author: PALMORE, Judge. STEWART, Judge

text:
    G. R. WATKINS, etc., et al., Appellants, v. Fred E. FUGAZZI, Mayor, et al., Appellees.
    Court of Appeals of Kentucky.
    Oct. 1, 1965.

      Weldon Shouse, Lexington, for appellants.
    Robert Matthews, Atty. Gen., Richard S. Smith, Lexington, Jo M. Ferguson, Grafton, Ferguson & Fleischer, Louisville, for appellees.
    Bert T. Combs, Foster Ockerman, Yan-cey, Martin & Ockerman, Lexington, Rod-man W. Keenon, Stoll, Keenon & Park, Lexington, Earl S. Wilson, Kincaid, Wilson & Trimble, Lexington, John Y. Brown, Lexington, Dan E. Fowler, Thomas P. Bell, Fowler, Rouse, Measle & Bell, Lexington, amici curiae.
   PALMORE, Judge.

Appellants instituted this declaratory judgment action in behalf of themselves and other taxpayers similarly situated, CR 23.01, to test the validity of a proposed method of financing a “Downtown Urban Renewal Project” in Lexington. The trial court received proof by depositions and entered judgment sustaining the city’s actions.

On April 1, 1965, the Board of Commissioners of Lexington adopted Ordinance No. 5144 describing an area in downtown Lexington and declaring it to be a blighted, deteriorated, or deteriorating area appropriate for an urban renewal project. KRS 99.530(1). The ordinance ratified a proposal of the Urban Renewal and Community Development Agency of the city (hereinafter called the Agency) for the preparation of surveys and plans for an urban renewal project embracing the area, approved the proposed financing plan on the basis of a capital grant of three-fourths of the cost thereof by the U. S. Housing and Home Finance Administrator (HHFA), 42 U.S. C.A. § 1453, and appropriated $37,000 to the Agency for use in going forward with the plans.

On April 22, 1965, the Board of Commissioners adopted Ordinance No. 5159, which is the ordinance under attack. It recites that one of its purposes is to induce HHFA and the Agency to establish an urban renewal project in the proposed Urban Renewal Area. Recognizing that it would be necessary to issue revenue bonds to fund the city’s portion of the expense, and further acknowledging that anticipated direct revenues (if any) from the project will not suffice to that end, the ordinance provides that “ * * * it will be necessary to pledge all occupational license fees derived from the area * * * if and when such fees are received. * * * ” The city’s Director of Finance is directed to make separate accounting of and segregate all occupational license fees derived from the area, beginning July 1, 1965, and to hold such monies for appropriate disbursement for the intended purposes of the ordinance.

Ordinance No. 5159 was enacted pursuant to KRS 82.105 to 82.180 and expressly “finds that' all occupational license fees derived from the described area, do, in fact, directly relate to the project, and by reason of increased or continued employment, will result in, and do constitute, increased receipts in the sense of ICRS 82.145 (2b).”

Evidence revealed that for 1964 the 1(4% occupational license fees collected from the proposed urban renewal area under an existing ordinance amounted, in round figures, to $231,000 out of a city-wide total of $3,222,000. It is beyond cavil that the continued exodus, already substantial, of commercial enterprises leaving for more favorable locations will materially reduce the volume of business and employment in the area, and hence the occupational license fees collectible therefrom, unless it is rehabilitated. However, it is obvious that no one can predict in advance the rate and eventual extent of such decline, from which it follows that there is and will be in the future no way to distinguish between revenues that would have been realized anyway and those that result from the rehabilitation project.

The prime immediate objective toward achieving the ultimate purpose of the program is the removal of extensive railroad tracks from the “core area” of Lexington. The evidence substantially establishes that these railroad lines have throttled progressive development of the heart of Lexington and that there is little or no hope of a remedy except through the means now being pursued.

Appellants present these basic questions: (1) Does the project constitute a “governmental project” within the meaning of KRS 82.105 to 82.180? (2)- If so, can the city pledge occupational license fees derived from the area to payment of bonds issued to finance the project? (3) May all such fees be segregated and pledged, or only that portion thereof which may somehow be identified as derived from new business and employment in the area?

The first of these questions is pretty well answered on the face of the statute, which defines a governmental project as “any building, structure, installation, activity, undertaking or program proposed by a governmental agency in furtherance of any lawful governmental or proprietary function of a governmental agency.” KRS 82.105(4). Any doubt as to whether an urban renewal project qualifies as such an “undertaking or program” is eliminated by KRS 82.120, the first sentence of which says, “A city may exercise all or any of the powers conferred upon it in KRS 82.-105 to 82.180 as incidents to the exercise of its urban renewal and/or urban redevelopment functions authorized and contemplated in and by KRS Chapter 99, or otherwise.”

Appellants suggest that this legislation envisioned only governmental projects that employ personnel, such as the IRS data processing center in Grimm v. Moloney, Ky., 358 S.W.2d 496 (1962). Conceding that the immediate purpose of the statute may have been to make it possible for the City of Covington to land the data processing center, it is nevertheless readily evident that its drafters were more far-sighted than to limit its application to the exigencies of that particular case. We think the language of the statute definitely refutes this contention.

The second and third questions are so interrelated that they are best discussed as one. They turn on the construction of KRS 82.145(2) (b), the pertinent provision of which is as follows:

“If * * * the city shall make a legislative finding of fact, as recited in the body of the ordinance authorizing issuance of the bonds, that the governmental project is of such nature as to provide increased revenues to the city by reason of increased employment and resulting increased receipts from occupational license fees * * * then the city may pledge and covenant that it will cause to be deposited in said separate and special fund the receipts which may be definitely identified as accruing from such occupational license fees * * * by reason of employment in or directly related to the governmental project,” etc.

The ordinance does not bind the city to continue for any period of time the imposition of occupational license fees. Hence there is no question of an unvoted debt within the proscription of Const. §§ 157 and 158. Cf. Grimm v. Moloney, Ky., 358 S.W.2d 496, 499-500 (1962); Turnpike Authority of Kentucky v. Wall, Ky., 336 S.W.2d 551, 557-558 (1960). The only problem here is one of statutory intent.

The city has made the requisite legislative finding, and no one suggests it is arbitrary, that the project is “of such nature as to provide increased revenues to the city by reason of increased employment and resulting increased receipts from occupational license fees.” Therefore, it has express authority to pledge “the receipts which may be definitely identified as accruing from such occupational license fees * * * by reason of employment in or directly related to the project.” The real question in the case is whether this means all of the occupational license receipts collected from employment in the area of the project or only such portion thereof as can reasonably be identified as revenue that would not have existed except for the project.

There is room for difference of opinion, of course, but our conclusion is that a strictly literal construction of KRS 82.145(2) (b) favors the city’s viewpoint. True, the city must first find that the project will bring increased receipts from occupational license fees, but when it has done that the statute does not say it may pledge only these increased receipts. It says the city may pledge “the receipts.” What receipts.? All occupational license receipts that can be definitely identified as accruing “by reason of employment in or directly related to the governmental project.”

Except for the circumstance that in Grimm v. Moloney, Ky., 358 S.W. 496 (1962), most cr all of the anticipated occupational license receipts would represent “new money” we descry no basis for the notion that only new money or new employment can come within the purview of the pledge authorized by this statute. As heretofore observed, clearly the law was not tailored to the figure of that case alone.

Further construing the statute in the light of its obvious purpose, we are of the opinion that “employment in” the project means employment in the territory formally embraced by the project. Just what “directly related” may be taken to mean is a question that does not confront us in this particular case.

It may be suggested that since the project must be in existence before any receipts can arise by reason of employment in it, and since Ordinance No. 5159 encompasses all receipts from the project area beginning July 1, 1965, the project already exists and is no longer to be “induced,” from which it follows that the city has no authority under KRS 82.-105 to 82.180 to issue revenue bonds (the whole purpose of the statute being to induee the establishment of the project). It must be remembered, however, that the object-of the chase is federal money, or, to say it more politely, federal participation. Without that the project evaporates. That the project technically is established by ordinance before HHFA finally approves it and joins in the financing is really immaterial, because until that time it is essentially contingent. If it falls through, the receipts set aside in anticipation of its success will revert to the city’s general fund.

One other circumstance not thus far mentioned in this opinion bears comment. The territory designated for inclusion in the project is not confined to the long, narrow strip occupied by the railroad facilities, but extends over to embrace the business houses on -one side of Main Street. It may be that this -is not strictly necessary from the standpoint of rehabilitation. In fact, it would be naive not to recognize that this valuable property on Main Street was included with an eye to the occupational license revenue it will be able to contribute. But the area a city chooses to place in an urban renewal project is primarily, if not exclusively, a matter of legislative discretion in which the courts have no legitimate power to interfere unless the action is so unreasonable that it can be called arbitrary and in violation of Const. § 2. Cf. Fowler v. Obier, 224 Ky. 742, 7 S.W.2d 219 (1928). It is not contended that the city has so acted in this instance.

The judgment is affirmed.

STEWART, Judge

(dissenting).

I dissent from the opinion for reasons that will be given.

Upon the basis of a finding by ordinance that the area involved (which comprises, for the most part, a section of Lexington’s downtown business district) is a “blighted, deteriorated and deteriorating area,” the city has assumed the right to seek to induce its own independent instrumentality (the urban renewal and community development agency of the city of Lexington) and an organ of the federal government (HHFA) to establish what the city chooses to call a “governmental project” in the area described in the opinion. To accomplish this end, it seeks to come under the terms and conditions of KRS 82.105 through 82.180, which the Statute Reviser has compiled in the Kentucky Revised Statutes under the heading, “Inducing Location of Governmental Projects.” (Emphasis added.)

Admittedly, the so-called “governmental project” is the removal of the railroad tracks from downtown Lexington. There is no indication in the record that any other urban development will be undertaken under the plan other than restoration work after the tracks are removed. The opinion stands for the proposition that this objective of the ordinance may constitute an urban renewal development venture and that it may be financed by the issuance of bonds.

A primary question is whether the removal of railroad tracks and such rehabilitation as may be a necessary result thereof is a governmental project within the meaning of KRS 82.105 through 82.180.

KRS 82.105(4) refers to a governmental project proposed by a “governmental agency”; and a governmental agency is defined by KRS 82.105(3) as the Commonwealth, the United States, or any division, department or instrumentality of either of them.

I believe the legislation under discussion envisioned the location within a city of a governmental agency which employs persons, similar to a new industry that is induced to come into the city, rather than a project involving the reconditioning contemplated here. This idea is made abundantly clear in Grimm v. Moloney, cited in the opinion, wherein this statement appears:

“It may be said that the basis of the allocation of the portion of occupational tax revenue collected from employees of the Center is that it is ‘new money,’ for it would not be received but for the location of the enterprise and its expected payroll of $6,000,000. Doubtless, some of these employees would be subject to the occupational tax anyhow by reason of other jobs in the city. But it is suggested that other persons would take their places in case they transferred to the Center.”

The city is undertaking to induce its own urban renewal and community development agency and HHFA, an instrumentality of the federal government, to spend some money to remove railroad tracks, but not to “locate” a governmental project within its boundaries. In my view this is not a governmental project within the purview of KRS 82.105 through 82.180.

In the instant case the occupational taxes pledged are from existing businesses rather than from new businesses. To this extent the present case goes beyond this Court’s ruling in Grimm v. Moloney, supra; for, in that case the money pledged was considered new money that would originate from the creation of a new project “located” in Covington by a federal agency.

The action of the city is in fact a pledge of its revenue to support a bond issue without allowing the city to vote on the proposition. This practice was denounced in the case of Curlin v. Wetherby, Ky., 275 S.W.2d 934, 937. That case said on this point:

“We are of the opinion that to extend the special fund theory to include funds derived from taxes would result in sanctioning an evasion of the spirit and purpose of the constitutional prohibition against debt. In the final analysis, the practical result of a * * debt is that future government officials are prevented from expending, for what they consider the best purposes, the revenues received during their administration. The fact that the people have expressed, through the Constitution, their desire that certain revenues be expended only for a specified purpose, does not mean that the people intended their periodically elected representatives to have any authority other than to expend current revenues for that purpose.”

The opinion makes no distinction between occupational taxes collected from employment or business in the area before the tracks are removed and those derived from the same area thereafter. All such taxes, regardless, so the opinion holds, may be pledged for the payment of the city’s share of the expense incurred. This holding flies in the face of the plain unambiguous language of KRS 82.145(2) (b).

Reduced to its simplest terms this statutory subsection provides that the governmental project must be of such a nature as to provide increased revenue to the city by reason of increased employment from occupational taxes. Only when this condition exists may the city pledge and segregate the receipts “which may be definitely identified as accruing from such occupational license fees or taxes by reason of employment in or directly related to the governmental project.”

Thus the clear import of KRS 82.145(2) (b) is that it applies solely to a governmental project that creates increased employment which provides increased revenues to a city. Does the removal of railroad tracks achieve this result? Certainly not. Furthermore, we conceive it to be impossible to definitely identify occupational tax receipts arising in the proposed urban renewal area “as accruing * * * by reason of employment in or directly related to the government project * sjc * if

The opinion states that the “ordinance does not bind the city to continue for any period of time the imposition of occupational license fees.” The implication of this statement is that a prolonged debt is not incurred, even though an unconditional long-term pledge of a portion of the occupational taxes is made under the ordinance to meet the city’s share of the cost that will be incurred. A city may noti abandon -its duty to collect occupational taxes in the area where it is now collecting such revenue for general city use in order to escape the obligation it seeks to assume in the case at bar. The method suggested by the opinion as a means of escaping liability, at some future time, for the expense of removing the tracks has been condemned by this Court. See Curlin v. Wetherby, supra.

I am convinced the plan proposed by the City of Lexington is not only unconstitutional but also is not supported by the statutory law of this state.

I would reverse the judgment.

I am authorized to state that HILL, J., joins me in this dissent.


source: Caselaw Access Project

author: HAMILTON, Justice.

license: Public Domain

text:
    HOUSE OF TOBACCO, INC., Petitioner, v. Robert S. CALVERT, State Comptroller of Public Accounts, State of Texas, Respondent.
    No. A-10706.
    Supreme Court of Texas.
    Oct. 6, 1965.
    Bernard & Bernard, Houston, for petitioner.
    Waggoner Carr, Atty. Gen., Sam L. Kelley, Asst. Atty. Gen., for respondent.
   HAMILTON, Justice.

For many years petitioner had been issued Distributor Cigarette Permit No. 179198-7 by the State Comptroller of Public Accounts. By letter dated October 30, 1964, the Comptroller notified petitioner that his permit had been forfeited, subject to becoming effective five days from said date in accordance with Art. 7.21, V.A.T.S. Tax.Gen. The reason given for the forfeiture was that petitioner had been conducting a business of distributing and wholesaling cigarettes without the authorized cigarette meter impression thereon, and which cigarettes were possessed with the intent to use, sell, circulate or pass such cigarettes in violation of the provisions of the above-mentioned article. Petitioner received this notice on November 2, 1964.

On November 4, 1964, petitioner sought a temporary restraining order against respondent canceling his permit, which was denied. However, a hearing was held on November 12, 1964, on the application for a temporary injunction. All parties were present and petitioner cross-examined the Comptroller and several of his employees but did not offer any testimony from its officers or employees.

The trial court held for the respondent and petitioner appealed to the Court of Civil Appeals. That court held that even though Art. 7.21 provided for suspension of permits of cigarette distributors by letter for those who violated its provisions, the statute also provided the cigarette distributor five days’ delay before the suspension or forfeiture of the permit could become final. The Court of Civil Appeals said that although Art. 7.21 did not expressly provide for notice and a hearing petitioner had availed itself of a hearing by instituting court action and participating in the hearing. As a result the Court of Civil Appeals held that the petitioner was not denied or deprived of his property without due process of law. A dissenting opinion argued that notice and a hearing were required by due process of law before the final administrative order was given. 387 S.W.2d 74.

Suggestion of Moot Controversy

Respondent contends that the controversy is now moot because the subject permit, by operation of law, automatically expired on February 28, 1965, such permit being of one year’s duration and renewable annually-Boston v. Garrison et al., 152 Tex. 253, 256 S.W.2d 67.

In reply petitioner cites the case of Isbell v. Brown, 196 S.W.2d 691 (Tex.Civ.App.1946, error refused). In that case Brown held a real estate dealer’s license for the year 1945. On November 9, 1945, Isbell, the Secretary of State, revoked this license. Brown filed suit to have the revocation order set aside on November 16, 1945, and the trial court awarded judgment for him. Defendant Isbell appealed and the Court of Civil Appeals held that Brown had failed in his burden of proof to show that the order was invalid. That court also held as follows:

“We do not regard this case as being moot. Under the provisions of Article 6573a, § 15, the decision of this case would have some effect upon appellee’s subsequent application for a license (within a period of one year after judgment, at least) and as appellee evidently desired to engage in the real estate business, something more than a mere abstract question of law is presented.”

See also Department of Public Safety v. Austin, 163 Tex. 280, 354 S.W.2d 376, which distinguishes the Boston case from a situation such as is presented here.

Here, there is prejudice to the petitioner by virtue of the provisions of Art. 7.21, V.A.T.S. Tax.-Gen., which provided the following:

“ * * * No new permit shall be issued within a period of one (1) year to anyone whose permit or permits have been forfeited, except at the discretion of the Comptroller.”

This is not a moot controversy because the Comptroller’s order affects the petitioner’s right to obtain a new permit in the light of the above-quoted provision of the statute. Petitioner’s permit was forfeited on November 4, 1964, and that final order could still affect his application for a new permit which he may otherwise be entitled to now.

We therefore hold that this controversy is not moot.

Lack of Due Process

Petitioner contends that the Court of Civil Appeals erred in affirming the trial court’s action in failing to issue a temporary injunction against the Comptroller of Public Accounts, prohibiting him from forfeiting the Cigarette Permit issued to petitioner because the authority for forfeiture deprives petitioner of its property without due process of law as guaranteed by the State and Federal Constitutions.

On the other hand, respondent argues that the nature of the petitioner’s interest is controlled by the police power of the State and since the State has the authority to prohibit entirely the sale of cigarettes and liquor, other jurisdictions have held that the revocation of such a permit without notice and a hearing does not violate due process. Austin v. State of Tennessee, 179 U.S. 343, 21 S.Ct. 132, 45 L.Ed. 224; Walker v. City of Clinton, 244 Iowa 1099, 59 N.W.2d 785 (1944); Ford Hopkins Co. v. City of Iowa City, 216 Iowa 1286, 248 N.W. 668.

While some other states have placed cigarettes in the category with liquor, racing and the like, Texas has not. County of Harris v. Shepperd, 156 Tex. 18, 291 S.W.2d 721. There we stated that:

“Certainly the taxing power of the state embraces a variety of forms and measures apart from those based only on value. The tax on gasoline, cigarettes and liquor are for revenue purposes only and the authority to levy these taxes is necessarily derived from the taxing power of the state.”

See also Sheppard v. Musser, Tex.Civ.App., 89 S.W.2d 222, as modified in 127 Tex. 193, 92 S.W.2d 219, appeal dismissed, 299 U.S. 513, 57 S.Ct. 121, 81 L.Ed. 379.

Added support for the above statement is found in Article 7.41, which states that it was intended by the Legislature for this to be an excise or use tax. Art. 7.41, V.A.T.S. Tax.-Gen. Furthermore, Art. 7.02 states that the impact of the tax is to be on the consumer.

By way of comparison, the provisions of the Texas Liquor Control Act state that it is to be deemed an exercise of the police power of the State for the protection of the welfare, health, peace, temperance and safety of the people of the State. Art. 666-2, P.C.; Jones v. Marsh, 148 Tex. 362, 224 S.W.2d 198. Of course, a license fee for the privilege of operating a certain type of business may be imposed for both regulation and revenue purposes. Payne v. Massey, 145 Tex. 237, 196 S.W.2d 493; Rapp & Son v. Kiel, 159 Cal. 702, 115 P. 651 (1911, Dictum); Bleon v. Emery, 60 Utah 582, 583, 209 P. 627 (1922); Mahany on Texas Taxes (1946), § 21.05, p. 642; Cf. Carter v. State Tax Commission, 98 Utah 96, 96 P.2d 727, 126 A.L.R. 1402 (1939).

Respondent relies upon the case of Gillaspie v. Department of Public Safety, 152 Tex. 459, 259 S.W.2d 177, cert. den. 347 U.S. 933, 74 S.Ct. 625, 98 L.Ed. 1084, for the holding that when the interest in question is a privilege, such as a driver’s license, rather than a constitutionally protected property right, due process of law does not attach to protect the interest involved. Justice Smedley also mentioned that this privilege was subject to reasonable regulations under the police power of the State in the interest of public safety and welfare. 259 S.W.2d at 182, and the cases cited therein. But as we mentioned earlier, this particular statute does not involve any regulation for the public welfare.

From our analysis of the authorities, we find that as a general rule constitutional due process applies to protect property rights but does not, as respondent has pointed out, extend to privilege granted under the State’s police power. Gillaspie v. Department of Public Safety, supra. The situation here is somewhere in between. The permit involved is not a property right as that term is utilized in the constitutional sense, yet, as a licensee, petitioner’s authorization to sell cigarettes is not regulated due to the need for the protection of the public under the police power.

The Court of Civil Appeals in its opinion held that petitioner was entitled to due process of law under the State and Federal Constitutions, since House of Tobacco had suffered a deprivation of its property, citing Board of Firemen’s Relief and Retirement Fund Trustees of Texarkana, Texas v. Hamilton, et al., 386 S.W.2d 754 (Tex.1965). There property rights were clearly involved and we held that the claimant Hamilton was entitled to an inherent right of an appeal concerning her claim for pension benefits as provided for by statute.

A case more in point is that of Francisco v. Board of Dental Examiners, 149 S.W.2d 619 (Tex.Civ.App.1941, error refused). Dr. Francisco, a dentist, sought a mandatory temporary injunction reinstating his license which had been canceled by an order of the Board of Dental Examiners on the ground that he had been convicted of forgery in Oklahoma. The court held that although the State could provide reasonable regulations concerning the practice of dentistry, the privilege to so practice once acquired became a right protected by the due process clauses of the State and Federal Constitutions. Sherman v. State Board of Dental Examiners, 116 S.W.2d 601 (Tex.Civ.App.1938, error refused); Waller v. State, 68 S.W.2d 601, (Tex.Civ.App.1934, error refused). In addition, the Court held that a hearing would be useful to determine a number of matters that the Board must take into consideration before it can act.

Also, in the case of Industrial Accident Board v. O’Dowd, we held that the “right to practice before an administrative board when once granted is admittedly a valuable right and entitled to protection under the due process clauses of the state and federal constitutions.” 157 Tex. 432, 303 S.W.2d 763.

Article 7.21 does not provide for notice and a hearing of the pending revocation or suspension of the cigarette distributor’s permit. All it does provide for is that a letter be sent notifying the distributor that on the fifth day from the date of the letter his permit will be summarily revoked. There is no provision for appellate review of this action in the statute. Petitioner was relegated to filing for a temporary restraining order and a temporary injunction after his permit had been canceled. One of the factors considered as important in the Gillaspie case, supra, was the provision for a trial de novo in the county court on appeal as to one aggrieved by the orders of the Department of Public Safety. There is no such provision here. Respondent testified that this revocation of the permit would “put the House of Tobacco out of business.”

Of course, petitioner is not in a profession in the sense of a doctor or a lawyer. Nevertheless, in order to wholesale cigarettes, it, too, must have a license. Art. 7.09, V.A.T.S. This is a privilege which does not have to be granted; however, once it is granted, it cannot be taken away except for good cause. A distributor’s very existence depends upon this permit and he has an investment, as does a dentist. In both cases,' if their license is revoked, each must turn to some other occupation. To draw the line here on the basis of whether one is practicing a profession would seem somewhat arbitrary and unjust. Therefore, we hold that the petitioner House of Tobacco is entitled to due process of law as guaranteed by the State and Federal Constitutions. Vernon’s Ann.St.Const., Art. I, §19; U.S.C.A.Const. Amend. 14.

Petitioner, being entitled to due process of law, was denied such, since the order forfeiting his permit was a final one. It is well settled that notice and a hearing are essential and such procedures must precede the final administrative order. Ewing v. Mytinger & Casselberry, 339 U.S. 594, 70 S.Ct. 870, 94 L.Ed. 1088, and the cases cited therein. Trapp v. Shell Oil Co., 147 Tex. 323, 198 S.W.2d 424; Glen Oaks Utilities, Inc. v. City of Houston, 161 Tex. 417, 340 S.W.2d 783. Also in the City of Houston v. Glen Oaks Utilities, Inc., 360 S.W.2d 549 (Tex.Civ.App.1962, error refused, N.R. E.), the Houston Court of Civil Appeals wrote the following:

“It follows that if a suit for injunction is a substitute for notice and opportunity to be heard by the rate-making body, then the requirement of procedural due process is meaningless.”

We therefore hold that the petitioner House of Tobacco was denied due process of law as guaranteed by the State and Federal Constitutions, since it was not given notice and an opportunity to be heard before the order of the Comptroller became final.

We further agree that although this statute does not provide for notice and a hearing, that such is not unconstitutional since these provisions may be by implication incorporated into the statute unless the statute expressly provides otherwise, which it does not. Industrial Accident Board v. O’Dowd, 157 Tex. 432, 303 S.W.2d 763; American Power & Light Co. v. Securities and Exchange Commission, 329 U.S. 90, 67 S.Ct. 133, 143, 91 L.Ed. 103; Caughman v. Columbia, Newberry & Laurens R. Co., 82 S.C. 418, 64 S.E. 240, 242 (1909); McManus v. Industrial Commission, 53 Ariz. 22, 85 P.2d 54, 56 (1938).

“Obviously if the explicit provisions of a statute direct an administrative board to proceed without notice in contravention of the constitutional due process requirements (as in the Francisco case) [Francisco v. Board of Dental Examiners, supra] there would be no room for a presumption that the Legislature intended that a notice be given. However, on the other hand, we must assume that the Legislature intended to, enact a valid law, and in the absence of express language to the contrary, intended that the administrative board should proceed in accordance with constitutional requirements. The Board here construed the statute as requiring notice and notice was actually given. * * * ” Industrial Accident Board v. O’Dowd, 157 Tex. 432, 303 S.W.2d 763.

Respondent earnestly argues that petitioner waived any right to complain, since he at no time demanded that the Comptroller of Public Accounts give him a hearing. Keeping in mind the fact that the statute does not so provide, nor are we cited to any such implied rule of the Comptroller (see Art. 7.12, V.A.T.S.), we would not place upon the petitioner the unnecessary burden of formally requesting a hearing for which there was no provision anywhere.

“As a condition precedent to the right to contest the validity of an agency’s order or decision, an aggrieved person is not required, absent statutory requirement therefor, first to apply to the agency to rescind or modify the action it has taken.” 1 Tex. Jur.2d, § 37, p. 677, citing Railroad Commission v. Houston Chamber of Commerce, 124 Tex. 375, 78 S.W.2d 591; Trapp et al. v. Atlantic Refining Co., 170 S.W.2d 506, 510 (Tex.Civ.App. 1943, error refused); Thomas v. Stanolind Oil Co., 145 Tex. 270, 198 S.W.2d 420.

The order of the Comptroller canceling the permit is void. The trial court should have granted the temporary injunction as prayed for. Accordingly, the judgments of the Court of Civil Appeals and the trial court must be reversed. We recognize that the permit which the Comptroller sought to cancel has expired. However, Rule 501, Texas Rules of Civil Procedure, requires that this court render the judgment which should have been rendered by the trial court. It is accordingly ordered that a temporary writ of injunction be issued as prayed for in plaintiff’s petition. No motion for rehearing will be entertained.


author: DICE, Commissioner.

text:
    Edward J. HALL, Appellant, v. The STATE of Texas, Appellee.
    No. 38371.
    Court of Criminal Appeals of Texas.
    June 16, 1965.
    Rehearing Denied Oct. 13, 1965.
    Minor Pounds, Lubbock, for appellant.
    Alton R. Griffin, Dist. Atty., William M. Laubach, Asst. Dist. Atty., Lubbock, and Leon B. Douglas, State’s Atty.', Austin, for the State.
   DICE, Commissioner.

The conviction is for the unlawful possession of a narcotic drug, to-wit, marijuana; the punishment, twenty-five years.

The state’s evidence shows that on the date alleged, detectives Rutherford and Wiley, after having obtained a search warrant, went to a certain cabin occupied by appellant at a motel in the city of Lubbock to search for narcotic drugs. In the search of the cabin, a quantity of marijuana was found in a suitcase.

Appellant timely objected to the evidence of the search and the fruits thereof, on the ground that the affidavit made by the two officers before the magistrate was Insufficient to authorize the issuance of the search warrant.

The affidavit for the search warrant is •similar to the affidavit in Aguilar v. State of Texas, 378 U.S. 108, 84 S.Ct. 1509, 12 L.Ed.2d 723, which was held insufficient by the Supreme Court of the United States to support a finding of probable cause by the magistrate for issuance of a search warrant.

The state concedes that the affidavit in the instant case is substantially the same as the one held insufficient in Aguilar v. State of Texas, supra, but insists that the test prescribed in Aguilar was met because the record shows that the magistrate received other information from the two officers which permitted him to make his determination of probable cause for the issuance of the warrant. In support of this contention, reliance is had upon the testimony of the justice of the peace who issued the search warrant, which was to the effect that before issuing the warrant he had a conversation with the two detectives and determined in his own mind that there was probable cause for its issuance.

The conversation between the magistrate and the two officers, which was not shown to have been sworn to under oath, could not be the basis for a determination of probable cause for issuance of the warrant.

Art. Í, Sec. 9, of Vernon’s Ann.St. Constitution of Texas, provides, among other things, that no warrant to search any place or to seize any person or thing shall issue “ * * * without probable cause, supported by oath or affirmation.”

Further, a search warrant is required by the statutes of this state to be issued on a written, sworn complaint or affidavit. Articles 310-312, Vernon’s Ann.Code of Criminal Procedure.

The judgment is reversed and the cause is remanded.

Opinion approved by the Court.


author: WILSON, Justice.

text:
    TEXAS RESERVE LIFE INSURANCE COMPANY, and Great American Health & Life Insurance Company, Appellant, v. R. L. LOTHRINGER, Appellee.
    No. 4394.
    Court of Civil Appeals of Texas. Waco.
    Sept. 16, 1965.

      Michael W. Wagner, San Antonio, for appellant.
    Reese D. Wade, Beeville, James E. Coate, Eureka Springs, Ark., for appellee.
   WILSON, Justice.

The insured recovered judgment in a non-jury trial against appellant insurer under an accident policy which provided monthly benefits of $100 for loss of time from injury which shall “independently of all other causes totally and continuously disable and prevent the insured from performing each and every duty pertaining to any occupation, and shall require the personal care and regular attendance of a legally qualified physician or surgeon.” There are no findings of fact.

The insurer says there is no evidence disability resulted from the injury alleged, a fall on her knee, independently of all other causes. It relies on medical opinion evidence that disability resulted from the fall, “with pre-existing hypertrophic osteoarthritis.” Insured testified, “I have never had any trouble in my life up to the time I fell” with the knee. Opinion testimony did not establish the issue as a matter of law. Hood v. Texas Indemnity Ins. Co., 146 Tex. 522, 209 S.W.2d 345, 346; Coxson v. Atlanta Life Ins. Co., 142 Tex. 544, 179 S.W.2d 943. The evidence made a fact issue for the trial judge.

It is urged there is no evidence insured was totally disabled from performing every occupational duty. She kept books, did office work and sold merchandise before the injury. There was evidence she could not sit at a desk or stand for extended periods, could not get in and out of an automobile, and could not work on an eight-hour shift. Insured testified without objection she was unable to “do the types of occupations” since the accident because of pain, and that her “disability had continued” to the date of trial. The policy provision relied upon is not to be given a literal interpretation, but is to be reasonably construed. Prudential Insurance Company of America v. Tate, 162 Tex. 369, 347 S.W.2d 556, 558; Metropolitan Life Ins. Co. v. Wann, 130 Tex. 400, 109 S.W.2d 470, 115 A.L.R. 1301. It does not require that insured be a helpless cripple. Connecticut General Insurance Co. v. Reese, Tex.Civ.App., 348 S.W.2d 549, 550, writ ref. n. r. e. The evidence is factually weak, but in our opinion is legally sufficient.

Recovery is resisted on the ground the injury was not proved to be such as “shall require the personal care and regular attendance” of a physician or surgeon as the policy required. The provision is a condition precedent to recovery on which insured has the burden of proof. United American Insurance Co. v. Selby, 161 Tex. 162, 338 S.W.2d 160, 164, 84 A.L.R.2d 367.

Insured was injured April 2nd. She was hospitalized for three weeks. She continued under regular treatment of a physician until September 14th. She was next seen, treated or attended by a physician or surgeon on December 14th of the following year. The evidence does not show that insured had reached a maximum recovery from the injury with disability for which further care and attention by a physician would be useless. The evidence does not show when personal care and regular attendance ceased, but it is clear it did not continue for the 15-month period for which judgment was rendered. See 1A Apple-man, Insurance, Sec. 655; 45 C.J.S. Insurance § 899; 84 A.L.R.2d 375. This error requires reversal and remand.

Other points are overruled. Reversed and remanded.


author: DAVIS, Justice.

text:
    Don McADEN, Appellant, v. SOIL IMPROVEMENT CORPORATION, Appellee.
    No. 7664.
    Court of Civil Appeals of Texas. Texarkana.
    Sept. 28, 1965.
    Robert G. Bush, III, Homer R. Caston, Jr., Nance & Caston, Sherman, for appellant.
    Franklin R. Roark, Jr., Robinson & Roark, Sherman, for appellee.
   DAVIS, Justice.

Plaintiff-appellee, Soil Improvement Corporation, sued defendant-appellant, Don McAden, individually, for actual damages, exemplary damages, and attorney’s fees because of an alleged wrongful levy of an Alias Execution by the Sheriff’s office of Grayson County on part of a carload of fertilizer alleged to belong to Soil Improvement Corporation. The levy was made on September 28,1963. The fertilizer, at that time, was in the name of Dave Tinkle, consignee. The Alias Execution was issued on a judgment in favor of Don McAden Company, a Corporation, against David Tinkle. The judgment was signed and entered on November 11, 1961, for the sum of $1,662.40, plus 6% interest, and costs of suit.

The jury answered the Special Issues, as submitted, in favor of Soil Improvement Corporation. Don McAden excepted and has perfected his appeal. He brings forward 25 points of error. The parties will be referred to as they were in the trial court.

In August of 1963, Soil Improvement Corporation was organized as a private corporation by Don W. Hefton, with David Tinkle as President, Leota Tinkle, his wife, as Vice President, and Don. W. Hefton as S ecretary-T reasurer.

Prior to September 14,1963, David Tinkle, by telephone, ordered a carload of fertilizer from Monsanto Chemical Company of El Dorado, Arkansas. Tinkle was advised by Monsanto Chemical Company that the fertilizer would have to be shipped through a distributor and it suggested the Farmers Fertilizer Company of Texarkana, Texas. The fertilizer was shipped by train on September 14, 1963, to “Don McAden Proprietorship”, consignee. McAden got in touch with an agent of Monsanto Chemical Company and advised said agent that he did not order a car of fertilizer. Then, Monsanto Chemical Company, through Farmers Fertilizer Company, advised the railroad company to change the consignee from “Don McAden Proprietorship” to Dave Tinkle. The change was made and David Tinkle was advised that the car of fertilizer had reached Sherman. Subsequently, some of the employees of the Don McAden Company observed David Tinkle unloading fertilizer out of the railroad car and advised McAden, McAden in turn advised his lawyer. The lawyer made an investigation which revealed that the car of fertilizer was in the name of Dave Tinkle, consignee; Dave Tinkle being one and the same person as David Tinkle. The lawyer secured the issuance of an Alias Execution on the Judgment in favor of Don McAden Company, a corporation. The Alias Execution was placed in the hands of the Sheriff’s office, which made a levy on 19 tons of fertilizer. Everything indicated that David Tinkle was the owner of the fertilizer at that time.

Immediately after the levy was made, Monsanto Chemical Company and Farmers Fertilizer Company were advised of the same. Then, Monsanto Chemical Company and Farmers Fertilizer Company began the process of changing the name of the consignee from Dave Tinkle to Soil Improvement Corporation. This was done about one month after the levy was made.

In the trial of the case, Tinkle testified that he told the Deputy Sheriff that the fertilizer belonged to Soil Improvement Corporation at the time the levy was made. This testimony was denied by all other witnesses. One of them testified that Tinkle told them that the fertilizer belonged to Monsanto Chemical Company. Tinkle testified, by deposition, that he told the Deputy Sheriff that the fertilizer belonged to Monsanto Chemical Company. Harold Trammel, President of Farmers Fertilizer Company, testified, very positively, that the name of the consignee would show the owner of the fertilizer at the time the levy was made. He knew that the fertilizer was in the name of Dave Tinkle, consignee. He testified that Tinkle was the owner of the fertilizer at the time the levy was made. After he had testified, the plaintiff made a motion to take a nonsuit. The trial court overruled the motion.

The defendant filed a motion for instructed verdict and a motion for judgment N.O.V. The trial court entered a judgment in favor of the plaintiff for $1,715.00, including $100.00 as loss of profits.

Before we start discussing the points of error, we will say that we have tried to determine whether or not the property involved was “wrongfully” levied upon, and whether or not the proper measure of damages were submitted to the jury, along with the other errors complained of.

By his point 1, defendant says the trial court erred in overruling his plea in abatement because the Sheriff’s Department was a necessary and indispensable party to the suit. This is on the theory that all joint tort feasors should be joined as defendants by plaintiff. Riley y. Industrial Finance Service Company, 157 Tex. 306, 302 S.W.2d 652 (1957). This decision follows the case of Landers v. East Texas Salt Water Disposal Co., 151 Tex. 251, 248 S.W.2d 731 (1952), where the Supreme Court held that where two or more wrongdoers joined to produce an indivisible injury, all of the wrongdoers are jointly and severally liable to the person wronged for the entire damage suffered. The court went on to hold that a plaintiff may sue one or more of the tort feasors. Then it held that if all of the tort feasors are not joined as defendants, then the defendants may bring in the others. The point is overruled.

By his point 2, defendant says the trial court erred in overruling his motion for continuance because of the absence of his main counsel, Homer Caston, Jr. According to the record, Caston was defendant’s main counsel. He had taken the depositions in El Dorado, Arkansas, and in Sherman. At the time the case was called for trial, Caston was in the U.S. Army, where he would be for another two weeks. The trial court overruled the motion and forced the defendant to go to trial and be represented by an inexperienced attorney. The record further shows that the plaintiff, by oral motion, had recently had the case passed for two weeks without giving any particular grounds therefor. It seems that a good cause was shown to pass the ease for two weeks, and that such a continuance would not have resulted in any injury to the plaintiff. Rule 253, Vernon’s Texas Rules of Civil Procedure. The point is sustained.

By his points 3 through 7, defendant complains of the error of the trial court in overruling some of his exceptions to the plaintiff’s First Amended Original Petition. Since the case was tried on the wrong theory of law, we will sustain these points. The execution was issued in the name of Don McAden Company. According to the evidence, the property was in the name of Dave Tinkle, consignee. There was a valid judgment in favor of the creditor against the judgment debtor. Another thing, if the execution had been wrongfully levied the damages would be governed by the actual value of the property at the time the levy was made. Ainsa et al. v. Moses et al. (Tex.Civ.App.), 100 S.W. 791 (1907), N.W.H.; Wollner et al. v. Darnell (Tex.Civ.App.), 94 S.W.2d 1225 (1936), N.W.H. That does not mean the probable retail value. There are many cases to this effect. See: “COMMENT” Creditor’s Liability in Texas for Wrongful Attachment, Garnishment, or Execution, 41, No. 5, Texas Law Review 692-716, and cases cited therein.

By their points 8, 18 and 19, defendants say the trial court erred in overruling his objections to the judgment in favor of the plaintiff and against Don McAden, individually; and erred in overruling defendant’s objections to the judgment in that the evidence failed to show that the levy of the execution "by the Sheriff’s Department and Don McAden Company was wrongful; and that Don McAden Company and the Sheriffs Department acted with anything other than reasonable and probable cause in making said levy. The Alias Execution that was issued was issued in favor of Don McAden Company, not in favor of Don McAden, individually. Since the judgment was in favor of the corporation, the corporation was a necessary and indispensable party to the suit. Royal Petroleum Corp. v. Dennis, 160 Tex. 392, 332 S.W.2d 313 (1960); Hortenstine v. Jackson (Tex.Civ.App.), 289 S.W.2d 613 (1956), W.R., N.R.E. The points are sustained.

Defendant takes the position that the plaintiff could have filed a bond and oath in which it could have alleged that the fertilizer belonged to plaintiff. Then, they could have had a trial to the right of the property. Art. 291, Vernon’s Ann.Tex.Civ. St. and Art. 7402, Vernon’s Ann.Tex.Civ. St.

24 T.J.2d 658, Sec. 196, says:

“ * * * In order that there may be a recovery of damages that result from an unlawful levy of execution on the property of an innocent third party, the injured party must establish that it is he and not the judgment debtor who owns the property.”

The evidence is quite conflicting as to who was the owner of the fertilizer at the time the levy was made.

By his point 9, defendant says the trial court erred in overruling his exceptions and objections to the court’s charge because of his failure to submit certain requested special issues. A defendant has a right to an affirmative presentation of any facts properly raised as a defense that, if true, would establish the defense. 57 T.J.2d 190, Sec. 493, and the authorities cited therein.

We will not discuss all of the special issues, but we will say that there are at least two that should have been presented. One of them is as to who was the owner of the property at the time the levy was made. The other one is as to whether or not the levy of the execution was wrongfully made. There is some doubt as to the value of the property that was levied upon. The plaintiff took the position that there was 19.8 tons in the car that was levied upon by the Sheriff’s office. There is positive evidence by the Sheriff’s office that it only levied upon 19 tons. A special issue should be submitted to inquire as to the actual tons of fertilizer that was levied upon; then, inquire as to its value.

It is doubtful' that any loss of profits could be recovered in this case, as well as any attorneys’ fees. In the event the plaintiff should be entitled to recover attorneys’ fees it will be necessary to prove what a reasonable attorneys’ fee would be. That proof must be made by a lawyer or lawyers that are acquainted with the facts in the case. In a trial of this case the only testimony shown was what the owner of the corporation who swore that he had agreed to pay said attorney. In a case like this, such proof is not sufficient.

It is the opinion of the court that under the laws of Texas the plaintiff can recover only the amount of the value of the property that was levied upon at the time of the levy. Since the Alias Execution was issued in the name of Don McAden Company, a corporation, the corporation is a necessary and indispensable party in this suit and the plaintiff will have to amend his pleadings and sue the corporation. There are some other errors that have been complained of, but since the case has to be reversed and be re-plead, we will overrule them for the sake of the record.

The judgment of the trial court is reversed and remanded.


author: MOORE, Justice.

text:
    W. M. MITCHELL, Jr., et al., Appellants, v. Orange Wesley GREGG, Appellee.
    No. 162.
    Court of Civil Appeals of Texas. Tyler.
    Sept. 16, 1965.

      Donald Carroll, Ramey, Brelsford, Flock & Devereux, Tyler, for appellants.
    Rex Houston, Wellborn & Houston, Henderson, for appellee.
   MOORE, Justice.

This is an appeal from an order overruling a plea of privilege. Appellants filed their record in this court on the 7th day of June, 1965. On July 15, 1965, the clerk of this court notified counsel for both parties that the cause was set for oral argument October 7, 1965. Appellants’ brief was due to be filed on July 7, 1965; however, neither the brief nor a motion explaining the absence of the brief or a request for an extension of time was filed by appellants.

On July 16th, appellee filed a motion to dismiss the appeal on the ground that appellants had failed to file a brief in accordance with Rule 414, Texas Rules of Civil Procedure. In their reply to the motion, appellants contended first that no brief was necessary because the appeal was from interlocutory order. In this connection they cite Rule 385(d), T.R.C.P. and numerous cases holding that where the appeal is from an order granting or refusing a temporary injunction, the “cause may be heard in the Court of Civil Appeals” on the bill, answer, affidavits and evidence submitted.

It is now settled that subdivision (d) of Rule 385 is limited in its application and does not refer to appeals from all interlocutory orders. Specifically, it does not apply to an order sustaining or overruling a plea of privilege. Moorman & Singleton v. Simmons, 360 S.W.2d 548, (Tex.Civ.App.) 1962, error refused, Tex. 364 S.W.2d 188. The time allowed for filing of briefs in an appeal from an order sustaining or overruling a plea of privilege is now governed by Rule 414, T.R.C.P., which allows appellant 30 days after the filing of the record in which to file his brief.

Rule 415, T.R.C.P. provides that a failure to timely file a brief will authorize the appellate court to dismiss the appeal unless good cause is shown for such failure and that appellee has not suffered material injury thereby. Appellants do not contend that they have good cause for failure to timely file their brief; however, they do contend that appellee has not suffered any material injury thereby.

This cause is presently scheduled for oral argument October 7, 1965, which is less than 25 days from the present date. Therefore, appellee has, presumedly at least, suffered consequential injury in that he has been denied thereby his affirmative right to seasonably file a reply brief. Davis v. Morgan Drive Away, Inc., 391 S.W.2d 165, (Tex.Civ.App.), citing cases. Because of the fact that no brief has been filed or tendered for filing, and because of the fact that appellants have made no effort to show good cause for the failure to file their brief, and have failed to overcome the presumption of injury, the appeal is dismissed.

Appeal dismissed.


author: CADENA, Justice.

text:
    Joe MARTINEZ, d/b/a Veteran’s Taxi, and Amado Jaime Lopez, Appellants, v. Antonio HERNANDEZ, Appellee.
    No. 14395.
    Court of Civil Appeals of Texas. San Antonio.
    Sept. 15, 1965.
    Rehearing Denied Oct. 13, 1965.

      Beckmann, Stanard, Wood & Vance, Richard C. Keene, San Antonio, Jacob G. Hornberger, Laredo, for appellants.
    Philip A. Kazen, Robert O’Conor, Jr., Nat B. King, Laredo, for appellee.
   CADENA, Justice.

Appellants, Joe Martinez and Amado Jaime Lopez, defendants below, complain of the action of the trial court in disregarding jury findings that plaintiff, Antonio Hernandez, appellee here, was eontributorily negligent and entering judgment that plaintiff recover from defendants the sum of $1,347.50 as damages for personal injuries suffered by plaintiff as the result of an automobile collision.

The collision in question occurred in the City of Laredo, at the intersection of Sanchez Street and San Bernardo Avenue, about 7:40 A.M. on May 3, 1963. At that time, plaintiff was proceeding west on Sanchez Street, a two-way street, 28 feet wide, with the eastbound and westbound traffic lanes each being fourteen feet wide. After plaintiff had entered the intersection his car was struck by a taxicab which was proceeding north on San Bernardo Avenue. The taxi was owned by defendant Joe Martinez and was being operated by his employee, Amado Jaime Lopez.

The jury found that the driver of the taxi was guilty of several acts of negligence, each of which was found to be a proximate cause of the collision. After answering several issues relating to contributory negligence, including proper lookout, excessive speed and proper control in favor of plaintiff, the jury found that at the time of the collision plaintiff was negligently operating his automobile to the left of the center line of Sanchez Street, and that such negligence was a proximate cause of the collision.

In response to a motion filed by plaintiff, the trial court disregarded the jury’s findings that plaintiff was eontributorily negligent, on the ground that there was no evidence to support them, and entered judgment for plaintiff.

The police officer who investigated the accident testified that the point of impact was “eight feet inside the intersection of Sanchez.” He determined the point of impact from the presence of debris in the intersection. A sketch drawn by this witness shows the point of impact as being eight feet north of the south curb line of Sanchez Street. Since each of the two lanes on Sanchez Street is fourteen feet wide, this testimony places plaintiff’s automobile, which was traveling west, six feet into the eastbound traffic lane, or six feet to the left of the center line of Sanchez Street at the time of the collision.

Plaintiff contends that the testimony of the police officer is so conjectural that it must be regarded as no evidence, since the force of the collision might have scattered debris over a wide area. But our Supreme Court has held that evidence concerning the location of debris at the scene of an accident is “clearly evidence of probative force from which the jury could conclude that the collision occurred at or near the point indicated,” notwithstanding the witness testified that the “force of the collision could have thrown the debris south and west of the point of impact.” De Winne v. Allen, 154 Tex. 316, 277 S.W.2d 95, 99 (1955).

It is true that the sketch drawn by the officer, standing alone, is somewhat inconclusive, since it shows the figure “8” between two segments of a broken line seemingly extending from the south line of Sanchez Street to the center line of that street, a distance which the evidence establishes as being fourteen feet. The sketch also shows plaintiffs automobile as being on the right side of the center line. However, we believe that the sketch, together with the testimony concerning the width of Sanchez Street, and the oral testimony of the officer as to the point of impact, permit the inference that at the time of the collision plaintiff was driving on the wrong side of Sanchez Street. Whatever apparent inconsistencies may result from the crude character of the sketch would go to the weight of the officer’s testimony but would not destroy its probative force as to the location of the point of impact.

Sec. 52 of Art. 6701d, Vernon’s Ann. Civ.Stats., makes it a crime to drive on the left side of the roadway except in certain situations which are not relevant here, since plaintiff introduced no evidence which would justify his presence on the wrong side of the street. Further, Sec. 57(a) of Art. 6701d makes it a crime to drive on the left side of the roadway of a two-way street “at any time” when approaching within one hundred feet of or traversing any intersection. The action of plaintiff in driving on the left side of the roadway was a violation of the statute and was negligence per se. Brown v. Nelms, Tex.Civ.App., 374 S.W.2d 917, no writ; Harbert v. Mathis, Tex.Civ.App., 230 S.W.2d 380, no writ; 7 Tex.Jur.2d, Automobiles, § 190, p. 543.

Plaintiff next argues that, even if it be assumed that he was negligent in operating his vehicle on the wrong side of the street, there is no evidence to support the finding that such negligence was the proximate cause of the accident, because (1) the accident could not have been avoided even if plaintiff had been on the right side of the roadway, and (2) plaintiff could not reasonably be expected to foresee or anticipate that the driver of the taxi was going to disregard the law or act in a negligent manner.

It is impossible to conclude from the record in this case that, as a matter of law, plaintiff’s presence on the wrong side of the street was not in fact a cause of the collision. While plaintiff testified that the taxi was being driven “very fast,” the record is silent as to the exact, or even approximate, speed of the cab. The only information we have concerning plaintiff’s speed is his testimony that he was driving at a speed of 20 or 25 miles per hour. Plaintiff’s car was damaged on the rear left door and fender, but the record does not disclose the exact point of damage, nor the distance from the point of damage to the rear end of plaintiff’s vehicle. The record does not compel the conclusion that the collision would have occurred even if plaintiff had been on the right side of the street, six feet north of the point of collision.

Our courts have held that a person is not bound to anticipate negligent or unlawful conduct on the part of another. Seinsheimer v. Burkhart, 132 Tex. 336, 122 S.W.2d 1063 (1939); Minugh v. Royal Crown Bottling Co., 267 S.W.2d 861, wr. ref. However., it appears that the abstract statement that one may assume that others will act in a lawful and non-negligent manner is, because of its generality, misleading. Even if a person is not bound to anticipate unlawful or negligent conduct by others, he is nevertheless under a duty to use ordinary care to prevent injury to himself or to others. Tarry Warehouse & Storage Co. v. Price, Tex.Civ.App., 76 S.W.2d 162, wr. dism. The purpose of the prohibitions, contained in Secs. 52 and 57(a) of Art. 6701d, against driving on the left side of the road is to protect all persons using the roadway at or near the intersection, regardless of the direction in which they are traveling. Harbert v. Mathis, supra. By operating his automobile on the wrong side of the road, plaintiff created a hazard to others using the roadway, and it cannot be said as a matter of law that he could not be expected to foresee the danger of a collision growing out of his negligent conduct.

Plaintiff relies strongly on the decision in Lewis v. Reichel, Tex.Civ.App., 256 S.W.2d 216, no writ. There the plaintiff drove his car into the rear of a truck which was being operated partly on the wrong side of the highway. The Beaumont Court of Civil Appeals held that the negligence of the truck driver in operating his vehicle on the left side of the road was not a proximate cause of the collision because a person of ordinary prudence could not have reasonably anticipated that the driver of another vehicle approaching from the rear would drive up behind the truck so quickly that he would be unable to stop his car before he crashed into the rear of the truck. If the holding in the Lewis case rests on the proposition that a negligent actor will not be held accountable unless he could reasonably be expected to foresee the exact details of another’s conduct, or the exact way in which an accident might happen, then, it seems to us, that decision requires too much “foreseeability.” If it were the law that the exact details of another’s conduct must be foreseeable, then very few negligent acts could be held to be the proximate cause of injury. All that our law requires is that the negligent actor, as a reasonably prudent man, should have foreseen the possibility of harm to others as a result of his negligent conduct. As Judge Hickman said in Sullivan v. Flores, 134 Tex. 55, 132 S.W.2d 110, 111 (1939): “As a person of ordinary intelligence and prudence, he should have anticipated the danger to others created by his negligent act, and the rule does not require that he anticipate just how injuries will grow out of that dangerous situation.” This statement has been subsequently approved as the “true rule” by our Supreme Court in Biggers v. Continental Bus System, Inc., 157 Tex. 351, 303 S.W.2d 359, 365 (1957).

In any event, in view of plaintiff’s negligent and unlawful conduct, we do not think he can claim refuge in the rule which permits one to assume that others will be diligent. The rule which permits a driver to assume that others will observe the rules of the road is subject to limitations. It affords no escape hatch for one who himself violates the law, and it may not be invoked to excuse a negligent driver from the consequences of his own negligence. Nesbit v. Everette, 5th Cir., 245 F.2d 59; State v. Arena, 46 Haw. 315, 379 P.2d 594; Skaggs v. Gypsy Oil Co., 169 Okl. 269, 36 P.2d 865; Mooney v. McCarthy, 107 Vt. 425, 181 A. 117; Pfeiffer v. Yellow Cab Co. of Atlanta, 88 Ga.App. 221, 76 S.E.2d 225.

Since the trial court erred in entering judgment non obstante veredicto against defendants, and since plaintiff has presented no cross-assignments requiring that the cause be remanded so that he might file a motion for new trial, it becomes our duty, under Rule 324, Texas Rules of Civil Procedure, to enter the judgment which should have been entered by the trial court.

The judgment of the trial court is reversed and judgment is here rendered that plaintiff take nothing.


author: HUGHES, Justice.

text:
    C. T. SCHNEIDER et al., Appellants, v. DELWOOD CENTER, INC., Appellee.
    Nos. 11325, 11344.
    Court of Civil Appeals of Texas. Austin.
    July 7, 1965.
    Rehearing Denied Oct. 6, 1965.
    Second Rehearing Denied Oct. 27, 1965.

      Smartt, Fallon & Cook, Jack F. Cook, Jr., L. Hamilton Lowe, Austin, for appellants.
    Rogan B. Giles, Meyers & Shannon, James R. Meyers, Austin, for appellee.
   HUGHES, Justice.

These two causes have been consolidated for briefing and other appellate purposes. It is conceded by the parties that both appeals present the same questions as to the merits of the controversy and that a final judgment has been rendered. We will, therefore, not discuss the two appeals separately nor the tortuous procedural trail which culminated in a final judgment.

Delwood Center, Inc., hereinafter called Delwood, was plaintiff below and is ap-pellee here. It sued, among others, appellants C. T. Schneider, Wilson Foreman and Bill Buck for a declaratory judgment declaring that liens asserted by appellants and others on a certain described 3.85-acre tract of land in Austin, Texas, and its improvements were invalid and without force or effect insofar as the fee title to such property, held by appellee, is concerned and that appellee be declared to have the right to mortgage, sell, lease or convey said property and improvements free and clear of and without regard to any and all liens asserted or claimed by defendants.

Summary judgment and a final judgment based on such summary judgment was rendered granting appellee, in substance, the relief for which it sued.

It is our opinion that the summary judgment and final judgment rendered by the trial court should be and they are affirmed.

The basic facts of this case are not complicated. Delwood owned a long term lease on about 22 acres of land between Town Lake and Riverside in the City of Austin. Delwood entered into negotiations with Herman F. Hall who desired to build improvements on 3.85 acres of the 22-acre tract. These negotiations resulted in a lease agreement between Delwood and Hall by the terms of which Hall could construct improvements on the designated 3.85-acre tract at his sole cost and expense. No improvements were required by this lease agreement and Delwood had no control over the construction of improvements, if made. This lease agreement was duly recorded in Travis County prior to the creation of any liens asserted by appellants.

We quote the following provisions of the Delwood-Hall lease:

“Lessee agrees that at the termination of this lease, however such termination may be brought about, to quit and surrender the premises and all improvements thereon to Lessor in good condition, reasonable wear and tear and acts of God or public enemy or unavoidable accident excepted. * * * Any and all improvements on the lease premises at the termination of the lease shall be and become the property of Lessor, and Lessee shall have no further interest or claim in the improvements thereafter.
16. A. It is understood and agreed by and between the parties hereto that in order for Lessee to be able to obtain interim and permanent financing for the construction and permanent financing of the improvements to be constructed upon the lease premises, it will be necessary for the lending institution or institutions which are providing such financing to have a first and superior lien on the particular property upon which the particular improvements are to be constructed. Lessor hereby agrees with Lessee, that it will subordinate and make junior and inferior any and all of its liens and rights in the premises granted by law or by this lease contract or its leases with Martha Ola Tulloch in favor of the lending institution or institutions which may provide the interim or permanent financing for the improvements to be constructed upon the lease premises in order to enable such institution or institutions to have a first and superior lien on the fee interest in said land.
* * * it is agreed as a further condition of this lease that the filing of any petition in bankruptcy, receivership or insolvency by or against the Lessee shall be deemed to constitute a breach of this lease and thereupon, ipso facto and without entry or other action by the Lessor, this lease shall become and be terminated.”

With this lease of record, Hall commenced the construction of an apartment complex on the 3.85-acre leased tract, and he entered into numerous contracts required for completion of the project. Appellants contracted with Hall and furnished labor and materials going into the apartment , construction. They did not deal with Delwood in regard to such contracts and they looked alone to Hall for their compensation.

During construction of the apartments, Delwood acquired fee title to the 3.85-acre tract leased to Hall.

Hall completed construction of the apartment project, but encountering financial difficulties, he defaulted on his contracts with appellants, who, by compliance with Art. 5452, V.T.C.S., fixed such liens on the 3.85-acre tract and its improvements as the law authorizes.

On July 7, 1964, an involuntary petition in bankruptcy was filed against Hall, and on August 24, 1964, he was adjudicated bankrupt. This event, according to its terms, brought an end to the Delwood-Hall lease, and Delwood has declared its termination.

The owner of the fee title to the 3.85-acre tract subordinated its interest to Franklin Life Insurance Company who holds a $700,-000.00 lien against the property. Delwood, in order to protect its fee title to the 3.85-acre tract, has undertaken to pay this encumbrance in accordance with its terms and has assumed control of the apartment project.

The general principles of law applicable to this factual situation are indisputable.

The rights of a contractor or materialman can rise no higher than those of the person with whom he has contracted or to whom he has furnished labor and materials. Accordingly, contracts with or material and labor furnished to a lessee of realty cannot, per se, give any rights against the lessor or his title to the realty. Grube v. Nick’s No. 2, Tex.Civ.App., 278 S.W.2d 252, El Paso, writ ref., n. r. e.

In Wotola Royalty Corp. v. Bethlehem Supply Corp., Tex.Civ.App., 152 S.W.2d 480, Amarillo, affirmed 140 Tex. 9, 165 S.W.2d 443, the Court, Justice Folley writing, quoted approvingly from Jones on Liens, Vol. 2, p. 260, as follows:

“ ‘A mechanics’s lien attaches to a lessee’s leasehold estate subject to all the conditions of the lease. Though the lessee has made valuable improvements, which are to become the property of the lessor at the end of the term, or which are to revert to him upon his failure to perform the covenants of the lease, upon the lessee’s default the property reverts to the lessor free from the lien of mechanics, unless these are in some way protected by statute.’ ”

This rule, judging from the authorities cited to support it, seems to be generally accepted.

Elsewhere in this opinion Justice Folley used this language:

“The interest held by the lessee and the assignee was subject to the performance of the drilling obligation, and of this fact the appellees had constructive knowledge at the time their purported liens were created. Under such conditions the lessee and the as-signee could encumber the real property only to the extent of the interest held in it by each respectively which interest expired by the non-performance of the contract; and with it we think also expired the liens of the ap-pellees in so far as the real property is concerned. This limitation upon the authority of a lessee of real property to encumber the property of the owner with mechanic and materialman’s liens under the provisions of article 5452, R.C.S. of 1925, has been well settled by the authorities of this State. In this connection, however, we are not unmindful of the fact that article 5452 provides for a lien only upon contracts with the owner of real property, his agent, trustee, receiver or contractor, and therefore excludes the authority of a lessee.”

We must now examine the points upon which appellants rely to avoid the effect of the law as it relates to the basic facts of this case.

The first three points, jointly briefed, are general in nature and are to the effect that issues of fact were present in the record sufficient to cause the rendition of summary judgments to be erroneous as to each appellant.

Delwood pleaded that it “did not participate in any way in the construction of such apartments and did not deal with or contract with any of the lien claimants in any way express or implied.” Appellants denied this allegation and say that it is the “implied” participation by Delwood which “creates serious difference between the parties.”

Appellants quoted, in their answers, paragraph 16.A of the Delwood-Hall lease, copied above, and alleged that such paragraph was made in their behalf as third party beneficiaries.

Appellants also alleged in their answers the following:

“Plaintiff, by entering into a written Escrow Agreement with Herman F. Hall and Dallas Title and Guaranty Company, dated April 29, 1964, recognized and acknowledged this defendant’s mechanics’ and materialman’s lien against said land and improvements.
Plaintiff and Herman F. Hall, at a time when said lease contract was in full force and effect, entered into a written agreement, dated May 21, 1964, by which they agreed to use the revenues received from South Shore Apartments for the payment of mortgages and said agreement by its terms was to remain effective until all liens were satisfied. Said agreement was made at a time when Herman F. Hall and plaintiff had actual knowledge of this defendant’s lien. This defendant says that such agreement constituted a contract for the benefit of third parties, to-wit, this defendant as one of the lienholders.
This defendant says in the alternative that by reason of the above and foregoing the plaintiff is estopped by its said contracts and agreements from denying the validity of this defendant’s first and superior lien against the fee interest in said land. * * * ”

Appellants contend that these allegations are sufficient to create an issue of fact as to whether the relationship of principal and agent existed between Delwood and Hall. We quote from their brief:

“Here, the Lessee was clearly authorized to incur the obligations which are the basis for the liens. The only dispute is as to whether or not he was authorized to incur the obligations in such manner as to render the land subject thereto. If he had such authority, actual or implied, the liens are good as to all the property, not just the improvements. Unless and until all the facts and circumstances surrounding the various transactions and negotiations between Herman Hall and the representatives of the Plaintiff, which resulted in the supplemental and independent written agreements above referred to, are developed, it cannot be said that the record shows conclusively that the Plaintiff was not bound by the contracts of Hall or that the land is free from the constitutional and statutory liens asserted.”

We will discuss first the contention of appellants that they are third party beneficiaries under paragraph 16.A of the Del-wood-Hall lease. In our opinion, this contention is untenable. Delwood subordinated all of its rights in the premises to “lending institutions” who it was contemplated by the parties would furnish interim financing for the apartment project, the contract reciting that in order to procure such financing it would be “necessary for the lending institution * * * providing such financing to have a first and superior lien” on the property.

Appellants are either mechanics or mate-rialman. They profess to be nothing more. There is no evidence that any of them is a “lending institution.” A “lending institution” has been judicially defined in Asplund v. Marjohn Corp., 66 N.J.Super. 255, 168 A.2d 844, as an “established public or private financing body, incorporated or otherwise recognized under appropriate law.”

The vocations of appellants bear no resemblance to the business of lending money.

Furthermore, appellants have not practically construed this Contract as applying to them. They procured no lien, superior or inferior from anyone. They relied completely, insofar as their actions are concerned, upon the responsibility of Hall and their statutory or constitutional liens, all of which are independent of the Delwood-Hall lease.

We overrule appellants’ points to the effect that they are “lending institutions” or that they are third party beneficiaries under the Delwood-Hall lease.

It is also our opinion that reliance upon the April 29, 1964, escrow agreement between Hall, Delwood, the Dallas Title and Guaranty Company and the City National Bank of Tarrant County Roes not give appellants Schneider and Foreman any rights under the theory that it was made for their benefit. The escrow agreement by which Hall was required to deposit over $27,000.00 in the Bank was made to protect Delwood and the Dallas Title and Guaranty Company against specific liens. The liens of Schneider and Foreman had not then accrued and, in any event were not included in the agreement.

The escrow agreement recited that Hall disputed the validity of the lien of Buck and that he desired to litigate it. The agreement also provided that none of the escrow money should be paid out without the signature of Hall except in payment of a final judgment establishing the validity of such lien. Hall in this agreement also represented that there were no other unpaid labor or material bills by reason of the improvement of the property in suit. Mr. Hall had executed a check for $55,600.00 in favor of the Title Company which was returned unpaid.

We have not gathered from the record just what became of the money placed in escrow, if it was placed in escrow. Appellants make this statement in their brief. “By what right did Plaintiff take over the bank account pledged to discharge these liens?” If this statement refers to this account and if there is a sufficient showing that Delwood did receive this escrow money then we will reconsider our disposition of this point as to Buck. In the meantime, we overrule it.

The May 21, 1964, agreement between Delwood and Hall recites that Hall has established a bank account in Austin for the operation of the apartments in suit and that it was subject to their joint checks and was to be disbursed only for payment of mortgages, utilities, upkeep and, “any other item agreed upon between the parties hereto, for and during the term of six (6) months from this day, or until the present liens against said apartment house have been satisfied completely. Upon satisfaction of all liens, this Agreement shall terminate.”

We hold that appellants are not shown to have any present right under this Agreement which was made to protect Del-wood’s fee title to the 3.85 acres from foreclosure. They do not hold any mortgages against this property. Delwood has not agreed to pay them their liens. The conditions of the agreement are not met by appellants.

Appellants do not point to any evidence, direct or circumstantial, tending to prove that in the premises Delwood was the principal and Hall was its agent, nor was this relationship pleaded.

We overrule appellants’ first three points.

Appellants’ fourth, fifth and sixth points are jointly briefed and will be so considered. They are that the three appellants have been erroneously denied the right to a factual determination as to whether all or any portion of the improvements placed on the land in suit may be removed without injury to such land.

There are affidavits of appellants in the record to the effect that some of the improvements placed on the land by them are capable of being removed without substantial damage to the land or improvements.

Among the authorities cited in support of these points is Freed v. Bozman, Tex.Civ.App., 304 S.W.2d 235, Texarkana, writ ref., n. r. e. This case holds that where improvements are placed on land under a contract with the owner of the land that a prior holder of a vendor’s lien on the land cannot prevent the removal of such improvements when such removal can be accomplished without injury to the freehold. There are many authorities to the same effect.

The problem here is that when the lease terminated the improvements thereon reverted to the owner of the fee under express provisions of the lease. The applicable law under these circumstances seems well settled.

Art. 5452, V.T.C.S., provides, in part:

“Any person or firm, lumber dealer or corporation, artisan, laborer, mechanic or subcontractor who may labor, specially fabricate material, or furnish labor or material: (a) for the construction or repair of any house, building or improvement whatever; (b) for the construction or repair of levees or embankments to be erected for the reclamation of overflow lands along any river or creek; (c) or for the construction or repair of any railroad: within this state under or by virtue of a contract with the owner, owners, or his or their agent, trustee, receiver, contractor, contractors, or with any subcontractor; upon complying with the provisions of this Chapter shall have a lien on such house, building, fixtures, improvements, * *

Appellants had no contract with the owner of the 3.85-acre tract, nor with his agents or representatives. In Kelly v. Heimer, Tex.Civ.App., 312 S.W.2d 430, San Antonio, writ ref., n. r. e., the Court made this statement:

“Where the contract for materials, labor and construction is not made with the owner or his duly authorized agent, the owner of the land may not he held liable personally, nor may a lien be fixed on his land.”

In Campbell v. Teeple, Tex.Civ.App., 273 S.W. 304, San Antonio, n. w. h., the Court, in discussing the lien of a materialman, stated:

“No lien can attach to the estate or reversion of the landlord, and, where goods have been put into, or fixtures are wrought into, a building so as to become a part of the realty, the mate-rialman’s liens can only attach to such estate of the tenant as he possesses and subject to all the terms and conditions of the lease and to all the rights of the landlord or owner, so that when the lease has been terminated and forfeited, the tenant has no estate left to which such a lien may attach. There is nothing upon which a materialman can foreclose.
No statute in this state provides for fixing any lien upon the landlord’s reversion or estate for goods furnished to a tenant.”

This case also quoted, with approval, from an opinion by Justice Fly in Penfield v. Harris, 7 Tex.Civ.App. 659, 27 S.W. 762, San Antonio, writ ref., and we copy a portion of such quotation:

“ ‘The lien contemplated in the above statute can be fixed on improvements, machinery, or fixtures placed on land by no one except by authority of the owner of the land, his agent, trustee, contractor, or contractors. * * * Plaintiffs in error [material-man] had no kind of lien on the property, whether it became a part of the improvements of the freehold or not. If the property became improvements on the land, then the lien for material furnished could not attach, because Al-vord did not own the land; and, if the property did not become improvements on the land, then the lien could not attach, because the lien for material cannot attach independent of connection with the land.’ ”

Under these authorities, and many more which could be cited, we hold that appellants have no lien on any of the improvements on Delwood’s land and, hence, no right to remove them.

We do not consider valid the effort of appellants to distinguish some of the authorities cited herein on the ground that the lease herein involved did not contain a provision that the improvements, on termination of the lease, should revert to lessor free of encumbrances. None of the cases cited by us or the parties has turned on this point. Neither in Penfield v. Harris, Campbell v. Teeple nor in Grube v. Nick’s No. 2, supra, nor in other cancelled lease cases which we could cite was this provision in the lease. We hold that the inclusion of such provision is- not a requisite to the rule stated and applied herein.

Appellants also contend that Delwood in making the lease recognized that Hall might effectively encumber the improvements to be placed on the premises. They draw this conclusion from a paragraph in the lease to the effect Delwood was given a lien on all improvements and fixtures attached to the buildings to secure payment of the rent. In this respect appellants say, “Were it true that no liens could attach to the improvements superior to the Lessor’s rights on termination of the lease for any cause, this provision for a Lessor’s lien would have been unnecessary.” Perhaps this provision of the lease was gilding the lily somewhat but we fail to see the logic in appellants’ argument that Delwood by giving itself a multiple choice of remedies for breach of the lease has not only lost one of them but also has given to appellants a remedy against itself. The points under consideration are overruled.

Point seven is that the court erred in not holding that appellants are entitled to relief by way of specific performance of the Contract made for their benefit as embodied in paragraph 16.A of the Delwood-Hall lease. Since we have held that no such Contract was made, we overrule this point for the reasons stated in discussing that question.

The eighth and last point is that the court erred in holding that appellants are not entitled to recover under the theory of quantum meruit for benefits conferred and to prevent unjust enrichment.

There is a sufficient showing that appellants have contributed to the value of Del-wood’s land for which contributions they have not been paid.

In Cantrell v. Garrett, Tex.Civ.App., 342 S.W.2d 466, Houston, n. w. h., the Court quoted the classic statement of Chief Justice Fly of the San Antonio Court in Barrow v. Booth, Tex.Civ.App., 227 S.W. 1113, n. w. h., setting forth the essentials of a plea of quantum meruit as follows:

“ ‘The law as to quantum meruit rests on the principle that a person will be compelled to pay for services if he stands by and permits another to render such services, under such circumstances as to convince any reasonable man that they were being done with the expectation of being paid for them, and no effort is made to prevent the rendition of such services. This proposition of law is based upon the knowledge of the person served that the services were being rendered for him, and not some other person (emphasis supplied), and liability will depend upon the facts of each case.’ ”

There is no showing in this record that appellants furnished any materials or labor to Delwood. They dealt with Hall and only with Hall. There is no basis for a recovery on quantum meruit. Point eight is overruled.

Having disposed of all points presented by appellants and finding no error, the judgment of the trial court is affirmed.

Affirmed.

On motion for rehearing

We expressed doubt in our opinion as to which bank account reference was made by appellants’ inquiry, “By what right did Plaintiff take over the bank account pledged to discharge these liens?” This doubt is removed, appellants stating that it refers to the May 21,1964, contract between Delwood and Hall. Since there is no showing that the $27,000.00 escrow deposit was made or, if made, that Delwood received any portion of it, under the April 29, 1964, agreement, we make unconditional our previous conditional ruling on this point.

Appellants make a very appealing argument based on Summerville v. King, 98 Tex. 332, 83 S.W. 680, in support of their contention that their liens should be superior to the rights of appellee insofar as improvements which may be removed without injury to the land or permanent improvements are concerned. This argument appeals because it, if applied, prevents unjust enrichment of a lessor under circumstances present here.

In Summerville the Court discussed present Art. 5459 which gives preference to certain liens for improvements over prior liens, encumbrances and mortgages against the land on which the improvements are placed. It is solely because of this statute that this result is achieved. Hammann v. H. J. McMullen & Co., 122 Tex. 476, 62 S.W.2d 59.

There is no similar statute subordinating the rights of lessors to those who contract with lessees. We do not consider Summerville as overruling or being inconsistent with Penfield v. Harris, cited in our opinion.

The motion is overruled.

Motion overruled.


author: COLEMAN, Justice.

text:
    Frances Merle Ellis PFEIFFER, a Feme Sole, Appellant, v. Harold Phillip PFEIFFER, Appellee.
    No. 14605.
    Court of Civil Appeals of Texas. Houston.
    Oct. 7, 1965.
    Rehearing Denied Oct. 28, 1965.

      John W. Mitchell, Houston, for appellant.
    J. Paul Pomeroy, Jr., Houston, for appel-lee.
   COLEMAN, Justice.

This is an appeal from an order of the District Court of Harris County, Texas, appointing a temporary receiver for the assets of a trust estate.

Appellant first complains of the action of the trial court in overruling her motion for continuance. As grounds for continuance appellant urged that an audit of the trustee’s accounts, previously ordered by the court, had not been completed and filed; that appellant did not have sufficient time to prepare her case prior to the date set for the hearing; and that appellant was not able to attend court because of sickness.

This suit was instituted on August 10, 1964, by a petition in which appellees, residuary beneficiaries of the trust in question sought an audit of the books and records of the trust and an accounting by the trustee, who was entitled to receive all income from the trust for life. On the 18th day of September, 1964, after a hearing, the court appointed an auditor to audit the books of the trust and to prepare an accounting. On January 29, 1965, appellees filed an amended petition in which they alleged mismanagement and misconduct on the part of appellant in the execution of the trust and sought the removal of the trustee and the appointment of a temporary receiver, pending the outcome of the suit for removal. A hearing on this matter was set down for February 4, 1965, and subsequently postponed to February 16, 1965. The attorney representing appellant apparently has advised her since her qualification as trustee. All books and records of the trust were in the possession of the trustee and were examined by the court-appointed auditor in the office of her attorney. Appellant might well have been put on notice of the nature of appellees’ contentions on the filing of the original petition in August, 1964. Appellant was able to be present and to testify at the hearing. The trial court did not abuse his discretion in refusing the motion for continuance.

Appellant also complains that the trial court erred in appointing the receiver because there was no need therefor and no showing of probability of ultimate recovery. The principles of law applicable to applications for temporary receiverships are discussed in Gunther v. Dorff, Tex.Civ.App., 296 S.W.2d 638, writ dism., w.o.j. There is evidence in this case from which the trial court might have found that there was danger that the property remaining in the trust fund would be lost, destroyed or materially injured unless a receiver was appointed, and that ultimate recovery by applicants was probable.

However, the principal assest in the hands of the trustee was the certificate of ownership to a substantial bloc of stock in a corporation controlled by appellees. The fact that the trustee could vote this stock and thereby elect one member of the Board of Directors of the Corporation would not be evidence of danger of serious injury to the trust even though the director might be a disruptive influence as charged.

Appellant offered to agree to an order enjoining the sale of the stock pending the litigation.

In Gunther v. Dorff, supra, the court said:

“Receivership is one of the harshest remedies known to the law, and should never be awarded where adequate legal or less onerous equitable remedy is available. Joy v. Joy, Tex.Civ.App., 153 S.W.2d 180; Shell Petroleum Corp. v. State, Tex.Civ.App., 86 S.W.2d 245.”

The order of the court appointed a receiver to “take charge of the assets” of the trust. The assets consisted of the stock certificate and a claim to certain real estate. The order grants the receiver no other powers and imposes on him no other duties. Under the record before us we are unable to say with certainty that injunctiye relief would be as effective as a receivership in preserving the estate, bearing in mind the power of the court to issue further order to the receiver respecting the property. Nor can we say that the receivership is materially more onerous than an injunction would have been. The trial court, therefore, did not abuse his discretion in appointing the receiver. Stanley v. Henderson, 139 Tex. 160, 162 S.W.2d 95; Brown v. Faulk, Tex.Civ.App., 231 S.W.2d 743; Zanes v. Mercantile Bank and Trust Co., Tex.Civ.App., 49 S.W.2d 922, writ ref.

At the time the order appointing the receiver was entered, no applicant’s bond required by Rule 695-a, Texas Rules of Civil Procedure, had been filed and the court’s order failed to condition the appointment on the filing of such bond. The filing of such a bond is essential to the appointment of a receiver. O’Connor v. O’Connor, Tex.Civ.App., 320 S.W.2d 384, writ dism.

Some six days after the entry of the order appointing the receiver, and after the filing of an appeal bond in this case, the trial court entered an order setting the amount of the applicant’s bond. On that day the applicant’s bond was filed along with the receiver’s oath and bond. Thereafter the order appointing the receiver was properly superseded. Thereafter the appeal was perfected by filing the transcript and statement of facts in this Court.

While the trial court erred in entering the order appointing a receiver prior to the filing of the applicant’s bond, this error was corrected by the court while the matter was yet under his control. There was substantial compliance with the rule, a circumstance not present in O’Connor v. O’Connor, Tex.Civ.App., 320 S.W.2d 384, writ dism. Under such circumstances reversible error is not shown. Carleton v. Dierks, Tex.Civ.App., 195 S.W.2d 834; Shell Petroleum Corp. v. Grays, Tex.Civ.App., 87 S.W.2d 289, writ dism.

We think it unnecessary to discuss the various motions filed in connection with the appeal, and order that each of them be denied.

The judgment of the trial court is affirmed.