author: WERLEIN, Justice.

text:
    Robert C. LOCKE et ux., Appellants, v. J. W. THIGPEN et al., Appellees.
    No. 13784.
    Court of Civil Appeals of Texas. Houston.
    Dec. 7, 1961.
    Rehearing Denied Jan. 11, 1962.
    Second Motion for Rehearing Denied Feb. 1, 1962.

      Dougal C. Pope, Houston, for appellants.
    Fulbright, Crooker, Freeman, Bates & Jaworski, B. J. Bradshaw, Houston, for appellees.
   WERLEIN, Justice.

This is an appeal by appellants, plaintiffs in the trial court, from a judgment instructing a verdict in favor of appellee, J. W. Thigpen, in a suit brought to set aside two deeds executed by appellants conveying to appellee Lot 303, Block 12 of Pel-ham Place No. 1, an addition to the City of Houston, Harris County, Texas, and also to recover title and possession of said lot and revenues derived therefrom in excess of the amounts expended by appellee in connection with the property and the payment of certain indebtedness of appellants.

Appellants in their first Point contend that the deed executed by them on July 8, 1949, is void because intended as a mortgage on their business homestead. Since such deed is not relied upon by appellee and is not material in arriving at a decision of the case, it need not be discussed.

Appellants assert that for several years preceding January 2, 1951, the date of the second deed, they had many business transactions with appellee and as a result thereof a confidential relationship had sprung up between them and appellee, who was a trust officer in the Bank of the Southwest. Appellant Robert C. Locke, who conducted the transactions for himself and his wife, testified that in 1947 appellee assisted appellants in borrowing some money needed in connection with making improvements on the property in question. In 1949 appellee lent appellants $5,000.00 for which a $6,-000.00 note was given, and at such time appellants executed said deed dated July 8, 1949, with the understanding that when the indebtedness was paid appellants would get the property back. Appellants were to pay $75.00 per week on the note. During the same year appellee helped appellants incorporate Locke’s Super Market, Inc., a grocery business, which appellants had been operating on the property in question since 1947. Appellee suggested the lawyer to draw up the incorporation papers and signed the same as an incorporator. He advanced $1,000.00 to assist in obtaining the charter for the company, which sum was later returned to him. He was issued two shares of stock in the company, served as one of its directors and had in his possession some of its records, and for awhile did the bookkeeping for the corporation.

Following the incorporation of the company, appellee continued to advance money from time to time to appellants or the corporation, and on one occasion guaranteed a credit account of the corporation up to $1,000.00. By January 2, 1950 appellants were indebted to appellee in the sum of approximately $10,000.00. Appellants operated the grocery store until December, 1950, or January, 1951, and according to appellant Locke they moved away from the property in May, 1951. Mr. Locke further testified that in November or December of 1950 he and appellee had an oral agreement relative to paying back to appellee the money which he had gotten from him, as follows:

“The Corporation was going to continue to operate the store; the Corporation was going to give Mr. Thigpen the right to collect the rent off of my property and apply such rent that was collected against the indebtedness I owed him or the Bank of the Southwest, whichever it was, and that is what I thought I was executing when I executed. * * * ”

Appellants’ counsel interrupted appellant and these questions and answers followed:

“Q Just a minute. Now, that was the agreement, was that the agreement you had with Mr. Thigpen?
'“A Yes, sir.
“Q That you were going to turn .your property over to him ?
“A Yes, sir.
“Q. That you were going to stay in business on the property?
“A Yes, sir.”

He further testified in effect that the ■agreement was that appellee would collect the rent from the property, and apply it on appellants’ indebtedness; make payments ■on a loan held by a third party which was ■secured by the property, pay taxes, insurance, expenses on the property, and that when appellee was paid in full, appellants would get the property back and pay some other indebtedness; and that appellee said it would take between five to six years to get his money back.

The original exhibits introduced in the trial are before us. They include: (^general warranty deed dated January 2, 1950, signed by appellants and duly acknowledged by them on January 18, 1951 before Helen Johnston, a notary public, filed for record January 24, 1951 and duly recorded in the Deed Records of Harris County, Texas, on February 6, 1951, (2) bill of sale from Locke’s Super Market, Inc., Robert C. Locke and Cleo B. Locke, to J. W. Thigpen, dated January 2, 1951, duly acknowledged January 18, 1951 before said Helen Johnston filed January 24, 1951 in the Chattel Mortgage Records of Harris County, selling and transferring to appellee an itemized list of all the equipment and fixtures in the grocery store, and (3) a five year lease between appellee as lessor and appellants as lessees of the premises in question, dated January 2, 1951, including all the fixtures and equipment as set out in said bill of sale.

Said appellant testified that he signed the foregoing instruments at appellee’s office January 2, 1951, but never read any of them; that he had not had any trouble and didn’t anticipate any; that he had confidence in appellee; that he told appellee he might take bankruptcy, and appellee replied that he would lose all his money if appellant did take bankruptcy; that after he signed the papers he moved to Hempstead and began selling chickens; that in the latter part of 1957, he asked appellee to give him his property back and was told that he had signed the property over to him; that nothing occurred between January 2, 1951 up until the first part of 1955 that would have caused him to suspect he had signed a deed to his property to appellee in January, 1951; and that it was his understanding that he was leasing the property to appellee who was to apply rentals to the indebtednesses.

There is also among the exhibits a bill of sale signed by both appellants, dated June 13, 1951, and duly acknowledged before J. C. Bogard, a notary public in and for Shelby County, Texas, transferring to ap-pellee all merchandise in the grocery store in satisfaction of past due rent on the grocery store from January 29, 1951 to June 11, 1951. Appellant testified that his brother operated the store for him until May or June, 1951. He also testified that he did not recall reading such bill of sale which he and his wife had signed and duly acknowledged, but he did recall appellee explaining that he could sell the goods and apply the proceeds to the debts appellants owed.

Appellee asserts that the only relationship between the parties was that of creditor and debtor; that appellant and not appellee was in a position to take advantage of the other, and that appellant by threats of taking bankruptcy caused appellee to change his position for the worse. Appel-lee points to the testimony of Mr. Locke to the effect that in December, 1950 he was obligated to pay appellee $75.00 per week on his indebtedness, and the only difference under the new arrangement was that the payments were to be called rent; that ap-pellee would receive no more under the alleged new arrangement than under the old, but he would have to pay under the new arrangement for repairs and upkeep of the property, taxes and insurance, and pay off other creditors of appellants. When appellant was asked why appellee would enter into such an agreement, he stated, “He was trying to collect his money.” Appellant was asked, “What was Mr. Thigpen to get on this new arrangement that he didn’t already have?” Appellant answered, “I can answer that by saying that I could have taken bankruptcy and cut him off from getting anything like all the rest of the creditors and he would have gotten about 5 cents on the dollar if I had taken bankruptcy.”

At another point Locke testified, “I didn’t have anything to give him but my homestead and I wasn’t going to give him that.”

In determining whether there was a confidential relationship between the parties which might give rise to a constructive trust, and also in deciding whether any fact issues were raised in connection with appellants’ other Points, we must view the evidence in the light most favorable to appellants against whom the verdict was instructed. White v. White, 1943, 141 Tex. 328, 172 S.W.2d 295; Thomas v. Postal Telegraph-Cable Co., Tex.Com.App.1933, 65 S.W.2d 282. If there is any evidence of probative force in favor of the losing party, we must hold the instruction improper. A peremptory instruction is warranted only when the evidence is such that no other verdict can be rendered. Stevens v. Karr, Tex.Sup.1930, 119 Tex. 479, 33 S.W.2d 725.

In applying these rules of law, we are compelled to hold that the testimony of appellant Locke raises a fact issue as to a confidential relationship between the parties. Locke’s testimony shows that -a friendship had sprung up between appellee and appellants; that appellee had not only assisted appellants in making a loan in 1947, but had over a period of years lent money to them and the corporation; that appellee had advised appellants in connection with organizing the corporation and was a director and vice president of the company; that he owned two shares of stock in the company and appellants owned 58 shares; that appellant called on appellee several times a month; that appellee guaranteed a credit account of the corporation up to $1,-000.00; that for awhile he kept the corporation books and then later his son kept the books for a time; that he had advanced to or for appellant nearly $10,000.00 without any security therefor other than the deed of July, 1949 which was invalid because intended as a mortgage on appellants’ business homestead; that appellee visited the grocery store and had advised appellant in connection with its operation, and on several occasions had gone with appellant to' wholesale grocers, and had advised appellant on financial matters.

The tendency of the courts is to construe the term “confidential relationship” liberally in favor of the confider. In Mills v. Gray, 1948, 147 Tex. 33, 210 S.W.2d 985, the court quoted with approval, the following language from 54 Amer.Jur. 178, § 233:

‘A constructive trust arises where a conveyance is induced on the agreement of a fiduciary or confidant to hold in trust for a reconveyance or other purpose, where the fiduciary or confidential relationship is one upon which the grantor justifiably can and does rely and where the agreement is-breached, since the breach of the agreement is an abuse of the confidence, and it is not necessary to establish such a trust to show fraud or intent not to perform the agreement when it was made. The tendency of the courts is to construe the term “confidence” or “confidential relationship” liberally in favor of the confider and against the confidant, for the purpose of raising a constructive trust on a violation or betrayal thereof.’ ’’

The court also quoted with approval from Scott on Trusts, Vol. 1, 253, Sec. 44.2, as follows:

“There are numerous cases to the effect that where at the time of the transfer the transferee was in a confidential relation to the transferor, and the transferor relied upon his oral promise to reconvey the land, he is chargeable as constructive trustee of the land for the transferor. In these cases it is held that the constructive trust will be imposed even though at the time when he acquired the property the transferee intended to perform his promise and was not therefore guilty of fraud in acquiring it; and even though the transferee did not take improper advantage of the confidential relation in procuring the transfer and was not therefore guilty of using undue influence. The abuse of the confidential relation in these cases consists merely in his failure to perform his promise.”

See also Omohundro v. Matthews, Tex. 1960, 341 S.W.2d 401; Johnson v. Peckham, 1938, 132 Tex. 148, 120 S.W.2d 786, 120 A.L.R. 720. See also Cartwright v. Minton, Tex.Civ.App., 318 S.W.2d 449, error ref., n. r. e. 1958, in which the court, in discussing the term “fiduciary”, stated :

“Generally speaking it applies to any person who occupies a position of peculiar confidence towards another. It refers to integrity and fidelity. It contemplates fair dealing and good faith, rather than legal obligation as the basis of the transaction. The term includes those informal relations which exist whenever one party trusts and relies upon another, as well as technical fiduciary relations.”

The alleged oral agreement between appellants and appellee to the effect that ap-pellee would lease the property, collect the rents and apply them to the indebtedness and other expenses and upkeep of the property, and then after payment of the indebtedness return the property to appellants, though in the nature of an express oral agreement, may give rise to a constructive ⅛ust and as such be enforceable since if a confidential relationship exists the agreement would not be affected by the Texas Trust Act or the Statute of Frauds. Mills v. Gray supra.

We think a fact issue has been raised as to whether there was any such agreement made between the appellee and appellants. Appellee contends, however, that appellant knew or in the exercise of reasonable diligence would have discovered that appellee was claiming the property as and for his own, and that appellants’ cause of action, if ever they had one was barred by the statute of limitations. Appellant testified that when the alleged oral agreement was entered into appellee told him that it would take five or six years for appellee to get his money back, and that there was nothing to indicate to appellant that appellee was claiming the property. Appellant also explained that in the letter addressed to ap-pellee June 1, 1951 in which he referred to the property as “your property,” he merely meant that appellee had the property under lease and it was his to use. Under this testimony we think a fact issue was raised as to whether or not appellants knew or would have known in the exercise of reasonable diligence that appellee was claiming to own the property.

Appellants also contend that the transfer of the property to appellee was fraudulent because appellee testified that at the time Mr. and Mrs. Locke signed the deed conveying the property to him, he did not intend ever to return the property tO’ appellants. If the agreement was as testified to by appellant, that appellee was to turn the property back to appellants after the indebtedness was paid, and if at the time ap-pellee made such promise he intended not to return the property, a fact issue would be raised as to whether or not appellee’s conduct was fraudulent. In Turner v. Biscoe, 1943, 141 Tex. 197, 171 S.W.2d 118, the court held that when a promise is made by a promisor expressly or by necessary implications stating that he has a present intention to perform and if such intention does not actually exist at that time a false statement has been made upon which fraud may be predicated. In such case the statute of limitations does not begin to run until the fraud has been discovered or would have been discovered by the exercise of reasonable diligence. In the instant case if the agreement was as stated by appellant, then a fact issue was raised as to whether or not appellant exercised reasonable diligence in waiting five or six years before making inquiry as to when he would get his property, in view of appellee’s statement that it would bei five or six years before the indebtedness would be paid and he would get the property back.

The rule is well established that the statute of limitations does not begin to run until the cause of action has accrued. 28 Tex.Jur., p. 139, Limitation of Actions, § 56. In Warnecke v. Broad, 1942, 138 Tex. 631, 161 S.W.2d 453, the court held that the statute of limitations only begins to run from the time that the right of action accrues. In the instant case under the alleged agreement appellants’ cause of action did not accrue until the indebtedness was paid some five or six years after the property was turned over to appellee. See also Williams v. Pure Oil Co., 1935, 124 Tex. 341, 78 S.W.2d 929; Hartman v. Hartman, 1940, 135 Tex. 596, 138 S.W.2d 802. Since a fact issue was raised as to whether or not appellant knew or would have discovered ap-pellee’s claim to the land in the exercise of reasonable diligence more than four or five years prior to the filing of suit, we cannot say as a matter of law that appellants’ claim was barred by limitation.

Appellee urges that the disputed oral agreement with respect to the property took place in November or December, 1950, and later in January, 1951 appellant and his wife went to appellee’s office and admittedly signed the group of documents appellee tendered to them; and that no fact issue has been presented as to prior negotiations before the documents were signed, because the evidence does not show that appellants’ signatures on the documents were fraudulently obtained. Appellants say that they did not read the deed dated January 2, 1951, the lease and the bill of sale, but they do not say that appellee did anything to conceal the nature of the contents of such instruments or to mislead them. It is elementary that a written contract cannot be varied by parol evidence of prior or contemporaneous agreements or negotiations since they are merged in the written instrument. The cases cited by ap-pellee merely hold that a party to a contract which has been voluntarily signed and executed by him, with full opportunity for information as to its contents, cannot avoid it on the ground of his own negligence or omission to read it, in the absence of fraud or imposition. Indemnity Ins. Co. of North America v. W. L. McAtee & Sons, 129 Tex. 166, 101 S.W.2d 553; Weitzman v. Adams, Tex.Civ.App.1940, 139 S.W.2d 855; Pioneer Bldg. & Loan Association v. Johnston, Tex.Civ.App.1938, 117 S.W.2d 556.

It is our view that the cases relied upon by appellee are inapplicable to the fact situation in this case. In them there was no evidence upon which a confidential relationship could be predicated. Appellants have raised a fact issue as to whether the execution of the instruments was the result of fraud consisting of appellee making a promise which at the time the same was made he did not intend to keep. Also, assuming the agreement to be that testified to by appellant, and that appellants and appellee occupied a confidential relationship toward each other, appellee was then placed under a duty to inform appellants at the time the instruments were presented for signature that they provided for a conveyance of the fee title rather than for a lease for years. The action of appellee in presenting the instruments which varied the terms of the agreement without disclosing the variance, with knowledge that appellants were not aware thereof, would constitute fraud. In such case appellants’ failure to read the instruments would be excused because of the fraud consisting of a violation of the duty to disclose imposed by reason of the confidential relationship for otherwise the duty to disclose would be nullified. We think fact issues were raised concerning such matters.

Appellant Locke testified that he did not read the instruments because he relied upon appellee, and had confidence in him. Appellant did admit that he looked at the line appearing at the end of the lease where the word “Lessor” appeared and that he signed on the line as Lessor. Actually the lease was from Thigpen as Lessor to appellants as Lessees for a period of five years, as clearly shown on the first page of the instrument. Appellant also admitted that he and his wife not only signed the bill of sale but also initialed the list of equipment attached thereto, and yet he testified that he did not know what the instrument was. Appellant’s testimony may give rise to serious doubts as to his veracity, but since the case is before us as an appeal from an instructed verdict, we cannot pass upon the credibility of appellants, nor the weight of the testimony, nor may we determine whether a judgment favorable to appellants would or would not be against the overwhelming weight and preponderance of the evidence. As a reviewing court we must accept appellant’s testimony as constituting some evidence more than a scintilla raising fact issues, and hence hold that the Trial Court erred in instructing the verdict.

Reversed and remanded.

On Motion for Rehearing

Appellee in his motion for rehearing asserts that the question of whether a confidential relationship existed between appellants and appellee is one of law and not of fact. On viewing the evidence in the light most favorable to appellant, we concluded that a fact issue was raised as to the existence vel non of a confidential relationship between the parties, and that there were also other fact issues raised by the evidence necessitating the reversal and remand of the case.

A confidential relation may exist as a matter of law in certain recognized fiduciary relations, such as that of trustee and cestui que trust, attorney and client, guardian and ward, principal and agent or surety, and husband and wife. It may also exist as a matter of fact wherever one person has reposed a special confidence in another to the extent that the parties do not deal with each other on equal terms, either because of an overmastering dominance on the one side, or weakness, dependence or justifiable trust, on the other. Ringer v. Finfrock, 1941, 340 Pa. 458, 17 A.2d 348. It is our view that in the instant case the question of whether a confidential relationship existed is one of ultimate fact to be determined by the jury under proper instructions as to what would constitute a confidential relationship.

We do not mean to say that the court may not find as a matter of law whether there is a confidential relation existing in certain cases not falling within those here-inabove mentioned. In MacDonald v. Follett, 142 Tex. 616, 180 S.W.2d 334, our Supreme Court, speaking through Hickman, Commissioner, stated that the Court would experience no difficulty in concluding that the facts related by Follett, if found to be true, establish a relation of trust and confidence between him and MacDonald. In that case, however, the court also significantly stated: “Our question then is whether the facts above recited, viewed in the light most favorable to Follett’s contention, raised an issue for the jury on the question of the existence of a relation of trust and confidence.”

In Schiller v. Elick, 1951, 150 Tex. 363, 240 S.W.2d 997, the court clearly stated that whether or not a fiduciary relationship exists is a question of fact. The court also said:

“Once the trial court finds as a fact the confidential relationship continuing through to the sale, Elick’s breach of duty becomes clear. * * * We are required to presume in support of the trial court’s judgment that this issue of fact — the existence of a fiduciary relationship giving rise to the duty to disclose — was found by the trial court against defendant Elick. The evidence in this record will support a finding either way.”

Courts in other jurisdictions have held that in some cases the existence of a confidential relation is a conclusion of law, in others it is a question of fact to be established by the evidence. In re: Thompson’s Estate, 387 Pa. 82, 126 A.2d 740, and cases cited. In Taylor v. Shields, Ohio App. 1951, 111 N.E.2d 595, the court stated: “What constitutes a confidential relationship between parties is a question of fact dependent upon the circumstances of each case.”

On this appeal we are not called upon to determine whether a finding by the jury of a confidential relationship would be unsupported by clear and convincing evidence, hut merely whether there is some evidence requiring submission of the question. Sanders v. Harder, Tex.Sup.1950, 148 Tex. 593, 227 S.W.2d 206. See McCormick on Evidence, Ch. 36, p. 680, Footnote 10, where it is stated: “The trial judge, moreover, may not direct a verdict if he considers the evidence not ‘clear and convincing,’ but he may use the test, in appropriate cases, to set aside a verdict.” As stated in the Texas Law Review, Note, Vol. 28, p. 988, the reasoning of the decisions in this State may seem anomalous and illogical in requiring the use of the “preponderance” test by the jury when the “clear and convincing” standard is applied by the court upon motion for new trial. It insures, however, trial by jury since a jury verdict may not be set aside more than two times.

The appellee’s motion for rehearing is overruled.


source: Caselaw Access Project

author: McDONALD, Chief Justice. WILSON, Justice

license: Public Domain

text:
    James J. JORDAN, Appellant, v. NEW AMSTERDAM CASUALTY COMPANY, Appellee.
    No. 3864.
    Court of Civil Appeals of Texas. Waco.
    Oct. 5, 1961.
    Rehearing Denied Jan. 25, 1962.

      John H. Holloway, Houston, for appellant.
    Fulbright, Crooker, Freeman, Bates & Jaworski, Jerry V. Walker, Houston, for appellee.
   McDONALD, Chief Justice.

This is a compensation case. Parties will be referred to1 as in the Trial Court. Plaintiff alleged he fell on concrete and sustained injuries to back, legs, nerves, and body in general, and that such injuries resulted in total permanent disability. Trial was to a jury which, in answer to Special Issues, found that plaintiff sustained injury on 12 September 1957 which produced total incapacity for 55 weeks (from 12 September 1957 to 1 October 1958), and partial incapacity for 75 additional weeks (from 1 October 1958 to 9 March 1960).

Plaintiff appeals on 9 points, the principal contentions of which are:

1) The finding that plaintiff’s incapacity would terminate 75 weeks after 1 October 1958 is supported by no evidence, and/or insufficient evidence, and/or is against the great weight and preponderance of the evidence.

2) The Trial Court erred in overruling Motion for New Trial based on jury misconduct.

3) The Trial Court erred in overruling Motion for New Trial based on prejudicial jury argument of defendant’s counsel.

4) The Trial Court erred in permitting defendant to exhibit motion pictures of plaintiff’s activities made without his knowledge.

5) The Trial Court erred in permitting defendant’s witness, Dr. Price, to testify to the jury that plaintiff was “medically” a man 65 years of age.

6) The Trial Court abused its discretion in denying a new trial on the ground of material “newly discovered evidence” of additional surgery performed on plaintiff after the trial of the case but before Motion for New Trial was acted on.

We revert to plaintiff’s 1st contention that the finding that plaintiff’s incapacity would terminate 75 weeks after 1 October 1958 is supported by no evidence or insufficient evidence. Plaintiff fell on concrete while working at a filling station sustaining back and body injuries. His doctor, Dr. Knight, diagnosed a ruptured disc between the 4th and 5th lumbar vertebrae. Plaintiff underwent surgery for a correction of this condition. Plaintiff and Dr. Knight testified in effect that plaintiff was totally and permanently incapacitated. Dr. Price, the defendant’s doctor, testified in effect that plaintiff was not totally and permanently incapacitated; that he had some problems which he described as arthritic changes caused by “wear and tear”; that there was nothing to indicate plaintiff could not do normal activities for a man of his age; and that in his opinion, plaintiff could do work in a filling station. At the time of trial, plaintiff was working as delivery man for a pharmacy. The jury awarded plaintiff 55 weeks of total incapacity, followed by 75 weeks of partial incapacity. We think that there is evidence to support the jury’s finding, and that same is ample under the rule of In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660.

Plaintiff’s 2nd contention complains of alleged jury misconduct. Plaintiff contends that while the jury was deliberating the case, several jurors related certain personal experiences with back injuries, and the duties which could be performed by one who had sustained a back injury. The record reflects that the jurors differed as to whether the alleged experiences in fact were related by various jurors. The Trial Court overruled Motion for New Trial, thereby impliedly finding that the alleged misconduct did not occur. We further conclude that the alleged misconduct, if it did occur, was not material and could not reasonably have resulted in any injury to plaintiff. In order to grant a new trial for jury misconduct: 1) such misconduct must be proved; 2) such must be material; 3) it must reasonably appear that probable injury resulted to the complaining party. Rule 327 Texas Rules of Civil Procedure; Crawford v. Detering Co., 150 Tex. 140, 237 S.W.2d 615; Baird’s Bread Co. v. Hearn, 157 Tex. 159, 300 S.W.2d 646.

The record fails to reflect that the offending statements actually occurred, or that any juror was influenced by same, if they did occur. The burden to show probable prejudice has not been met. See also Rule 434 T.R.C.P.

Plaintiff’s 3rd contention is that defendant’s counsel made improper argument to the jury. The record reflects that plaintiff went to a Dr. Seducia and to a Dr. DeYoung. These doctors were not called to testify by plaintiff. Defendant’s counsel argued substantially to the jury: “Where is Dr. Seducia and Dr. DeYoung”; “I think that we can assume that if Dr. Seducia and Dr. DeYoung thought plaintiff had anything wrong with him, they would be here to tell you about it.” Plaintiff objected to the foregoing argument as prejudicial and inflammatory. The Trial Court overruled such objection.

Before a judgment is reversed because of the argument of counsel, two things must appear: 1) the argument is improper, 2) it must be such as to satisfy the reviewing court that it was reasonably calculated to and probably did cause the rendition of an improper judgment in the case. “Probably” means, “having more evidence for than against; supported by evidence which inclines the mind to believe, but leaves some room for doubt; likely.” Aultman v. Dallas Ry. & Term. Co., 152 Tex. 509, 260 S.W.2d 596, 600; Rainey v. McMillian, Tex.Civ.App., 271 S.W.2d 103, W/E Dis’d; Lantex Const. Co. v. Lejsal, Tex.Civ.App., 315 S.W.2d 177, W/E Ref. n. r. e.; Lumbermen’s Lloyds v. Loper, 153 Tex. 404, 269 S.W.2d 367; Indemnity Ins. Co. of N. A. v. Carrell, Tex.Civ.App., 318 S.W.2d 744, W/E Ref., n. r. e.; Langford v. Pearson, Tex.Civ.App., 334 S.W.2d 473, W/E Ref. n. r. e.; Rules 434 and 503 T.R.C.P. Applying the foregoing rules to the argument of counsel, as well as to the record as a whole, we conclude that the argument, if improper, was harmless, and that the jury would have in all probability entered the same verdict that was rendered, whatever the argument'of counsel

Plaintiff’s 4th contention is that the Trial Court erred in permitting the defendant to exhibit to the jury motion pictures of plaintiff’s activities, made without plaintiff’s knowledge.

Defendant’s witness who displayed and took the pictures, testified that he had seen both the pictures and the transactions which they portrayed and that the pictures accurately and correctly reflected what he had seen. The pictures merely showed plaintiff going about his duties delivering parcels for the pharmacy for which he worked, and which he himself testified about. The evidence was admissible. Further, the Trial Judge has considerable discretion in admitting or excluding photographic evidence. City of Ft. Worth v. Barlow, Tex.Civ.App., 313 S.W.2d 906. The Trial Judge in the instant case did not abuse his discretion.

Plaintiff’s 5th contention complains of the witness Dr. Price testifying that in his opinion plaintiff was “medically” a man 65 years of age. Plaintiff’s true age was 50. Dr. Price testified that his disabilities were due to “wear and tear”. He amplified this by stating that the plaintiff’s physical condition or age “medically”, was some 10 or 15 years older than his actual age. The record is clear that this testimony did not mislead the jury as to plaintiff’s actual age, and that all concerned understood that Dr. Price was merely testifying as to plaintiff’s physical condition. Such is admissible. Federal Underwriters Exch. v. Cost, 132 Tex. 299, 123 S.W.2d 332.

Plaintiff’s 6th contention is that plaintiff should have a new trial because of “material newly discovered evidence.”

The instant case was tried during the week of 15 October 1959. Judgment was not actually entered in the case until 25 July 1960. On 22 August 1960, plaintiff filed Amended Motion for New Trial setting up, among other things, that subsequent to the trial, plaintiff was first examined by Dr. Brelsford, who found evidence indicating a need for surgery; that on 16 August 1960 a myelogram confirmed a complete block of the spinal canal at the level of the L-4 lumbar disc interspace; that Doctors Brelsford and Robertson, on 18 August 1960, operated on his disc in a “second back operation”. Plaintiff contends that the 75 weeks’ partial incapacity terminated on 9 March, 1960, and that the second hack operation and the necessity therefor conclusively established that his “temporary incapacity” extended longer than 75 weeks.

At hearing on the Motion for New Trial, plaintiff testified that both Dr. Price and Dr. Knight had advised him that he would need no further surgery; but that subsequent to the trial he sought the further medical advice of Doctors Brelsford and Robertson, who operated on his back in the same place that the first operation had been performed; that he was in the hospital 11 or 12 days, and that it would be 6 months before he could return to any work. The operation cost approximately $1500.00, and has not been paid for. The Trial Court overruled plaintiff’s Motion for New Trial.

Denial of a motion for a new trial on the ground of newly discovered evidence is generally regarded as a matter resting within the discretion of the trial court, and its ruling will be disturbed only when an abuse of discretion is shown. A refusal to grant a new trial on this ground will not be reversed where the motion does not show proper diligence to obtain the evidence before the trial; where the evidence could be used only for the purpose of impeachment, or where the evidence is not such as it would probably change the result if proved on a new trial. 4 Tex.Jur.2d 826, pp. 366, 367.

In the case at bar the issue of total permanent disability was sharply contested; the jury found 55 weeks total disability followed by 75 weeks partial disability. Such period of partial disability expired 9 March 1960. Plaintiff continued to suffer disability, and went to Doctors Brels-ford and Robertson. Doctors Brelsford and Robertson examined him; performed a myelogram on him; and thereafter performed a second operation on his back in the same place that the first operation had been performed. Plaintiff remained in the hospital 11 or 12 days and testified that he could do no. work for 6 months. We think the second back operation and the incapacity accompanying same are new facts to be considered by the jury. Plaintiff had not sought additional medical service earlier, since both his own doctor and the defendant’s doctor told him no further surgery on his back was indicated or necessary.

We conclude that 1) knowledge of the facts was acquired after the trial; 2) there was no lack of diligence on plaintiff’s part in failing to ascertain the facts prior to trial; 3) that such facts and evidence are material and would probably change the verdict upon another trial. Moreover, we feel that justice will be better served by giving the jury the benefit of such evidence. We think the instant factual situation parallel to, and controlled by our Supreme Court’s opinion in Missouri-K.-T. Ry. v. Evans, 151 Tex. 340, 250 S.W.2d 385 and the authorities there collated under Par. 11, p. 393.

Plaintiff’s 6th contention is sustained, and the cause is reversed and remanded.

On Motion for Rehearing.

Rehearing denied.

WILSON, Justice

(dissenting).

If this should be the only cause in which the question could arise, silent submission to my colleagues’ apparent aim toward a righteous result in an isolated case might be expedient. It is not such; and I think the holding sets a new snag to thwart the end of litigation.

This case may be viewed properly only by excising from the opinion the averments in the motion, for no attempt was made to prove them. These unproved allegations, it is thought, prompted the action of the majority. Plaintiff testified on the motion. His only competent and admissible evidence was that (a) none of the doctors who treated him just before trial told him he needed a second operation, (b) but he knew personally he did need another operation; (c) that an incision was made on the back eight months after trial by a surgeon who had made a myelogram; (d) that by “seeing it in a mirror” plaintiff could tell this incision was made at the same location as that for the first operation before trial. This doctor did not testify; his testimony was not tendered. For this omission no explanation is suggested. Claimant testified pain had continued, and the second operation was “still a hinder” to his complete recovery. His medical testimony at trial on the merits had been that he was permanently incapacitated.

There is no evidence on the new trial hearing suggesting the slightest causal connection between the original injury and the second operation. No circumstance was tendered to the trial court indicating the first pre-trial laminectomy was imperfect. No one intimated to the judge (whose discretion we must say was abused) the reason an uncalled surgeon deemed his work necessary. No witness told the trial judge its result. Silence met the question of what condition the operation sought to correct. The trial court could do no more than guess what the doctor would testify to if called, and we can guess no better.

The court was not simply not required'— it was not authorized — to grant a new trial on newly discovered evidence which was merely cumulative. Much less was there abuse of his discretion. The new evidence presented could only go to the issue of incapacity. On the trial, plaintiff’s evidence was that he suffered pain, he couldn’t work, couldn’t stoop or lift, couldn’t stand for any length of time, and his condition was growing worse instead of better. In the opinion of his medical witness who performed the first operation, as given on the trial, he could not do the tasks he was performing when injured. This condition, he said, was permanent; claimant could not do manual labor; his permanent incapacity for manual work was 50% to 75%; the doctor would not “pass him for doing manual work”. Defendant’s medical opinion evidence was that he was disabled, but only to the extent of 15% to 20%. The jury found plaintiff had sustained more than a year’s total incapacity, with partial incapacity for about 1½ years beyond.

The effect of plaintiff’s new evidence was simply that his incapacity was of greater duration or extent than found by the jury under evidence at the trial which would have supported more favorable findings.

This is not like the Evans case, said to be controlling; there an entirely new, unknown, different and unknowable cause of incapacity was discovered and proved. Removal of an eyeball revealed concealed cancer as the cause. The only similarity in the cases is a post-trial operation. Evans was never meant to go this far. This court is not required or authorized to pass on whether discretion would have been abused if the facts alleged had been proved.

There is no more reason, as a matter of public policy, for setting aside this judgment for evidence of post-trial physical condition which might increase recovery, than for such action where the evidence would reduce it. See Ham v. Taylor, 22 Tex. 225; Missouri, K. & T. R. Co. of Texas v. Gist, 31 Tex.Civ.App. 662, 73 S.W. 857, 859, writ ref.; St. Louis S. W. R. Co. v. Turner, Tex.Civ.App., 225 S.W. 383, 389, writ ref.; Gulf, C. & S. F. R. Co. v. Brown, 16 Tex.Civ.App. 93, 40 S.W. 608, writ dis.; Adams v. Eddy, Tex.Civ.App., 29 S.W. 180; Texas Motor Coaches v. McKinney, Tex.Civ.App., 186 S.W.2d 714, 717; 31 Tex.Jur. Sec. 97, p. 110.

This dissent springs from what is believed to be a peril that the decision will yield fraud and uncertainty in cases yet unforeseen, but now foreseeable. There is no suggestion of bad faith in the present case; it is one of absence of newly discovered evidence. The unscrupulous may well use our holding to compel new trials, or to create for the trial judge additional quandary and dilemma. I think it wrong to reverse on the showing made.


author: COLEMAN, Justice.

text:
    Otis MASSEY et al., Appellants, v. Richard A. FARNSWORTH, Appellee.
    No. 13695.
    Court of Civil Appeals of Texas. Houston.
    Dec. 7, 1961.
    Rehearings Denied Jan. 11, 1962.
    Further Rehearings Denied Feb. 1, 1962.

      Fulbright, Crooker, Freeman, Bates & Jaworski, Austin C. Wilson and Howard Wolf, Houston, for appellants.
    Pat F. Timmons, Chas. W. Bell, John V. Singleton, Jr., and Otto A. Yelton, Jr., Houston; Bell & Singleton, Houston, of counsel, for appellee.
    W. James ICronzer, Houston, for appellee, on motion for rehearing.
   COLEMAN, Justice.

Appellee has filed a forceful motion for rehearing, and, on reconsidering our opinion, we have determined that it should be withdrawn. Appellee’s motion is granted in part as reflected by this opinion.

Richard A. Farnsworth, plaintiff in the trial court and appellee here, sued Otis Massey, Earl C. Calkins, Frank L. Tucker, Mustang Tractor & Equipment Company, Eureka Investment Company and Eureka Credit Corporation [hereinafter referred to as “Old Companies”], Mustang Tractor and Equipment Company of Houston, Eureka Investment Company of Houston and Eureka Credit Corporation of Houston [hereinafter referred to as “New Companies”] in three capacities, (1) as a minority stockholder for the use and benefit of Old Companies, (2) in his individual capacity as a stockholder in Old Companies for his own use and benefit, and (3) as a dissenting shareholder under the Texas Business Corporation Act, V.A.T.S. He alleged a cause of action based on fraud and in the alternative he requested the appointment of an appraiser and the valuation of his stock interests in Old Companies.

The case was submitted to the jury on issues relating to the cause of action for fraud and resulting damages and an issue as to the fair value of plaintiff’s stock in Old Companies prior to the sale of their assets. The jury found against appellee on the issues submitted on the derivative cause of action. The court rendered judgment for plaintiff for the amount found by the jury to be the fair value of his stock.

Defendants have appealed to this Court on these Points of Error:

“First Point
“The trial court erred in failing to render and enter judgment that appellee take nothing by his suit because, as a matter of law, appellee was bound by the corporate actions taken by the Old Companies and therefore, was limited to the $151,529.27 set aside as his share of the proceeds of the liquidation and dissolution of the Old Companies since, under the undisputed evidence appellee did not comply with the requirements of Article 5.12A(1) of the Texas Business Corporation Act.
“Second Point
“The trial court erred in submitting Special Issue No. 41 to the jury and rendering and entering judgment in favor of appellee thereon in complete disregard of the mandatory procedure for determining the value of the interests of dissenting shareholders prescribed by Article 5.12 C and D of the Texas Business Corporation Act.”

By their First Point appellants assert that the trial court should have entered judgment that plaintiff take nothing. This calls for consideration of two questions: (1) whether or not by reason of the Texas Business Corporation Act the valuation procedure therein provided is exclusive, and (2) whether or not appellee has complied with the provisions of the Act relating to valuation. A number of matters might be voted on at a stockholder’s meeting. The fact that one of the stockholders voted against the action taken by the majority would not constitute him a “dissenting stockholder” as that term is used in the Business Corporation Act. The term is used there to refer to a stockholder who has undertaken to follow the provisions of the Act leading to valuation of and payment for his shares. Prior to the adoption of the Texas Business Corporation Act in 1955, the only statute setting out a procedure for protecting a dissenting shareholder of a Texas corporation was concerned only with the consolidation of building and loan associations. Note, IV Baylor Law Review, 111, at p. 115. Mergers, consolidations and the sale of all of the assets of a solvent corporation could be accomplished only by unanimous consent of the stockholders. Ballentine, Corporations, 667 (Rev.Ed. 1946); Hildebrand, Texas Corporations, Sec. 64. Shareholders could stop proposed mergers or sales, but did not have the right to require the corporation to purchase their shares. Johnson v. Baldwin, 69 S.E.2d 585 (S.Ct.S.C.1952); Anderson v. International Minerals and Chemical Corp., 295 N.Y. 343, 67 N.E.2d 573 (1946). By the Texas Business Corporation Act 80% of the stockholders of a Texas corporation were given the power to merge or consolidate corporations, or to sell all of the assets of a corporation, over the objection of the other 20%. To offset the loss of the power by the minority to block such action, the Act required such corporations to purchase their shares at a value to be determined by the courts of the State after a prescribed valuation procedure. The right which a minority shareholder had at common law to block mergers, consolidations or sales of all assets was not a right of a dissenting shareholder as that term is used in the Act; rather it was a right which any shareholder had who disagreed with the proposed corporate action.

In Meade v. Pacific Gamble Robinson Co., 29 Del.Ch. 406, 51 A.2d 313 (1947), the court said:

“Since the right to an appraisal in lieu of the right to defeat a merger was given by statute, it is not unreasonable to conclude that the statute is exclusive as to the rights given a dissenter who cares to proceed thereunder, at least to the extent the statute fairly purports to cover the subject. See Root v. York Corporation, D.C., 56 F.Supp. 288.”

Art. 5.14 of the Texas Business Corporation Act provides: “Nothing contained in part Five of this Act shall ever be construed as * * * abridging any right or rights of a dissenting stockholder under existing laws.” While the legislature had not enacted a general law dealing with the rights of dissenting stockholders prior to the adoption of the Texas Business Corporation Act, there was a considerable body of case law in this and other states concerning the rights of minority stockholders. Prior to the effective date of the Texas Business Corporation Act, it had been determined by the Texas courts that a single stockholder could enjoin a corporation from entering into an ultra vires transaction. The Country Club of Tyler, Texas v. R. M. McLaughlin, 300 S.W.2d 124 (Tex.Civ.App., ref., n. r. e.). In the recent case of Popperman v. Rest Haven Cemetery, Inc., 345 S.W.2d 715 (Tex.Sup.Ct.), it was held that the officers and directors of a corporation may enter into contracts with the corporation, but the limitations of this rule were pointed out as follows:

“Closely related to the foregoing principles is the well-established rule that transactions between an officer or director and the corporation are subject to strict scrutiny; it was stated in Zorn v. Brooks, supra, 'that a contract between a corporation and one or all of its officers and directors is not void per se, but that it may be avoided for unfairness or fraud.’ [125 Tex. 614, 83 S.W.2d [949], 951]. Previously, this court in Tenison v. Patton, supra [195 Tex. 284, 67 S.W. 92], discussed at some length the problem of contracts between officers and directors and the corporation itself, and recognized that such contracts are binding where the contracting director establishes the fairness of 'the transaction to the corporation. See also Texas Auto Co. v. Arbetter, Tex.Civ.App., 1 S.W.2d 334, er. dism.; and Felty v. National Oil Company of Texas, Tex.Civ.App., 155 S.W.2d 656.”

Such transactions may be enjoined or set aside. Zorn v. Brooks, 83 S.W.2d 949 (Tex.Com.App., opinion adopted); 14 Tex. Jur.2d, Corporations, § 228 et seq.

The Texas Business Corporation Act authorizes a corporation to sell all of its assets, but it does not specifically, or by necessary implication, authorize the directors or majority stockholders of a corporation to sell such assets to themselves, or to a corporation in which they are the sole stockholders, officers and directors. Since the Business Corporation Act does not clearly require a minority stockholder to resort to appraisal in the case of sale of all of the assets of a corporation where such sale results from a fraudulent conspiracy, as was alleged here, or is otherwise unfair to the corporation, or its minority stockholders, the courts should not extend the statute by construction to require it. 58 Columbia Law Review 251; 45 Harvard Law Review 233. We do not think that the legislature intended to weaken the protection afforded minority stockholders by overturning this body of case law by implication.

The words “dissenting shareholders”, as used in Art. 5.14 of the Business Corporation Act have the same meaning as when used in Art. 5.12. It cannot be argued successfully that the legislature intended by Art. 5.14 to repeal or nullify the previous provisions of the act authorizing mergers and consolidations, which necessarily would follow if “dissenting stockholders” and “minority stockholders” are held to be synonymous terms. If the legislature had intended to preserve all rights recognized by common law as vesting in “minority stockholders” by Art. 5.14, no doubt it would have so provided in plain and unambiguous terms. We hold that the legislature intended this clause to be a savings clause to preserve accrued rights. See “Comment of Bar Committee,” Vernon’s Annotated Texas Civil Statutes, Vol. 3A, pp. 276 et seq. This construction will give full effect to certain provisions of the Act, which otherwise would be contradictory. Martin v. Sheppard, 129 Tex. 110, 102 S.W.2d 1036; Spence v. Fenchler, 107 Tex. 443, 180 S.W. 597. The actions of the stockholders and directors to which appellee dissented, with the exception of the adoption of the provisions of the Act, took place after such adoption. There is no contention that the proceedings by which the provisions of the Act were adopted were had in violation of the statute or the provisions of the charters or by-laws of the corporations. Art. 5.12, viewed as a savings clause, is not applicable here.

Art. 5.12, Texas Business Corporation Act, provides:

“A. In case any shareholder of any domestic corporation lawfully elects to exercise his right to dissent from any of the corporate actions referred to in the last preceding Article hereof, the following procedure shall be followed: (emphasis supplied)
“(1) Such shareholder shall file with the corporation * * * a written objection * * * setting out that his right to dissent will be exercised if such action be approved * * *. If such corporate action be approved * * * and such shareholder shall not have voted in favor thereof, such shareholder may * ⅜ * make written demand * * * for payment of the fair value of his shares. * * * Any shareholder failing to make demand * * * shall be bound by such corporate action.■. (Emphasis supplied.)
“(2) * * * the existing, surviving, or new corporation * * * shall give notice thereof to each dissenting shareholder who has made demand * * for the payment of the fair value of his shares. * * *
“(3) [provision for payment of agreed valuation.]
“B. jf; * * * the shareholder and * * * corporation * * * do not so agree [on value], then the dissenting shareholder or the corporation may, * * * file a petition * * asking for a * * * determination of the fair value of such shares by an appraiser to be appointed by the court. * * * [provision for service on corporation, which shall file list of dissenting shareholders and for notice to such shareholders]. All shareholders thus notified and the corporation shall thereafter be bound by the final judgment of the court. (Emphasis supplied.)
“C. [provision for determining shareholders who are entitled to valuation of and payment for their shares and for appointment and powers of the appraiser]
“D. [provisions concerning the filing of appraiser’s report, exceptions thereto and the judgment of the court] * * Unless the dissenting shareholder shall file such petition within the time herein limited, such shareholder and persons claiming under him shall be bound by the corporate action to which he seeks to dissent. * * * ”

It is apparent from this summary that it was the intention of the legislature that any stockholder who began proceedings for valuation of his shares should pursue such remedy to conclusion and be bound by its outcome, or in the event such shareholder determined that he did not desire to sell his stock, he could withdraw from the proceedings and thereby be bound by the corporate action. It is also apparent that one action and one forum should determine valuation for all dissenting shareholders.

The Act, however, does not require any shareholder to elect to dissent. He can disagree with the action of the corporation and, if he believes the proposed action illegal, ultra vires or tainted by fraud, he may at once proceed to take such legal action as may be indicated. If he fails to prevail in such legal action, and if he is then unable to follow the statutory procedure for dissent, he will be bound by the corporate action. Note 66 Harvard Law Review, pp. 746 et seq. We hold that the Texas Business Corporation Act requires a stockholder to elect either to pursue such legal as distinguished from equitable remedies, as are available by statute or common law, or else to follow the prescribed procedure for appraisal and payment to him of the value of his stock.

The record reflects that appellee, by proxy, attended the meetings of the Old Companies held on December 20, 1957 and there stated his objections to the proposed action which, by agreement, were reduced to writing and incorporated into the written minutes of each meeting. Thereafter, again by proxy, appellee attended a meeting of the stockholders of Eureka Credit Corporation on January 6, 1958, at which he renewed the objections made previously and, thereafter, presented to the meeting a written instrument directed to the officers, directors and stockholders of Old Companies stating (among other things) his stock interest in the companies and that the “true, fair market value of my stock interest in the three corporations is not less than $312,-000.00, which sum I herewith demand to be paid * *

On January 10, 1958, appellee received by mail a notice that the sale had been approved by the stockholders. Appellants made no further effort to follow the valuation procedure as provided by the Act, and now contend that appellee did not make the demand for payment of fair value contemplated by the Act, or, if he did, that such demand was not made within ten days after written notice of the stockholders’ action was delivered or mailed to him as required by the Act and that, therefore, he is bound by the corporation action and entitled only to his share of the proceeds of the sale.

The written demand presented to Old Companies at the January 6, 1958 meeting complied with the statutory requirements and was timely. As was held in Duddy v. Conschohocken Printing Co., 163 Pa.Super. 150, 60 A.2d 394, the word “within” has a number of recognized meanings including, “Not later than,” or “any time before,” and “before the expiration of.” In the case cited the words “within twenty days after” the merger was effected were held to fix the end, but not the beginning of the period during which the demand had to be made. The reasoning of that case is applicable here. Note, 47 Michigan Law Review, p. 273.

However, even if it be considered that appellee’s demand was presented prematurely, the demand was continuing in nature, never withdrawn, and became effective as a statutory demand on the same •day as, but after, the mailing of the notice •of approval. This construction will not make less certain the time for taking future steps required by the Act and will not work inconvenience on any of the parties to the ■sale. The statute should be construed in •such a manner as to make effective the protection afforded the minority stockholder.

No further action was required of appellee without prior action by appellants except the filing of his petition in the proper court requesting the appointment of an appraiser and the determination of the value of his stock by the court. We do not have .before us the question of the effect of the ■failure of appellants to follow the prescribed procedure. Since appellee filed a proper ■petition in a proper court within the time limit prescribed by the Business Corporation Act, he was not by its terms bound by the corporate action and limited to his proportionate share of proceeds of the sale of the assets of. Old Companies available for •distribution to the stockholders at its dissolution.

Since no appraiser was appointed nor appraiser’s report filed with the court, it is obvious that the matter was not ready for trial if these matters were material. We think they were material and cannot be waived. No one can say that a consideration of the evidence of value presented to the appraiser and the report subsequently prepared by him and presented to the court would be of no value. It might lead to compromise and settlement by the parties; it might be accepted by the parties and almost certainly would expedite the trial of the issue of value by the court. Sec. subd. C. of Art. 5.12, Texas Business Corporation Act, provides that on the filing of the petition requesting the appointment of an appraiser, a hearing shall be held to determine which shareholders have complied with the act and, after the hearing, that the court shall appoint an appraiser. The court is not granted discretion in the matter. There is no provision that at the hearing the court should determine whether or not an appraiser was necessary. IV appears that appellee had elected to proceed with valuation and sale of his stock under the provisions of the Act and thereby had waived any right which he otherwise may have been able to assert for damages because of the particular corporate action to which he had filed his dissent. We do not here consider the effect such an election may have on stockholders’ derivative actions.

Since appellee has preserved no Points of Error complaining of the denial of equitable relief in this case, there is no necessity to determine whether or not it might have been granted or to construe the effect of the Business Corporation Act on causes of action based on equitable grounds.

Appellee assigned as a cross-point the proposition that he is entitled to a judgment against the defendants for $54,000.00 assessed as damages for fraud as well as $312,000.00 which the jury determined to be the fair value of appellee’s stock interest in “Old Companies.”

In answer to issues submitted to them, the jury found that the individual defendants entered into a combination to (1) acquire 80% of the stock in “Old Companies,” (2) to form “New Companies,” (3) to transfer all assets of “Old Companies” to “New Companies” and (4) to exclude plaintiff from participation in stock ownership in “New Companies”; that a purpose of such combination was to defraud plaintiff; that the purpose of the combination was carried into effect and resulted in damage to plaintiff and that the sum of $54,000.00 would reasonably compensate plaintiff, as a minority stockholder in “Old Companies,” for the damages he suffered as a result of the fraudulent conduct of the defendants; that the fair value of plaintiff’s interest in “Old Companies” on December 19, 1957, was $312,000.00. While appellants made certain objections to the charge they brought forward in their brief no assignments of error relating thereto.

Special Issue No. 14 reads as follows:

“What amount of money, if paid now in cash, would reasonably compensate Plaintiff, Richard A. Farns-worth, as a minority stockholder in the Old Companies, for the damages, if any, referred to in Special Issue No. 12?”
“Answer in dollars and cents, if any.”
Special Issue No. 12 reads as follows :
“Do you find from a preponderance of the evidence that the carrying into effect of the purpose of the combination, if any, inquired about in Special Issue No. 1 resulted in damages to Plaintiff Richard A. Farnsworth as a minority stockholder in the Old Companies ?”

The court gave no special instructions concerning the elements of damage which might be considered by the jury in answering Special Issue No. 14. Neither party requested such an instruction or objected to the charge of the court by reason of the failure of the court to include such an instruction. Neither party contends in this Court that the court’s charge was erroneous in that respect. It appears that all parties and the court intended that the answer to this issue would encompass all damage which the plaintiff had suffered as a minority stockholder by reason of the conspiracy to defraud alleged and found by the jury.

By reason of plaintiff’s alternative count for valuation under the Texas Business Corporation Act the court submitted Special Issue No. 41 reading:

“From a preponderance of the evidence what do you find to have been the fair value on December 19, 1957, of Plaintiff Richard A. Farnsworth’s 10.-4167% interest in the Old Companies?
“Answer in dollars and cents.”

To which the jury answered “$312,000.”

“In connection with your answer to the foregoing Special Issue No. 41, you are instructed by the Court that by the term ‘fair value’ is meant that value of the Old Companies, arrived at after a consideration of book value, the nature and value of the property which comprises the tangible assets of those companies, the amount and nature of the liabilities of such companies, the value of the good will, if any, of the companies, including their record of earnings, their good name and reputation, if any, the type of business conducted by them, the demand for the products, and business conditions generally on or about December 19, 1957.”

It will be noted that this issue inquired as to the fair value of plaintiff’s interest in Old Companies “On December 19, 1957.” The-first meeting of the stockholders was held December 20, 1957 and the last meeting January 6, 1958. At these meetings a sale of the assets of the various “Old Companies”' was authorized and a plan of dissolution adopted. The assets were transferred on December 31, 1957 and the “Old Companies” were formally dissolved December 22, 1958. In May of 1958 the directors of “Old Com- ■ parties” determined that plaintiffs share of the assets of “Old Companies” was $151,-529.27, which amount was set aside for him, but plaintiff has not claimed this money since he contends that such amount does not represent true fair value of the assets.

Art. 5.12, V.A.T.S., Business Corporation Act, provides in part: “ * * * The fair value of such shares shall he the value thereof as of the day before the vote was taken authorizing such corporate action [sale of all assets], * *

We do not think, under this record, that Special Issue No. 41 was intended as a damage issue or is appropriate as such. The pleadings of the parties and their conduct in the trial court as reflected in the record also support this conclusion. A case may not be tried and submitted to the jury on one theory and argued on appeal on an entirely different theory. 3 Tex.Jur.2d, § .371.

If appellee is entitled to a judgment on the verdict of the jury on the theory that their answers sustain his cause of action for conversion of his interest in “Old Companies,” as contended by appel-lee in this Court, he is entitled to damages in the sum of $54,000.00 as found by the jury in answer to Special Issue No. 14. However, the cause of action pled by ap-pellee was on the theory that appellants had conspired together to acquire appellee’s interests in “Old Companies” at less than fair value. This is not a suit for damages by reason of the corporate action to which appellee dissented. This cause of action, based on conspiracy to defraud, encompass■es the corporate action and had its inception prior to the adoption of the Business Corporation Act. The adoption of the provision of the Act, appellee alleges, was for the purpose of giving protective coloration to the fraudulent scheme. This theory was submitted to the jury. The jury found that appellee had been damaged in the sum of .$54,000.00. By asking for such damages, appellee confirmed the sale and waived any right he might have had to rescission since he is not entitled to damage for the taking of his interest at less than fair value and recovery of the interest also. Appellee is the owner of his proportionate share of the assets of the dissolved corporations which the evidence shows to amount to $151,529.-27. This means that appellee’s total compensation for his interest would be the sum of damages ($54,000.00) and share of assets ($151,529.27), or $205,529.27, an amount less than the jury found to be the fair value of appellee’s interest in the companies. Since there was no contention that the jury’s answers were in conflict in the motion for new trial, there is no assignment of error to that effect in this Court.

Appellee alleged and the jury found that the conspiracy was formed before the “Old Companies” had adopted the Texas Business Corporation Act. Some of the overt acts envisioned by the plan, i. e., acquiring 80% of the stock in “Old Companies,” were complete before the companies adopted the provisions of the Act. “A purpose unlawful in itself or in the means to be employed for its accomplishment is a requisite of an actionable conspiracy.” 15 C.J.S. Conspiracy § 3, p. 998. “The means contemplated to effect the purpose of a combination are material only if the purpose is lawful, in which case illegal means taint the whole transaction.” Ibid, Conspiracy § 4, p. 999. Here the purpose of the conspiracy as found by the jury, to defraud plaintiff, was unlawful. The means employed, sale of all assets of the companies to “New Companies” wholly owned by the conspirators at less than fair value, were also unlawful.

“Conspirators are jointly and severally liable for all damage resulting from the conspiracy, each being responsible for the acts of the other in furthering the common design.” 15 C.J.S. Conspiracy § 18, p. 1028.

The corporations were co-conspirators and equally as liable for damages as were the individual defendants under the facts of this case. The provisions of the Texas Business Corporation Act are not available as a defense since the adoption of the Act and the proceedings thereunder for the sale of assets were merely the means adopted to attain an unlawful end in furtherance of a conspiracy already in being. “Where parties, in pursuance of a conspiracy or combination for that purpose, fraudulently make use of legal proceedings to injure another, an action lies against them, at the suit of the person injured, to recover damages sustained.” IS C.T.S. Conspiracy § 16, p. 1027.

Appellants have chosen to base their appeal to this Court solely on grounds relating to the Texas Business Corporation Act. They do not complain that the judgment is excessive or that it is not supported by the evidence. They complain of no procedural errors. It appears that this position was taken because the trial court based its judgment solely on the answer made by the jury to Special Issue No. 41. The judgment reads in part: “It is Ordered, Adjudged and Decreed by the court that plaintiff Richard A. Farnsworth do have and recover * * * the sum of Three Hundred Twelve Thousand and No/100 ($312,-000) being the amount found by the jury to have been the fair value on December 19, 1957, of Plaintiff Richard A. Farns-worth’s 10.4167% interest * * (Italics supplied.) There follows in the judgment a provision for interest and costs and the further provision decreeing that all relief sought by either party, and not specifically granted, be denied. The portion of the judgment emphasized might lead one to the conclusion that the court was rendering judgment on the appellee’s alternative count for valuation. However, it is merely descriptive, and is not part of the judgment. Baxter v. Dallas County Levee Dist., 5 Cir., 131 F.2d 434; Davis v. Hemphill, Tex.Civ.App., 243 S.W. 691. If a judgment is capable of two constructions, only that construction which correctly applies the law will be adopted. McDonald, Texas Civil Practice, § 17.10, p. 1337. Ap-pellee was entitled to a judgment on the answers made by the jury to the special issues submitted. Appellants’ second assignment points out the error of the court in rendering judgment based on Special Issue No. 41. It is evident that the recovery awarded to appellee is based in part on the answer to this issue and constitutes error. Special Issue No. 41 should have been disregarded by the court since it was submitted in connection with appellee’s alternative count for valuation on which he is entitled to no recovery.

It is the duty of this Court to render the judgment which properly should have been rendered by the trial court. The judgment of the trial court is reformed and hereby rendered against appellants and in favor of appellee in the sum of $205,529.-27, with interest on $151,529.27 from the 22nd day of December, 1958, at the rate of 6%, and on $54,000.00 from the 8th day of April, 1960, at the rate of 6%. The costs in the trial court and in this Court are assessed one-half against appellants and one-half against appellee.

The judgment as reformed is affirmed.

On Motions for Rehearing

Appellee has filed a second motion for rehearing in which he strongly re-urges his contention that appellants have waived their objection to the failure of the trial court to appoint an appraiser by proceeding to trial without first presenting to the trial court a plea in abatement.

A proceeding for valuation of shares is purely a creature of statute. A stockholder did not have a cause of action at common law to require the corporation to purchase his shares merely because he objected to the action of the majority in selling all of the assets of the corporation. The Business Corporation Act created the right and prescribed the procedure to be followed by the dissenting stockholder. The Act does not authorize the shareholder to bring suit for the value of his shares. It authorizes him to “file a petition in any court of competent jurisdiction in the county in which the principal office of the corporation is located, asking for a finding and determination of the fair value of such shares by an appraiser to be appointed by the court.” Art. 5.12, subd. B, Texas Business Corporation Act. Section D of the Act provides for the appraiser to file his report with the clerk of the court and that “ * * * Such report shall be subject to exceptions to be heard before the court both upon the law and the facts. The court shall by its judgment determine the fair value of the shares * * Until the appraiser’s report and the exceptions thereto, if any, are filed, there is nothing before the court except the petition for determination of the fair value of the shares by an appraiser. There are no pleadings in support of which evidence might be introduced and issues drawn. The only judgment authorized by the Act is one based on such portions of the appraiser’s report to which no exceptions are filed and the court’s determination of such issues as are raised by exceptions to the report. We are impelled to the conclusion that the appointment of the appraiser and the filing of his report is jurisdictional for the reason that the question of valuation cannot be brought before the court for determination in any manner except as prescribed by the Texas Business Corporation Act. The pleadings authorized by this Act cannot be made to conform to the requirements of Rules 22, 45, 47, 83 and 85, Texas Rules of Civil Procedure, setting forth requirements for initiating and defending civil suits.

Appellee sought relief in alternative counts. He failed to show himself entitled to valuation of his shares by the court. He did plead a cause of action based on fraudulent conspiracy and secured jury findings supporting it. We are of the opinion that he is not entitled to damages for fraudulent conspiracy and also valuation of his shares under the Texas Business Corporation Act. Since judgment cannot be rendered on the count for valuation, judgment has been rendered on the count for fraudulent conspiracy. One element of such damage would be the reduction in value of his shares by reason of the sale made the basis of the suit. Since the jury was authorized to consider all proper elements of damage by the court’s charge, we must presume that they did so in making their answer to special issue No. 14. If we should reverse this cause for the purpose of permitting further proceedings in valuation, we would be authorizing appel-lee a double recovery. If we give no effect to the jury answers to the issues on actionable conspiracy, we would be permitting appellee a new trial of a cause of action where there was no error other than in rendering judgment on the verdict of the jury, an error which we are authorized to correct, and now have corrected.

Appellee’s motion for rehearing is denied.

Appellants have also filed a motion for rehearing in which they contend that as a matter of law there was no actionable conspiracy. They contend that “ * * * there was not the slightest dispute about the occurrence of the controlling factual transactions; the question was purely and simply a legal one, — were the acts of appellants lawful?” In our former opinion we answered this question in the negative, however, it is possible that our opinion could be misinterpreted. As we stated in our original opinion, appellee charged appellants with fraud in that they conspired together to acquire the assets of “Old Companies” for themselves at less than their fair market value, thereby injuring appellee. We hold that the sale of all of the assets of “Old Companies” to “New Companies” at a price far less than fair market value, as found by the jury, was fraudulent. The answers of the jury establish that the sale of the assets of “Old Companies” by the directors was a sale to themselves. Popperman v. Rest Haven Cemetery, Inc., Tex., 345 S.W.2d 715, and the authorities cited therein, demonstrate that the contract of a corporation with a director may be avoided for fraud or unfairness. The sale of corporate property at a price much less than its fair value by the directors and officers of a corporation to a corporation owned by them, incorporated for the purpose of purchasing such assets and conducting the identical business previously conducted by the selling corporation, is a species of fraud. Such a sale would not be permitted over the objection of a nonparticipating stockholder if less than “substantially all” of the assets were sold in such a transaction and such stockholder would not be forced into the position of a dissenting stockholder under the terms of the Business Corporation Act. The provisions of that Act authorizing the sale of all or substantially all of the assets of a corporation over the protests of minority stockholders does not authorize the directors of a corporation to sell to themselves. If the assets of “Old Companies” had been sold to another corporation in an arm’s length transaction, appellee’s objection could not have prevented the sale, nor would such a transaction have afforded the basis for a suit for damages. We recognize that the courts of New York in Beloff v. Consolidated Edison Co., 300 N.Y. 11, 87 N.E.2d 561, Ct.App.N.Y.1949, and Blumenthal v. Roosevelt Hotel, 202 Misc. 988, 115 N.Y.S.2d 52 and possibly, California, Beechwood Securities Corp. v. Associated Oil Co., 104 F.2d 537, 9th Cir. 1939, have held that there is no constitutional right to continue as stockholder or to follow .n investment into a consolidated corporation. However, we do not think that such decisions, in view of the policy of this State with reference to transactions with a corporation by its officers and directors, require us to hold that the Texas Business Corporation Act authorizes unfair or fraudulent transactions between a corporation and its officers and directors or require a minority stockholder complaining of such transactions to seek valuation as his sole remedy.

Appellants also contend in their motion for rehearing, for the first time, -that the answer of the jury to the damage issue is supported by no evidence. There was in evidence the amount realized from the sale by the corporation and a great deal of evidence concerning the properties owned by the corporation and their values as well as the earnings of both “Old Companies” and “New Companies.” While the evidence is too voluminous to quote, we have carefully considered the record and find that the answer made by the jury properly is supported by. competent evidence.

Appellants’ motion for rehearing is denied.

In answer to appellee’s request, additional findings and statements of evidence are made as follows:

I. Appellee questions the correctness of the statement found in our opinion that Special Issue No. 41 was not intended as a damage issue or appropriate as such. He further states that it was his contention, recognized by all parties, including the trial judge, that said issue was an inquiry as to the “fair value of appellee’s stock interest * * * We agree with this contention, but do not agree that this issue, designed to secure a finding as to fair value, is a damage issue appropriate to a cause of action for actionable conspiracy. However, we do consider that the answer of the jury properly could be considered as establishing that the sale was made for an inadequate consideration and should be considered, in connection with the other issues submitted, in determining whether or not judgment should have been rendered on the cause of action for actionable conspiracy. Since we are in agreement with appellee that the issue was a fair value issue, we do not consider it necessary to elaborate further in response to Request No. 1.

II. It is the opinion of the Court that appellee submitted the case to the jury on alternative counts, (1) actionable conspiracy, and (2) statutory valuation under the Texas Business Corporation Act. In this Court appellee has spent considerable time arguing that he is entitled to judgment on a cause of action for conversion of his stock interest.

III. Interest on the sum of $151,-529.27 was allowed from the date of formal dissolution of the corporation for the reason that after the corporation was dissolved appellee was entitled to his share of the assets on demand. Prior to dissolution of the corporation the proceeds from the sale of the assets were the property of the corporations. It appears in the record that the funds were tendered to appellee only on conditions which became improper on dissolution. Conditions might properly be attached to a tender made at a time when there was no obligation to pay.


author: DIXON, Chief Justice.

text:
    George S. ATKINSON et al., Appellants, v. CITY OF DALLAS, Appellee.
    No. 16038.
    Court of Civil Appeals of Texas. Dallas.
    Dec. 15, 1961.
    Rehearing Denied Jan. 19, 1962.

      James P. Donovan, Dallas, for appellants.
    H. P. Kucera, City Atty., and N. Alex Bickley and Thomas B. Warren, Assts. City Atty., Dallas, for appellee.
   DIXON, Chief Justice.

This is an appeal from a summary judgment.

On April 3, 1961 appellant George S. Atkinson and 35 other persons, with the later addition of 10 more persons, filed a class suit against the City of Dallas, Texas, seeking to enjoin the City from constructing a new parallel runway at Love Field Municipal Airport.

Appellants’ petition asked for a temporary injunction, which was denied after a hearing which lasted three days. At this hearing testimony was heard from eight witnesses, which testimony occupies 578 pages in a statement of facts in addition to 47 exhibits.

Some time thereafter the City of Dallas filed its motion for summary judgment and appellants filed their answer to appellee’s motion. On July 17, 1961 appellee’s motion for summary judgment was sustained. Appellants were denied a permanent injunction.

The record before the trial court when appellee’s motion was sustained consisted of the pleadings and the evidence and exhibits which had been introduced at the hearing on appellants’ application for temporary injunction. The transcribed testimony and the exhibits were made a part of the City’s motion for summary judgment and are part of the record before us on this appeal.

In their first and seventh points on appeal appellants assert that the trial court erred in holding as a matter of law that the proposed construction of the runway is not a threatened taking of appellants’ property rights without compensation in violation of the provisions of the Constitution of the United States and of Texas and of the Texas Statutes. More particularly appellants claim that the City is threatening to seize and take the air rights over appellants’ property through the construction and use of the nearby runway without compensation and without condemnation or purchase; and that they will suffer irreparable damage with no adequate remedy at law

Appellants say that the proposed construction and use of the runway violates the 14th Amendment to the Constitution of the United States, Art. 1, §§ 17 and 19 ■of the Constitution of the State of Texas, Vernon’s Ann.St., and the following State Statutes: Arts. 46d-2, 46e-13, 3268, and .3269 Vernon’s Ann.Tex.St.

Art. 46d-2 V.A.C.S. of the Municipal Airports Act, enacted in 1947, authorizes municipalities to establish, acquire and maintain airports. The Act took the place •of certain prior existing statutes. Art. •46d-15 of the Act expressly declares that the exercise of the powers so granted shall be considered public and governmental functions. In City of Corsicana v. Wren, 159 Tex. 202, 317 S.W.2d 516 the Supreme ■Court of Texas held that the said declaration in the statute was not violative of Art. 1, §§ 13 and 19 of the Constitution of the .'State of Texas, or the 14th Amendment of the Constitution of the United States. The Court further held that the City of ■Corsicana was immune from liability for the negligence of its employee in the operation of its airport.

Appellants allege that if the runway is ■constructed airplanes will fly over their property, causing noises, vibrations and disturbances which will expose appellants to permanent mental and physical injury, and do irreparable damage to their property due to increased insurance rates, reduced rental values, etc. This, according to appellants, constitutes a taking of their property without compensation and without exercising the power of eminent domain.

The position taken by appellants is that Art. 46e-13 V.A.C.S. makes it the duty of the City to condemn airspace which cannot be provided for by the Airport Zoning Statute, Art. 46e-3, V.A.C.S. We think these statutes deal only with landing and take-off hazards and the elimination of •present and future obstructions to the approach and departure of aircraft. There is no proof that approach hazards to air•craft exist now or are likely to exist on the properties of appellants, consequently Art. 46e-13 is not applicable.

We cannot agree with appellants ■that the facts alleged by them constitute a taking of their property as contemplated by Art. 1, § 17 of the Constitution of the State of Texas and the State Eminent Domain Statute. The proposed runway will be wholly within the boundaries of Love Field Airport and wholly on land owned by the City. There is evidence in the record that appellants’ properties lie 2200 feet or more from the runway. None of appellants own any part of the ground on which the runway will be located. It is not claimed that the City will take over appellants’ property by actual physical possession.

There is a difference between a taking of property and a damaging of property. The difference is discussed in McCammon & Lang Lbr. Co. v. Trinity & B. V. R. Co., 104 Tex. 8, 133 S.W. 247, 36 L.R.A.,N.S., 662. In that case, speaking of the meaning of “taking” the Court said:

“Whether the compensation is first to be made must, of course, depend upon the answer to the question whether or not there is to be a taking. Whatever may be the full meaning of the words ‘property’ and ‘taking,’ in the Constitution, there is no escape from the conclusion that the first includes the fee-simple title to the thing owned, whether it be burdened with an easement or not, and that the latter includes the appropriation of that thing, or of some interest or estate in it, by actual physical possession, such as exists when a railroad is constructed and operated upon it G[ulf], C. & S. F. Ry. Co. v. Lyons, 2 Willson, Civ.Cas.Ct.App. § 139, and authorities cited.”

In this case the City does not propose to take actual physical possession of any of appellants’ properties.

We do not hold in this opinion that appellants have a cause of action for damages, for that question is not before us. However, we do hold that if appellants have a cause of action at all, it is for damages to their property not for a taking of their property within the meaning of the Constitution and Eminent Domain Statutes. City of Dallas v. Megginson, Tex.Civ.App., 222 S.W.2d 349; Williams v. City of Dallas, Tex.Civ.App., 52 S.W.2d 373; Duvall v. City of Dallas, Tex.Civ.App., 27 S.W.2d 1105; City of Abilene v. McMahan, Tex.Com.App., 292 S.W. 525; Baugh v. Texas & N. O. R. Co., 80 Tex. 56, 15 S.W. 587. Appellants’ first and seventh points are overruled.

In their second point appellants allege error in the court’s holding as a matter of law that the construction of the proposed runway would not constitute a nuisance.

It is undisputed that the proposed runway will be a permanent improvement constructed by a municipality for a public use pursuant to legislative authority. Therefore, it is not legally a nuisance. Williams v. City of Dallas, 52 S.W.2d 373 (Syl. 4); City of Abilene v. McMahan, Tex.Com.App., 292 S.W. 525, 528; Aycock v. San Antonio Brewing Association, 26 Tex.Civ.App. 341, 63 S.W. 953, 955. Moreover, even if we were to say that the proposed runway could legally be a nuisance, appellants’ cause of action, if any, would be for damages, not for injunction. City of Dallas v. Winans, Tex.Civ.App., 262 S.W.2d 256; Baugh v. Texas & N. O. Ry. Co., 80 Tex. 56, 15 S.W.2d 587. Appellants’ second point is overruled.

Appellants in their third point charge that the court erred in holding as a matter of law that the proposed runway if constructed would not be in violation of the Municipal Airports Act requiring construction to be consistent with Acts of Congress and all regulations or standards established pursuant thereto. Specifically, appellants claim that the construction of the runway would be violative of Acts. 46d-2(d) and 46d-7(b) V.A.C.S.

The point is not well taken. Section 1350, Title 49, U.S.C.A. provides that if no Federal funds are applied for the only approval required of the Administrator of the Federal Aviation Agency is as to the “use of airspace by aircraft.” The Federal Government is not contributing any funds to the construction of the proposed runway. The City of Dallas, through the sale of revenue bonds, will furnish all the funds necessary for the construction of the runway. The record shows that the City already has the approval of the Administrator as to the “use of airspace by aircraft.”

Furthermore, we think that if any complaint on this score is to be made, it should be made by the Federal Aviation Agency, not by appellants. The Federal Aviation Agency, not the City of Dallas, operates the airport’s control tower and will determine who may use the runway. It is up to the Agency to apply its regulations. City of Newark v. Eastern Airlines, Inc., D.C., 159 F.Supp. 750. In the case now before us neither the Airlines who will use the runway, nor the Federal Government are parties to the action, though it is held in Bourland v. City of San Antonio, Tex.Civ.App., 347 S.W.2d 660 that they are indispensable parties. Appellants’ third point is overruled.

Appellants’ fourth and sixth points allege error on the court’s part in holding as a matter of law that the proposed runway is a necessary public improvement and that the action of the City is not arbitrary and capricious.

The undisputed evidence in this case shows that Love Field Airport has been in operation by the City since the year 1922 and has been owned by the City since 1928. From time to time as air traffic at the airport has increased the airport and its facilities have been enlarged and expanded to meet the ever growing demands of the public. The construction of the proposed runway will merely be another in a succession of expansions to meet the growing needs. The statutes entrust to the municipal authorities the responsibilities of deciding when a necessity exists to make such public improvements and the courts may not review the decisions of the proper municipal authorities in that respect unless such decisions are arbitrary and without reason. Under the undisputed circumstances presented in. this record there is no support for a finding that the action of the City Authorities is arbitrary or without reason. City of Corsicana v. Wren, 159 Tex. 202, 317 S.W.2d 516; Town of Ascarate v. Villalobos, 148 Tex. 254, 223 S.W.2d 945; Gillham v. City of Dallas, Tex.Civ.App., 207 S.W.2d 978; Sitterle v. Victoria Cold Storage Co., Tex.Civ.App., 33 S.W.2d 546; and West v. Whitehead, Tex.Civ.App., 238 S.W. 976. Appellants’ fourth and sixth points are overruled.

In their fifth point appellants say that the court erred in holding as a matter of law that the new runway was not a donation or a loan of credit to private corporations or associations in violation of Art. 3, § 52 of the Constitution of Texas.

Art. 46d-4 V.A.C.S. provides that cities operating airports are given authority to enter into contracts and lease arrangements not to exceed 40 years with airlines and other users of the airport, and may also fix charges for the use of the airport facilities and operate the airport as a utility. Art. 46d-ll provides that all revenues arising from the operation of the airport shall be appropriated solely to, and used by the municipality for purposes authorized by the Municipal Airports Act.

We find no donations or loan of the City’s credit contemplated in these provisions, or in the City’s plans of operation. Appellants’ fifth point is overruled.

In their eighth and tenth points appellants assert that the court erred in holding that the proposed issue of bonds was legal, and was not violative of statutory and constitutional restrictions as to bond issues and debt limits; and in holding that the City could legally issue revenue bonds to finance construction of the runway without first submitting a proposition for the issuance of the bonds to the qualified voters who are tax payers of the City.

The City proposes to finance the construction of the runway by the issuance of revenue bonds in the amount approximately of $5,000,000. The ad valorem bond limit of the City has been fixed at $135,000,000. The sworn pleadings of the City allege that at the time of the trial there were $117,000,000 of ad valorem tax bonds outstanding. Appellants claim the amount of outstanding tax bonds is greater. We shall not try to reconcile this difference for in our opinion the question is immaterial to our decision in this case.

Revenue bonds are not considered as debts coming within constitutional and statutory restrictions on the amount of municipal debts. City of Seymour v. Municipal Acceptance Corporation, Tex.Civ.App., 96 S.W.2d 814; City of Dayton v. Allred, 123 Tex. 60, 68 S.W.2d 172; Sowell v. Griffith, Tex.Com.App., 294 S.W. 521.

We find no provision in the Constitution of Texas requiring the submission to the voters of a City the proposition to issue bonds. The statute which is now known as Art. 701, V.A.C.S. was enacted in 1899. Moller v. City of Galveston, 23 Tex.Civ.App. 693, 57 S.W. 1116. In City of Corpus Christi ex rel. Harris v. Flato, Tex.Civ.App., 83 S.W.2d 433 it was held that a city with a population of over 5,000 may issue revenue bonds pursuant to Arts. 1111 and 1112 V.A. C.S. without submitting the proposition to the voters. See also Womack v. City of West University Place, Tex.Civ.App., 32 S.W.2d 930. In the instant case the City proposes to proceed according to Art. 1269j, V.A.C.S. It has a right to do so. Appellants’ points eight and ten are overruled.

Appellants’ ninth point is to the effect that the court erred in holding that appellants were estopped to seek an injunction and that appellee was not estopped to build the runway. According to appellants the pleadings of the parties raise fact questions which must be settled before the pleas of estoppel may be determined.

We find nothing in the record to indicate that the trial court made any specific findings or conclusions in regard to estoppel. The court based its judgment on the legal principles which we have heretofore discussed in this opinion, which we believe to be correct conclusions, and fully support the court’s judgment. Appellants’ ninth point is overruled.

In their eleventh point appellants say that the record presents genuine issues of material fact, therefore the summary judgment was not proper. In their argument under this point appellants list eleven alleged fact issues. We have carefully considered each of the alleged fact issues. We cannot agree with appellants. The alleged fact issues either present questions of law or present matters which are immaterial in view of applicable legal principles. Appellants’ eleventh point is overruled.

In a well prepared brief appellants cite more than one hundred cases which they say support their position in this controversy. We shall undertake to discuss here only a few of these cases.

In United States v. Causby, 328 U.S. 256, 66 S.Ct. 1062, 90 L.Ed. 1206 the Supreme Court of the United States was concerned with Title 49, § 180, U.S.C.A. which authorized the Civil Aeronautics Authority to prescribe minimum safe altitudes of flight, the statute further providing that “navigable airspace” should mean airspace above said minimum. The Authority had prescribed 500 feet as the minimum during the day and 1,000 at night for air carriers. The statute was later repealed. In its stead Title 49, § 1301, par. 24 was enacted and is now in effect. The latter statute expressly provides that “ ‘Navigable airspace’ * * * shall include airspace needed to insure safety in take-off and landing of aircraft.” Thus by Act of Congress the minimum of navigable airspace was changed. There is no showing here that the City of Dallas, by constructing the proposed runway, will violate Title 49, § 1301, par. 24, U.S.C.A. the the statute now in effect. Moreover, the Causby case, supra, involved a claim for damages, not injunctive relief.

Brazos River Conservation & Reclamation District v. Costello et al., 135 Tex. 307, 143 S.W.2d 577 involved an actual physical taking of the property owners’ land by flood waters creating what is now known as Possum Kingdom Lake. In the instant case we have no physical taking of appellants’ property.

Koslosky v. Texas Electric Service Co., Tex.Civ.App., 213 S.W.2d 853, 854 involved an undertaking to build a power line under a grant from a County Commissioners Court. The grant was held to be void among other reasons because the County had no authority to make the grant since power and control of City streets is lodged in the City not the County.

Appellants cite several cases in which condemning authorities were enjoined from proceeding with operations which were declared to be void. We do not disagree with such holdings. We simply say that the laws under which the City is proceeding are not void, so the cited cases are not applicable.

We find no material error in the trial court’s judgment.

The judgment is affirmed.