author: WERLEIN, Justice.

text:
    HANOVER INSURANCE COMPANY, Appellant, v. Richard H. SONFIELD, Appellee.
    No. 14478.
    Court of Civil Appeals of Texas. Houston.
    Jan. 7, 1965.

      Harold R. DeMoss, Jr., Houston, Brace-well, Reynolds & Patterson, Houston, of counsel for appellant.
    Sonfield, Sonfield & Lawrence, William J. Kershner, Houston, for appellee.
   WERLEIN, Justice.

Appellee, Richard H. Sonfield, brought this suit against appellant to recover under a yacht policy issued by appellant damages to a boat which appellee alleged was severely damaged when it fell off of his trailer while it was being hauled by him from Austin to Houston. From the court’s judgment rendered against it, appellant has appealed on the ground that the circumstances of the accident were not risks insured against in the policy, and the trial court’s findings of fact do not support the court’s judgment.

In its findings of fact, the court found, among other things, that when appellee was transporting the boat from Austin to Houston on September 4, 1961, his automobile hit a bridge abutment, causing the boat to fall from the trailer and become damaged as a result thereof, and that the boat was damaged in the sum of $1300.00 which was a fair and reasonable amount necessary in order to return the boat to as nearly the same condition as it was in prior to the accident. The court concluded that appellant was liable to appellee in such amount, and that a “land transit rider” was not a part of the policy and was not necessary in order to hold appellant liable for such damages. The so-called “Agreed Findings of Fact and Conclusions of Law” were actually approved only as to form by appellant’s attorney.

The perils which are insured against by the policy involved in this case are set forth in two paragraphs in the section of the policy headed “Hull Insurance” which read as follows:

“Touching the adventures and perils which the Company is content to bear and take upon itself, they are of the Harbors, Bays, Sounds, Seas and Waters as above named, Fire, Explosion, Collision, Assailing Thieves, Theft of entire vessel, Jettison, Bar-ratry of the Masters and Mariners and all other like marine perils, losses and misfortunes that shall come to the hurt, detriment or damage of the said vessel or any part thereof.
“This insurance also to cover loss of or damage to hull or machinery directly caused by the following:
“Accidents in going on or off, or while on drydocks, graving docks, ways, gridirons or pontoons; “Bursting of boilers, breakage of shafts or any latent defect in the machinery or hull, (excluding the cost and expense of replacing or repairing the defective part);
“Contact with aircraft or with any land conveyance;
“Negligence of master, mariners, engineers, pilots or repairers other than Assureds;

provided such loss or damage has not resulted from want of due diligence by the owners of the vessel or by the Assured.”

It is clear that the loss in question did not result from any designated or other like marine peril. In the case of Charles Clarke & Company v. Mannheim Ins. Co., Com.App.1919, 210 S.W. 528, the court stated that a loss from a peril of the sea was one which has for its proximate cause the fortuitous action of the sea, operating either singly or in conjunction with other elements or causes, or is peculiar to transportation by vessels supported by the sea or its buoyancy, subject to certain well-defined limitations. The term “collision” used in connection with marine perils generally has reference to a collision between two vessels or between a vessel while navigating and some other floating object, and, also, according to some authorities, contact between a vessel in navigation and certain fixed obj ects, such as piers, wharves, bulkheads and pilings. Lehigh & Wilkes-Barre Coal Co. v. Globe & Rutgers Fire Ins. Co., 2d Cir. App., 6 F.2d 736; Cline v. Western Assur. Co., 101 Va. 496, 44 S.E. 700; Burnham v. China Mutual Ins. Co., 189 Mass. 100, 75 N.E. 74.

The second paragraph which defines the coverage of the policy confines the coverage to certain particular perils and is conditioned on there being no want of due diligence on the part of the assured or owner of the boat as a cause of the loss or damage. Appellee contends that he is entitled to recover since the loss is one coming within the provision “contact with any land conveyance.” He testified that the boat as it was coming off the trailer hit his car and the frame work of the boat trailer and then slid on down the highway. He argues, therefore, that there was contact with a land conveyance. It will be noted that ap-pellee did not plead that the boat struck or had contact with any land conveyance. He merely pled that the boat fell off the trailer and was severely damaged. The trial court did not find that the boat struck any land conveyance. The court found that ap-pellee’s automobile struck the bridge abutment, causing the boat to fall from the trailer and become damaged as a result thereof. Appellee did not object or except to the court’s finding. Nor did he request any additional finding. The finding by the court is in accord with appellee’s pleading and it finds support in the evidence. If the damage resulted, as the court found, from the boat falling off of the trailer, then it cannot be said that the damage resulted from the boat coming in contact with a land conveyance. The policy required appellee to show that the loss was “directly caused by” contact with a land conveyance. This appellee failed to do.

It seems obvious that the finding of the trial court that the loss resulted to the boat when the automobile struck a bridge culvert and caused the boat to fall from the trailer will not support the court’s judgment in favor of appellee. “The rule that supplemental findings necessary to support the judgment are presumed, has no application when the findings and conclusions disclose the basis therefor, and that the court did not find such necessary supplemental facts.” Burford v. Pounders, 145 Tex. 460, 199 S.W.2d 141. We are required to appraise the judgment in light of the findings actually made. We cannot presume a different finding in favor of the judgment where it has not been made. Reid v. Gulf Oil Corporation, Tex.Civ.App., 323 S.W.2d 107, aff’d 161 Tex. 51, 337 S.W.2d 267; Rule 299, Texas Rules of Civil Procedure.

It is clear that the cause of the boat falling from the trailer was the striking of the bridge abutment by the automobile. If the boat as it came loose from the trailer and fell therefrom in fact struck appellee’s car and was damaged, it is more than likely that the major portion of the damage to the boat resulted from the boat’s striking the ground, skidding along the highway and turning over. Appellee has wholly failed to show what damage, if any, resulted from contact with his automobile or trailer. Where damage to insured property is occasioned by two separate causes, one covered by the policy and the other not covered, the burden is upon the insured to show the amount of recoverable damage arising solely from the cause covered by the policy. Progress Laundry & Cleaning Co. v. Reciprocal Exchange, Tex.Civ.App., 109 S.W.2d 226, writ dism.; Palatine Ins. Co. v. Coyle, Tex.Civ.App., 196 S.W. 560, aff’d Com.App., 222 S.W. 973; Cox v. Queen Insurance Co., Tex.Civ.App., 370 S.W.2d 206, writ ref., n. r. e.

Moreover, the policy expressly provides that it covers loss or damage to the hull of the boat resulting from contact with any land conveyance, “provided such loss or damage has not resulted from want of due diligence by the owners of the vessel or by the assured.” This provision does not constitute an exception or exclusion. It is rather a condition of the coverage. Appellant has not assumed liability for damage resulting from contact with a land conveyance generally, but only when it has not resulted from want of diligence by the assured. In the instant case appellee merely testified that he lost control of his car. It is our view that the statement by appellee that he lost control of his car is in effect an admission of want of diligence on his part, in the absence of any excuse or exculpable reasons for losing control of the car. The burden was on appellee to prove that the loss for which recovery was sought came within the coverage provided in the policy. To establish such fact it was necessary for appellee to prove not only that the boat came in contact with a land conveyance but also that the damage did not result from any want of diligence on his part. Bethea v. National Casualty Co., Tex.Civ.App., 307 S.W.2d 323, writ ref. Even if it can be said that want of diligence on the part of an assured ordinarily constitutes an exception or exclusion which must be pleaded as a defense, appellee is hardly in a position to urge that appellant did not plead want of diligence as an exception to liability for loss resulting from contact with a land conveyance since appellee has not pleaded that the loss resulted from such contact and in fact has failed to plead any loss or risk covered by the policy. Appellant did deny in its pleading that the loss and casualty in question was a covered risk under the terms of the policy.

Appellee has placed some reliance upon the following provision in the policy:

“Beginning the adventure upon the said vessel, as above, and so shall continue and endure during the period aforesaid, in port and at sea, in docks and graving docks, and on ways, gridirons and pontoons, at all times, in all places, and on all occasions not conflicting with warranties and clauses contained herein.”

It is our view that this provision has reference to the duration of the policy and the places where a loss may occur, but it does not have any bearing upon what caused the loss. It does not in any way relieve appellee from establishing that the loss falls within the terms and conditions of the policy. The clause neither adds to nor subtracts from the coverage specified by the other paragraphs of the policy. Read v. Agricultural Ins. Co., 1935, 219 Wis. 580, 263 N.W. 632.

We are not in accord with appellee’s contention that the trial court’s judgment should be affirmed because appellant did not object or except to the judgment. The case was tried before the court without a jury. The judgment of the court, which appellant approved only as to form, concludes with the sentence: “To which judgment Defendant, Hanover Insurance Company, gave notice of appeal in open court.” In addition to the notice of appeal given in the judgment, appellant filed his formal notice of appeal in the office of the District Clerk.

In our opinion, the omission in the judgment of the words “To which judgment Defendant excepts” does not constitute a waiver on the part of the appellant of its right to appeal from the trial court’s judgment. Nor are the findings of fact in a case tried without a jury conclusive on appeal although not excepted to, where a statement of facts appears in the record, as in the instant case. Swanson v. Swanson, 1950, 148 Tex. 600, 228 S.W.2d 156.

In Perkins v. Perkins, Tex.Civ.App., 237 S.W.2d 659, the court held that while entering a formal exception to the court’s judgment would be the better procedure, the failure to do so did not prevent consideration of, an appeal on its merits. In Counts v. Southwestern Land Co., Tex.Civ.App. 1917, 206 S.W. 207, a default judgment was entered and appellant moved to set aside such judgment. The court overruled such motion. Appellant did not formally except to the order overruling the motion but did file a notice of appeal. The court held that no formal words are necessary and that the notice of appeal certainly gave notice that objection was being made to the order of the court. The court cited 3 C. J., p. 900, as authority for considering “that an appeal is per se an exception to the judgment itself.” This is in accordance with Rule 373, T.R. C.P., which provides in effect that formal exceptions are unnecessary and that all that a party need do is make known his obj ection to the action of the trial court. The cases cited by appellee are inapplicable to the factual situation of this case.

In view of our holding it will not be necessary to discuss appellant’s last point of error which asserts that the trial court erred in entering judgment for appellee without reducing the amount of damages by the amount of the deductible provided for in the policy. Appellee has filed in this Court a remittitur of the $250.00 deductible provided.

Judgment reversed and rendered.


source: Caselaw Access Project

license: Public Domain

text:
    Ann CHESSER, Appellant, v. Johnie C. MURPHY et ux., Appellees.
    No. 14483.
    Court of Civil Appeals of Texas. Houston.
    Jan. 14, 1965.

      Joel W. Cook and Ansel M. Kahn, Houston, for appellant.
    Elliott & Elliott, Loran L. Elliott, Houston, for appellees.
   WERLEIN, Justice.

This suit was brought by appellees, Johnie C. Murphy and wife, against John Chesser and wife, Ann Chesser, and William E. Thomas and wife, to recover a deficiency-judgment following foreclosure under powers of sale contained in a deed of trust and chattel mortgage. Thomas and wife, who-were not served with citation, were dismissed from the suit without prejudice, and a default judgment was taken on March 23, 1964 against John Chesser and Ann Chesser, who had been duly served with citation, but who failed to answer and wholly made default. Appellant, Ann Chesser, has perfected her appeal by writ of error from the trial court’s judgment insofar as it decrees any recovery against her personally.

Appellees alleged in their petition the execution and delivery by Mr. and Mrs. Thomas and appellant and her husband of a $25,000.00 note dated October 14, 1961 payable to appellees, secured by a deed of trust of even date therewith upon certain lots conveyed to them by appellees, and also the contemporaneous execution by said parties of another deed of trust upon said property to secure a $35,000.00 note payable to Reagan State Bank of Houston. The deed of trust attached to plaintiffs’ petition shows that the $35,000.00 note was executed by the same parties as the $25,-000.00 note, the latter being a second lien note. Appellees also alleged that default was made in the payment of certain installments of the $25,000.00 note; that the property was sold by the trustee under the deed of trust securing such note, and that they purchased the property at the foreclosure sale for $22,203.64, which was duly credited on the note, leaving a balance of $5,712.66 due and owing thereon. They sought to recover not only the amount of the deficiency owing on said note and interest which they paid on the $35,000.00 note to protect their equity in the property, but also to recover on certain other alleged obligations, notes and a check which were not signed by appellant and to which she was not a party.

Appellees’ petition and exhibits do not show that appellant, Ann Chesser, joined in any of the transactions set out therein, other than her joinder with her husband in signing the $25,000.00 and $35,000.00 notes and the deeds of trust securing the same. The petition shows on its face that appellant was a married woman at the time of the transactions sued upon. Appellees did not allege that any part of the indebtedness was for the benefit of appellant’s separate property, or that it was for necessaries or for any other purpose which under the law in force at the time of the 1961 contracts and transactions would permit or justify the rendition of a personal judgment against her.

There can be no recovery against appellant on the notes and check which she did not execute and to which she was not a party. The Negotiable Instruments Act, Article 5932, § 18, Vernon’s Annotated Texas Statutes, provides: “No person is liable on the instrument whose signature does not appear thereon, except as herein otherwise expressly provided. * * * ” In this case, no exception is shown which would make appellant liable on the instruments she did not sign. In oral argument before this Court, appellees’ counsel in effect conceded that appellant would not be liable on such instruments and that the trial court’s judgment would have to be reformed accordingly.

Appellant did not become personally liable on the $35,000.00 note or the $25,000.-00 note which she signed since appellees’ petition shows on its face that appellant was a married woman and appellees did not allege that any part of the indebtedness sued upon was for the benefit of appellant’s separate property, or that it was for necessaries for herself or her children, or for any other purpose which under the law in force at the time of the execution of the 1961 contracts and transactions would permit or justify the rendition of a personal judgment against her. Giles v. First National Bank of Brownfield, Tex.Civ.App. 1953, 257 S.W.2d 945; Shannon v. Childers, Tex.Civ.App., 202 S.W. 1030, writ ref., and authorities cited therein. In the latter case it was also held that the defense of coverture need not be pleaded where the petition discloses the disability, and further that where the petition upon its face discloses that the defendant was a married woman, and no facts are alleged which, under any possible theory, would relieve the disability of coverture so as to render her personally liable for a breach of a covenant of warranty, the petition fails to state a cause of action against her, and does not support a judgment against her.

In Long v. Crutchfield, Tex.Civ.App., 295 S.W. 625, the court said: “It is well settled by authority in this state that married women cannot be bound personally, by contracts, so as to subject their separate property, unless it is done by their express authority conferred upon them by statute.” See also Perkins v. Compton, Tex.Civ.App., 61 S.W.2d 575, in which the court said:

“The petition showing that Mrs. Jennie Perkins was one of the makers of the contract, that she was a married woman at the time she executed it, and not showing further that it was executed in pursuance of any authority conferred upon her by the statutes, and for any purpose contemplated thereby, is insufficient to support a judgment by default against her. Graham et ux. v. Carmany (Tex.Civ.App.) 2 S.W. (2d) 467, and authorities there cited.”

After stating the applicable principle of law, the court said in Stevenson v. Abernathy, Tex.Civ.App., 69 S.W.2d 850: “The law as announced by the foregoing authorities, so far as our investigation has disclosed, has been followed by an unbroken line of authorities in this state.”

The indebtedness alleged in the instant case is the joint obligation of the husband and wife and a community debt for which the husband alone can be made personally responsible or liable by judgment. The debt cannot be collected out of the separate estate of the wife, and she cannot be made personally responsible or liable therefor by judgment, under the appellees’ petition.

Appellees undertake to distinguish this case from the numerous authorities relied upon by appellant, contending that the instant case involves appellant’s signature as a co-maker with her husband and as a surety with her husband on notes signed by Mr. and Mrs. Thomas. We find nothing in appellees’ petition or exhibits attached thereto which shows that appellant signed the notes as a surety with joinder of her husband. The petition and exhibits merely show that appellant and her husband and Mr. and Mrs. Thomas signed the notes as joint makers and principals. Article 4623, V.A.T.S., Acts 1848, p. 77, G.L., Vol. 3, p. 77, provided:

“Neither the separate property of the husband nor the community property other than the personal earnings of the wife, and the income, rents and revenues from her separate property, shall be subject to the payment of debts contracted by the wife, except those contracted for necessaries furnished her or her children. The wife shall never be the joint maker of a note or a surety on any bond or obligation of another without the joinder of her husband with her in making such contract.”

In 1957 Article 4623 was amended so as to delete entirely therefrom the provision consisting of the last sentence thereof. At the time the notes in question were executed in 1961, Article 4623 did not contain such deleted provision. In 1962 said Article was amended so as to again incorporate therein such provision, and in 1963 the entire article was repealed by the 58th Legislature of Texas.

Before the deletion in 1957 of said provision in Article 4623, it had been held by our courts that a married woman could with the joinder of her husband make herself liable as a surety for another. In Red River National Bank v. Ferguson, 1918, 109 Tex. 287, 206 S.W. 923, our Supreme Court, speaking through Chief Justice Nelson Phillips, in referring to said provision, used the following language:

“This is a restrictive clause, — a purely negative provision. It does not purport to confer upon the wife any express authority. Such as it does confer is only by implication. It implies that the wife, when joined by her husband in the making of such contract, may become the joint maker of a note with another, or a surety upon another’s bond or obligation. It is to be construed as if so written. But the common sense of the language is that it is not the husband’s note, bond or obligation that is referred to or intended. It is the note, bond or obligation of 'another,’ in whose execution with the wife he is merely required to join.”

See also Boone v. Likens-Waddill Motor Co., Tex.Civ.App., 49 S.W.2d 979; Mc-Ilhenny v. Eldridge, Tex.Civ.App., 235 S.W. 244, error ref.; Texas Water Supply Corp. v. Reconstruction Finance Corp., 5th Cir. 1953, 204 F.2d 190; Tolbert v. Standard Accident Ins. Co., 148 Tex. 235, 223 S.W.2d 617.

Appellees contend that by virtue of said surety provision included in Article 4623 from 1913 to 1957, it was established that a married woman could make herself liable as surety for another, and that this was not changed by the 1957 amendment deleting such provision with respect to being a joint maker or surety on the obligation of another with the joinder of her husband, since the inference is that after such deletion she could make such surety contract even without the joinder of her husband, and hence could certainly do so with his joinder as she allegedly did in the instant case. We do not agree with this contention. Our Supreme Court has held that such provision did not confer upon the wife any express authority to become a surety. It merely implied that the wife when joined by her husband could become the joint maker of a note with another, or a surety upon another’s bond or obligation. It is our view that after such provision was deleted in 1957 there could be no longer any implication that a married woman could become a joint maker of a note with another or a surety upon another’s bond or obligation, either with or without her husband’s joinder. In Tolbert v. Standard Accident Ins. Co., supra, our Supreme Court said: “It would be to ignore the public policy of this state, continuously maintained since 1840, that in the absence of statutory authorization for a wife to make contracts, they are voidable at her option.”

Appellees further assert that appellant, if she had any right not to be held personally liable on such notes, waived the same by not electing to have the notes in question declared void prior to the time of the 1962 amendment to Article 4623 and the amendments of Articles 4614, 4621, 4624 and 4626 which took effect in 1963. We do not agree with such contention. Nor do we agree that the 1962 amendment or the 1963 amendments to such statutes deprived appellant of her substantive right of immunity from personal liability under the facts of this case. It is well settled that the laws which are in existence at the time and place of the making of a contract, and where it is to be performed, enter into and become a part of such contract as if expressly referred to or incorporated therein. Stanolind Oil & Gas Co. v. Terrell, Tex.Civ.App., 183 S.W.2d 743, writ ref.; Winder Bros. v. Sterling, 1929, 118 Tex. 268, 12 S.W.2d 127. A substantive right conferred by such existing law, when it constitutes part of an agreement by implication, may not be defeated by a subsequent amendment of the law. 13 Tex.Jur. 2d 352, Contracts, § 165; 17 C.J.S. Contracts § 22, p. 626; 17A C.J.S. Contracts § 330, p. 295.

It is true that appellant could have filed an answer in the case and pled cover-ture. She was not required to do so. Since appellees’ petition showed she was a married woman, she had the right to assume that the court would not enter a default judgment against her personally on a petition which did not state a cause of action against her. It is not shown when appellant learned that the default judgment was taken. It was not necessary for her to take any affirmative action prior to the erroneous judgment taken against her. She is now timely seeking to be relieved therefrom insofar as it grants a recovery against her personally. Had she made an appearance in the case, there might be some plausibility in appellees’ assertion of waiver because of her failure to plead coverture and the insufficiency of appellees’ pleading. Rule 90, Texas Rules of Civil Procedure. But such is not the case where a judgment is taken by default.

The law is well settled that in order to support a default judgment it is essential that the petition show a good cause of action upon which a default judgment can be entered. In Rule 90, T.R.C.P., it is provided that every defect, omission, or fault in a pleading, either of form or of substance, is waived unless complained of in the lower court, and they shall not be grounds for reversal of a cause. It is specifically provided, however, in Rule 90 that such rule shall not apply as to any party against whom a default judgment is rendered. Griswold v. Carlson, 1952, 151 Tex. 246, 249 S.W.2d 58. This clearly indicates that appellant has not waived the right under Rule 90, T.R.C.P., to assert at this time the insufficiency of appellees’ petition to support a default judgment against her personally. A petition must adequately allege a cause of action before it can support a default judgment. White v. Jackson, Tex. Civ.App., 358 S.W.2d 174, writ ref., n. r. e.; Griswold v. Carlson, supra.

The judgment of the trial court, insofar as it decrees any personal recovery against appellant, Ann Chesser, is reversed and rendered; otherwise not disturbed.


author: MURRAY, Chief Justice. POPE, Justice

text:
    The STATE of Texas, Appellant, v. SOCONY MOBIL OIL COMPANY, Inc., et al., Appellees.
    No. 14290.
    Court of Civil Appeals of Texas. San Antonio.
    Dec. 2, 1964.
    Rehearing Denied Dec. 30, 1964.

      James E. Barlow, San Antonio, for appellant.
    James D. Baskin, Jr., Richard E. Goldsmith, Lester L. Klein, San Antonio, Ross Madole, Donald G. Canuteson, Dallas, for appellees.
   MURRAY, Chief Justice.

This suit was instituted by the State of Texas acting through the Criminal District Attorney of Bexar County, seeking an injunction against three corporations: So-cony Mobil Oil Company, Inc., Mission Telecasting Corporation and Idea Research and Development Corporation. Mission Telecasting Corporation is the owner and operator of KONO-TV, broadcasting as Channel 12, in San Antonio. The above three corporations will be hereinafter referred to as Mobil, KONO-TV and Idea, respectively. The trial was to the court without the intervention of a jury, and resulted in a judgment denying the injunction, from which judgment the State has prosecuted this appeal.

The purpose of the injunction was to restrain the operation of a promotion scheme conducted by the above three corporations known as TV-Bingo. The petition alleged that such scheme was a violation of the law, and specifically charged that it constituted one of the following:

“1. A Lottery under the Penal Code.
“2. A Gift Enterprise under the Constitution.
“3. An evasion of the Lottery Law based upon the Lottery principle under the Constitution.
“4. A Bank or Gaming Table under the Penal Code.”

All exceptions of the defendants were waived prior to the trial before the court. Thus, the answer of the defendants consisted of two pleas to the jurisdiction based on federal pre-emption of regulation of the television industry, censorship and other constitutional grounds, and the following denials: (1) A re-assertion of the denial of the State’s right to regulate broadcasting because of both federal pre-emption and on the theory of censorship; (2) denial that the scheme set out is a violation of the law because the player does not pay a consideration for the privilege to play; (3) a claim that the State waived its right to criminal prosecution because of an opinion issued by the office of the Attorney General.

The trial court overruled the plea to the jurisdiction and denied the injunction, as above stated. Appellees contend that the scheme does not constitute a lottery because no consideration is paid for the bingo cards, but appellant contends that the facts show a sufficient consideration to constitute the scheme a lottery. We take the following statement of the facts from appellant’s brief:

“The facts show that about the middle of September, 1963, KONO-TV began broadcasting a widely advertised show called Channel 12 TV Bingo. That the show consists of an announcer who calls off a regular Bingo game on television. The jackpot that a player may win is $25.00 and if there is no winner, is increased every day by $25.00 until there is a winner. This jackpot is paid to the winner in cash. That the jackpot has gotten as high as $225.00. Bingo cards may be obtained by the player at a station owned by the Mobil company and operated by one of its dealer-agents.
“The border of the card is a distinctive color and the card to be played changes each week. That a card to win must be a current card. A sample card is attached as State’s Exhibit No. 1. This card is a normal Bingo card with the word Bingo spelled out across the top and 5 rows of numbers from 1 to 75 under each letter and one free space. The game played on television is black-out type Bingo — all numbers must be covered to win.
“The numbers are fed to the announcer by chance by an air blower machine. Each number and one letter are on a ping-pong ball blown around and around by the air and they come out of an air vent opened by the announcer. He has absolutely no control over the number that may come up. A winner must call KONO-TV during the program or within 30 minutes after the program is over to win.
“The sales manager of Mobil, Wade Walles, testified that Mobil has a contract with Idea to put on TV-Bingo. That the scheme was a ‘cooperative advertising” program and dealer-agents were allowed to join under a complicated system whereby each dealer-agent paid ‘approximately two-tenths of a cent a gallon’ of gasoline to get in. Mobil sells the gasoline to the dealer-agents and also pays a share of the cost of the Bingo. That the sales manager of Mobil testified that he did not know where the dealer-agent got the money to pay for his part but it was set up to' charge him on the basis of gallonage. The dealer-agent is given 200 cards when he gets in the program. This is 8 books since there are 25 cards to the book. If he wants more, the dealer-agent can buy all of the books from Mobil he wants at a flat rate per book after the original entrance fee. Mobil gets the books from Idea.
“The purpose of the scheme is to increase sales. It does increase sales. The overall scheme was estimated by the agents of Mobil to have increased sales of gasoline ten per cent during the time it has been in operation. The dealer-agent was supposed to own the cards that he bought and they were his to do with as he pleased. Mobil says that the dealer-agent was definitely instructed to give these cards to anyone that asked for them.
“Mobil pays Idea for the operation of this scheme $1,087.00 per week. Approximately 50 Mobil stations in Bexar County participate in this scheme.
“KONO-TV is a television station licensed by the Federal Communications Commission. It receives $190.00 and some odd cents per broadcast from Idea for this show. The show is broadcast daily. '
“Idea claims to have a copyright on this scheme and is the promotor of the scheme. Idea pays the jackpot money.
“L. C. Waller, who leases a Mobil Station at 934 Fredericksburg Road, San Antonio, testified that he gives the cards to anyone that comes in. He also stated that he paid $165.00 to get into the program and thirty cents for each 100 cards after the first 200. H. W. Bailey, who leases a Mobil Station at 11014 Goliad Road, San Antonio, testified that he puts out 500 to 1000 cards a week and paid $165.00 to get in and $3.00 per 1000 after the first 200. He testified that he gives the cards to anyone over 18 years of age. Frank Burger who operates a Mobil Station owned by Mobil and leased to him on Commerce Street, Houston Highway, San Antonio, testified that he paid around $300.00 to get in and puts out 2,000 to 5,000 cards a week. He says that he was never told who to give the cards to, but normally gives them to anyone that asks. This money is all paid to Mobil.”

Art. 654, Vernon’s Ann.Penal Code, prohibits the operation of a lottery in the following language:

' “If any person shall establish a lottery or dispose of any estate, real or personal, by lottery, he shall be fined not less than one hundred nor more than one thousand dollars; or if any person shall sell, offer for sale or keep for sale any ticket or part ticket in any lottery, he shall be fined not less than ten nor more than fifty dollars.”

In 37 Tex.Jur.2d p. 493, § 1, is the following statement:

“The term lottery has no technical signification in the law, and since our statute does not provide a definition, its meaning must be determined from popular usage. According to that test a lottery is a scheme for the distribution of prizes by lot or chance among those who have paid, or agree to pay, a consideration for the right to participate therein, or the distribution itself. Therefore, a game depending entirely on skill is not a lottery although prizes are offered for the best solution.”

Thus we see that a lottery is composed of three elements, to-wit: (1) a prize or prizes; (2) the award or distribution of the prize or prizes by chance; (3) the payment either directly or indirectly by the participants of a consideration for the right or privilege of participating. It is not denied by appellees that there are prizes and that they are disposed of by chance, but appellees do strenuously contend that the participants do not pay any consideration for the right to participate in TV-Bingo. The filling stations pay for the cards, but they give them away to any and all persons who come to their stations and request them. They are not required to buy anything at the filling station, although the cards may be given to customers who do make a purchase at such filling stations. It is not shown what proportion of the bingo cards is given to customers and what proportion is given to non-customers. TV-Bingo is intended to increase the sale of Mobil products in this area- and it has had that effect.

The case of Brice v. State, 156 Tex.Cr.R. 372, 242 S.W.2d 433, is in point here. In that case the first two elements of a lottery were shown, but the third element was missing. The scheme thus was very similar to the scheme here. The public was permitted to register for prizes to be given away upon a certain day; no charge was made for the privilege of registering; any one could register, he was not required to’ be a customer; no admission was charged to be present at the drawing. In fact, there was no requirement that the lucky prize winner be present at the drawing. White’s Auto Stores furnished the prizes for advertisement purposes. The Court of Criminal Appeals of this State held that Art. 654, supra, was not violated in that the participants in the prize drawing did not pay, directly or indirectly, any consideration for participating in the drawing, a necessary element of a lottery. Judge Woodley, speaking for the Court of Criminal Appeals, after discussing a number of authorities, said:

“Under the authorities mentioned, we must conclude that in the absence of any character of favoritism shown to customers, the lottery statute, Art. 654, P.C., is not violated under a plan whereby a merchant awards a prize or prizes by chance to a registrant without requiring any registrant to be a customer or to purchase merchandise or to do other than to register without charge at the store, though the donor may receive a benefit from the drawing in the way of advertising.”

Appellant cites the case of Cole v. State, 133 Tex.Cr.R. 548, 112 S.W.2d 725. This was a so-called “bank night” case in which Cole was convicted of operating a lottery. The scheme there was to have people sign a book. This they could do without paying a a consideration, and if their numbers were drawn on any Tuesday night they would receive a prize of $25.00 if they were present in the theater, or if they appeared in the theater within a reasonable time after their numbers were drawn and claimed their prize. They could gather outside the theater on Tuesday night and if their number was called, attempt to get into the theater and claim their prize within a reasonable time, otherwise they would receive no prize. Just how a person on the outside could learn that his number had been drawn and get into the theater in time to claim his prize is not made clear. It was not shown that anyone outside the theater ever claimed a prize in time. Under these circumstances, the Court held that for all practical purposes the public were in effect required to purchase tickets to the theater, and thus pay a consideration for the privilege of participating in the lottery. Here there is no such requirement, a person can receive a card and win a prize in TV-Bingo without paying one cent for the privilege •of participating.

The State cites a number of other cases contending that TV-Bingo was a lottery, to-wit: Featherstone v. Independent Serv. Station Ass’n of Texas, Tex.Civ.App., 10 S.W.2d 124; Smith v. State, 136 Tex.Cr. R. 611, 127 S.W.2d 297; Hoffman v. State, Tex.Civ.App., 219 S.W.2d 539; Griffith Amusement Co. v. Morgan, Tex.Civ.App., 98 S.W.2d 844; City of Wink v. Griffith Amusement Co., 129 Tex. 40, 100 S.W.2d 695. These are all earlier cases than Brice v. State, supra, and are distinguishable from the Brice case, in that in those cases the payment of a consideration, either directly or indirectly, for the privilege of participating, was established. TV-Bingo as conducted by appellees herein is not a lottery.

Appellant contends that even if TV-Bingo is not a lottery under the provisions of Art. 654, supra, it is nevertheless a violation of Sec. 47, Art. 3, of our State Constitution, Vernon’s Ann.St., reading as follows:

“The Legislature shall pass laws prohibiting the establishment of lotteries and gift enterprises in this State, as well as the sale of tickets in lotteries, gift enterprises or other evasions involving the lottery principle, established or existing in other States.”

Our Legislature has never passed a law making it a criminal offense to operate “gift enterprises or other evasions involving the lottery principle.”

The injunction was here sought under the provisions of Art. 4667, Vernon’s Ann.Civ.Stats., and in order to secure an injunction under this article a violation of the criminal statutes of this State must be alleged and proved. State ex rel. Shook v. All Texas Racing Ass’n, 128 Tex. 384, 97 S.W.2d 669, 100 S.W.2d 348.

Appellees contend that an additional reason for denying an injunction herein is that the State has no power to restrain the broadcast of TV-Bingo, because such power has been pre-empted by Congress, citing Federal Radio Commission v. Nelson Bros. Bond & Mortgage Co., 289 U.S. 266, 53 S.Ct 627, 77 L.Ed 1166; National Broadcasting Co. v. United States, 319 U.S. 190, 63 S.Ct. 997, 87 L.Ed. 1344; Benanti v. United States, 355 U.S. 96, 78 S.Ct. 155, 2 L.Ed.2d 126; Com. of Pennsylvania v. Nelson, 350 U.S. 497, 76 S.Ct. 477, 100 L. Ed. 640; American Broadcasting Co. v. United States, D.C., 110 F.Supp. 374, on appeal to Supreme Court of U.S., Federal Communications Comm. v. American Broadcasting Co., 347 U.S. 284, 74 S.Ct. 593, 98 L.Ed. 699; Capíes Co. v. United States, 100 U.S.App.D.C. 126, 243 F.2d 232; Farmers’ Educational & Coop. Union v. WDAY, Inc., 360 U.S. 525, 79 S.Ct. 1302, 3 L.Ed.2d 1407; Allen B. Dumont Laboratories, Inc. v. Carroll, 3 Cir., 184 F.2d 153; Head v. New Mexico Board of Examiners, 374 U.S. 424, 83 S.Ct. 1759, 10 L.Ed. 2d 983; 18 U.S.C.A. § 1304. After examining these authorities, we are convinced that Congress has pre-empted the field of regulating the broadcasting of lotteries over TV, and that we do not have jurisdiction to enjoin TV-Bingo, even though it might constitute a lottery under Texas Statutes.

The judgment of the trial court denying the injunction is affirmed.

POPE, J., dissenting.

On Motion for Rehearing.

POPE, Justice

(dissenting).

In my opinion, the scheme is a lottery. Someone must pay for everyone who plays. Someone must pay for each bingo card. Each of some fifty service station dealers pays from $167.00 to $300.00 as an original price, and from $10.00 to $15.00 a week thereafter. Unless the dealers pay, they get no cards to distribute for the “free” games. When they quit paying, they cease getting cards. The television station receives $190.00 a day to stage the game. The promoter receives $1,087 each week. The truth is that this scheme was operated upon a plan that obscures but does not destroy the fact that nobody plays until somebody pays. If, in a bingo parlor each person paid for the person who sat next to him, one might argue plausibly that nobody paid for his own game. I would grant the injunction.


author: TIREY, Justice.

text:
    The CITY OF WACO, Appellant, v. ARCHENHOLD AUTOMOBILE SUPPLY CO., Appellee.
    No. 4246.
    Court of Civil Appeals of Texas. Waco.
    Dec. 31, 1964.
    Rehearing Denied Jan. 21, 1966.

      Thomas R. Hunter, City Atty., Earl Bracken, Asst. City Atty., Jones, Boyd, Westbrook & Lovelace, Waco, for appellant.
    Bryan, Wilson, Olson & Stem, Waco, for appellee.
   TIREY, Justice.

In January 1962, the City of Waco, a home rule city, began the construction of a one-way viaduct beginning at the south side of Franklin Avenue and running to Webster Street. Appellee’s property is located at the southwest corner of the intersection of South 17th Street and Franklin Avenue, such property fronting sixty feet on Franklin Avenue and extending back to the alley 165 feet. The viaduct was built wholly upon the right-of-way of the City of Waco separating the grade of South 17th Street from several railroad tracks and local industrial traffic. Prior to the construction of the viaduct appellee had full access to Franklin Avenue, and that access has not been interfered with. Prior to the construction of the viaduct appellee had access to the whole of South 17th Street and part of 17th Street remains open at ground level under the viaduct. Appellee purchased the property in 1952 and did so for the purpose of constructing thereon an automobile supply house and it is appellee’s contention that it was important to its business that it have a corner location to place its building on. The building as constructed contained approximately 7000 square feet and fronted on Franklin Avenue with a side entrance, and a loading entrance on South 17th Street. The building was set back from the property line on South 17th Street 14.5 feet; this allowed off-street parking adjacent to South 17th Street on appellee’s property, and allowed off-street loading and unloading facilities from South 17th Street at ground level. The building was set back from the property line of Franklin Avenue so as to allow head-in parking, but the exact distance it was set back is not shown. The viaduct had its place of beginning on what may be termed the south line of Franklin Avenue and the intersection of South 17th Street, and the viaduct elevated South 17th Street from ground level at Franklin Avenue to ground level at Webster Street some three blocks south of Franklin Avenue. The elevation of South 17th Street abutting appellee’s property was raised gradually from ground level before the construction of the viaduct to a height varying from approximately two feet to thirty-two feet above ground level.

Pertinent to this discussion plaintiff alleged that the City constructed the viaduct for public use and as a result plaintiff’s property has been greatly damaged because of the fact that it completely blocked its access to its property on South 17th Street side, making it necessary to reconstruct its loading dock at an expense of $5,000.00, and that it does not provide a suitable means for the loading and unloading of the merchandise that it engages in selling, and that the deprivation of their access to South 17th Street for loading and unloading purposes has depreciated the reasonable market value of their property to at least the sum of $40,000.00.

The jury found that the market value of the property was reduced by reason of the construction of the viaduct and that its reasonable cash market value immediately before the construction was $61,475.00, and further found the reasonable cash market value immediately after the construction to be $46,475.00, and the court overruled the City’s motion for judgment non obstante veredicto and granted plaintiff’s motion for judgment for the sum of $15,000.00, and interest in the sum of $962.00 from November 1, 1962 to date, and 6% per annum from date of the judgment, which was entered on December 2, 1962. The City duly perfected its appeal.

Appellant’s Point 1 is:

“The trial court erred in holding that the plaintiff was entitled to recover damages from the City of Waco for the limitation of access to South 17th Street when such limitation was due to a reasonable exercise of the City’s police power and when plaintiff’s property retained full access to Franklin Avenue as well as the retention of access to a portion of South 17th Street.”

We sustain this point and it will require that this cause be reversed and rendered.

Our view of this cause is that the controlling facts are without dispute and these facts are that the appellee had full access to its frontage on Franklin Avenue, and that that has not been interfered with. At the same time, the plaintiff’s access to South 17th Street has been cut off from the intersection of such street with Franklin Avenue, but plaintiff still has access to its property by way of South 16th Street, and by the use of Mary Street, and by virtue of the circuitous alley south of and abutting the rear of appellee’s property, which alley extends to the east side of the 18th street overpass, and such alley has an outlet onto Franklin Street at 18th. There is a partial access to plaintiff’s property from the alley under the viaduct to the east side of its building up to a distance of about 80 feet from the intersection of South 17th with Franklin Avenue, but the exact distance is not shown, nor does it show the exact height of the overpass, but the elevation is graduated from ground level. The access to the appellee’s property at ground level at the loading zone is adequate, and as we understand the record the only complaint is the circuitous route involved in getting to and from the loading zone. It is also without dispute that it was necessary to the plaintiff’s business to change its loading dock from South 17th Street to the south side of the building, and there is no doubt that this is more inconvenient to the plaintiff’s customers, because in approaching appellee’s place of business from Franklin Avenue, which is a one-way street east beginning at the intersection of North 18th Street and Franklin Avenue, they would have to go to South 16th Street and intersect the alley between Mary Street and Franklin Avenue or go to Mary Street in order to get to plaintiff’s loading and unloading dock. It is also true that their customers could enter a twenty foot alley from Franklin Street just east of the 18th Street overpass, and this circuitous route would take them into the alley just to the rear of appellee’s building. To that extent it is an inconvenience and a limitation on the customer’s access to the loading dock. There is ample evidence to sustain the jury’s verdict that the reasonable market value of appellee’s property had been damaged, but the City’s answer to this contention is that the City of Waco, under the undisputed facts, had exercised its police power in a reasonable manner to construct the viaduct in order to provide for free and safe flow of traffic along South 17th Street in the City of Waco, and that the construction of the viaduct had not cut off all reasonable access to appellee’s property. We are in accord with this view and think it is supported by the constitution and laws of the State of Texas, and our Supreme Court has so interpreted similar factual situations. In Spann v. City of Dallas, et al., 111 Tex. 350, 235 S.W. 513, our Supreme Court made the following statement:

“The police power is founded in public necessity, and only public necessity can justify its exercise. The result of its operation is naturally, in most instances, the abridgment of private rights. Private rights are never to be sacrificed to a greater extent than necessary. Therefore, the return for their sacrifice through the exercise of the police power should be the attainment of some public object of sufficient necessity and importance to justly warrant the exertion of the power.
“The public health, the public safety, and the public comfort are properly objects of this high importance; and private rights, under reasonable laws, must yield to their security.
“Since the right of the citizen to use his property as he chooses so long as he harms nobody, is an inherent and constitutional right, the police power cannot be invoked for the abridgment of a particular use of private property, unless such use reasonably endangers or threatens the public health, the public safety, the public comfort or welfare. A law which assumes to be a police regulation but deprives the citizen of the use of his property under the pretense of preserving the public health, safety, comfort or welfare, when it is manifest that such is not the real object and purpose of the regulation, will be set aside as a clear and direct invasion of the right of property without any compensating advantages.”

Article 1175, Vernon’s Ann.Tex.St, provides that home rule cities, such as the City of Waco, has full power of local self-government and enumerates many powers that a home rule city may exercise. Section 16 of that article provides that a home rule city has

* * * exclusive dominion, control, and jurisdiction in, over and under the public streets, avenues, alleys, highways and boulevards, and public grounds of such city and to provide for the improvement of any public street, alleys, highways, avenues or boulevards by paving, raising, grading, filling or otherwise improving the same * * (emphasis added).

Section 18 of Article 1175, V.A.T.S., provides that a home rule city has the right:

“To control, regulate and remove all obstructions or other encroachments or encumbrances on any public street, alley or ground, and to narrow, alter, widen or straighten any such streets, alleys, avenues or boulevards, and to vacate and abandon and close any such streets, alleys, avenues or boulevards * * *»

Article T, Section 4, of the Charter of the City of Waco provides that:

“The City shall have exclusive dominion, control and jurisdiction in, upon, over and under the public streets, sidewalks, alleys, highways, public squares and public ways within the corporate limits of the City, and in, upon, over and under all public property of the City. With respect to each and every public street, sidewalk, alley, highway, public square, public park or other public way within the corporate limits of the City, the City shall have the power to establish, maintain, improve, alter, abandon, or vacate the same; to regulate, establish, or change the grade thereof; to control and regulate the use thereof; and to abate and remove in a summary manner any encroachment thereon.” (emphasis added).

Section 5 of Article I of the Charter of the City of Waco provides that:

“The City shall have the power to develop and improve or cause to be developed and improved, any and all public streets, sidewalks, alleys, highways, and other public ways within the corporate limits of the City by laying out, opening, narrowing, widening, straightening, extending, lighting, and establishing building lines along the same; by purchasing, condemning, and taking property therefor; by filling grading, raising, lowering, paving, repaving and repairing, in a permanent manner, the same; and by constructing, reconstructing, altering, repairing, and realigning curbs, gutters, drains, sidewalks, culverts, and other appurtenances and incidentals in connection with such development and improvement authorized hereinabove, or any combination or parts thereof. * * *.” (emphasis added).

In the case at bar the City of Waco has exercised its police power in constructing this overpass in order to provide for the public safety of traffic: using South 17th Street,. and in so doing has constructed this viaduct over the main line of the St. Louis Southwestern Railway Company’s track, and the main line of the Missouri-Kansas-Texas Railway Company track, and the various switching tracks adjacent thereto, and in so doing it has provided for safe traffic in this community for traffic moving from south to north one-way, and such viaduct, without question, contributes greatly to the safety and convenience of the citizens of this community, as well as all traffic moving from the south to the north over this viaduct; that it is a valid exercise of the police power granted to the City cannot he denied. In City of San Antonio v. Pigeonhole Parking of Texas, 158 Tex. 318, 311 S.W.2d 218, pt. 1, (which opinion is quite clear and comprehensive) we find the following statement by our Supreme Court:

“Undoubtedly the general rule is that access to a public highway is an incident to ownership of land abutting thereon and the corollary follows that this right cannot be taken or destroyed for public purposes without adequate compensation being given therefor. * * * While this rule is universally followed where the power of eminent domain is exercised, it does not apply when a municipality invokes its police power for the protection of the health, safety and general welfare of its citizens.
•t» *l*
“ ‘All property is held subject to the valid exercise of the police power; nor are regulations unconstitutional merely because they operate as a restraint upon private rights of person or property or will result in loss to individuals. The infliction of such loss is not a deprivation of property without due process of law; the exertion of the public power upon subjects lying within its scope, in a proper and lawful manner, is due process of law. Moreover, police regulations do not constitute a taking of property under the right of eminent domain; and compensation is not required to be made for such loss as is occasioned by the proper exercise of the police power. * * * ’ ” See Lombardo v. City of Dallas, 124 Tex. 1, 73 S.W.2d 475, 478.

As we understand the decision of our Supreme Court in City of San Antonio v. Pigeonhole Parking of Texas, supra, the burden of showing that the action of the City of Waco in building and constructing the viaduct was unnecessary, unreasonable and arbitrary was upon the appellee, and we think it has wholly failed to make such a showing, and that the action of the City in doing so, under the undisputed factual situation here, is conclusive and cannot be changed by our courts.

Finally, our view of our Texas Constitution and our Statutes and the City Charter of Waco, and the authorities here cited, are to the effect that the Texas Constitution provides that no person’s property shall be taken, damaged, or destroyed for or applied to public use without adequate compensation being made, unless by the consent of such person; that the police power of the State has been delegated to municipalities to be exercised for the protection of the health, safety, comfort, convenience and welfare of the public, and when the police power of the State or a municipality is validly and reasonably exercised, damages caused thereby to abutting property is noncompensable and does not fall within the meaning of Section 17 of Article 1 of the Texas Constitution, Vernon’s Ann.St.; that home rule cities, such as the City of Waco, have exclusive dominion, control and jurisdiction in,- over and under its public streets, including the right to change the grade of such streets; that if there is substantial evidence in support of the need for, or reasonableness of, regulations of a municipality under its police power, the court will not substitute its discretion for the governmental or legislative discretion of the governing body of the municipality; that the elimination of traffic hazards by the control of the direction of traffic, parking, relief of congestion, ■elimination of hazardous crossings, etc., are all valid exercises of a municipality’s police power; that when a landowner’s property is located upon a corner and has access to one street, if the safety, comfort, convenience, health or general welfare of the public demands a denial of access to the other street, such a denial of access by a municipality is a valid exercise of its police power and is noncompensable; that the State or a municipality has the right to reroute, relocate, improve, abandon, or vacate its streets in any reasonable manner that it deems necessary for public safety, health, comfort, convenience, or welfare of the community.

Under the foregoing expressed views each of the other points raised by appellant pass out of the case. As we have heretofore stated, the construction of the viaduct by the City was a valid exercise of its police power, and since appellee has access to its property as herein stated, and has not been denied total access to its property, there is no taking, and the loss and inconvenience it may have sustained is noncompensable. The Amarillo Court in Moorlane Company, et al., v. Highway Department of the State of Texas and City of Amarillo, Tex.Civ.App., 384 S.W.2d 415 (n. w. h.), in a recent decision handed down on October 26, 1964, supports the views here expressed. See also Pennysavers Oil Company v. State of Texas, Tex.Civ.App., 334 S.W.2d 546 (w. ref.); State of Texas v. Clark, 161 Tex. 10, 336 S.W.2d 612; Boys Town, Inc., v. Pauline Pipkin Garrett, Tex. Civ.App., 283 S.W.2d 416, (n. r. e.); City of Waco v. DuPuy, Tex.Civ.App., handed down this date, and cases therein cited.

The cause is reversed and rendered and the costs are taxed against appellee.


author: POPE, Justice.

text:
    ATOMIC FUEL EXTRACTION CORPORATION, Appellant, v. ESTATE of Tom SLICK et al., Appellees.
    No. 14282.
    Court of Civil Appeals of Texas. San Antonio.
    Dec. 30, 1964.
    Rehearing Denied Jan. 27, 1965.

      Sears & Burns, Houston, W. R. Smith, San Antonio, Haskell, Helmick, Carpenter & Evans, John H. Tippit, Denver, Colo., for appellant.
    Carl Wright Johnson, Nat L. Hardy, San Antonio, Holland & Hart, Denver, Colo., Stahl & Sohn, Cox, Smith & Smith, San Antonio, for appellees.
   POPE, Justice.

Plaintiff, Atomic Fuel Extraction Corporation, sued Transworld Resources Corporation, Nuclear Resources, Inc., and Tom Slick, who died after suit was filed. The parties will be called Atomic, Transworld, Nuclear, and Slick, respectively. Atomic during 1957 owned a milling contract issued by the Atomic Energy Commission, which would terminate if $2,000,000 was not made available to assure construction of the mill. Atomic charges that the three defendants agreed to furnish the funds but failed to do so. It asserted damages of more than four million dollars under four alternative causes of action: breach of contract, breach of an agent’s fiduciary duty, fraud, and tor-tious interference with a contract. After a lengthy trial, the court granted all defendants’ motions for instructed verdict.

Atomic had contracts with both Trans-world and Nuclear but it seeks to reach Slick by invoking the doctrine that those corporate entities should be disregarded. In order, we shall discuss our conclusions that Atomic raised fact issues which prevented an instructed verdict for either Transworld or Nuclear, but that Atomic only proved nominal damages against them; that Atomic failed to prove grounds to disregard the corporate entities with whom it chose to contract, and that the instructed verdict for Slick was proper since Atomic’s actions, save the one on contract, are barred by the two-year statute of limitations.

We shall discuss the contractual origin of this controversy. Atomic, during 1956, obtained a contract from the Atomic Energy Commission which entitled it to construct a uranium mill in Colorado. The contract would terminate unless Atomic began the mill construction by June 1, 1957. Atomic was able to get an extension of time, but the extension provided for an automatic termination on October 1, 1957, in these words: “ * * * unless by said date the Contractor (Atomic) has in its possession and available for the performance of this contract Two Million Dollars ($2,000,000) in cash in excess of its current liabilities, and the Commission has by the same date received clear and convincing written proof thereof, which proof shall be in the form of a contractual agreement between Atomic Fuel Extraction Corporation and the party or parties providing such money.”

John Black, an officer and the moving force in Atomic, in July of 1957, wrote Slick Oil Company in San Antonio in an effort to interest that firm in Atomic’s uranium venture and to obtain the necessary finances for the mill. This letter resulted in a conference in Denver on July 16, between Black and other officers of Atomic and James V. McGoodwin and others from San Antonio. This conference led to the execution of what is called a letter of agreement dated July 18, 1957. This document is not the basis of the action on contract, but it led up to the actual contracts, called the August 13 letter agreement and the August 16 merger agreement. On August 13, 1957, Transworld submitted a letter agreement to Atomic. It was signed by McGoodwin for Transworld, and was signed and accepted by all of the directors for Atomic. Since this is one of the two documents upon which Atomic grounds its contract action, we shall set forth its relevant portions:

“Informal discussions with the Atomic Energy Commission indicate that performance of the management contract, as discussed in the letter of Agreement, will not satisfy the Atomic Energy Commission requirements under your contract with that agency for a •mill operation. Furthermore, the ore supply for the proposed mill is not certain due to the questionable validity of your contract with Beaver Mesa Company concerning certain uranium lode mining claims.
“Notwithstanding these difficulties, Transworld is willing to undertake the •construction and operation of a uranium mill under your contract with the Atomic Energy Commission on the following terms and conditions:
1. Atomic Fuel either will be merged into a corporation designated by Transworld or will transfer all of its assets and liabilities to the designated corporation, the alternative to be at the option of Transworld. In either event the consideration will be delivery of at least 25% of the then issued and outstanding stock of the designated corporation to the stockholders of Atomic Fuel or to it, depending on the alternative followed.
:2. (Omitted.)
-3. Transworld is satisfied that Atomic Fuel has a good posses-sory title to its mining claims, a list of which will be supplied to Holland & Hart, attorneys, by August 23, 1957, with the exception of the Echo-Hatch group as to which there is a dispute regarding ownership.
4. The liabilities and debts of Atomic Fuel do not exceed $300,000.00, based upon a thorough audit of the books of Atomic Fuel by Peat, Marwick, Mitchell & Co.
5. Transworld is able to obtain an ore supply of a quantity and quality sufficient to meet the production commitments to the Atomic Energy Commission in the mill contract referred to above.
6. The ore supply is amenable to processing by the method contemplated by Transworld
7. (Omitted.)
8. The officers and directors of Atomic Fuel cooperate fully with Transworld and the designated corporation to secure the approval of the stockholders of Atomic Fuel for all necessary corporate action.
9. All of the foregoing matters, with the exception of 2(d), must be accomplished not later than September 20, 1957.”

Investigations disclosed that the AEC would not approve a mere assignment of Atomic’s milling contract to another firm. The AEC required a merger. Because Transworld owned mineral interests other than uranium and related ores, and it was intended to keep the Atomic venture separate, it was determined that a new corporation would be formed which would merge with Atomic. On August 16 Nuclear Resources was incorporated in Colorado, and on that date Nuclear and Atomic executed the merger agreement. It detailed the method of the merger and imposed a condition precedent upon Atomic in these words: “subject to the conditions hereinafter contained, the merger provided for herein will become effective as of the close of business on September 20, 1957.” Nuclear would be the surviving corporation, would exchange its stock for Atomic’s in the proportion provided, would become vested with Atomic’s assets, and charged with its debts. Article VII of the merger agreement stated, among other things, that the merger “shall be effective only if the following conditions are met:

“(2) Nuclear is satisfied that the conditions stated in a certain Letter of Intent dated August 13, 1957, from Transworld Resources Corporation to Atomic have been met.
“(3) * * * Despite approval of the merger by the stockholders, the merger may, by action of the Board of Directors of Nuclear, be abandoned at any time prior to the actual filing of this agreement with the Secretary of State of Colorado, and any decision so to abandon the merger shall rest solely in the discretion of the said Board of Directors.”

The next day, August 17, Atomic’s Board of Directors ratified both the August 13 letter agreement and the August 16 merger agreement. On August 21, Atomic and Transworld agreed to some changes in the August 13 letter agreement. The changes substituted Nuclear for Transworld, extended the dead-line for compliance with the conditions precedent, from September 20 to September 25, and added this paragraph:

“9. The plan under which Nuclear acquires the assets and liabilities of Atomic Fuel shall be mutually satisfactory to legal counsel for this corporation (Atomic), Nuclear and Trans-world and further that said plan can be legally and effectively carried out within the time permitted by the Atomic Energy Commission and the provisions of Contract No. AT(05-l)-698.”

On September 25, 1957, the stockholders of Atomic met and approved the merger with Nuclear. The next day this telegram was sent to the AEC:

“Transworld Resources, Inc. hereby commits Two Million Five Hundred Thousand Dollars for the construction of the Bedrock, Colorado mill subject only and solely to the completion of the ore purchase negotiations now in progress to fulfill the AEC contracts for said mill and the conditions relating to the extension of that contract AT (05-1) 698. Copy to J. V. McGoodwin.
Tom Slick, Chairman of the Board Transworld Resources, Inc.”

The AEC did not regard this as a compliance with its requirement that $2,000,000' in cash must be furnished. On September 30, the day before the terminal date of the AEC milling contract, Slick, McGoodwin and others met with representatives of the AEC in Washington and were told that the only way Atomic’s AEC contract could be preserved was “to come up with two million dollars in cash in excess of current liabilities like the contract called for.”' Slick was trying to get an extension of time to October 30. On October 1, this telegram was sent by C. V. Wood, President of Transworld Resources, Inc., to J. V. McGoodwin, President, Nuclear Resources,. Inc.:

“Pursuant to action of the Board of Directors of this company taken in response to a proposal from you, we hereby commit to you two and one half million dollars to comply with the provisions of the financial requirement of the modification to contract AT-05— 1968. You are hereby authorized to. expend such fund in accordance with said contract as now or hereafter modified by the Atomic Energy Commission and whether the mill shall be built at Bedrock, Colorado or elsewhere but for no other purpose if the proposed merger with Atomic Fuels, has not yet been completed you are authorized at your discretion to commit to Atomic Fuels such funds as may be necessary under said contract as now or hereafter amended amounts expended hereunder shall be repayable on. or before April First 1962, together with interest at the rate of six per cent per year and security shall he arranged "by incumberance on the mill sight and townsight and improvements thereon. And by assignment to this company of the proceeds to be derived from the ■sale of uranium concentrates under the terms of said contract. We hereby ■agree to renegotiate the security to be .guaranteed hereunder upon completion of the final financing of this project to the end that the financial interest finally concerned shall be adequately secured.”

The AEC decided this still did not meet their requirements and terminated the milling contract as of October 1, 1957. Atomic asserted damages for defendants’ breach of the August 13 letter agreement in failing to provide the necessary finances for construction of the mill and for breach of the August 16 merger agreement. Defendants contend that the instructed verdict should be upheld because Atomic failed to meet the several conditions precedent stated in the August 13 letter agreement. Among those conditions was the one that Trans-world must be “satisfied” that Atomic has ■a good possessory title to its mining claims. Others were that the ore supply must be sufficient, must be amenable to processing "by the methods contemplated by defendants, •and Atomic’s debts must not exceed $300,-000. Nuclear, by its merger agreement, was ■to be satisfied about all of these conditions.

Atomic rightly urges that a jury issue was raised on its compliance with these conditions precedent. It presented ■evidence which a jury could believe that showed (1) that defendants were in fact satisfied and said so, (2) that defendants’ ■claimed dissatisfaction was not in good faith, and (3) that defendants prevented Atomic’s compliance. Black testified that on September 25, 1957, just after Atomic’s ■stockholders had approved the merger, he, a Mr. Turner and McGoodwin, President of Nuclear, conferred in a hotel room. We find this question and answer:

“Q Was anything said by anyone else concerning ore or ore supply for the mill on that occasion?
“A Yes, sir, there was. Mr. Turner had his brief case there, and he removed some fifteen copies of an ore commitment contract that I had prepared for him to take around and get signed, and handed them — or laid them on the bed in front of Mr. McGoodwin and said, ‘Here are fifteen more ore commitments from miners in this area.’ And Mr. McGoodwin said ‘We won’t need those. We have plenty of ore available.’ And he handed them back to Turner.”

This is some evidence of an admission of satisfaction prior to October 1, 1957, which defendants later denied.

Whether the defendants’ dissatisfaction about the conditions was feigned or in good faith is a fact issue. Coker v. Wesco Materials Corporation, Tex.Civ. App., 368 S.W.2d 883, 13 Tex.Jur.2d, Contracts, § 301. As stated in 5 Williston on Contracts (3rd Ed.) § 675A: “It has been questioned whether an agreement in which the promise of one party is conditional on his own or the other party’s satisfaction contains the elements of a contract— whether the agreement is not illusory in character because conditioned upon the whim or caprice of the party to be satisfied. Since, however, such a promise is generally considered as requiring a performance which shall be satisfactory to him in the exercise of an honest judgment, such contracts have been almost universally upheld.” The decision must be made in good faith. Golden State Mutual Life Ins. Co. v. Kelley, Tex.Civ.App., 380 S.W.2d 139, 141; 3A Corbin on Contracts, § 465; 86 A.L.R.2d 205; 44 A.L.R.2d 1125.

One situation which occasioned the condition precedent that Transworld and Nuclear must be “satisfied” was that Atomic, prior to its contracts with defendants, had fallen into a dispute with Beaver Mesa, Inc., about some mining claims and ore deposits. Of course, defendants had to know whether there was adequate ore available for a uranium mill if they were to finance it. Defendants, at the trial, contended that this dispute with Beaver Mesa was not finally settled by the September 25 deadline, and that the availability of mining claims and ore deposits was not assured to their satisfaction. Atomic meets this contention by proof that defendants thrust them out of the settlement negotiations with Beaver Mesa and prevented their efforts to reach a settlement.

Atomic presented proof that defendants were primarily interested in re-negotiating the Atomic-Beaver Mesa contract so they could obtain the economic advantages of the depletion allowance. Instead of ore delivered to the mill, defendants wanted ore in place. To achieve this, as well as the settlement of the dispute with Atomic, McGoodwin took over the negotiations with Beaver Mesa. Black testified that during September of 1957 McGoodwin and his attorneys conducted conferences with Beaver Mesa. McGoodwin reported to him that defendants “were trying to get — to buy the ore in the ground and then contract with Simpson Mining Company to mine it and so — that they could take advantage of this depletion situation and he further discussed the fact that the only thing that seemed to be left to determine was the costs — mining costs. They had agreed on everything else in principle but the mining costs.”

Black testified that he and another director of Atomic both offered to assist McGoodwin in these negotiations, but “Their reply was that they didn’t want him to monkey with it.” Black’s testimony is borne out by documentary evidence. On September 24, defendants’ attorney handed Black a copy of a memo which summarized the terms of the settlement and at that time told Black “the negotiations with Beaver Mesa had been finalized and that all that was necessary was to reduce it to a formal contract.” Black’s testimony that the final settlement contract was never signed is the fact which defendants say was conclusive proof of non-compliance with the conditions about adequate mining claims. The memo is in evidence. It shows, as Black testified, a settlement of the dispute and a revised method of acquisition of the ore in place. The memo was prepared by Beaver Mesa’s attorney and then forwarded to Nuclear’s attorney for his preparation of the formal contract, which was never done. The memo was not a contract, nor was it offered as such. It was, however, evidence which supported Black’s testimony that Atomic was excluded from these settlement negotiations, that defendants preempted the field, and succeeded in changing the original agreement on terms more satisfactory to Nuclear. This bears out Black’s testimony that Nuclear’s real concern was in purchasing ore in place and not the claimed dispute between Atomic and Beaver Mesa. In our opinion, this proof is sufficient to raise a fact issue about defendants’ prevention of compliance with the condition precedent it now insists upon. “The principle that prevention by one party excuses performance by the other, both of a condition and of a promise, may be laid down broadly for all cases.” 5 Williston on Contracts (3rd Ed.), § 677.

Another condition precedent required by paragraph 4 of the August 13 letter agreement was that Atomic’s debts must “not exceed $300,000, based upon a thorough audit of the books of Atomic Fuel by Peat, Marwick, Mitchell & Co.” That accounting firm made the audit and then expressed no opinion. The report was, “Because we have not been able to satisfy ourselves as to the correctness of substantial amounts relating to assets and liabilities of the corporation as of June 30, 1957, we are not in a position to express an opinion on the accompanying balance sheet.” This was not a compliance with the condition precedent. Atomic offered evidence, however, to raise a fact issue on whether defendant Nuclear, by its acts and conduct, waived this condition.

Performance of conditions precedent can be waived. The waiver may be by words or deeds or both. “It is immaterial how the promisor manifests his intention to fulfil the prior duty without the performance of the condition thereof. Whether he speaks of waiver or uses other words in this connection is of no consequence, if the undertaking to perform is made plain.” Restatement, Contracts, § 88, Comment c.; Equitable Life Assurance Society v. Ellis, 105 Tex. 526, 147 S.W. 1152; Bankers Life & Loan Ass’n of Dallas v. Ashford, Tex.Civ.App., 139 S.W.2d 858; Childress v. Cook, 5 Cir., 245 F.2d 798.

There is evidence that defendants waived the condition precedent about Atomic’s debts. On September 25, 1957, the contract terminated if the condition was not met. On that date Slick, as chairman of Transworld’s Board, sent the telegram to AEC committing two and a half million dollars “subject only and solely to the completion of the ore purchase negotiations.” Atomic’s debts were not mentioned. McGoodwin, Slick and others were in Washington on September 30 and October 1, 1957, arguing to the AEC that the contract with Atomic was in force and they were seeking an extension of the AEC milling contract. Still treating the contract with Atomic as in force, on October 1, the President of Transworld unconditionally committed two and a half million dollars to Nuclear for the mill construction. In December, 1957, McGoodwin, as President of Nuclear, still regarded the merger deal as pending, the September deadline having long since passed. He sent Black this telegram:

“Nuclear Resources herewith commits to conclude its pending merger deal with Atomic Fuels immediately on conclusion of a satisfactory extension of Atomic Fuels’ mill contract from the A.E.C. which as a minimum would restore the time schedule which according to the A.E.C. letter of July 9, 1957 date applied on October 1. Responsible reserve studies and financial commitments should assure prompt and successful culmination of the project.”

If the contract had terminated, how could the merger still be pending? As late as June, 1958, McGoodwin was in correspondence with other prospective investors and still taking the position that the merger was planned. On September 11, 1958, McGoodwin sent Black a telegram with respect to a proposed merger of Atomic with another company, and in it he wrote, “said merger will not affect the proposed merger with Nuclear Resources.” For months after the deadline for compliance with the condition, Nuclear still recognized its contract with Atomic. It never raised the point about Atomic’s excessive debts either with Atomic, other investors, or the AEC. There was evidence of waiver of the condition precedent about Atomic’s debts.

We come now to defendants’ contention that it reserved sole right to abandon the merger as provided in the August 16 merger agreement. The contract provided: “Despite approval of the merger by the stockholder, the merger may, by action of the Board of Directors of Nuclear, be abandoned at any time prior to the actual filing of this agreement with the Secretary of the State of Colorado, and any decision so to abandon the merger shall rest solely in the discretion of the said Board of Directors.” Defendants argue that the agreement was never filed with the Secretary of the State of Colorado and until it was, they could abandon it. This provision, while granting much to Nuclear’s discretion — or judgment' — , had other requirements. The power to abandon was upon (1) action of the Board of Directors, (2) a decision, (3) exercise of discretion. All of the evidence is that there was never any action of the Board of Directors nor a decision by them with respect to abandonment of the merger. There was never a meeting after its first organization meeting.

Nuclear’s president, McGoodwin, pursued a course prior to and following the September 25 deadline which excluded any idea of abandonment. On September 26, the day after the deadline, McGoodwin was still trying to raise the money. The following day he was in conference with the AEC Operations Office in Grand Junction, when he argued that the money had been raised. McGoodwin told the AEC officials that “Completion of the statutory merger was wholly within the control of Nuclear Resources, Inc., and could he accomplished at any time deemed feasible.” McGoodwin flew to Washington, and on September 30, after conferences with Slick and the AEC, informed Black of Atomic that financial arrangements had been completed. Eight days later he assured Black that the AEC contract would be extended, though the October 1 deadline had already passed. For months thereafter Nuclear’s officers and stockholders diligently sought to save the contract. During that time there was no indication to Atomic that any decision had been made or action taken to abandon the merger. We mention this, not on the point of waiver but as evidence from which a fact finder could infer that the Nuclear decision to abandon was never made. We conclude that there is no basis for an instructed verdict for Transworld and Nuclear on the claimed grounds that Atomic failed to meet the conditions stated in the two contracts. These were issues of fact.

All defendants claim, however, that Atomic failed in its proof on the element of damages since it only proved speculative lost profits for a new and unestablished business. Atomic alleged as to each of the alternative causes that it lost sales of uranium concentrates amounting to $9,289,-212, and of vanadium concentrates amounting to $6,006,500, a total of $15,295,712. It claimed one-fourth of that amount under the terms of the merger agreement.

Since the decision in Southwest Battery Corporation v. Owen, 131 Tex. 423, 115 S.W.2d 1097, Texas has permitted recovery of lost profits to a business that can prove it is established and making profits at the time a contract is breached or a tort committed. That case explains that pre-exist-ing profits, together with other facts and circumstances, may supply the reasonable certainty required both as to the fact of damages and the amount. The success of an enterprise, measured in profits, is dependent upon a multitude of risks, chances- and circumstances; and without some history of profits there is inadequate data upon which to prove the fact of damages with the certainty required. A new and unestablished business without a profit record leaves too much to conjecture and speculation.

Atomic meets this weakness of proof by argument that profits were within the contemplation of the parties. Hadley v. Baxendale, 9 Exch. 341; McGuire v. Osage Oil Corporation, Tex.Com.App., 55 S.W.2d 535. That too is a rule of certainty which a claimant must méet, but it is in addition to-the one that applies to future profits of a new and unestablished business. In our opinion, profits were surely contemplated by all the parties, but the argument misses the point. See United Iron Works v. Twin City Ice & Creamery Co., 317 Mo. 125, 295 S.W. 109, 113.

In Southwest Battery Corporation v. Owen, supra, because there was an established business, future profits were allowed. In those Texas cases which have permitted recovery, there was some data and history of profits from an established business. Pace Corporation v. Jackson, 155 Tex. 179, 284 S.W.2d 340; City of San Antonio v. Royal, Tex., 16 S.W. 1101; National Bank of Cleburne v. M. M. Pittman Roller Mill (Tex.Com.App.1924), 265 S.W. 1024, 36 A.L.R. 1405 ; Berne v. Keith, Tex.Civ.App., 361 S.W.2d 592, 599; Adams v. Hood County Sand & Gravel Company, Tex.Civ. App., 354 S.W.2d 593; Richker v. Georgandis, Tex.Civ.App., 323 S.W.2d 90; Rios v. Lowenfield, Tex.Civ.App., 289 S.W.2d 332; Schoenberg v. Forrest, Tex.Civ.App., 253 S.W.2d 331, 334; Schoenberg v. Forrest, Tex.Civ.App., 228 S.W.2d 556; Gregory v. Reynolds, Tex.Civ.App., 219 S.W.2d 107; International Union of Operating Engineers, etc. v. Cox, Tex.Civ.App., 212 S.W. 2d 1000, 1003; Joyce v. Anderson-Bledsoe Stave Co., Tex.Civ.App., 173 S.W.2d 315; Purvis & Bertram v. Sharv, Tex.Civ.App., 164 S.W.2d 416; Payne Advertising Agency v. Wilhelm, Tex.Civ.App., 145 S.W. 2d 641; Belcher v. Bullion, Tex.Civ.App., 121 S.W.2d 483; Graham Hotel Co. v Garrett, Tex.Civ.App., 33 S.W.2d 522; McArthur v. Day, Tex.Civ.App., 19 S. W.2d 134; Big Four Ice & Cold Storage Co. v. Williams, Tex.Civ.App., 9 S. W.2d 177; Bagby v. Hodge, Tex.Civ.App., 297 S.W. 882; Settegast v. Foley Bros. Dry Goods Co., Tex.Civ.App., 297 S.W. 676; Merchants Life Ins. Co. v. Griswold, Tex.Civ.App., 212 S.W. 807, 812; Grand Prairie Gravel Co. v. Joe B. Wills Co., Tex.Civ.App., 188 S.W. 680; American Const. Co. v. Caswell, Tex. Civ.App., 141 S.W. 1013; American Const. Co. v. Davis, Tex.Civ.App., 141 S.W. 1019.

In sharp contrast with those precedents are those which have consistently denied future profits when the business was new and unestablished. Wissman v. Boucher, 150 Tex. 326, 240 S.W.2d 278, 281; National Bank of Cleburne v. M. M. Pittman Roller Mill, supra; Edwards v. Ward Associates, Inc., Tex.Civ.App., 367 S.W.2d 390, 395; Barbier v. Barry, Tex. Civ.App., 345 S.W.2d 557, 563; Harrison-Daniels Co. v. Aughtry, Tex.Civ.App., 309 S.W.2d 879; Williams v. Saunders, Tex. Civ.App., 243 S.W.2d 596, 600; Silberstein v. Laibovitz, Tex.Civ.App., 200 S.W.2d 647, 650; Page v. Hancock, Tex.Civ.App., 200 S.W.2d 421, 423; C. V. Hill & Co. v. Parker, Tex.Civ.App., 145 S.W.2d 330; Central Freight Lines v. York, Tex.Civ.App., 135 S.W.2d 186; First Nat. Bank of Quinlan v. Donohoe, Tex.Civ.App., 293 S.W. 217; Texas Power & Light Co. v. Roberts, Tex. Civ.App., 187 S.W. 225; 1 A.L.R. 156; Walter Box Co. v. Blackburn, Tex.Civ. App., 157 S.W. 220; Fraser v. Echo Mining & Smelting Co., 9 Tex.Civ.App. 210, 28 S.W. 714. The denial of damages for lost profits to a new and unestablished business is the general rule. 15 Am.Jur.,. Damages, § 157; 25 C.J.S. Damages § 42; McCormick, Damages, § 29; 1 Sutherland, Damages, § 67; 17 Tex.Jur.2d, Damages, § 148; 64 Harv.L.Rev. 317.

An established business should be one that is in actual operation long enough to give it permanency and recognition. It should be one that has earned a profit which can reasonably be ascertained and approximated. Carolene Sales Co. v. Canyon Milk Products Co., 122 Wash. 220, 210 P. 366, 367; Outcault Adv. Co. v. Citizens’ Nat. Bank, 118 Kan. 328, 234 P. 988, 41 A.L.R. 194. A business in successful operation, if changed into a different form or line of business, may become a new and unestablished venture. Harrison-Daniels Co. v. Aughtry, supra; Silberstein v. Laibovitz, supra. Proof of an operation of a business at a loss fails to meet the test. Silberstein v. Laibovitz, supra; Walter Box Co. v. Blackburn, supra.

Atomic has not brought itself within the category of an established business. The venture in question is uranium and vanadium milling, admittedly a speculative one. Neither Atomic nor any of the defendants have ever previously had any experience in this industry. Plaintiff has never milled a ton of uranium or vanadium ore. There was no market for vanadium. Atomic has never made a profit during any year of its existence. With debts around $300,000, its income from all sources in 1957 was $6,874.42; in 1958 was $1,624.14, and in 1959 was $60.00. Although more than twenty firms had been approached, none of them were interested in Atomic’s AEC milling contract. Atomic’s expert metallurgist testified that during the period of the incidents involved in this suit, the uranium industry was declining, the “bloom is off the rose,” mills were "shutting down” or “selling the ore allocation to other mills.” The AEC was unfriendly to Atomic, was not in favor of additional mills in the area, was “leveling off” in its uranium procurement during 1957, and informed Atomic in July of 1957, that there was no present need for the additional mill. The Atomic AEC contract was called, according to Atomic’s expert, the first “poor contract” because the fringe benefits included in prior milling agreements were omitted. After November, 1958, the AEC began making purchases on a limited basis. Three mills were already serving the same area. The trial court properly regarded this venture as a new and unestablished business which was unable to prove that it had earned profits or ever would. While Atomic’s AEC contract required $2,000,000 cash deposited by October 1, 1957, as evidence of its good faith to move forward, that sum did not represent the cost of a mill. That was about one-half of its cost. Atomic was unable to prove loss of profits with that measure of certainty which is required.

Atomic may be able to prove a breach of the contracts, and if so it would be entitled to nominal damages for breach of its rights. 17 Tex.Jur.2d, Damages, § 4; 25 C.J.S. Damages §§ 11, 12; McCormick, Damages, § 24. This defeats the instructed verdict in favor of the defendants. Wilson v. Hart, Tex.Civ.App, 332 S.W.2d 107; Hutchinson v. Texas Aluminum Co, Tex. Civ.App, 330 S.W.2d 895; Collier v. Bankston-Hall Motors, Inc, Tex.Civ.App, 267 S.W.2d 898; Monzingo v. Jones, Tex.Civ. App, 34 S.W.2d 662. It is suggested that Atomic should have asked the court to award nominal damages, and failing to do so, it can not assert error on appeal for that denial. Atomic has not yet been in a position to so move the court. Its right even to nominal damages is still undecided. Wafer v. Edwards, Tex.Civ.App, 248 S.W. 2d 320. The court could neither grant nor deny nominal damages until Atomic’s right to them has been established or defeated. The judgment in favor of Transworld and Nuclear will be reversed and remanded for determination of Atomic’s right, that is, whether defendants breached the contracts. 4 Tex.Jur.2d, Appeal & Error, § 869.

Atomic also contends that Tom Slick was the alter ego of Transworld and Nuclear and is liable on the contract. The evidence showed that Slick wholly owned Trans-world. He furnished money as loans to Transworld in the sum of $474,762.36 between 1957 and 1959. It had no income and its assets were speculative mining claims valued by the evidence anywhere from nothing to seven million dollars. Nuclear was an outgrowth of the uranium milling venture and it too was wholly owned and financed by Tom Slick. It had no bank account and no financial records for 1957. Both Transworld and Nuclear’s board of directors consisted of persons closely associated with Tom Slick. Neither corporation held stockholders’ meetings. Trans-world held three, and Nuclear only one directors’ meeting during 1957. Following the AEC’s decision to terminate the milling contract, but not before, Slick wrote letters and began negotiations with the AEC in an effort to salvage the contract. He wrote letters to others also and spoke of “our company,” “a business venture which I have.” McGoodwin, who was Vice-President of Transworld and President of Nuclear, was also an attorney for Slick. There were other facts which showed that both Transworld and Nuclear were dependent upon Slick for funds with which to operate.

In our opinion, however, the court properly instructed a verdict for defendant Slick. Atomic was never confused about the parties with whom it contracted. When it made its contracts with Transworld and Nuclear, it then knew about Slick, his position with respect to the two corporations, and that he was not a promisor. Atomic initiated negotiations with Slick Oil Company and knew McGoodwin represented Slick. It knew Slick was an officer of and wholly owned both corporations, and that they depended upon him for their operating expenses. In the case of Nuclear, it was Atomic’s plan, as well as that of Trans-world, to create it as a new company. Certainly nobody was mistaken about its finances or its purpose. Black, the representative for Atomic, in all these transactions admitted he knew Nuclear had no assets — “didn’t have a dime.” Slick signed no agreements. He sent two telegrams to the AEC prior to October 1, 1957, and signed both as a corporate officer. At Atomic’s stockholders’ meeting to approve the merger with Nuclear, Slick’s name was not mentioned as the one who was furnishing the finances.

Black, the attorney, director, secretary and dominating officer for Atomic, as well as the other officers and stockholders of Atomic, throughout all of the transactions with Transworld and Nucelar, had full information about Slick and knew that he was not a party to any contract with Atomic. No questions were raised and nobody asked Slick to bind himself personally. Atomic, with full knowledge, chose to deal with and continued to deal with the corporations to the exclusion of Slick. It was fully aware of the risks. Hanson v. Bradley, 298 Mass. 371, 10 N.E.2d 259, states the law which the trial court correctly applied:

“The right and the duty of courts to look beyond the corporate forms are exercised only for the defeat of fraud or wrong, or the remedying of injustice. In the present case we have a corporation formed without substantial capital, relying on borrowing money to make valuable a hotel that it was buying on credit. The plaintiff dealt with that corporation. There is nothing to show that he was deceived. The fair inference is that he knew the worthlessness of the corporation with which he contracted, and knew that his contract was of no value unless the corporation could borrow money * *.
“The plaintiff was not wronged by the fact that the corporation was organized with a trifling capital and could not live except upon borrowed money; nor by the fact that the lenders insisted on security. He knew the essential facts and accepted the situation.”

The Texas decisions follow the same rule. Pace Corporation v. Jackson, 155 Tex. 179, 284 S.W.2d 340; Staacke v. Routledge, 111 Tex. 489, 241 S.W. 994; Noblitt v. Barker, Tex.Civ.App., 97 S.W.2d 1010; Seymour Opera-House Co. v. Wooldridge, Tex.Civ.App., 31 S.W. 234, 235. Accord, Farrier v. Hopkins, 131 Tex. 75, 112 S.W.2d 182.

Atomic’s other actions are barred by limitations. The pleadings and Black’s testimony state that defendants defrauded Atomic “in the inception of the contract,” that is, back in August of 1957. Atomic asked for damages for fraud and not rescission of the contract, and the actions are governed by the two-year statute of limitations. Lacy v. Carson Manor Hotel, Inc., Tex.Civ.App., 297 S.W.2d 367. The amended petition which asserted fraud was not filed until February 6, 1963. With that date in mind, we shall review the admitted evidence. Everyone knew what in fact had been done and had not been done with respect to the AEC’s requirements by October 1, 1957. By October 4, it was known that the AEC did not regard Trans-world’s commitment as a compliance. In November, 1957, Black saw and talked to Slick for the first time and Black testified that Slick told him that he never intended to put up the money personally. Black testified “That is the first time I ever understood that he was not going to put it up right from the beginning of my negotiations.” From that time on Black had knowledge. By January, 1958, Atomic knew that the contract would not be reinstated. Efforts to reinstate the contract or obtain a new contract were unavailing and Atomic knew this by May 2, 1958. Anything that happened thereafter did not alter the fact of Black’s knowledge, stated by Slick himself, that he had never intended personally to supply the cash to finance the mill. As early as 1958, Atomic had knowledge of facts that would cause a reasonably prudent person to make inquiry which would lead to a discovery of the claimed fraud. Wise v. Anderson, 163 Tex. 608, 359 S.W.2d 876. Such knowledge is in law knowledge of the fraud itself. More than five years later, Atomic asserted its tort actions. They are now barred.

The judgment must be reversed and the cause of action asserted against Trans-world and Nuclear for breach of contract is remanded. The judgment in favor of Slick is affirmed. Costs are adjudged against Transworld and Nuclear.