author: HICKMAN, C. J.

text:
    SPAIN v. FIRST STATE BANK OF STAMFORD et al.
    No. 868.
    Court of Civil Appeals of Texas. Eastland.
    May 15, 1931.
    Rehearing Denied June 12, 1931.
    A. A. Heathington and Wilson & Childers, all of Abilene, for appellant.
    E. V. Hardwick, of Stamford, for appel-lees.
   HICKMAN, C. J.

■The appellant obtained a judgment against Central West Texas Insurance. Association, hereinafter called the association, for the sum of $570, and costs of court, which judgment has become final. Thereafter he caused a writ of garnishment to issue and be served on First State Bank of Stamford for the purpose of subjecting funds on deposit in said bank in the name of the association to the payment of his - judgment. The answer of the garnishee to the question of whether it was indebted to the association was as follows: “This garnishee would show and here states that the Central West Texas Insurance Association has five different accounts in this bank; that the names of said accounts and the amount on deposit in each account when said writ of garnishment was served are as follows: one account known as Class D had ⅜14.49; one account known as Dues account had $146.47; one account known as Mortuary X fund had $33.87, and the fifth account known as X fund had $1.27. * * * ”

The answer was not traversed. The association intervened and conducted its own defense. In its plea of intervention, it alleged that the funds as set out in the answer of the garnishee were not subject to garnishment to satisfy the judgment of appellant for the following reasons: “That this defendant is a local mutual aid benefit society, operating under the provisions of Chapter 274, Laws of the 41st Legislature passed at its regular-session, and consists of several classes. That one provision of said law provides that the funds in one class of such association cannot be used to pay claims arising in another class, and said funds are required to be kept separate from each other; that the judgment forming the basis of this writ of garnishment was obtained in Class D of this association, on a claim of a member in said Class, and on a claim against said Class D only. That the funds and only funds on deposit for the benefit of said class was $14.49 and $1.27 in the expense fund of said class; that said association carried an account known as Mortuary account and in said account was carried the benefit funds of Classes A, B and Senior Class, the three classes of this association which at this time is operating under a merger of said classes, as provided by law, and by its constitution and by-laws; that this defendant also has an account known as Dues account, which defendants say are funds derived from semiannual dues of the members and which funds belong to the secretary and treasurer under the constitution and by-laws of this defendant association, and not part of which are liable for the payment of claims arising in said class D; that under the law and constitution 'and by-laws of this association only the funds deposited to Class D or belonging to said class, can be used for the payment of the judgment obtained by the plaintiff herein against this defendant; that the total amount of said funds belonging to said Class D in said garnishee bank is $15.76, for which reasons judgment against the garnishee herein should be limited to said amount, all of which this defendant is ready to verify.”

The case was tried below before the court without the' assistance of a jury, and resulted in a judgment for appellant for the sum of $15.76, this amount being the sum of the following two accounts mentioned in the answer: $14.49 in account known as class D, and $1.27 in account known as X fund. From this judgment, Spain, the plaintiff below, has appealed.

By special exceptions to the answer of the association and objections to the introduction of evidence, appellant has properly preserved and here presents that, since the answer of the garnishee disclosed a total indebtedness to the association in excess of the amount of his judgment against it, judgment should have been rendered below a'gainst garnishee for $570, besides costs. The association is operating under the provisions of the Acts of 1929, 41st Legislature, chapter 274, being articles 4875a — 1 to 4875a— 81, Vernon’s Anhotated Civil Statutes, Texas. It was organized prior to the enactment of these statutes, but has availed itself of the provisions thereof in the manner provided by article 4875a — 23. The evidence introduced upon the trial established that appellant’s judgment was recovered on account of an accident which he sustained, and that claims based upon accidents were classified under the by-laws of the association as class D.

Article 4875a — 11 provides: “* * * The funds of one group or class shall not be used to pay claims for any other classes.” The same article requires that accounts of the mortuary assessments of the several classes shall be kept separately. To permit one having a claim for accident under class D to appropriate for its satisfaction money belonging to another class and collected for payment of other claims would be to nullify the statute. The officers of the association could not have voluntarily done this without a breach of trust. The fund in each class constituted a trust fund for the benefit of persons belonging to that class and who had, or might thereafter have, a claim against same. The association was but a trustee of the various funds, under the duty imposed by statute to disburse same only in accordance with the statute. It is well settled that funds owing to one as trustee are not subject to garnishment to satisfy a claim against the trustee as an individual. Belva Oil Co. v. Lowe (Tex. Civ. App.) 27 S.W.(2d) 599.

The contention that the evidence offered for the purpose of showing appellant’s claim to have been based upon accident should have been excluded as a collateral attack upon the original judgment cannot be sustained. The mere showing of the nature of a claim upon which a judgment was rendered by introducing the petition forming the basis of the judgment is not an attack upon the judgment. Article 4875a — 24 provides that: “Any association organized under the provisions hereof or accepting the provisions hereof shall for the purposes of operation be and become a body corporate with authority to sue and be sued in its own name and to exercise the other powers and functions specifically herein granted, but not otherwise.” Appellant could not have procured a judgment in his original suit against class D. All judgments for or against an association operating under these statutes should run in its name, and, if the fact that a judgment runs against the corporation generally should be held to preclude proof in a garnishment proceeding of the class to which the claim belonged, the provisions of article 4875a — 11, above quoted, would be nullified. The position of the association, it seems to us, is analogous to that of a municipality. Suppose, for instance, one who had obtained a judgment against a city for damages for personal injury should, in a proper manner, seek to subject to the payment of his judgment money deposited by a city in a bank in a sinking fund to discharge outstanding bonds. It would hardly be contended that, under the rule forbidding a collateral attack upon a judgment, the city would be precluded from showing that the claim forming the basis of the judgment was not one to the payment of which the sinking fund could be subjected. We can perceive no reason why the supposed -case and the instant ease are not analogous.

Affirmed.


source: Caselaw Access Project

author: WALKER, J.

license: Public Domain

text:
    COCKERHAM v. GILCHRIEST CHEVROLET CO., Inc.
    No. 2078.
    Court of Civil Appeals of Texas. Beaumont.
    May 7, 1931.
    W. T. Davis, of San Augustine, for plaintiff ip error.
    Bogard & Anderson, of San Augustine, for defendant in error.
   WALKER, J.

This was a suit by defendant in error against plaintiff in error upon a promissory note in the principal sum of $214, dated the 30th day of December, 1929, due February 1st after date, with interest at 10 per cent, per annum from date and 15 per cent, attorney’s fees. Plaintiff in error answered by demurrers, general denial, and an unsworn plea of failure of consideration, to which defendant in error duly excepted by a supplemental petition. Upon trial to the county court without a jury judgment was rendered against both parties on their demurrers and in favor of defendant in error against plaintiff in error for $125 with interest at 6 per cent, per annum and 15 per cent, attorney’s fees. Plaintiff in error has duly prosecuted his appeal from the judgment, and defendant in error has duly filed cross-assignments of error.

The substance of plaintiff in error’s propositions is that the judgment against him was wholly without support in the pleadings and the evidence. There is no merit in the contention that the judgment has no support in the pleadings. Defendant’s suit was upon its note in the amount stated, with a prayer ■for appropriate relief, which was sufficient to' support a judgment for the full amount sued for, less any deficiency shown by plaintiff in error under his plea of failure of consideration. However, plaintiff in error correctly insists that the judgment against 'him as to amount is wholly without support in the evidence. There is not a scintilla of evidence in the record sustaining a finding in his favor for any specific sum as a defense against the full amount sued for by defendant in error, nor is there any evidence reducing the interest rate from 10 per cent, to 6 per cent, but the issue of partial failure of consideration was raised. Plaintiff in error does not insist, however, that judgment should be reversed and rendered in his favor, but only that the judgment of the lower court be reversed and the cause remanded.

On the facts stated plaintiff in error correctly asserts that the judgment is fundamentally erroneous, but, as stated by 3 Tex. Jur. § 574, to constitute reversible error the error complained of must not only be fundamental but “must also operate to. the injury of the appellant.” Again, in the same volume, page 584, it is said: “Error in rendering judgment for an amount less than the damages found by the jury is fundamental, though an appellant who is benefitted rather than injured thereby may not complain.”

In this case the errors of 'which plaintiff in error complains operated materially in his favor, that is, to reduce the principal amount of the note sued upon from $214 to $125 and the interest rate from 10 per cent.. to 6 per cent. Under the rule just announced 'by Texas Jurisprudence, which has full support in Owenwood Oil Corp. v. Sweet (Tex. Civ. App.) 263 S. W. 641, and Wilber v. Kray, 73 Tex. 533, 11 S. W. 540, appellant has suffered no injury and, therefore, cannot have the judgment of the lower court reversed.

By cross-assignments of error defendant in error challenges the judgment as being without support, and has advanced propositions sufficient to reverse the judgment, but erroneously insists that judgment should be rendered in its favor.

If in error in asking for a reversal and rendition in its favor, then plaintiff in error abandons its cross-assignments and prays that the judgment of the lower court be in all things affirmed, which is accordingly ordered.

Affirmed.


author: VAUGHAN, J.

text:
    GRAND COURT OF TEXAS, ORDER OF CALANTHE, v. SMITH.
    No. 10794.
    Court of Civil Appeals of Texas. Dallas.
    April 11, 1931.
    Rehearing Denied June 6, 1931.
    R. D. Evans, of Waco, for appellant.
    W. J. Durham, of Sherman, for appellee.
   VAUGHAN, J.

Appellee instituted this suit on a benefit certificate issued by appellant to one Helen Poole, a deceased member of its order, to collect insurance in the sum of $300, for expense of burial, $75, and sick benefits due the deceased from July 1, 1928, to July 1, 1929, at $2 per week, less $5.40 for dues and premiums deducted, for interest on the entire sum at the rate of 6 per cent, per annum. The cause was submitted to the jury on the following special issues: “Question No. 1: Was Helen Poole incapacitated by sickness of January 1, 1929? Question No. 2. Was Helen Poole in good standing in the Dalton Court, Order of Calanthe of Texas January 1, 1929? Question No. 3. Were the officers of Dalton Court, Order of Calanthe of Texas, at Denison, Texas, notified of the sickness of Helen Poole, if she was sick, between July 1, 1928 and January 1, 1929?” Each issue was answered “Xes,” and on said verdict the court rendered judgment for appellee in the sum of $473.60. This appeal is before us without a statement of facts.

Appellant contends that the trial court committed fundamental error in rendering judgment for appellee, for the reason that appellee’s petition failed to allege a cause of action, in that no facts were alleged by which an insurable interest in appellee could be lawfully inferred; appellant being a fraternal benefit society, incorporated under the laws of the State of Texas, by which laws the payment of benefits by appellant was confined to certain parties specified in article 4831, R. S. 1925, as amended by Acts 41st Leg., 2nd C. S., 1929, p. 28, c. 16, § 6 (Vernon’s Ann. Civ. St. art. 4831). The transcript shows that appellant’s answer contained a general demurrer, but that same was not passed upon by or called to the attention of the trial court for decision. Under this state of the record, we must assume that said demurrer was waived, and therefore,it is to be considered only for the purpose of determining whether or not fundamental error was committed in rendering judgment in favor of appellee. Dallas Tailors’ Supply Co. et al. v. Goen (Tex. Civ. App.) 25 S.W.(2d) 224.

Article 4831,' supra, in part reads as follows: “The payment of death benefits shall be confined to wife, husband, relative by blood to the fourth degree, children by legal adoption, mother-in-law, son-in-law, daughter-in-law, step-father, step-mother, step-children, father-in-law or to a person or persons dependent upon the member. * * * Within the above restrictions each member shall have the right to designate his beneficiary. * * ⅞ If a member shall die without designating a beneficiary, or if at the death of the member the beneficiary designated is dead ór has no insurable interest in the life of the member, the benefits payablé under the certificate shall not be forfeited but shall be paid to the persons named in this article, but in such order as the by-laws of the society shall prescribe ; and if such society shall fail to prescribe the order of payment, then the same shall be payable to the persons named in this article and in the order first named.”

Appellee’s right to recover as a beneficiary under said statute was alleged as follows:

“That the defendant is a fraternal benefit society doing business in Grayson County as such Society or corporation and that the defendant has an agent in Travis County, Texas, to wit: James B. DeWeese, Commissioner of Insurance of Texas, and upon whom feerv-ice may be had herein. * * * That on or about the 14th day of September, A. D. 1918, the defendant society issued its certain policy of insurance, in writing, No. 21094, to one Helen Poole, whereby the defendant society, in consideration of the payments of premiums as the same became due and payable, and by the terms of said policy of insurance and the provisions of the constitution and bylaws of the defendant society, insured the life of the aforesaid Helen Poole in the- sum of Three Hundred Seventy-Five ($375) Dollars in favor of Eliza Smith, who was named sole beneficiary in said insurance policy.”

From this it cannot be gathered that appel-lee alleged the existence of facts upon which, as a matter of law, she was entitled to recover on the benefit certificate involved, viz. a person dependent upon the said Helen Poole, or as one related to her in any of the respects named in said article 4831; and, it being necessary that appellee establish by proof that she was a beneficiary within the terms of said article, it was incumbent upon her, ir. order to state a cause of action, to have- alleged the existence of such relationship to, or her dependency upon, the said Helen Poole. Elkhart Mutual Aid, Benev. & Relief Ass’n v. Houghton, 98 Ind. 149; Sleight et al. v. Supreme Council of Mystic Toilers et al., 121 Iowa, 724, 96 N. W. 1100; Supreme Council Catholic Benev. Legion v. McGinness, 59 Ohio St. 531, 53 N. E. 54; Leumann et al. v. Grand Lodge, A. O. U. W. of Neb., 85 Neb. 803, 124 N. W. 475; Sherry et ux. v. Operative Plasterers’ Mutual Union, 139 Pa. 470, 20 A. 1062; Pine v. Supreme Circle Brotherhood of the Union, 77 N. J. Law, 344,71 A. 1130.

Therefore the court committed fundamental error in rendering Judgment for appellee. In view of the fact that the general demurrer interposed by appellant was not presented to the trial court so as to secure a ruling thereon, the cause will not be rendered, but will be remanded, in order that appellee may, on said demurrer being sustained, avail herself of the valuable right accorded her by law to amend her petition so as to, if it may be in her power, allege a cause of action upon the involved benefit certificate. Therefore said cause is reversed and remanded.

Reversed and remanded.


author: LEDDY, J. CURETON, C. J.

text:
    HARMON et al. v. SCHMITZ et al.
    No. 1274—5727.
    Commission of Appeals of Texas, Section B.
    June 10, 1931.
    Stevens & Stevens, E. A. Tully, Jr., and P. S. Matthews, all of Houston, for plaintiffs in error.
    E. B. Pickett, Jr., of Liberty, for defendants in error.
   LEDDY, J.

At the close of the evidence in this case, the trial court peremptorily instructed the jury to return a verdict in favor of the defendants in error. The correctness of this action is dependent upon a proper answer to the question: Did the evidence adduced, present a question for the determination of the jury as to whether Arthur Cannon in his lifetime made a valid parol gift of the property in controversy to his sister, Mrs. R. D. Harmon, one of the plaintiffs in error?

Some seventeen years ago Cannon married. He lived with his wife, the defendant in error, who is now Mrs. J. F. Schmitz, about two years, and was then divorced. One child was born of this union, Meriam Cannon, a girl, now about fifteen years of age. Cannon was an oil well driller. After his divorce he spent several years following his occupation in the foreign oil fields. During this time he accumulated the property involved in this suit. Upon his return to this country he deposited his money, about $2,500 in cash, as well as 39 shares of stock in the Standard Oil Company of New Jersey, in the First National Bank at Houston. In the early part of February, 1927, he went to Mr. Hall, assistant cashier of this bank, and stated that he had entered into a partnership agreement with some one to buy oil leases, and was afraid his partner was not going to carry his part, and that his bank account might therefore be attached. He sought information from Hall as tp how this contingent liability might be avoided. The advice given by this bank official and Cannon’s subsequent action thereon is shown by the testimony of defendants in error’s witness, 1-Iall, who testified as follows:

“He asked me if there was not any way in which he could protect his property, and I stated to him that I had known of cases where it had been done, where property had been transferred to the name of a wife, or a mother, or father, or some relative that could be trusted; and so he asked me if I would show him what to do with his stock certificates — he had some shares of Standard Oil, I do not remember how many or anything about it — but I filled out a blank power of attorney for him, made it out to his sister. You understand this power of attorney was not made on the stock certificates, but on a blank power of attorney.
“I suggested that he put his property in some one else’s name until he straightened out his affairs. I suggested to him to buy a New York draft for his bank balance. I think he did that, for part of it. I told him- to put this check in some safe place. I suggested that he have it made out to some relative and either turn it over to them, or put it in a safe place. I do not recall that I recommended any kind of a safe place.
“He bought a New York draft. That draft was payable to Mrs. Harmon, I think. I am not sure. I do not know whether it was endorsed over to Mrs. Harmon. I did not see that at all.
“I did not-advise that he put-this property in the name of some relative. I merely suggested that it had been done. I suggested that it could be done, and he adopted my suggestion.
“fie drew from his personal account the money with which to purchase this New York: Exchange or draft that I speak of. He drew a check on his personal account.
“He had this oil stock that I speak of in the safe deposit box, I believe. I do not know that. I am not sure about that. After he drew this money and bought this New York exchange for two thousand dollars the cheek or draft that he had purchased was put in a safe deposit box. The safety deposit box was in his sister’s name. He was renting a box at that time. The box was rented at the time. The box had not been rented for some time. It Was rented at the time; that is, he rented it in order to put that in it. Mr. Cannon had a box in his own name, and had that box transferred to the name of Mrs. Pinkie Harmon.
“The records there at the bank show that Mr. Cannon rented a box for his sister and took the cards but to her, which she signed, and they were delivered back to the bank. 1 do not know who by; maybe by her, and maybe by him. We do not have any record of that. All we know is that they were brought back properly signed. ' The bank has possession of those cards that were signed.”
“He didn’t say anything to me at that time regarding any desire to give Mrs. Harmon, his sister, any property. He indicated to me that his purpose in putting that property in her name was to avoid any litigation he might get into by reason of this oil lease business he had gotten into — that he stated he had gotten into. * * ⅜ he stated to me that he had gotten into an oil lease proposition and was afraid he might get sued, and he wanted to put it beyond the reach of any law suit, or any creditor.”

It is shown that Cannon followed strictly the advice given him by this bank official. He rented a safety deposit box in the name of his sister, Mrs. Harmon, purchased New York exchange in the sum of $2,000, and indorsed the same to said sister. The 39 shares of Standard Oil stock were assigned by a written, assignment, which was pinned to the stock, and all of these documents were placed in the safety deposit box. There were two keys to the box; one was given to Mrs. Harmon and the othér retained by Cannon, it being found on his person after his death, some thirty days later. It was also shown that under Cannon’s indorsement of the New York exchange appears -an indorsement in blank by Mrs. Harmon. As a part of the same transaction, Mrs. Harmon executed what is designated as a power of deputy to William A. Cannon, which reads as follows:

“I hereby authorize the First National Bank, 8afe' Deposit Department, to permit William .A. Cannon to have access to Box No. 77 in the Safe Deposit Department of said Bank until written notice to the contrary is given to said Bank. Full power and authority is hereby given and granted unto the said William A. Cannon to do and perform all and every act or thing whatsoever in and about the premises with reference to both withdrawing or changing from time to time the contents of said Box or in relation to any other thing pertaining thereto, including the removal of said contents, as fully to all intents and purposes as the undersigned might or could do if personally present, hereby ratifying and confirming all that the said William A. Cannon shall do or cause to be done by virtue hereof.”

We think it clear that the evidence offered by defendants in error does not raise the issue that William A. Cannon intended to make a present gift of this property to his sister, Mrs. R. D. Harmon. It shows conclusively that the transfer and assignment of the draft and stock was made by Cannon in pursuance of the advice given him by Hall, the officer of the bank, for the purpose of putting this property in his sister’s name so as to avoid any contingent liability that might arise by reason of the oil lease transaction in which he expected to become involved.

We will next consider whether the plaintiffs in error offered sufficient proof to raise the issue that Cannon intended to and did make a present gift of this property to Mrs. Harmon. The evidence relied upon by defendants in error to raise this issue is certain declarations made by Cannon to Judge Isaacs and Dr. Hubert. With reference to these declarations, the former testified: “He (Cannon) told me prior to his death that he had some money, and that he had it in the bank in Houston. He did not tell me what bank, but he. had it in his sister’s name. He said it was in his sister’s name, and that the box was rented in her name, and that he was here and yonder, and liable to be engaged off when he died, and he wanted her to have his money; that he did not want his former wife to have any of it,”

Dr. Hubert gave the following testimony in regard to Cannon’s declarations: “He told me he had his property put in Mrs. Harmon’s name. He said his money and the stuff he had put in her name so if these fellows sued him or did anything they could not get his money; if they sued him about the lease business.”

Does all of the evidence, when considered most favorably to plaintiffs in error, present a jury question on the issue as to whether Cannon made a present gift of the property in question to his sister, Mrs. Harmon? We think the evidence when thus considered so conclusively shows there was no intention on the part of Cannon to vest a present interest in this property in his sister that it was the duty of the trial court to direct a verdict for defendants in, error.

In order to prevent property left by deceased persons from being fraudulently appropriated under claims of parol gifts, the law has established certain safeguards in regard to the enforcement of such gifts. Before the gift can be sustained, it must appear that all of the elements required to constitute the same be clearly established. The essential elements of this character of gift are well defined by Judge Sanborn in Allen-West Commission v. Grumbles (C. C. A.) 129 F. 257, 290, in this language: “Among the indispensable conditions of a valid gift are the intention of the donor to absolutely and irrevocably divest himself of the title, dominion, and control of the subject of the gift in praesenti at the very time he undertakes to make the gift; * * * the irrevocable transfer of the present title, dominion, and control of the thing given to the donee, so that the donor can exercise no further act of dominion or control over it.”

In Ruling Case Law, vol. 12, p. 832, § 10, the author, in defining the requisites of a gift of this nature, says: “To make a valid, effective gift inter vivos there must be an intention to transfer title to the property as well as a delivery by the donor and an acceptance by the donee. Mere intention to give without delivery is unavailing, and delivery is insufficient unless made with an intention to give. * ⅜ ⅜ There must be an intention on the part of the donor to relinquish the right of dominion on the one hand and to create it on the other, and the delivery must be not only of possession, but also of the dominion and control of the property.”

In Cyc., volume 20, p. 1223, the rule is thus announced: “As a general rule, to establish a gift inter vivos there must be a preponderance of clear, explicit, and convincing evidence in support of every element needed to constitute a valid gift. It is necessary to establish by this kind of evidence competency of donor, delivery, acceptance, and the parting by the owner with his control or right of dominion over the subject of the gift. This rule is especially applicable where the gift is not ásserted until after the donor’s death and wheré a confidential relation existed between the parties. ⅜ * * ” .

Again, the same author, volume 20, p. 1193, says:

“To constitute a valid gift inter vivos the purpose of "the donor to make the gift must be clearly and satisfactorily established and the gift must be complete by actual, constructive, or symbolic delivery without power of revocation.”

When the evidence contained in this record is tested by the application of these well-settled legal principles, it falls short of raising the issue as to a completed gift by Cannon to his sister. Nowhere in the testimony do we find any declaration by Cannon which is fairly susceptible of the construction that it was his intention to relinquish his ■ dominion and control over this property and to vest immediate title to same in his sister.

The evidence offered by plaintiffs in error not only does not contradict the evidence ot defendants in error as to Cannon’s purpose in transferring this property to his sister, but it is strongly corroborative of such intention. He stated to Judge Isaacs, after he had transferred the property to his sister, that he had some money, and he had it in the bank at Houston, but it was in his sister’s name. This was a direct and positive claim of ownership by Cannon made after the alleged parol gift had been completed, and is utterly inconsistent with the view that by the transfers executed by him he intended to part with his dominion and control of this property and vest absolutely and unconditionally the title to same in another. His declaration to this witness that he “was here and yonder and liable to be engaged off when he died and ho wanted her (Mrs. Harmon) to have his money, that he did not want his former wife to have any of it,” does not, when considered in connection with his entire statement, indicate anything further than a mere desire for his sister to have this property at his death. This testimony falls far short of showing, or tending to show, an intention to make a present gift of the property. “A mere intention to make a gift,” 'says the author of Corpus Juris, volume 29, p. 629, “however clearly expressed, which has not been carried into effect, amounts to nothing, and enforces no rights in the subject matter of the proposed gift upon the intended donee. The intention must be affected by a complete and unconditional delivery.”

The testimony of Dr. Hubert is also corroborative of the view that Cannon had merely placed his property in his sister’s name for the purpose of avoiding liability from future creditors, as the witness testified that Cannon told him he (Cannon) had hhj property in Mrs. Harmon’s name. “He said he had his money and the stuff he had put in her name so if these fellows sued him or did-anything they could not get his money.” This testimony strongly negatives an intention on the part of Cannon that this property should belong to his sister from the date of its transfer, for, if such had been the intention, then it was not his money, and he did not in fact have his money in his sister’s name.

Again, when we consider .the evidence as a whole, it conclusively shows that Cannon did not intend to part with dominion and control over this property. It will be noted that, while he indorsed the exchange or draft to Mrs. Harmon, she immediately indorsed it-in blank. The transfer made of the oil. stock was not executed on the usual form printed on tlie certificate, but by a separate assignment which was attached to the stock. The property was therefore left in condition where the check could be cashed by Cannon, because it was properly indorsed by Mrs. Harmon, and the stock could be detached from the assignment, and disposed of by executing the printed transfer on the back thereof. That it was intended for Cannon- to retain control of this property is manifest from these facts and the further fact that as a part of the same transaction in which Cannon put this property in Mrs. Hannon’s name he caused her to execute what is termed a deputy power, the terms of which we have heretofore quoted. This instrument authorized ■ him to remove this property from the safety deposit box at any time he saw fit and to substitute any other property therefor, and he retained a key to the safety deposit box which enabled him to continue to exercise dominion and control over the property. The control thus permitted was inconsistent with a completed gift of the property to his 'sister, but the same was in complete harmony with the plan outlined by the bank official to place this property in Mrs. Harmon’s name in order to avoid it being reached by Cannon’s creditors.

It is argued that the execution and delivery by Cannon to his sister of the transfers of the draft and oil stock is of itself some evidence of a gift of the property to her. This would be true if the record contained no explanation of the circumstances under which they were executed and delivered. But such is not the case. It affirmatively appears that Cannon did not intend these instruments should have the eifect which their language implies.

Finally, it is insisted that, if the transfer of this property was made by Cannon to his sister with the fraudulent motive of defrauding his creditors, the law precludes his heir from enforcing the trust upon which it was executed.

The fact that Cannon transferred his property to his sister with the motive of putting it beyond the reach of those whom he feared might become'creditors did not operate to prevent a trust being declared in the property, if the anticipated indebtedness never in fact arose. Under such circumstances, his motive to defraud becomes unimportant, as there was no one to be defrauded. That such a motive is not sufficient to defeat the enforcement of a trust was distinctly declared by our Supreme Court in Rivera v. White, 94 Tex. 540, 63 S. W. 125, 126. In discussing this question, Judge Williams, speaking for the court, said: ■ “That a conveyance upon a trust, such as that shown by the evidence, constitutes the cestui que trust the equitable owner of the property, is not to be disputed, unless the motive with which the deed is made vitiates the trust; and we think the law has no concern with the futile intent to protect the property from a claim which its owner, fears may be asserted against him, but which is never asserted, and does not exist.”

The evidence affirmatively discloses that the liability which Cannon feared might involve his property never in fact arose. He was negotiating for an oil lease, and it was this transaction which he was fearful might involve him in some liability which would cause his property to be attached. The lease, however, was never consummated, and no liability arose against him by reason thereof.

We therefore recommend that the judgment of the Court of Civil Appeals, 26 S.W.(2d) 289, affirming the judgment of the trial court, be affirmed.

CURETON, C. J.

Judgments of the district court and Court of Civil Appeals are both affirmed, as recommended by the Commission of Appeals.


author: SHORT, P. J. CURETON, C. J.

text:
    COCKE et ux. v. WRIGHT.
    No. 1267—5671.
    Commission of Appeals of Texas, Section B.
    June 10, 1931.
    Tom D. McCullough, A. A. Cocke, and Phillips & Phillips, all of Dallas, for plaintiffs in error.

      John W. Pope, of Dallas, for defendant in error.
   SHORT, P. J.

On June 12, 1928, G. G. Wright, receiver of-the United Home Builders of'America, had rendered in his favor a judgment against the plaintiffs in error for $2,813.09, with interest thereon from that date at the rate of 3 per cent, per annum, and all costs of court, with a foreclosure, of a lien on a certain lot in a certain addition to the city of Dallas, and an order of sale to sell it, in satisfaction of the judgment, after a certain dati, 'in case the judgment was not paid. After this date, and the failure to pay the judgment, the receiver had issued an order of sale and placed it in the hands of the sheriff of Dallas county, who proceeded to execute it by advertising the property for sale on the first Tuesday in January, 1929. On the 31st day of December, 1928, the plaintiffs in error procured a temporary writ of injunction enjoining the sale on the ground that the plaintiff in error, A. A. Cocke, had an unsatisfied judgment in his favor against the United Home Builders of America in a sum greater than the amount of the judgment against him, and was entitled to have the judgment in favor of the receiver satisfied by crediting the amount due the receiver on the judgment he held. After the parties had filed all necessary pleadings a trial was had before the court, upon the issues made, and a judgment was rendered dissolving the injunction, by the same district court in which the receivership proceedings were pending. The plaintiffs in error then carried the case to the Court of Civil Appeals at Dallas, where the judgment of the district court was affirmed. 23 S.W.(2d) 449.

The plaintiffs in error were granted a writ of error by the Supreme Court and the case having been referred to this section of the commission, it has been submitted upon the briefs of the parties and also upon oral argument. The United Home Builders of America was a co-operative association, created under a declaration of trust dated January 2, 1919, and operated thereunder until the month of May, 1920, at which time it went under the supervision of what was then the Banking and Insurance Department of Texas, and continued to operate under said department until the appointment of the receiver, who qualified on the 26th day of January, 1923. The declaration of trust under which the United Home Builders of America was created had the effect to create a co-partnership between the parties to said agreement, add all persons became members thereof who purchased contracts through which the association'transacted its business. Barlow v. Wright (Tex. Civ. App.) 279 S. W. 593; Thompson v. Schmitt, 115 Tex. 53, 274 S. W. 554, A. A. Cocke and W. M. Webb were named as trustees in the declaration of trust. The company issued and sold what it denominated as a 3 per cent, loan home purchasing contract to its members, which were nuhibered beginning with No. 1 in numerical order. It sold approximately 25,606 of these contracts, but it appears that approximately three-fourths of these contracts became nullified by a failure of the purchasers to comply with the conditions imposed upon them in the declaration of trust. The members would pay $10 per month upon them, and when as much as $150 was paid, exclusive of the first three payments, then if sufficient money had been created in the loan and trust fund to reach the sum of $1,000 and that member’s number had been reached, in its numerical order, he would be entitled to a loan from the company upon real estate security, in the sum of $1,-0001 to be repaid at $10 per month with accrued interest ‘at 3 per cent: per annum on unpaid policies, payable monthly.

While A. A. Ooclte, plaintiff in error, was still acting as eotrustee and also as its general counsel, he borrowed money from the company upon a mechanic’s lien or his homestead, basing the loan on matured contracts in the company, which he held. This is the transaction upon which judgment was rendered in the district court and the enforcement of which was temporarily enjoined. While A. A. Cocke was still acting as eo-trustee of the company he became the owner of 43' of such contracts and others not involved in this suit,yand obtained another loan from the company known and classed by it as a temporary loan in the sum of $16,982.50, representing borrowed money from the company and among others he delivered to the company 43 home builders’ contracts involved here as a pledge to secure the payment of said note. This note was afterwards reduced by payment to $5,686.07, besides interest. In the receivership proceedings these 43 contracts were valued at $9,539.55, the ■ same being evidenced by a judgment rendered in the receivership proceedings, and it is th.e contention of the plaintiffs in error that' they have t-he right to have the judgment, the collection of which was temporarily enjoined, canceled by crediting the amount of it on the judgment, in favor of A. A. Cocke, for $9,-535.55, on the ground that this later judgment was of equal dignity with that of the former, and that the Court of Civil Appeals erred in holding that the judgment for the debt in the amount of $9,539.55, against the association, was not entitled to be set off against the receiver’s judgment for $2,813.69.

It is the contention of the defendant in error that to allow this claim would bé inequitable for the reason that it appears that the assets of the partnership would be sufficient to pay only forty cents on the dollar to' the remaining partners, while A. A. Cocke, to the extent of the judgment enjoined, would receive one hundred cents on the dollar.

It appears from the record that when the receiver tools charge of the affairs of the partnership there were about sis hundred members who had borrowed money from it, as had the plaintiff in error, Oocise, and that there were about seven thousand members who had not borrowed any money from it, but who were holders in good standing of its three per cent, loan home purchasing contracts. The partnership being insolvent, and no longer in existence, except for the purpose of winding up its affairs, it was the duty of the receiver, under the orders of the court, to collect from those who owed it, the full amounts of their respective debts, and after paying the expenses of the receivership proceedings to distribute the remainder among the partners. Assuming there were six hundred borrowers, then there were six hundred debts due the partnership, and these six hundred debts were the property of all the partners to the extent of their respective interests as shown by the contracts they owned. These debts, if collectible, could only be fully paid by a delivery of one hundred cents on the dollar to the receiver. It must be assumed that these seventy-six hundred owners of these contracts, including the seven thousand members who had not borrowed any money from the partnership, and the six hundred who had, were all entitled to the same treatment by each receiving, according to the valué of his adjudicated claim against the partnership, his pro rata share of the net assets of the partnership. This division of the assets, in > this manner, would enable each member of the partnership to receive his full proportion of the net assets.

In the case of Prudential Building & Loan Association v. Shaw (Tex. Com. App.) 26 S.W. (2d) 168, where a somewhat similar situation was being discussed, it was held that where a building and loan association was insolvent in the sense that it cannot pay its shareholders in full, on petition of the association to reduce liability to members, under the Building & Loan Act, § 57 (Acts of the 41st Legislature, Second Called Session, c. 61 [Vernon’.s Ann. Civ. St. art. 8Sla — 58]), both stock of borrowing and nonborrowing members should be written down alike, unless there is some contract between the shareholder and the association precluding such action, since, generally, borrowing shareholders occupy a dual relationship to the association. In that case the partnership was still a, going concern. In this case the partnership has ceased to operate, and the sole purpose of the receivership proceedings is to wind up its affairs, under the direction of the court, and necessarily the actual value of its assets, to be distributed among the shareholders, or,.in this case the contract holders, cannofe.be ascertained until all the debts due the partnership have been collected which can .be. When this has been done, and not until then, can there be a distribution of the assets among the contract holders, whether they be borrowing or nonborrowing members.

The equitable principle involved in this case is discussed in the case of People’s Building & Loan Association v. McPhilamy, 81 Miss. 61, 32 So. 1001, 1006, 59 L. R. A. 743, 95 Am. St. Rep. 454, by the Supreme Court of Mississippi, . wherein is quoted, with approval, the following from Strohen v. Franklin Saving Fund & Loan Association, 115 Pa. 273, 8 A. 843:

“The insolvency of the company [as before observed] puts an end to its operation as a building association. To a certain ex-' tent, it also ends the contract between it and its members, and nothing remains but to wind it up in such manner as to do equity to creditors and between the members themselves. As regards the latter, care should be taken to adjust the burden equally, and not throw on either the borrowers or non-borrowers more than their respective share. That result may be reached by requiring the borrower to repay what he actually received, with interest. He would then be entitled, after the debts are paid, to a pro rata dividend, with the nonborrower for what he had paid upon his stock [or contracts]. He will thus be obliged to bear his proper share of losses. To allow him to credit upon his mortgage his payments on his stock would enable him to escape responsibility for his share of the losses, and throw them wholly upon the nonborrowers. In other words, the borrower ' would escape without loss. It will not do to administer the affairs of an insolvent corporation in this manner.” <

According to the plan set out in the declaration of trust, no one could borrow any money from the partnership unless he became a partner, but this fact does not change the rules of equity, which would be applicable to a partnership in the hands of a receiver for the liquidation of its affairs where the XJartners owed nothing, and where all the claims, in its favor, were due to be paid by strangers to the partnership. The receiver in this proceeding represents the interests of all the partners, including the borrowing and the nonborrowing members. To the extent that A. A. Oocke was a member of the partnership, the receiver represents him, while A. A. Oocke, one of the plaintiffs in error, represents himself, not as a member of the partnership, but as one of its debtors. When the receiver was appointed and had qualified, this had the effect to put the property of the . partnership in custodia legis. Texas Trunk Ry. Co. v. Lewis, 81 Tex. 8, 16 S. W. 647, 26 Am. St. Rep. 776. The receiver is a mere agent of the court vvhereinthe receivership proceedings are pending, and these proceedings have the legal effect to segregate the property of the partnership from the rights of those who have claims against its property. So in the ease at bar the judgment sought to be enjoined is under the control of the court, acting through its receiver, and is not the proper subject of injunction, at the instance of Cocke, as an individual, who is asserting ownership of a claim against the partnership, as such individual claimant. The court had rendered a judgment in favor of the receiver against Cocke and wife, from which no appeal was taken. This judgment concludes the rights of Cocke and wife in the premises, and establishes the lien on their property to secure its satisfaction. Even though Cocke and wife had the tight to plead an offset in the case, wherein judgment was rendered which is sought to be enjoined, Cocke’s claim against the partnership, as now set up, should have interposed upon the trial of the case. The judgment is conclusive of all matters between the parties with the record in this condition. As such debtor Cocke is obligated to repay to the partnership all of the moneys he borrowed from it, and the receiver'is under the duty to collect all of these moneys in so far as he can. In the effort to collect the moneys the receiver is entitled to appropriate whatever security, for the money loaned, the partnership had when he took possession of its affairs. In this instance, the security, is in the form of a town lot, which the court has held to be subject to the payment of this debt, as evidenced by a judgment from which no appeal was ever taken. This judgment speaks for itself, and is in all respects enforcible, according to its terms. When the debts due the partnership have been collected, and the expenses of the receivership have been paid, A. A. Cocke, as a member of the partnership, will be entitled to .receive his pro rata share in the distribution of its assets.

There is another question presented by the assignments of error, and which has been discussed by the Cdurt of Civil Appeals in its opinion, but the conclusion we have reached, as to the question discussed, renders unnecessary a discussion of that question, especially since we think the Court of Civil Appeals has correctly disposed of it. As the receiver has the right to collect the judgment sought to be enjoined, as we have held he has, and if the receiver represents all of the contract holders, whether borrowing or nonborrowing members, as we have held he does, the proceeds of this judgment, in his hands, would, of course, be in the custody of the court, in which the receivership proceedings are pending, and like all other assets belonging to the partnership, when collected by the receiver, would be subject to disposal by the court, when the time shall arrive for a final disposition of -the case. As we view the record, the only question presented is whether the receiver has the right to subject the security mentioned in the judgment to its satisfaction.

Believing that he has, we recommend that the judgments of the Court of Civil Appeals and of the district court be affirmed.

CURETON, C. J.

Judgments of the district court and Court of Civil Appeals are both affirmed, as recom-' mended by the Commission of Appeals.


author: SHARP, J. OURETON, C. J.

text:
    PENNSYLVANIA FIRE INS. CO. v. W. T. WAGGONER ESTATE.
    No. 1465—5702.
    Commission of Appeals of Texas, Section A.
    June 10, 1931.

      Thompson, Knight, Baker & Harris and Pinkney Grissom, all of Dallas, for plaintiff in error.
    O. O. Franklin, of Yernon, for defendant in error.
   SHARP, J.

W. T. Waggoner, trustee of the W. T. Wag-goner Estate, instituted this suit against the Pennsylvania Eire Insurance Company to recover the sum of $2,000 on an insurance policy issued by the defendant,' securing plain-tilt against loss or damage by fire to a 1925 model Reo speed wagon. It was alleged that on January 28, 1928, the Reo speed wagon was totally destroyed by fire. The case was submitted to a jury upon special issues. Based upon the findings of the jury, plaintiff recovered a judgment a'gainst the defendant for the sum of $1,640, with interest thereon from May 22, 1928, at the rate of 6 per cent, per annum. The Pennsylvania Eire Insurance Company appealed the case to the Court of Civil Appeals for the Seventh district, and the judgment of the trial court was affirmed. A writ of error was granted.

Plaintiff in error contends that, since the insurer and insured could not agree upon the amount of loss or damage, an appraisal was demanded by the insurer, and an award was made by two of the appraisers in tlie sum of $600 in accordance with the provisions of the policy, and that the insurer within a reasonable time tendered to the insured that amount which was refused; that the award is binding upon both parties to the contract, and the court erred in refusing the special charge permitting a recovery against plaintiff in error only to the extent of the award.

Defendant in error contends that the policy required that competent and disinterested appraisers be selected to ascertain the loss; that the appraiser selected by the insurer was partial and biased in favor of that company; and the award, having been made by one appraiser and the umpire, who were not fair and impartial, was invalid and not binding upon the insured.

Defendant in error attacks the validity of ■the award made by the appraiser and the umpire, alleging that the arbitration proceedings were not valid, and were not fairly and impartially conducted, and should be set aside, and prayed for judgment in the sum of $2,000, with interest from May 22, 1928, being sixty days after proof of loss was furnished the insurer. On the pleadings and the evidence introduced, the court submitted to the jury the following special issue: “Were the appraisers who made the award on the arbitration in evidence in this case partial to the insurance company in fixing the amount of the damage ascertained by them?” To which the jury answered “Yes.”

The jury further found, in answer to special issue No. 3, that the sum of $1,640 was the reasonable market value of the truck immediately before it was burned. Up on these findings by the jury, the trial court rendered judgment in favor of the insured for the sum of $1,640, with interest from sixty days after proof of loss was furnished to the insurer.

The policy by its terms required that the insured and insurer select competent and disinterested, appraisers. They constitute a quasi court, and should be free from partiality and bias in favor of either party. Our Supreme Court, in the case of Delaware Underwriters et al. v. Brock, 109 Tex. 425, 211 S. W. 779, 780, speaking through Judge Greenwood, in passing upon the qualification of appraisers provided for under a similar policy, says:

“ * * * The Alabama Supreme Court clearly gave the right construction to the appraisal clause in these policies, when it said:
‘"The purpose of the clause is to secure a fair and impartial tribunal to settle the differences submitted to them. In their selection it is not contemplated that they shall represent either party to the controversy or be a partisan in the cause of either, nor is an appraiser expected to sustain the views or to further the interest of the party who may have named him. And this is true, not only with respect to estimating the amount of the loss, but also with reference to the selection of an umpire. They are to act in a quasi Judicial capacity and as a court selected by the parties free from all partiality and bias in favor of either party, so as to do equal justice between them. This tribunal, having been selected to act instead of the court and in the place of the court, must, like a court, be impartial and nonpartisan. For the term “disinterested” “does not mean simply lack of pecuniary interest, but requires the appraiser to be not biased or prejudiced.” And, if this provision of the policy was not carried out in this spirit and for this purpose, neither party is precluded from going to the courts, notwithstanding the agreement to submit their differences to the board of appraisers.’ Hall Bros. v. Western Assurance Co., 133 Ala. 639, 640, 32 So. 257, 258.”

The award relied on by the insurer in this case purported to be the act of J. W. Barker and the umpire, Ray Puckett, only, and was, according to the finding of the jury, invalid. The award so made by the appraiser and umpire for the loss or damage to the truck was $600. In answer to a special issue, the jury found that the appraisers were partial to the insurer, and furthermore found that the market value of the truck at the time of its damage was $1,640. Therefore, for such reason it did not preclude an investigation and determination of the amount of insured’s loss and the extent to which the insurer was liable therefor. Delaware Underwriters et al. v. Brock, supra; Royal Insurance Co. v. Parlin & Orendorff Co., 12 Tex. Civ. App. 572, 34 S. W. 401; Milwaukee Mechanics’ Ins. Co. v. West Development Co. (Tex. Civ. App.) 275 S. W. 203, 204; Id., 115 Tex. 361, 282 S. W. 562.

We think the pleadings and proof sufficiently raised the question as to whether the appraisers appointed were competent and disinterested, as provided for in the policy. This issue being properly raised, the question as to the competency or disinterestedness of an appraiser is primarily for the jury. The inadequacy of an award may also be considered in determining the bias and prejudice of the appraisers. Under the state of the record. we think it is a question of fact to be determined. Cooley’s Briefs on the Law of Insurance, vol. 4, pp. 3641 and 3642; Royal Ins. Co. v. Parlin & Orendorff Co., supra; Milwaukee Mechanics’ Ins. Co. v. West Development Co., supra.

Plaintiff in error further contends that the trial court erred in refusing to define the meaning of the term “gross inadequacy” or “grossly inadequate,” in connection with the special issue submitted to the jury.

The jury, having found that the appraisers selected were partial to the insurer, rendered the award invalid. .Tlierefor'e .the action of the trial court in-failing to define the term “gross inadequacy” or “grossly inadequate,” used in the special issue submitted respecting the award made by the appraisers, becomes immaterial and harmless.

Plaintiff in error further contends that the judgment is excessive as to interest, in that the interest is made to run from May 22, 1928, which was the date that the award of the appraisers was made, and, under the provisions of the policy, no interest is payable until sixty days after the notice, ascertainment, estimate, and verified proof of loss of the amount have been received by the company, and, if appraisal is demanded, then not until sixty days after an award has been made by the appraisers.

The defendant in error prayed for judgment in the sum of $2,000, with interest thereon from and after May 22, 1928. Judgment was rendered in favor of defendant in error and against plaintiff in error in the sum of $1,640, with interest thereon from May 22, 1928, at the rate of 6 per cent, per annum until paid. The policy provides as to payment as follows: “ * * * and the loss shall in no event become payable until sixty (60) days after the notice, ascertainment, estimate- and verified proof of loss herein required, have been received by this Company, and if appraisal is demanded, then, not until sixty days after an award has been made by the appraisers.”

The proof of loss for $2,000 was submitted to the company on March 22, 1928. On March 24, 192S, the company demanded an appraisal in accordance with the provisions of the policy, which demand was complied with by the Waggoner Estate. The appraisal was had under date of May 22, 1928, and the sum of $600 was awarded to the Waggoner Estate. Soon thereafter plaintiff in error tendered to defendant in error the sum of $600, the amount awarded by the appraisers, which was refused, and suit was instituted on July 28, 1928.

The question presented for decision is: Was interest due and payable sixty days after the notice, ascertainment, estimate, and verified proof of loss was furnished or not until sixty days after the award had been made by the appraisers?

The foregoing provision with respect to notice and proof of loss and an appraisal, if demanded, is a valid provision of the policy. The parties thereto had agreed to it, and, under the decisions of this state, it is enforceable. There is no contention that plaintiff in error denied its liability under the policy. If the insurance company had denied liability under the policy, such denial would have matured the demand for the loss or damage under the policy. Under such circumstances, interest would run from the date of denial of liability, regardless of whether sixty days had expired after the proofs of loss had been furnished or an award made. Queen Ins. Co. v. Jefferson Ice Co., 64 Tex. 578; Delaware Underwriters v. Brock, 109 Tex. 425, 211 S. W. 779; Fire Ass’n of Philadelphia v. Strayhorn (Tex. Com. App.) 211 S. W. 447.

Under the pleadings and evidence, the validity of the award made by the appraisers was questioned. The jury found that the appraisers were partial to the insurer. The award was signed only by Barker and the umpire Puckett. The appraiser selected by the insured did not sign the award. The effect of the finding was that the insurer had not complied with the terms of the policy by selecting a competent and disinterested appraiser, and, on account of the wrongful act or default of the insurer in that respect, no valid award was made. When the insurer demands the appraisal, as it did in this case, it must in good faith select a competent and disinterested- person as an appraiser before it can claim that interest dohs not run thereon until after sixty days of the date of the award. By virtue of the findings of the jury, there was no valid or enforceable award made, hence interest would be allowable sixty days after the proof of loss was furnished. Queen Insurance Co. V. Jefferson Ice Co., supra; Delaware Underwriters v. Brock, supra; Eire Ass'n of Philadelphia v. Strayhorn, supra.

Eor the reasons herein stated, we recommend that the judgment of the trial court and the Court of Civil Appeals be affirmed.

OURETON, C. J.

Judgments of the District Court and Court of Civil Appeals are both affirmed, as recommended by the Commission‘of Appeals.


author: LEDDY, J. CUBETON, C. J.

text:
    GRANT et al. v. PENDLEY et al.
    No. 1259—5648.
    Commission of Appeals of Texas, Section B.
    June 10, 1931.
    B. H. Gardner, T. B. Greenwood, Jr., and B. R. Reeves, all of Palestine, for plaintiffs in error.
    Melton & Mejton, of Chickasha, Okl., and W. C. Campbell, of Palestine, for defendants in error.
   LEDDY, J.

The case zfiade by plaintiffs in error’s pleadings, and the evidence offered by them in support of same, tended to show that the execution of deeds to certain lands owned by them had been procured by means of false and fraudulent representations made -by the defendants in error for the purpose of, and which did, induce the execution of such instruments.

In this state of the record defendants in error were permitted, over objection of plaintiffs in error, to introduce witnesses to testify that the general reputation of each of them for truth and veracity and honesty and fair dealing in the community in which he resided was good.

This testimony was admitted before either of the defendants in error had testified, upon the evident theory that the pleadings of plaintiffs in error, as well as the evidence offered in support thereof, charged each of them with intentional fraud, and that thereby defendants in error’s characters were made an issue so as to justify the admission of supporting evidence of general good character.

The authorities on the question as to permitting supporting evidence of general reputation for honesty and fair dealing and truth and veracity by a party in a civil case, where his adversary has by pleadings and evidence charged him with the commission of a crime involving moral turpitude or the perpetration of an intentional fraud, are somewhat in con-" diet. The overwhelming weight of authority, however, denies the right to introduce this character of evidence in any civil action except where the character of a party by the nature of the action is squarely at issue, or where it is offered for the purpose of supporting the testimony of a witness who has been directly impeached. As the questioh is one of considerable importance, it may be well to briefly examine -the pronouncement of the leading text-writers and authorities upon this subject.

Corpus Juris, volume 22, page 473, announces the correct rule on this subject to be as follows:

“The general rule is that a party is not entitled to introduce evidence of his good character in the first instance merely because his adversary has by pleadings, or the nature of the action, charged him with committing a legal wrong or even an act for which he might be subjected to a criminal prosecution.”

A similar doctrine is laid down by the author of Ruling Case Law, volume 10, § 119, in the use of this language:

“It has sometimes been held in civil actions, where the party is charged with gross fraud or depravity upon circumstances merely, that evidence of uniform integrity and good character was admissible for the purpose of rebutting any unfavorable inference or presumption which might arise from the circumstances proven. But the very decided weight of authority holds. that evidence of general good character is inadmissible, by way of defense in a civil action in which a party is charged with a specific fraud.”

Chamberlayne, on the Modern Law of Evidence, volume 4, § 3274, is in harmony with the foregoing view. He announces the rule to be:

“As has already been indicated, the exclusion of evidence of character of a party as a basis for an inference as to his conduct is practically absolute in civil cases. A good fundamental reason for this rule is found in the fact that a party’s character is ordinarily of no probative value in such actions. * * * There is, however, another reason, and it is one of administrative policy. It doubtless has its source in a variety of considerations, but that which assumes greatest importance is the necessity that the issues be confined in order that trials may not be of undue length.”

The right to introduce this character of evidence in a civil case is likewise denied by Mr. Jones, in his excellent work on Evidence, volume 1, § 148. He states:

“Evidence of character in such eases has but a remote bearing as proof to show that the act in question has or has not been committed. It is uncertain in its nature because true character is ascertained with difficulty and those who are called to testify are reluctant to disparage the influential and often too willing to disparage one under a cloud.”

This author further states that there are a few cases which support the admissibility of this character of evidence in cases of fraud, but in this connection he says:

This view is contrary to the clear weight of authority and does not seem to be based upon any recognized principle of the law of evidence. Instances are constantly, arising both in actions in tort and contract where the motives of parties are called in question; but this fact does not, in any legal sense, render the general character of such party relevant to the issue. It is a far safer rule that, in conformity to the general rules of evidence in civil cases, each transaction should be ascertained by its own circumstances and not by the character of the parties. The rule may bo considered as settled that in civil suits evidence of character is not admissible except where it is directly on the issue, and when from the nature of the issue said evidence is of special importance. Whether the act charged or complained of be indictable or not is not material.” Volume 1, § 155.

In the case of Thompson v. Bowie, 4 Wall. 463, 471, 18 L. Ed. 423, the Supreme Court of the United States declares the rule upon this subject in this language:

“It is very rare that in civil suits the character of the party is admissible in evidence, and it is never permitted, unless the nature of the action involves or directly affects the general character of the party.”

Judge Shelby, in Quinalty v. Temple, 176 F. 67, 69, 27 L. R. A. (N. S.) 1114, 99 C. C. A. 375, in discussing the danger of admitting such evidence in civil cases, says:

“At best, such evidence is a mere matter of opinion, and, in matters of opinion, witnesses are apt to be influenced by prejudice or partisanship, of which they may be unconscious, or by the opinions of those who first approach them on the subject. The introduction of such evidence, in civil cases, to bolster the character of parties and witnesses who have not been impeached, would make trials intolerably tedious and greatly increase the expense and delay of litigation.”

The Supreme Court of Connecticut, in Stow v. Converse, 3 Conn. 325, 8 Am. Dec. 189, after declaring that such evidence is not admissible in civil cases, remarks that were the rule otherwise, “general character would become the principal evidence ’ in. most cases; and he who could throng the court with witnesses to establish his reputation in general, would shelter himself from the wrongs he had perpetrated.”

The inherent weakness of this character of evidence is portrayed by William Shakespeare, wherein one of his characters is made to say of another:

“Even so may Angelo, In all his dressings, characters, titles, forms, Be an arch villain.” Measure for Measure,
Act 2, Sc. 1.
Again, the same author warns of the danger of too strict a reliance upon reputation in the language:
“Reputation is an idle and most false imposition ;
Oft got without merit and lost without deserving.” Othello, Act 2, Sc. 3.

Supporting the doctrine announced by the foregoing eminent text-writers will be found cases by courts of practically all of the states, among which we cite the following: Thompson v. Bowie, 4 Wall. 463, 18 L. Ed. 423 ; Lord v. Mobile, 113 Ala. 360, 21 So. 366; Powers v. Armstrong, 62 Ark. 267, 35 S. W. 228; Continental Ins. Co. v. Jachnichen, 110 Ind. 59, 10 N. E. 636, 59 Am. Rep. 194; Porter v. Whitlock, 142 Iowa, 66, 120 N. W. 649 ; Colburn v. Marble, 196 Mass. 376, 82 N. E. 28, 124 Am. St. Rep. 561; Adams v. Elseffer, 132 Mich. 100, 92 N. W. 772; Milan Bank v. Richmond, 235 Mo. 532, 139 S. W. 352; Taylor v. Heft, 150 App. Div. 509, 135 N. Y. S. 450; Baltimore & O. R. Co. v. Colvin, 118 Pa. 230, 12 A. 337; Dame v. Kenney, 25 N. H. 318; Southern Kan. Ry. Co. v. Robbins, 43 Kan. 145, 23 P. 113; Leinkauf v. Brinker, 62 Miss. 255, 52 Am. Rep. 183; Marcom v. Adams, 122 N. C. 222, 29 S. E. 333; Cummins v. Crawford, 88 Ill. 312, 30 Am. Rep. 558; Wilson Lumber & Milling Co. v. Atkinson, 162 N. C. 302, 78 S. E. 212, 49 L. R. A. (N. S.) 733.

The authorities in our own state are not altogether harmonious upon the question. The Supreme Court, in Texas & Pacific Railway Co. v. Raney, 86 Tex. 363, 25 S. W. 11, 13, has definitely adopted the view that supporting testimony of good character should be admitted, where a party to a suit is charged by his adversary with a- crime involving moral turpitude. In the case in which this doctrine was announced it appeared the railway company had made an issue that the plaintiff had forged á receipt for medical services, which he claimed the physician treating his injuries had given him. Under these circumstances it was distinctly held that the plaintiff was entitled to offer supporting evidence of general good character. Our Supreme Court in this case, went further than seems warranted by .the decided weight of authority. It was broadly announced that such evidence was admissible to support the reputation of a party, where a crime or fraud was charged. That portion applying the rule in case of fraud was dictum, as the facts in the case before the court tended to show the commission of the crime of forgery.

In view of the unanimous pronouncement of all the leading text-writers, supported by the great weight of authority throughout the country, we are not inclined to further extend the rule so as to permit evidence of good character to be admitted in civil eases merely because one of the parties has been charged with fraud, or his motives have been questioned by the pleadings or the evidence of an adversary. In this connection the language of Judge Moursund, in Luckenbach v. Thomas (Tex. Civ. App.) 166 S. W. 99, 105, meets with our hearty approval. In holding that such evidence should not be admitted in fraud cases this able jurist said:

“Our courts have been more liberal in permitting such evidence than the weight of authority appears to warrant. * ⅜ ⅜ We are unwilling to extend the doctrine further, and to apply it in a case where fraud is charged, especially where such charge is not based upon circumstances from which different inferences might be drawn, but it is to be determined by virtue of the credit to be given to the testimony of the witnesses as to whether or not certain statements were made, and whether or not they were true or false. If the party charged with making false representations, even though it is charged that same were made knowingly, can be permitted to strengthen his testimony by proof of his good reputation for honesty, it appears' reasonable that the other party, who is • sought to be put in the attitude of seeking to unjustly mulct his opponent in damages to which he is bound to know he is not entitled, should aleo be permitted to bolster his testimony by proof of his good reputation for honesty. Thus a large number of witnesses would be called, and the controversy resolved into one to determine which could establish the best reputation.”

Plaintiff in error seeks to invoke the rule announced in a few cases that where a party to a suit is a stranger at the place where the case is tried, he may offer supporting testimony of good character. Judge Brown expressly repudiated a similar contention in the Raney Case, cited supra, wherein he says:

“If his being a stranger controls in the matter, then defendant could have introduced evidence as to the character of the witnesses whose depositions it took, and thus the case would have been converted into one of investigation of character, with as many issues as there were witnesses.”'

We are cited to the decision of this commission in Brnnilon v. Gartman, 288 S. W. 817, as directly holding that supporting evidence of good reputation for honesty and fair dealing is admissible, where a party is charged by his. adversary with fraud or crime.

It will be observed that the case was reversed upon other grounds, the commission expressly declining to decide the question as to the admissibility of this character of evidence because the bill of exception raising the same was defective. The statement made in the course of the opinion as to what would have been held if the question had been properly presented is not authoritative, and must be regarded as mere dicta.

If such evidence be held proper in cases of this character, it is difficult to draw the line as to just when such testimony should be excluded. If defendants in error are entitled to offer such evidence to rebut the inference that they have been guilty of deliberate misrepresentation, then, logically, plaintiffs in error would be entitled by similar evidence to rebut the inference that they were seeking to obtain title to land to which they knew they had no just claim. In fact, there would be but few cases wherein such evidence would not be admissible. With both sides using character witnesses, often the real merits of1 the controversy would be obscured or entirely lost sight of, and he who could best develop this phase of his testimony would stand the better chance to obtain a verdict. As has often been declared, it is a far safer rule that controversies between citizens should be decided upon facts having a direct bearing upon the issues between them rather than upon mere opinions of partisan friends as to the relative standing of the parties to the litigation.

We therefore announce the rule to be that supporting evidence of good character, either for truth and veracity or honesty and fair dealing, should only be admitted in those cases where the nature of the action directly involves the character of a party, where a witness has been impeached, or where a party by his pleading or evidence charges his adversary with the commission of a crime involving moral turpitude.

We do not agree with the conclusion of the Court of Civil Appeals that in any event the error in admitting the evidence complained of was harmless. As the evidence was sharply conflicting upon the material issue as to whether defendants in error made fraudulent representations to induce the execution of the deeds by plaintiffs in error, we cannot say that this improper evidence did not, to some extent, influence the jury in answering such issue in favor of defendants in error.

There are other questions raised by plaintiffs in error,' but as they are not of such a nature as to likely arise upon another trial, it is unnecessary that we decide them.

We recommend that the judgments of the trial court and the Court of Civil Appeals be reversed, and the cause remanded for another trial.

CUBETON, C. J.

Judgments of the district court and Court of Civil Appeals both reversed, and cause remanded, as recommended by the Commission of Appeals.

We approve the holdings of the Commission of Appeals on the questions discussed in its opinion.