fraud or illegality affecting the instrument, has all the rights of such former holder in respect of all parties prior to the latter.

“Sec. 59. Every holder is deemed prima facie to be a holder in due course; but when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as holder in due course. * * * ”

As previously stated, there was no evidence on matters contained in § 55, nor do we find any in connection with §§ 57, 58 or 59, supra, nor were any issues requested or submitted on any of the elements contained therein.

Under Section 56, assuming the pleadings and the evidence will support submission of an issue and its submission is requested, the issue generally is submitted in the language of the statute and ordinarily the inquiry would be: Did the plaintiff, at the time of the purchase of the note in question, have actual knowledge of any infirmity or defect in said note or did he have knowledge of such facts that his action in taking the instrument amounted to bad faith. An issue in this form was not requested by Former nor was one submitted. Fortner requested issues which, in effect, inquired whether Frankfurt and Pritchard prior to disbursement of funds read the controversial sentence and knew it was in the lien forms. Appellee objected to these issues and requested in lieu thereof issues inquiring-as to whether or not Frankfurt and Pritchard knew at the time they took the $73,000.00 note that Dalworth had no right to assign it and whether or not they had knowledge of such facts that their action in taking the note amounted to bad faith as defined by the court. The court did not err in disregarding the jury’s answers to the issues submitted.

The undisputed evidence showed that appellee’s assignor, J & J J Sales Company, loaned Dalworth $55,000.00 on the strength of the $73,000.00 note being pledged as collateral and that said note was the only security therefor. Under Article 5933, § 27, supra, for due course holder purposes, J & J J Sales Company’s rights against the $73,000.00 note were the same as an outright purchaser except that its rights reached only to the extent of its lien. Continental National Bank of Fort Worth v. Conner, 147 Tex. 218, 214 S.W.2d 928, 933 (1948). Since J & J J Sales Company transferred the notes and liens in question to appellee, he acquired its rights therein. As heretofore reflected, the amount due on the $55,000.00 note exceeded the unpaid balance owing on the $73,000.00 note and the proceeds in the registry of the court by approximately $2,664.36, including attorney’s fees.

Assuming that Dalworth acquired the note wrongfully or wrongfully negotiated it, there were no pleadings or evidence that Frankfurt’s W. A. Pritchard, Trustee, or J & J J Sales Company (all subsequent holders of said note) had any knowledge of such facts. Fortner’s sole argument is that appellee’s rights are dependent upon the construction of the terms of the two transfer of lien forms (Exhibits 3 and 4) because Dalworth failed to make a loan to appellant Fortner and thus the assignment to Dalworth was null and void. In the absence of knowledge of any information to the contrary the title to the note, unconditionally endorsed by Fortner and transferred by him would remain absolute and vested in the transferee, or assignee by the language of the controversial sentence.

In 9 Tex.Jur.2d, pp. 63, 64, the effect of collateral instruments, executed at the same time as the negotiable instrument, upon the rights of the holder of the negotiable instrument is stated as follows: “Where other instruments are executed at the same time, for the same purpose, and in the course of the same transaction in which a bill or note is given, all of the papers are treated as one instrument as between the original parties. * * * But the rule does not apply in a suit by holder in due course since his rights are determined by looking only to the negotiable instrument itself.” Also, in Continental National Bank of Fort Worth v. Conner, 147 Tex. 218, 214 S.W.2d 928, 930, it is stated: “Where the suit is one by a holder in due course of a negotiable document, in connection with which other instruments have also been executed between the original parties, the rule, that all the instruments are to be treated as one, has no application, * *

Under Article 5935, § 59, supra, Frankfurt’s and J & J J Sales Company were deemed prima facie to be holders in due course of said note. “The burden of proof is on the one who denies that the instrument is held in due course to establish this fact by a preponderance of the evidence.” Cargill, Inc. v. Continental Grain Co., 388 S.W.2d 247 (Fort Worth Tex.Civ.App., 1965, ref., n. r. e.). See also Continental National Bank of Fort Worth v. Conner, supra.

The law is settled in Texas that the test is “good faith” and not diligence, negligence or constructive notice. Thus, the issues containing the language of the controversial sentence were improper.

In the ease of American Surety Co. of New York v. Fenner, 133 Tex. 37, 125 S.W.2d 258, 259 (1939), the court quotes with approval the following language from the Court of Civil Appeals opinion: “The opinion also correctly states, quoting from the opinion of this Court in Quanah, A. & P. Ry. Co. v. Wichita State Bank & Trust Co., 127 Tex. 407, 93 S.W.2d 701, 106 A.L.R. 821, that it is ‘the settled law of this state that the ordinary rule of notice does not apply to the purchaser of a negotiable instrument for a valuable consideration before maturity. The test in negotiable instrument cases is good faith, andnot diligence or negligence. Unless the purchaser has actual knowledge of facts and circumstances that would render the paper non-collectible or has knowledge of such facts as that a purchase of the instrument would amount to bad faith, it is immaterial that he has notice of such facts as would put a reasonably prudent person on inquiry, and that such inquiry would lead to discovery.’ * * * It is pointed out in the Wichita State Bank case * * * that it is the rule in this state ‘that in the purchase of a negotiable instrument the title is derived from the instrument itself, and not from the title of the party who transfers it.’ ”

The court, after having found that there was substantial testimony from which it might be inferred that the defendant acted in dishonest disregard of the rights of the bank, remanded the case to the trial court for trial on the correct theory of bad faith instead of the negligence theory it was originally tried on.

In the case of West v. First Baptist Church of Taft, 123 Tex. 388, 71 S.W.2d 1090 on page 1096, (1934), the court, quoted with approval from its earlier decision in Wilson v. Denton, 82 Tex. 531, 18 S.W. 620, 622, the following: “ ‘The ordinary rule of constructive notice which applies to the purchaser of property is not applicable in the case of negotiable instruments. As promotive of their circulation, a liberal view is taken, which makes the bona fides of the transaction the decisive test of the holder’s rights. He is entitled to recover upon it if he has come by it honestly. * * and it became the law that, while gross negligence might be evidence tending to show mala fides, and, as such, admissible, it did not in itself amount to proof of mala fides, and was not sufficient to deprive the holder of his right to recover.’ ”

Page 1097 of 71 S.W.2d contains a summary which states in essence that, knowledge of facts merely sufficient to cause one of ordinary prudence to make inquiry, with failure to do so is not evidence of bad faith for otherwise the jury would be permitted to find bad faith where the evidence shows only ordinary negligence. “Even gross negligence is not the same thing as bad faith and does not of itself amount to proof of bad faith, although it may be evidence tending to prove bad faith. To constitute evidence of bad faith, the facts known to the taker must be such as reasonably to form the basis for an inference that in acquiring the negotiable instrument with knowledge of such facts he acted in dishonest disregard of the rights of defendant. * * * the unheeded suspicious circumstances must be of a substantial character and so strong that bad faith rather than merely negligence can reasonably be inferred from them. * * *”

Where the issue is properly raised the question as to whether a person is a holder in due course is for the jury. 9 Tex. Jur.2d 347, § 311. As previously stated the ultimate and controlling issues in this case, assuming there was an infirmity in the $73,000.00 note or a defect in the title of someone who negotiated it, should be in the language of § 56, Article 5935, supra.

Since Fortner had the burden of proof to establish that neither Frankfurt’s nor J & J J Sales Company were holders in due course and it was not established that either had such actual knowledge or acted in bad faith and the controlling issues were not submitted to the jury, Fortner waived this defense and appellee must be considered a holder through a holder in due course. Their title was derived from the instrument itself.

In view of the authorities herein cited we are of the opinion that the ap-pellee’s rights against the $73,000.00 note are not dependent upon the legal meaning of the controversial sentence since he was not an original party thereto. The trial court correctly held that appellee had a valid lien on the $73,000.00 note to the extent of the amount due him on the $55,000.00 note of Dalworth.

In Peavy-Moore Lumber Co. v. First Nat. Bank, 133 Tex. 467, 128 S.W.2d 1158, 1163, 125 A.L.R. 1185 (1939), it was held: “A contemporaneous instrument or agreement, the provisions of which are repugnant to a note or draft, will not be construed as a part of the note or draft. When there is such repugnancy effect will be given to the provisions of the note or draft, which will be regarded as constituting the primary contract.”

Neither appellee nor Frankfurt nor Pritchard were parties to the preparation or execution of the two transfer of lien forms, hence the rule of construction that the written instruments are construed against the author would not be applicable against them. The other authorities cited by Fortner are not in point.

In connection with the court’s action in disregarding immaterial issues, attention is directed to 57 Tex.Jur.2d, pp. 319-322: “In a cause submitted on special issues it is the duty of the court to render judgment based on the material findings of the jury. The findings must be sufficient to support the judgment. * * * Immaterial findings of fact have no effect as a verdict; they may not be considered as a basis for the judgment, and should be disregarded. Likewise, the fact that the jury inferentially found the existence of evidentiary facts incidental to the main issue cannot furnish a basis for a final judgment. And the court may ignore findings on matters of law that should not have been submitted.”

The disregarded issues relating to the controversial sentence have previously been discussed. The other issues were properly disregarded because they were evi-dentiary and there was no evidence to support them.

The undisputed evidence was to the effect that the $54,000.00 Dalworth note was paid from the proceeds of the $55,000.00 loan and that Pritchard paid $30,000.00 to Dalworth, $25,000.00 to Frankfurt’s and simultaneously received the $55,-000.00 note, the $73,000.00 note, transfer of lien, etc. The only testimony on this subject was from Pritchard and Victor Frankfurt. The $54,000.00 loan of Frankfurt’s had not been paid prior to Pritchard’s disbursement of the $55,000.00. Fortner in his brief admits this and states that following this the $54,000.00 note executed by Dalworth to Frankfurt’s was marked “Paid.” Pritchard in refinancing the loan which Frankfurt was unable to complete became subrogated to the rights of the latter.

We will briefly discuss the third question concerning the acceptance by Fortner of the $63,266.72 note of Dalworth under the circumstances related above. “Waiver is the intentional relinquishment of a known legal right available at the time, or such conduct as warrants an inference of the relinquishment of the right, whereas estoppel arises wherever, by the fault of one party, another has been induced to change his position for the worse. Waiver does not necessarily imply that one has been misled to his prejudice or into an altered position, but estoppel always involves this element.” 60 Tex.Jur.2d 184; in Anderson v. Ladd, 131 Tex. 479, 115 S.W.2d 608, 614 (1938), the Supreme Court cited with approval the following statement from Farmers & Mechanics National Bank v. Head, 7 S.W.2d 61, Com. of Appeals, 1928, “A waiver, as such, must be distinguished from ordinary estoppel in pais, for it is not essential to the former that the opposite party do anything whatever upon the strength of the statement or act relied upon as constituting a waiver. It is like the legal concept of election of remedies.”

As heretofore stated we are of the opinion that Fortner by his acceptance of the $63,266.72 note under the circumstances then existing waived any rights he may have had to the $73,000.00 note.

Appellant argues that the word “intent” should have been incorporated in the issue and cites some authorities relating to the correct submission of such issues.

The appellant, however, failed in his objections to point out to the court the omission complained of. Under Rule 279, Texas Rules of Civil Procedure, the facts are deemed to have been found by the court in such manner as to support the judgment.

Sandra Lee Sample in her appeal contends there were no issues submitted or findings by the jury upon which any recovery could be based against Dalworth or the estate of Sample.

Rule 279, T.R.C.P., provides in part that “Upon appeal all independent grounds of recovery or of defense not conclusively established under the evidence and upon which no issue is given or requested shall be deemed as waived * *

Rules 386 and 390, T.R.C.P., provide for the manner and time in which the statement of facts and transcript are to be filed in this court. The appellant Sample has failed to comply with these rules- and Fortner has filed a motion to dismiss the appeal and to affirm on certificate. In view of the record before us, we think the motion to dismiss the appeal of Sandra Lee Sample should be and it is accordingly granted.

In the event we are in error in so doing, we find the appellant Sample’s points of error are without merit and each is accordingly overruled.

Each and all of the appellant Fortner’s points of error are likewise overruled and the judgment of the trial court is in all things affirmed.