author: CADENA, Justice.

text:
    Betsy Ann Meuth MANG et al., Appellants, v. The TRAVELERS INSURANCE COMPANY et al., Appellees.
    No. 14551.
    Court of Civil Appeals of Texas. San Antonio.
    Feb. 23, 1967.
    Rehearing Denied March 22, 1967.

      Robert L. Strickland, Carl Raymond Crites, Thomas H. Peterson, San Antonio, for appellants.
    Grady Barrett, San Antonio, for appel-lees.
   CADENA, Justice.

Betsy Ann Meuth Mang, individually and as guardian of her minor children, filed this suit to recover from defendant, The Travelers Insurance Company, $15,-000.00, the face amount of a life insurance policy issued by Travelers on the life of Alvis Ray Meuth who, at the time of his death, was the husband of Betsy Meuth Mang, the beneficiary under the policy. Plaintiffs appeal from a summary judgment rendered in favor of the defendant insurance company.

Alvis Ray Meuth was killed in an airplane crash on March 10, 1963. It is undisputed that at the time of his death he was traveling as a passenger in an airplane piloted by William E. Fricke, who held a student pilot certificate.

The policy in question excluded from its coverage injuries occurring in consequence of travel or flight in any aircraft except, insofar as here pertinent, while the insured was traveling “as a passenger in a powered civil aircraft of United States or Canadian registry having a valid and current airworthiness certificate issued by the duly constituted authority of the United States or Canada having jurisdiction over civil aviation, and operated by a duly licensed or certificated pilot, while such aircraft is being used for transportation only and not for any purpose such as testing, experimenting, or any other purpose except the sole purpose of transportation.”

The airplane in question was a powered civil aircraft having a valid and current airworthiness certificate issued by the appropriate agency of the United States. Therefore, the only question which we need decide is whether the airplane in question, which was being operated by a student pilot, was, at the time of the fatal accident, being “operated by a duly licensed or certificated pilot.”

The certification of pilots in this country is governed by Part 61 of the Federal Aviation Regulations promulgated by the Federal Aviation Agency. Sec. 61.1 recites that Part 61 prescribes the requirements for the issuance of “the following certificates and ratings, and the conditions under which those certificates and ratings are necessary, and the general operating rules for the holders of those certificates and ratings: (a) Student, private, and commercial pilot (airplane, rotorcraft, glider, and lighter-than-air aircraft) certificates. (b) Airline transport pilot certificates. (c) Special purpose pilot certificates. (d) Flight instructor certificates, (e) Aircraft and instrument ratings, (f) Free balloon pilot certificates.”

The requirements for obtaining a certificate, the privileges conferred by the issuance of a certificate, and the limitations imposed on the holder of a certificate vary according to the type of certificate involved. (Secs. 61.61-61.183). Sec. 61.-73(a) (1) expressly prohibits the holder of a student pilot certificate from acting as pilot in command of an aircraft that is carrying a passenger. The student pilot certificate which was issued to William Fricke, the pilot of the aircraft in question, had printed thereon in large letters the words, “Passenger Carrying Prohibited.”

Plaintiffs rely on the well-settled principle of insurance law that if the obligations and liabilities of the insurer are not expressed in clear and unambiguous language, the policy will be construed strictly against the insurer and in favor of the insured or beneficiary. Under this canon of construction, an insurer may not escape liability merely because its interpretation of a policy provision appears to be a more likely reflection of the intention of the parties than does the interpretation contended for by the insured or beneficiary. In cases of ambiguity, an interpretation imposing liability will be adopted unless such an interpretation is unreasonable. Continental Casualty Co. v. Warren, 152 Tex. 164, 254 S.W.2d 762 (1953). However, under this maxim of strict construction, the judicial thumb will be placed on the scales in order to make them tip in favor of the insured only when use of the other so-called aids to construction leave the scales so nearly in equilibrium that the policy may reasonably be given one of several constructions. Contracts of insurance are to be construed as are other contracts, giving consideration to all parts of the instrument. United American Ins. Co. v. Selby, 161 Tex. 162, 338 S.W.2d 160, 84 A.L.R.2d 367 (1960).

Policy provisions aimed at limiting the liabiliy of the insurer for injury or death resulting from aircraft travel by the insured are far from uncommon. These exclusionary clauses have taken many forms and, of course, in construing such clauses primary emphasis must be placed on the wording of the clause under consideration. The policy before us excepts from its coverage all injuries or death resulting from aircraft travel except (1) where the insured was a passenger on an aircraft operated by a passenger airline on a regularly scheduled passenger trip over its established route, or (2) where the insured was a passenger on a certified airworthy powered aircraft operated by a duly licensed or certificated pilot. The only reasonable interpretation of the provision in question is that which gives it the effect of limiting liability to those cases where the air travel of the insured takes place under circumstances which reduce, to a considerable extent, the risks incident to such travel. It would, we think, be unreasonable to hold that the provision here involved, which limits coverage to passengers traveling in an aircraft piloted by a duly licensed or certificated pilot, contemplates anything other than situations where a passenger-carrying aircraft is being operated by a pilot whose training, ability and experience are such as to entrust to his care not only his own safety and that of the aircraft, but the safety of passengers as well.

We hold, therefore, that the term “duly licensed or certificated pilot,” as used in the provision limiting liability to cases where the insured is a “passenger” on an aircraft operated by such a pilot, necessarily refers to a pilot who holds a license or certificate which authorizes him to operate an aircraft carrying passengers. Cf. Burns v. Mutual Benefit Life Ins. Co., 79 F.Supp. 847, 854 (W.D. Mich., 1948, aff’d, 179 F.2d 236, cert. den., 339 U.S. 947, 70 S.Ct. 802, 94 L.Ed. 1362). A person holding a student pilot certificate is not such a pilot.

The judgment of the trial court is affirmed.

KLINGEMAN, J., not participating.


source: Caselaw Access Project

author: WERLEIN, Justice.

license: Public Domain

text:
    AMERICAN SMELTING & REFINING COMPANY, Appellant, v. William O. RIDGWAY, doing business as Ridgway Company et al., Appellees.
    No. 14981.
    Court of Civil Appeals of Texas. Houston.
    Feb. 9, 1967.
    Rehearing Denied March 9, 1967.
    Huggins, Vickery & McConnell, Harley W. McConnell, Houston, for appellant.
    Kucera, Lay & Lightfoot, Bennett Lay Houston, for appellees.
   WERLEIN, Justice.

This suit was brought upon a sworn account by appellant, American Smelting & Refining Company, sometimes referred to as Federated Metals, the latter being a division of American Smelting & Refining Company, against William O. Ridgway, doing business as The Ridgway Company, and The Ridgway Company, a corporation. After the suit was filed, hut before trial, appellee, William O. Ridgway, was adjudged to be of unsound mind, and appellee, William O. Ridgway, Jr., was appointed guardian of his person and estate and made a party to the suit. The case was tried by the court without a jury and judgment was rendered against the corporation and in favor of the appellees, William O. Ridgway, doing business as Ridgway Company, and William O. Ridgway, Jr., his guardian. The parties stipulated that there was due and owing on the open account the sum of $3,507.34, and the only question to be determined was the individual liability of appel-lee, William O. Ridgway, on such account. The only issue before us is whether the court properly denied judgment against William O. Ridgway and William O. Ridg-way, Jr. as the guardian of his person and estate.

At the request of appellant the court made findings of fact and conclusions of law. Among other findings, the court found that on June 1, 1960 a certificate of incorporation was issued by the Secretary of State of the State of Texas to The Ridgway Company; that prior to the year 1958 and through May 31, 1960, William O. Ridgway did business as a proprietorship under the name of The Ridgway Company and from time to time purchased supplies from American Smelting & Refining Company; that on September 10, 1958, on October 10, 1958, on December 10, 1958, on April 10, 1958, and on May 9, 1959, The Ridgway Company, a proprietorship, issued, checks to appellant in various amounts ranging from $3,300.98 to $5,169.73, all of said checks being signed “The Ridgway Co. — SPECIAL ACCOUNT” by W. O. Ridgway; that said checks were all endorsed and negotiated by appellant; that on July 13, 1961, on August 12, 1961, on September 13, 1961, on October 11, 1961, and on September 25, 1962, The Ridgway Company, a corporation, issued checks in various amounts to appellant, all of said checks being signed “The Ridgway Co., Inc.” by W. O. Ridgway or “The Ridg-way Co., Inc.” by W. O. Ridgway, Jr.; that said checks were all endorsed and negotiated by appellant; and that the amount sued for was for merchandise delivered after the incorporation of The Ridgway Company.

The court concluded that the indebtedness sued on was that of The Ridgway Company, a corporation, and not that of William O. Ridgway; and that appellant had notice that The Ridgway Company was a corporation at the time of the deliveries of the goods described in appellant’s petition.

Each of the five checks drawn on “The Ridgway Co. — SPECIAL ACCOUNT” by W. O. Ridgway has printed in the left hand ⅞ths inch wide space on the face of the check the following: “The Ridgway Co.— Special Acct. 7608 Jensen Drive OX-4— 4791.” Each of the five checks issued after 1960 has printed in such space the following; “The Ridgway Co., Inc., 7608 Jensen Dr. [16] OX-4-4791.” All of said checks were stamped “For Deposit in the National Bank of Commerce of Houston, Texas, Federated Metals Division American Smelting and Refining Co.” There is no evidence as to who stamped the checks for deposit.

Appellant asserts that the trial court erred in rendering judgment that it take nothing from appellee because The Ridgway Company was incorporated without a change of firm name and appellee did not show that he complied with the notice provisions of Article 1302-2.02, Vernon’s Annotated Texas Statutes. Said article provides in substance that whenever a business firm desires to be incorporated without a change of firm name, such firm shall, in addition to the notice of dissolution required at common law, give notice of such intention to become incorporated for at least four consecutive weeks in some newspaper published at the seat of State government, and in the county in which such firm has its principal business office, and that “Until such notice has been so published for the full period above-named, no change shall take place in the liability of such firm or the members thereof.”

It is not claimed that appellee complied with said article. William O. Ridgway, Jr. testified that he did not know whether his father notified appellant that he had incorporated in 1960, and that the cancelled checks which he found were all the evidence that he had with respect to appellant being notified. Robert A. Colton, General Manager of the Houston plant of appellant, testified that he billed William O. Ridgway, the individual, as The Ridgway Company, from the middle of 1957 until the middle or latter part of 1964, and never changed the style of the account that he carried. He also testified that appellant was never notified by Mr. Ridgway that he had a corporation, and that there was nothing in appellant’s file which would reflect that they ever received any notification of such incorporation.

There is no evidence that appellant had actual knowledge of the incorporation of The Ridgway Company. The name of the company was the same after incorporation as it was before. The evidence showed that appellant began dealing with appellee as a proprietorship as early as 1957 and continued to carry the account in the name of The Ridgway Company or Ridgway Company, and made no change in the billing of such company at any time. The invoices and the billing all indicated that appellant had no actual knowledge of appellee’s incorporation and confirmed the testimony of appellant’s plant manager. Appellee might have concluded from the invoices and billing that appellant understood it was dealing with appellee as a proprietorship.

It is our view that Article 1302-2.02 means exactly what it says. It states in unmistakably clear language that, “Until such notice has been so published for the full period above-named, no change shall take place in the liability of such firm or the members thereof.” Appellee contends that the only purpose of said article was to inform parties dealing with the firm of its incorporation and that since the checks sent to appellant after the incorporation gave notice that appellee had become a corporation, it was not necessary to comply with said article. There might be some merit in ap-pellee’s contention if appellant had actual or express knowledge of the incorporation, since in such event it might be presumed that it was intending to contract with and sell the goods in question to the corporation. But such was not the case. There was never any change in the course of dealing. The material presumably ordered by appellee by telephone in 1964 was picked up from time to time by appellee’s truck as shown by the invoices which also showed “Sold to Ridg-way Company”.

It cannot be said that the five checks delivered to appellant after the incorporation conveyed actual or express knowledge of the incorporation to appellant. There is a difference between actual knowledge and notice which might impose upon one the duty of making a reasonably diligent inquiry which might result in actual knowledge. Woodward v. Ortiz, 1951, 150 Tex. 75, 237 S.W.2d 286. See also American Surety Co. of New York v. Bache, 82 S.W.2d 181, Tex.Civ.App.1935, writ ref. Four of the checks issued after the incorporation were issued in 1961 and the last check issued is dated September 25, 1962. The indebtedness for which recovery was sought grew out of the sale and delivery of goods to Ridgway Company in the year 1964. The fact that such checks bore the signature “The Ridgway Co., Inc.” was not sufficient to establish that the corporation was purchasing goods from appellant two or three years later or previously. As hereinabove stated, there was no change in the firm name, although “Inc.” was added to the firm name on the checks in place. of the words “ — Special Account” previously printed thereon. It was not shown that any responsible official had ever seen any of the checks which apparently were routinely stamped for deposit on the reverse side thereof. It was not shown that such checks were not used to pay for goods purchased by appellee under some arrangement between him and the corporation.

In Spolane v. Coy, 153 S.W.2d 672, Tex.Civ.App.1941, N.W.H., the defendant had been conducting his business under the name of Sterling Radio Products Company. Such company was incorporated under the same name on February 15, 1940. On June 13, 1940, a person working for Sterling Radio Products Company converted some property of the plaintiff who sued the defendant individually for the conversion. The defendant contended that he was not individually liable for the acts of an employee of Sterling Radio Products Company, a corporation. Although the conversion was after the date of the incorporation, the court affirmed the judgment against the defendant individually on the basis of Article 1307, V.A.T.S., from which Article 1302-2.02 is derived without change. The court said: “In the absence of a showing in this record that appellant complied with the provisions of said Article 1307, appellant was personally liable for the act of his agent, Mr. Bennett, acting within the scope of his authority, as found by the trial court.”

In Hobbs v. Triangle Supply Company, 378 S.W.2d 726, Tex.Civ.App.1964, n. w. h., the defendants were engaged in business as a partnership under the name of Hobbs Drilling Company. They attempted to escape liability by showing the incorporation of Hobbs Drilling Company under the name of Hobbs Drilling Company, Inc. The court said:

“Appellants offered no proof and introduced no evidence showing publication of notice in a newspaper or to show that plaintiff had been notified or informed in any way of the corporation which they had organized prior to the time the material was furnished and the indebtedness here in question came into being. Actually the language of the statute requires publication of such notice in a newspaper as a prerequisite to a release of the firm members. In this state of the record we are unable to see that any issue of fact was presented as to the individual liability of appellants. The court did not err in rendering judgment against them.”

So, in the instant case there is no evidence showing publication of the required statutory notice, nor is there any evidence to show that appellant had been notified or informed of the incorporation of appellee. Appellee asserts that appellant was notified of the incorporation by the checks herein-above discussed. We do not agree. The checks did not convey actual knowledge or information to appellant of the incorporation of appellee, nor did they relieve ap-pellee of the duty of publishing the statutory notice. Furthermore, it is our view that the mere receipt and deposit of the checks did not impose upon appellant the duty of making any inquiry. In First National Bank in Dalhart v. Flack, Tex.Civ.App., 222 S.W.2d 455, the court said: “It is a general rule that whatever puts a party on inquiry amounts in law to notice, provided the inquiry becomes a duty, and would lead to a knowledge of the facts by the exercise of ordinary intelligence and understanding.” (Emphasis added) See also 66 C.J.S. Notice § 11(b), p. 646. In the instant case appellant was under no duty to make an inquiry to determine whether appellee was still operating as a proprietorship or had been incorporated. Appellant was selling and delivering the goods to The Ridgway Company and invoicing and billing them as it had always done, and appellee was bound to know of such invoicing and billing. It would have been a simple matter for appel-lee to have complied with the statutory notice or to have written a letter or otherwise conveyed to appellant express knowledge of the incorporation.

The record shows that appellant understood that it was dealing with appellee as an individual. If appellee in dealing with appellant was in fact representing the corporation instead of himself, he failed to disclose such fact to appellant and therefore became liable to appellant. In Anderson v. Smith, 398 S.W.2d 635, Tex.Civ.App. 1965, n. w. h., the plaintiff sued defendant, Hal Anderson, individually, for services rendered. The defendant contended that the indebtedness was owing by Hal Anderson, Inc., a corporation. The defendant further contended that plaintiff was placed upon notice of the incorporation based upon the fact that plaintiff had received some three checks drawn by Hal Anderson, Inc. The court held that payment by such checks did not constitute notice that the defendant was merely acting as an agent for the corporation. In the Anderson case the court quoted a statement made in Saco Dairy Co. v. Norton, 140 Me. 204, 35 A.2d 857, 150 A.L.R. 299, as follows: “It might well be that the check was received in such routine manner that it had little or no significance on the question of knowledge of the plaintiff.”

We have carefully considered the case of Comstock v. Wood, 204 Iowa 1027, 216 N.W. 640, relied upon by appellant. That case is factually distinguishable from the instant case. In that case there was a substantial compliance with the statute and the appellant had actual notice of the form in which the capital was paid and had participated as an appraiser in connection therewith.

That part of the judgment of the Trial Court which decrees that appellant recover against Ridgway Company, a corporation, from which no appeal has been taken, will remain undisturbed. Insofar as the judgment decrees that appellant take nothing as against the appellees individually, the judgment of the Trial Court is reversed and rendered that appellant recover judgment against William O. Ridgway, doing business as Ridgway Company, and William O. Ridgway, Jr., Guardian of the Estate of William O. Ridgway, N. C. M., jointly and severally with the Ridgway Company, a corporation.

Reversed and rendered.

On Motion for Rehearing

Appellee, in his motion for rehearing, asserts in effect that this Court committed fundamental error since it lacked jurisdiction to render judgment against him because there is no evidence that appellant’s claim was presented to the guardian and rejected and that suit was commenced within 90 days after the claim was rejected. Appellant pleaded: “That Plaintiff did duly present his claim attached hereto and marked Exhibit ‘B’ for the above described materials for payment to Defendant, William O. Ridgway, and Defendant William O. Ridgway, Jr., did reject said claim.” Ap-pellee’s answer contains no general denial nor any special denial of such allegation, which therefore must be taken as true. Bauman v. Chambers, 91 Tex. 108, 41 S.W. 471 (1897); Diaz v. Chinn, 150 S.W.2d 411 (Tex.Civ.App.1941, n. w. h.). In Bauman v. Chambers, our Supreme Court also held that such admitted allegations need not be read in evidence. See also McDonald, Texas Civil Practice, sec. 7.23, p. 645.

It was not necessary for appellant to present its claim for attorney’s fees to the guardian as required by Section 314, Texas Probate Code, V.A.T.S., since the claim was for an undetermined and uncertain amount. Boykins v. Parr, 327 S.W.2d 463, Tex.Civ.App.1959, writ ref., n. r. e., and authorities there cited.

Rehearing overruled.


author: DENTON, Chief Justice.

text:
    SUN OIL COMPANY, Appellant, v. Earnest WHITAKER et al., Appellees.
    No. 7700.
    Court of Civil Appeals of Texas, Amarillo.
    Feb. 20, 1967.
    Rehearing Denied March 20, 1967.

      Stubbeman, McRea, Sealy & Laughlin, W. B. Browder, Jr., and James G. Noland, Midland, Charles F. Heidrick and E. M. Cage, Dallas, for appellant.
    Allison, Mann & Allison, Earl R. Allison, Levelland, for appellees.
    Nelson, McCleskey & Harriger, Don Graf, Lubbock, for intervenor.
   DENTON, Chief Justice.

This suit was instituted by Sun Oil Company seeking a temporary and permanent injunction against Earnest Whitaker and Doyle Henderson. Sun seeks to enjoin the two named defendants from preventing or interfering with Sun’s use of underground fresh water under a 267 acre tract of land in Hockley County, Texas, for a proposed water flooding project. The High Plains Underground Water Conservation District No. 1 intervened. The trial court, after a hearing, denied the motion for a temporary injunction and Sun Oil Company has perfected this appeal.

Sun Oil is the lessee of an oil, gas and mineral lease executed by L. D. Gann as lessor, on April 5,1946 covering the 267 acre tract in Hockley County. Whitaker is the owner of the land by virtue of a deed from Gann dated January 2, 1948. Whitaker and his son-in-law Henderson are presently cultivating the land as an irrigated farm. The deed to Whitaker reserved all minerals and expressly made the conveyance subject to the terms of the oil and gas lease. The lease has remained in force and effect by virtue of eight producing oil wells on the leased land. Production of the oil wells has diminished and in an effort to improve production Sun has obtained authority from the Railroad Commission to inject fresh water into two injection wells. To accomplish this Sun has drilled a water supply well in the northeastern corner of the tract and two injection wells in the central part of the tract. Sun alleged the defendants have repeatedly threatened to prevent them from using such water in the proposed water flooding project.

The oil and gas lease, under which Sun is asserting its right to the use of the subterranean water, contains the clause: “Lessee shall have free use of oil, gas, coal, wood and water from said land except water from Lessor’s wells for all operations hereunder”. (Emphasis added.) All parties agree that the right of Sun Oil, the lessee, to the free use of the underground water for water flooding turns on the construction of the phrase “for all operations hereunder”. As far as we have been able to determine this question has not been previously raised in this state.

It is the contention of Sun that since its valid oil and gas lease expressly provides that it “shall have free use of oil, gas, coal, wood and water from the said land except water from Lessor’s wells for all operations hereunder”; and that water flooding to enhance oil production under the lease is one such operation under its lease; it has a legal right to the free use of water from the leased premises for water flooding. For its refusal to enforce such right, Sun contends the trial court has abused its discretion.

The defendants and the intervenor take the position that at the time of the execution of the mineral lease in 1946, secondary recovery by water flooding was unknown in the South Plains area; that the “free use of oil, gas, coal, wood and water” by the lessee had reference to the ordinary drilling operations ; and that the lessee is limited to such operations of a general nature as will not substantially destroy the estate of the surface owner. As we understand it, the defendants do not contend the lessee does not have an implied right to conduct secondary recovery operations, but say the lease does not show it was the intention of the parties at the time the lease was executed to permit the lessee the free use of any amount or all of the underground water to carry out water flooding. The trial court’s findings of fact and conclusions of law were favorable to the contentions of the defendants and intervenor.

It has long been settled in this state that the mineral and royalty owners hold the dominant estate, and have the right to use as much of the surface and to use it in such a manner as is reasonably necessary to carry out the purposes of the lease. Harris v. Currie, 142 Tex. 93, 176 S.W.2d 302. However, the owner of this dominant estate must exercise their rights with due regard to the rights of the surface owner. Miller v. Crown Central Petroleum Corporation (Tex.Civ.App.) 309 S.W.2d 876. Placid Oil Company v. Lee (Tex.Civ.App.) 243 S.W.2d 860.

In interpreting oil and gas leases it is the duty of the court to ascertain the intention of the parties. McMahon v. Christmann, 157 Tex. 403, 303 S.W.2d 341, 304 S.W.2d 267; Skelly Oil Company v. Archer, 163 Tex. 336, 356 S.W.2d 774. In the interpretation of contracts, whether they be ambiguous or simply contain language of doubtful meaning, the primary concern of the courts is to ascertain the true intention of the parties. Smith v. Liddell, 367 S.W.2d 662 (Sup.Ct.). As a general rule, where the terms of written contracts are plain and unambiguous, parol evidence is inadmissable to vary the terms or to show the construction placed thereon by the parties at the time the contract was entered into. Murphy v. Dilworth, 137 Tex. 32, 151 S.W.2d 1004. In the Murphy case, Chief Justice Alexander said: “It is true that, even though a written contract be unambiguous on its face, parol evidence is admis-sable for the purpose of applying the contract to the subject with which it deals; and if by reason of some collateral matter an ambiguity then appears, proof of the facts and circumstances under which the agreement was made is admissable, in order that the language used in the contract may be read in the light thereof for the purpose of ascertaining the true intention of the parties as expressed in the agreement. In other words, if the meaning of the language used in a written contract becomes uncertain when an attempt is made to apply it to the subject matter of the contract, though not otherwise uncertain, parol evidence is permissible to aid in making the application.” The court held the parties could not under such rule, prove a different agreement from that expressed in the written contract, but the rule “permits proof of the then existing circumstances, in order to enable the court to apply the language used therein to the facts as they then existed.” In interpreting a clause of an indemnity contract the Supreme Court in Spence and Howe Construction Company v. Gulf Oil Corporation, 365 S.W.2d 631 held: “The general rules relating to construction of contracts are applicable to indemnity contracts. We agree with the statement of the Court of Civil Appeals that ‘In construing contracts we must seek the intention of the parties from the language used in the contract. All of the language used is to be considered. Too, consideration may be given to the subject matter of the contract and the surrounding facts and circumstances, not for the purposes of varying or adding to the contract but in order to find out the intentions with which words are used.’ ” See also Dauray v. Gaylord (Tex.Civ.App.) 402 S.W.2d 948 (Ref. N.R.E.). King v. City of Dallas (Tex.Civ.App.) 374 S.W.2d 707 (Ref. N.R.E.).

The phrase “all operations hereunder” is not ambiguous on its face. However the meaning of that language when applied to the rights of the parties hereto become uncertain and doubtful. We do not think it can be said such language is not subject to more than one reasonable meaning. Contrary to Sun’s contention “all operations hereunder” has not been given a settled, legal construction. It does not have an exact meaning. The lease does not specifically grant the lessee the right to engage in secondary recovery by the process of water flooding. To hold the phrase under consideration is not subject to more than one reasonable interpretation, we would be compelled to hold as a matter of law that the lessee is entitled to free water for water flooding as an operation under its lease rights. We think such a holding would be untenable. We therefore conclude the trial court correctly admitted evidence pertaining to the conditions and circumstances under which the oil and gas lease was executed.

The lease was executed in 1946. There was ample evidence to the effect water flooding was not practiced in the West Texas area at that time, even though it was known in the oil industry for some time prior to 1946. Knowledgeable people in the Hockley County area became aware of secondary recovery by water flooding in the 1950’s. The fresh underground water Sun proposes to use is in the Ogallala formation, the only source of domestic and irrigation water in that area. Whitaker irrigates his crops from two irrigation wells and has one domestic well which draws water from the Ogallala formation. This fresh water producing formation is a closed, isolated reservoir to the extent there is no replenishment of the Ogallala water except from moisture that may percolate down to the formation after falling on the surface. This replenishment is irregular and relatively insignificant. These characteristics have been judicially determined by a holding that water in this formation in the Southern High Plains was subject to depletion and exhaustion for tax refund purposes. United States v. Shurbet, 5 Cir., 347 F.2d 103. It is undisputed the Whitaker tract of land lies in the same Southern High Plains region of Texas involved in the Shurbet case. A water well drilled into the Ogallala formation in close proximity with other wells in the same formation will take part of the water from those wells. Sun’s own engineer estimated its water flooding project would ultimately consume approximately 65% of the available Ogallala water under the Whitaker tract. As we understand it, Sun does not contend that its water flooding from the Ogallala formation would not substantially and materially devalue the surface estate. However this fact in itself, is not controlling, but we think it is material in ascertaining the intention of the parties to the lease. The defendants and the interpleader do not contend the lessee does not have the implied right to conduct the secondary operations, but do contend such operations should be reasonably conducted in such a way as not to substantially destroy the surface estate. That is, they say Sun is not limited solely to such operations as existed at the time the lease was executed, but is limited to those operations as then existed and others reasonably contemplated that will not substantially impair or destroy the surface estate.

In Wiser Oil Company v. Conley 346 S.W.2d 718 (Kentucky Court of Appeals), the surface owner sought an injunction against the lessee of an oil and gas lease to prevent secondary recovery by water flooding and for damages to the surface and a coal seam retained by the land owner. Although the language of the oil and gas lease does not appear in the opinion, the court held the land owner was entitled to damages. The court approved the trial court’s findings of fact to the effect the lessee’s water flooding would require the drilling of water wells, which would require that a pillar of coal 200 sq. ft. be left around each proposed well; that such operation would cause substantial injury to the coal and to the surface which was regularly farmed; that water flooding was not in use in Kentucky at the time of the execution of the lease. The court held: “There is a sound basis for the rule that a deed or lease of minerals carries with it the right to use as much of the surface, or other property, as may be reasonably necessary to exploit the minerals. We also are aware of the well-known concept that where the injury done to the property was of an anticipatory character, such a result would constitute damnum absque injuria. But where, as here, there is no express release of damages and a new method of withdrawing oil is employed, which was not in the minds of the parties at the time the lease was executed and which will destroy or substantially damage the landowner’s remaining estates, principles of justice and humanity would require the reasonable compensation be paid the landowner for the devastation wrought.”

In Atwood v. Rodman, Tex.Civ.App., 355 S.W.2d 206 (Ref. N.R.E.), the question was whether the reservation “oil, gas and other minerals” included limestone and caliche. In holding it was not such a mineral, the court held it was not the intention of the grantor when he severed the estates to include limestone and caliche in the conveyance of “other minerals”. The court there said; “ * * * we therefore believe that he had no- intention, when he severed these two estates, of deliberately creating potential ruin of all of the surface by including limestone and caliche in the term ‘other minerals’. Otherwise there would have been no point in severing the two estates, because he would have been conveying, or reserving, something in an instrument that provided for the destruction of the very things he was trying to convey or reserve.” The court then concluded: “Our holding is that contracts and instruments such as those here involved should be construed and given effect in terms of their environment at the time of execution. By environment we mean the ordinary terms, customs and usages then in effect as these are evidence of the intent of the parties.” We believe the language used in these cases is logical, sound and persuasive in the proper interpretation of the lease before us.

In view of the absence of a settled, legal construction of the phrase “all operations hereunder,” together with the circumstances and conditions under which the lease was executed, we hold the parties to the lease did not intend to include the free use of fresh water to the lessee for water flooding. To hold otherwise would mean the potential destruction of the surface estate. Water is not a “mineral” within the phrase “all oil, gas and other minerals” found in oil and gas leases. Fleming Foundation v. Texaco, Inc. (Tex.Civ.App.) 337 S.W.2d 846 (Ref. N.R.E.). The grant- or reserved the water under the land. The ownership of the water was conveyed to Whitaker along with the surface. While Sun does not claim ownership of the underground water, it is claiming unlimited free use of such water. It is to be noted that water is the only mineral or substance which the lessee is authorized to use “for all operations hereunder” with any limitation attached to such use. The wording “except water from lessor’s wells” must be considered along with the other wording of the clause under consideration. It sets apart the use of water from the named minerals. We think it could be forcibly argued that the taking of water from the Ogallala formation by Sun for water flooding would violate that term of the lease. As previously stated a water well drilled into this formation in close proximity with other wells in the same formation will take water from the existing wells. However, our holding is not based on this reasoning. The phrase does have some meaning and it clearly reveals the parties intended to treat water differently from oil, gas, coal and wood. In construing the phrase “all operations hereunder” in accordance with the applicable rules of construction, we conclude it was not the intention of the parties to include the free use of fresh water for the purposes of conducting a water flooding project. There was much testimony which pointed to the greatly reduced value of farm land in the South Plains area of West Texas which had no underground water reservoirs available for irrigation purposes. Principles of equitable justice must dictate that a grantor would not reasonably intend in the absence of specific language to the contrary, to grant a use which could, and under this record would, have the effect of substantially destroying the very estate the grantor reserved. We think the views herein expressed clearly reflect the true intentions of the parties to the lease.

In our opinion appellant Sun Oil Company has failed to show its right to the free úse of the water for water flooding. It therefore follows it failed to prove a probable right to a permanent injunction and a probable injury. Oil Field Haulers Ass’n v. Railroad Commission, 381 S.W.2d 183 (Sup.Ct.). We therefore conclude the trial court did not abuse its discretion in denying the temporary injunction.

The judgment of the trial court is affirmed.


author: DIXON, Chief Justice.

text:
    Eddie KATZ, Appellant, v. SOUTHWESTERN SCRAP MATERIALS COMPANY et al., Appellees.
    No. 16884.
    Court of Civil Appeals of Texas. Dallas.
    March 3, 1967.

      Marvin G. Shwiff, Dallas, for appellant.
    Edward E. Crowell, Jr., of Gardere, Porter & DeHay, Jerry Jones and John W. Copeland of Thompson, Knight, Simmons & Bullion, Dallas, for appellees.
   DIXON, Chief Justice.

Appellant Eddie Katz sued appellees Southwestern Scrap Materials Company and Fitzhugh-Penn Corporation for personal .injuries sustained when he fell or jumped off of a ladder on premises owned by Fitzhugh-Penn Corporation and leased to Southwestern Scrap Materials Company. We shall hereafter refer to the appellees as Fitzhugh and Southwestern respectively.

The appeal is from a summary judgment in favor of appellees that appellant take nothing by his suit.

Appellant Katz is an electrician of eighteen years’ experience. For about three years prior to his injury he had been engaged in business for himself as an electrical contractor.

Fitzhugh bought the property in 1955 and since that time has leased it to various tenants.

Southwestern leased the property in January 1963 under the terms of a written monthly rental agreement in the form of a letter from Fitzhugh to Southwestern which stipulates that “the metal building has no utilities and that if any are desired, they may be installed at your expense and further that you accept the building and property in its present condition and that no expense or maintenance will be required of the owners.” It is undisputed that Southwestern accepted the terms of the agreement as set out in the letter.

Katz was familiar with the premises, having done work for Southwestern before. In fact, he had been employed by Southwestern to check the premises in connection with the renting of the premises in January 1963. He knew it was an old building.

On a day in April 1965 the lights in the warehouse went out and Southwestern employed Katz to find the trouble and remedy it. After checking the interior and exterior of the building Katz ascertained that some wires had become frayed from rubbing against the building and had to be replaced.

Katz himself did the work aided by one helper. He placed a ladder against the wall of the building about two feet to the side of the point where the defective wires were to be cut to enable them to be removed. It was eighteen feet from that point to the level part of the floor of the ramp on which the ladder rested. Katz climbed to a point where the wires were a little bit above eye level. He could have climbed higher, but chose that position on the ladder because it was comfortable. He leaned “way out” and pulled on the wires to determine whether they would break.

Having tested the wires Katz again leaned over and with his right hand was using a clipper to cut the wires. He was leaning heavily with his left hand on the eye bolt onto which the wires were tied. Katz weighed 183 pounds. He had cut two of the three wires and was cutting the third when the eye bolt on which he was leaning gave way. Katz lost his balance and either fell or jumped off the ladder, he is not sure which. He says that if he leaped off the ladder it was done instinctively to avoid becoming entangled with the ladder. However, he says that the ladder was stable and did not move at all when he either fell or jumped.

Both of Katz’s legs were broken in the fall, his right leg in several places. He was hospitalized and afterward was bedridden at home for about four months.

Katz in his suit for damages alleges that his injuries were proximately caused by the negligence of appellees in failing to secure the eye bolt to the wall in a proper manner; in violating a city ordinance by failing to secure the eye bolt properly; in maintaining the eye bolt in an unsafe condition; and in failing to warn him that the eye bolt was not properly secured to the wall.

Appellant presents only one point on appeal in which he simply makes the broad assertion that there are genuine issues of material facts which should be passed on. The point is too general to require our consideration. Missouri-Kansas-Texas R. Co. v. McFerrin, 156 Tex. 69, 291 S.W.2d 931, 941; Crutchfield v. Associates Investment Co., 376 S.W.2d 957 (Tex.Civ.App., Dallas, 1964, ref. n. r. e.); Mooney Aircraft, Inc. v. Adams, 377 S.W.2d 123 (Tex.Civ.App., Dallas, 1964, ref. n. r. e.); Cotten v. Republic Nat’l Bank of Dallas, 395 S.W.2d 930 (Tex.Civ.App., Dallas, 1965, ref. n. r. e.). However, we gather from appellant’s statement and argument under the above point that he relies on each of the alleged acts of negligence as a fact issue. Therefore, we shall consider the point.

Appellee Fitzhugh, the owner but not the occupier of the property, in its first counterpoint says that the court properly granted its motion for summary judgment because as a matter of law appellant has no cause of action against it.

In support of the above contention appel-lee Fitzhugh points out that (1) Southwestern, not Fitzhugh, had exclusive possession and control of the premises by virtue of the written rental agreement; (2) there was no reservation to the landlord, Fitzhugh, of any portion of the premises or of any duty or obligation to repair or maintain the premises; (3) under the express terms of the lease Southwestern accepted the premises in their condition as of the time of the execution of the rental agreement and assumed responsibility for all utilities; and (4) Fitzhugh had no knowledge of any defects located on the premises.

There is no evidence that Fitz-hugh installed the eye holt in question, or ever undertook to maintain it, or had any knowledge that it was improperly secured. Our Supreme Court in Yarbrough v. Booher, 141 Tex. 420, 174 S.W.2d 47, 150 A.L.R. 1369 (1943) said:

“The rule in this state and in most others is: ‘Where there is no agreement by the landlord to repair the demised premises and he is not guilty of any fraud or concealment by failing to disclose hidden defects of which he has knowledge, the tenant takes the risk of their safety and the landlord is not liable to him or to any person entering under his title or by his invitation for injury caused by reason of their unsafe condition. 27 Tex.Jur. p. 354, Sec. 209. Churchwell v. Pure Oil Pipe Line Co., Tex.Civ.App., 289 S.W. 196; Perez v. Raybaud, 76 Tex. 191, 13 S.W. 177, 7 L.R.A. 620.’ Morton v. Burton-Lingo Co., 136 Tex. 263, 150 S.W.2d 239, 240.”

See also Flynn v. Pan American Hotel Co., 143 Tex. 219, 183 S.W.2d 446 (1944); Morton, et al. v. Burton-Lingo Co., 136 Tex. 263, 150 S.W.2d 239 (1941); Jackson, et al. v. Amador, 75 S.W.2d 892 (Tex.Civ.App., 1934, error dism.); Churchwell v. Pure Oil Pipe Line Co., 289 S.W. 196 (Tex.Civ.App., 1926, no writ hist.) ; Perez v. Raybaud, 76 Tex. 191, 13 S.W. 177 (1890); Texas & P. Ry. Co. v. Mangum, 68 Tex. 342, 4 S.W. 617.

Appellant cites us to Genell, Inc. v. Flynn, 163 Tex. 632, 358 S.W.2d 543 and Hall v. Medical Building of Houston, 51 Tex. 425, 251 S.W.2d 497. Neither of the above cases is in point.

The Genell case did not involve a suit against a landlord. The court did say by way of dictum that the manager and operator of an apartment house has the same status as that of a landowner so far as the duty toward an invitee is concerned. We believe that in making the statement the court had in mind a situation where an owner is in possession or control of the premises and the invitee is the invitee of the landlord. That is not the situation here. It is interesting to note that the Genell case tends to support the appellees’ position in this case on another point: the question of foreseeability in regard to proximate cause.

The facts in the Hall case are quite different from the facts in this case. There the owner had about 250 tenants, mostly doctors occupying offices. The owner retained control of elevators, hallways and the lobby. The plaintiff’s injury occurred in connection with a door which opened from a hallway into the main lobby of the building. The proper maintenance of the door was the owner’s, not the tenant’s, responsibility.

Appellee Fitzhugh’s first counterpoint is sustained.

In other counterpoints appellees assert that the trial court properly sustained their motions for summary judgment because (1) they breached no duty owed to appellant; (2) proximate cause was lacking as a matter of law; (3) appellant was guilty of contributory negligence; and (4) appellant voluntarily encountered a known risk.

Under the “no duty” doctrine an occupier of premises is required to keep his premises in a reasonably safe condition for his invitees. There is no duty to warn of an open and obvious danger, for the invitee can himself see and is charged with notice of such danger. It is when the danger is not open and obvious that the occupier of the premises owes a duty to warn the invitee of the danger if he, the occupier, knows about it, or in the exercise of ordinary care should know about it. The latter requirement is because of the duty of the occupier to inspect and to discover dangerous conditions. The burden rests on the plaintiff to negative “no duty”. Halepeska v. Callihan Interests, Inc., 371 S.W.2d 368, 378 (Tex.Sup.).

Applying the above principles we have no hesitancy in saying that Fitzhugh’s plea of “no duty” is good. Fitzhugh was not in possession or control of the premises; was under no duty to repair or maintain them; was under no duty to inspect them; and appellant was not Fitzhugh’s invitee.

We are also of the opinion that appellee Southwestern comes within the “no duty” rule. There is no evidence that Southwestern knew that the eye bolt was improperly secured, if in fact it was. And we find no evidence that Southwestern should have known of such defect. The mere fact that there was a defect in the way the eye bolt was secured, if it is a fact, is not of itself proof of negligence. Texas & P. Ry. Co. v. Howell, 117 S.W.2d 857, 860 (Tex.Civ.App., Eastland, 1938, dism. w. o. j.). Appellant himself says that he could not tell from looking at the eye bolt that it was not properly secured to the wall. He was familiar with the premises, having inspected the wiring before. In fact, he had been called in to locate and remedy the trouble on this occasion. He says that in ascertaining what the trouble was he inspected the wiring inside and outside the ' warehouse. In the performance of its duty properly to maintain the electrical wiring what more could Southwestern do than to employ the services of a trained, experienced electrician? It seems to us that if the defect escaped the notice of a trained electrician, it would not be reasonable to hold that Southwestern should have known about it.

We are of the opinion that appel-lees are correct when they say that as a matter of law proximate cause is lacking in this case — this for the reason that it must be held that appellees could not reasonably have foreseen that appellant would be injured in the manner shown by the undisputed facts. The eye bolt over the years had served the purpose for which it was intended: to hold the wires in place. It was not intended that the eye bolt should support the weight put upon it by a man weighing 183 pounds who was leaning “way out” pulling at the wires and cutting them. As we have said, appellant was an experienced electrician, well aware of the purposes for which eye bolts are used. He had been employed to come to the premises to check for defects in the electric wiring which caused the lights to go out. He had been there before. He knew it was an old building. How could appel-lees be expected to anticipate that he would lean heavily on the eye holt for support? Houston Lighting & Power Co. v. Brooks, 161 Tex. 32, 336 S.W.2d 603 (1960). See also Davidson v. Methodist Hospital of Dallas, 348 S.W.2d 400, 403 (Tex.Civ.App., Dallas, 1961, ref. n. r. e.) and cases there cited; Oaxaca v. Lowman, 297 S.W.2d 729 (Tex.Civ.App., El Paso, 1956).

Appellees make much of the fact that appellant testified that he does not know whether he jumped or fell from the ladder. Their view is that this evidence is equivocal and as such is no evidence at all, and will not support a finding of a causal relationship between the injuries sustained and any act or omission on the part of appellees. In support of their view we are cited to Alamo Casualty Co. v. Stephens, 259 S.W.2d 729 (Tex.Civ.App., Austin, 1953, ref. n. r. e.); Williams v. Rearick, 218 S.W.2d 225 (Tex.Civ.App., Amarillo, 1949, ref. n. r. e.); Bonner v. Texas Co., 89 F.2d 291 (5th Cir.1937); Mayfield v. Aetna Life Ins. Co., 100 F.2d 199 (5th Cir.1938). However, appellant also testified that whether he fell or jumped he was caused to do so by losing his balance due to the eye bolt coming loose. Though we are convinced that ap-pellees cannot be held to have foreseen the consequences of the eye bolt’s improper fastening to the wall, hence there could not be proximate cause, we are not prepared to say that the holdings in the above cited cases are applicable here by virtue of appellant’s equivocal testimony as to whether he fell or jumped from the ladder.

Appellant says that the manner of securing the eye bolt to the building was in violation of a city ordinance, therefore was negligence per se. But liability arises in cases of negligence per se only if the violation is a proximate cause of the injuries in question. We have held that there was no proximate cause because foreseeability was lacking. The rules for determining proximate cause are the same for negligence per se and common negligence, so we hold that even if there was a violation of an ordinance there was no liability on the part of appellees on that account. Kenny v. El Paso Electric Co., 371 S.W.2d 777 (Tex.Civ.App., El Paso, 1963, ref. n. r. e.); East Texas Motor Freight Lines v. Loftis, 148 Tex. 242, 223 S.W.2d 613; 40 Tex.Jur.2d 460.

Moreover, for liability to be imposed for violation of a duty arising by statute or ordinance the purpose of the violated statute or ordinance must be to prevent the type of injury which plaintiff suffered. Bazan v. Corpus Christi Transp. Co., 358 S.W.2d 235 (Tex.Civ.App., Eastland, 1962, no writ hist.). There is no evidence in this case that the purpose of the ordinance was to enable the eye bolt to be used safely as a support for a man weighing 183 pounds.

Appellee Southwestern says that it cannot be held liable because as a matter of law appellant voluntarily assumed the risk involved. We have held that ap-pellees are absolved of liability under the “no duty” rule. The line of differentiation between “no duty” and assumed risk is thin indeed, as pointed out in the Hale-peska case. In Ellis v. Moore, 401 S.W.2d 789, 792 (Tex.Sup.1966), our Supreme Court has said that in assumed risk there must be knowledge of the danger involved and appreciation of the particular danger. Assumed risk, unlike no duty, is an affirmative defense. Halepeska v. Callihan Interests, Inc., 371 S.W.2d 368, 379 (Tex.Sup.1963). The burden is on the defendant to prove it. We think appellant should have known better than to lean his weight against an eye bolt whose purpose was merely to hold three electric wires in place But we cannot be sure that he did know or appreciate the particular danger involved in his doing so. We overrule ap-pellee Southwestern’s counterpoint on assumed risk.

Both appellees assert that there is no liability on their part because appellant was guilty of contributory negligence as a matter of law. We agree.

Ordinarily contributory negligence is a fact question. But when the facts are undisputed and permit of only one reasonable inference contributory negligence becomes a matter of law. Appellant with eighteen years’ experience is bound to have known that the eye bolt was intended merely to support the weight of three electric wires, not to support the weight of a heavy man. He testified that he was accustomed to lean on a building brace for support. There was no evidence that the eye bolt here was used to brace the building. Under the undisputed facts as heretofore stated we are of the opinion that he was guilty of contributory negligence as a matter of law.

Appellant’s point on appeal is overruled. The judgment of the trial court is affirmed.

Affirmed.


text:
    TRINITY UNIVERSAL INSURANCE COMPANY, Appellant, v. Floyd PALMER, d/b/a Palmer’s Landscaping Service, Appellee.
    No. 14503.
    Court of Civil Appeals of Texas. San Antonio.
    Jan. 18, 1967.
    Rehearing Denied March 15, 1967.

      Wiley & Thornton, Sam Gross, Lewin Plunkett, San Antonio, for appellant.
    Lang, Byrd, Cross, Ladon & Oppenheimer, Stephen Lang, San Antonio, for appellee.
   CADENA, Justice.

This suit was filed by appellee, Floyd Palmer, d/b/a Palmer’s Landscaping Service, to recover $12,500.00, plus attorney’s fees, for landscaping work done by him, as subcontractor, during the months of June, July, August, September, October and December, 1963, in connection with the construction of the Tradewinds Apartments in San Antonio. Named as defendants were F. B. & D., Inc., the owner of the building, Alvin Frieden, the general contractor, and appellant, Trinity ■ Universal Insurance Company (herein called “Trinity”), the surety on a payment bond executed in accordance with the provisions of Article 5472d.

Palmer’s suit against Trinity was severed from his cause of action against the owner and general contractor. The parties stipulated that Palmer had given Trinity sufficient notice to perfect his claim against the bond for work done by him during the months of September, October and December, 1963, and that Trinity was obligated to pay Palmer $2,005.14 for such work, plus $1,000.00 as reasonable attorney’s fees in connection with the collection of such amount. The amount actually in dispute, then, is $10,494.86, representing Palmer’s claim for work done by him during June, July and August, 1963, plus a reasonable attorney’s fee for the collection of such amount.

The trial court entered summary judgment in favor of Palmer for the full amount of his claim, $12,500.00, plus $3,000.00 for attorney’s fees. On this appeal Trinity contends that the trial court erred in awarding Palmer recovery for work done by him during June, July and August, and in awarding $2,000.00 as- attorney’s fees in connection with such recovery.

The 1961 Hardeman Act (Articles 5452-5456, 5458-5460, 5463, 5464, 5466-5471, 5472c and 5472d), which applies to the construction of private, i. e., non-governmental, projects, is designed to protect not only contractors, subcontractors, materialmen and laborers, but also owners. Subcontractors and others furnishing labor or materials are protected by provisions establishing procedures by which they may perfect liens against the property of the owner and impound, in his hands, funds due the original contractor. If a payment bond has been provided in accordance with Article 5472d, the subcontractors can, by following the prescribed procedures, enforce their claims against the surety on such bond. The Act protects the owner by limiting, at least theoretically, his potential liability to the amount of the original contract. In addition, a prudent owner may insulate himself and his property from liability by insisting that the original contractor furnish a payment bond.

The bond executed by Trinity in this case was conditioned, executed, approved by the owner, and filed as required by the first three paragraphs of Article 5472d, so that if Palmer followed the prescribed procedures, he may enforce his claim against Trinity.

Paragraph 4 of Article 5472d enumerates two methods by which a claimant may perfect a claim against the payment bond: (1) “in the manner prescribed for fixing and securing a lien by Article 5453”; and (2) by giving to the original contractor all notices required by Article 5453 and, in addition, giving to the corporate surety all notices which, under Article 5453, are required to be given to the owner. Palmer does not contend that he followed the second alternative, so that the validity of his claim against Trinity for work done by him during the three months in dispute depends upon whether he perfected his claim against the bond “in the manner prescribed for fixing and securing a lien by Article 5453”.

Palmer timely filed his affidavit claiming a lien, as required by Paragraph 1 of Article 5453. However, Paragraph 2 of that statute declares that if the lien claimant is other than an original contractor, such claim shall not be valid or enforceable unless the claimant complies with the notice provisions set out in subsequent portions of Article 5453. Paragraph 2 further provides that compliance with applicable notice provisions “shall be conditions precedent to the validity of such claims”.

The notice provisions applicable to lien claims asserted by subcontractors which arise from debts incurred by the original contractor are found in Paragraph 2b (2) of Article 5453. It is conceded that the notices on which Palmer relies were timely given, and the only question is whether such notices were in the form required for the creation of a lien. After setting forth the necessity for giving notice to the owner, Paragraph 2b(2) continues: “A copy of the statement or billing in the usual and customary form shall suffice as a notice under this subparagraph; provided, however, if such statement or billing is to be effective to authorize an owner to retain funds for the payment of such claim as provided in Article 5463 of this Act, it shall contain or be accompanied by some form of statement to an owner to the effect that if the bill remains unpaid he may be personally liable and his property subjected to a lien unless he withholds payments from the contractor for the payment of such statement or unless the bill is otherwise paid or settled.” (The statement concerning the potential liability of the owner and his property is hereinafter referred to as the “statutory warning.”)

Trinity contends that, since the copies of statements mailed by Palmer to F. B. & D., Inc., the owner, did not contain the statutory warning, they were insufficient to create a lien on the owner’s property and that, therefore, Palmer has not perfected a claim against the bond by proceeding “in the manner prescribed for fixing and securing a lien by Article 5453.” In his brief Palmer argues (1) that compliance with the provisions relating to the creation of a lien is not necessary in order to perfect a claim against the bond; and (2) that if compliance with such provisions is a condition precedent to the liability of the surety, the notices sent by Palmer to the owner were sufficient to create a lien despite the absence of the statutory warning.

Because Paragraph 7 of Article 5472d precludes the imposition of liability on the owner or his property where a payment bond has been filed, Palmer insists that an enforceable claim against the bond can be perfected without taking the steps necessary for the creation of a lien. But this argument ignores the plain language of Paragraph 4 of that Article, which enumerates only two methods of perfecting a claim against the bond. Since Palmer did not give the required notices to both the original contractor and the surety, he can reach the bond only if he proceeded in the manner prescribed by Article 5453 for fixing and securing a lien. The statute provides no third avenue leading to the liability of a surety. The conclusion is inescapable that, unless a claimant has given the required notices to the original contractor and the surety, he must follow the statutory procedure which, in the absence of a payment bond, would have resulted in the creation of a lien against the property of the owner. Any other construction would deny effect to the plain meaning of the language, “in the manner prescribed for fixing and securing a lien.”

Palmer next contends that his failure to give the owner the statutory warning does not constitute a failure to proceed in the manner prescribed for fixing and securing a lien. This theory is based on the language in Paragraph 2b (2) of Article 5453, to the effect that a copy of the statement or billing in the usual form shall be sufficient as a notice. According to this interpretation of Paragraph 2b(2), the mailing of a copy of the billing is sufficient, of itself, to create a lien, and the statutory warning is required only if the claimant, in addition to having his claim secured by a lien, desires to impound, in the hands of the owner, funds due the original contractor.

The judicial interpretation of our lien statutes prior to the adoption of the Harde-man Act discloses the legislative purpose in providing that a copy of the billing or statement shall be sufficient as a notice. Prior to 1961, our lien statutes dealt only in a cursory manner with the question of notice. Under Article 5453, as it existed prior to its amendment in 1961, it had been held that the notice to the owner, as well as the lien affidavit filed by the claimant with the county clerk, must itemize the value of articles furnished and labor done, and that a statement of the total price in a lump sum was not sufficient. Lebo v. Dochen, 310 S.W.2d 715 (Tex.Civ.App., 1958, writ ref’d n. r. e.). The language on which Palmer relies was plainly intended to eliminate the need for such particularization. Paragraph c of Article 5455 eliminates the need for such itemization in the affidavit.

To give to the language relating to the sufficiency of the notice an effect beyond that of eliminating the need for itemization would be to create a conflict between Paragraph 2b (2) of Article 5453 and Paragraph 2 of Article 5463, which declares that the owner shall not be required to pay, nor his property be liable for, any money that he may have paid to the original contractor before he is authorized, under Article 5463, to retain funds due the contractor. Paragraph 1-b of Article 5463 authorizes such retainage “[ujnder notices of claims sent under subparagraph 2-b of Article 5453, immediately upon receipt of such notices” by the owner. Since Palmer’s claim is that of a subcontractor, arising from a debt incurred by the original contractor, Paragraph 2b(2) of Article 5453 is applicable and, as has been noted, under that paragraph the owner is not authorized to withhold funds unless the statement or billing contains, or is accompanied by, the statutory warning. Under Palmer’s interpretation, the owner’s property would be liable, despite the provisions of Paragraph 2 of Article 5463, for money paid by the owner to the original contractor before the owner is authorized to withhold funds.

Since both Articles 5453 and 5463 are integral parts of what is clearly a comprehensive legislative scheme, they must be construed together in such a way as to achieve the presumed legislative intent to create a consistent and sensible set of regulations. A construction which creates a conflict among the various parts of the legislative plan is, if possible, to be avoided.

If we construe Paragraph 2b (2) of Article 5453 as sanctioning the creation of a lien only if the owner fails to withhold funds after he is authorized to do so by receipt of the statutory warning, all conflict between that provision and Paragraph 2 of Article 5463 disappears. This is a reasonable construction of Paragraph 2b (2) of Article 5453, since the wording of the required warning is clearly to the effect that a lien will attach “unless” the owner withholds funds due the original contractor. This language makes the failure to withhold funds a condition precedent to the creation of the lien. Since the giving of the warning is a condition precedent to the owner’s authority to withhold funds, it must be concluded that the giving of the warning is a condition precedent to the creation of the lien.

The right to participate in the funds withheld from the original contractor cannot be separated from the right to enforce a lien against the owner’s property. Lebo v. Dochen, supra, 310 S.W.2d at p. 721.

This construction gives effect to all of the language of Paragraph 2b(2) of Article 5453. The provision that a copy of the statement or billing shall be sufficient eliminates the requirement of itemization of the prices of materials furnished and labor done, and the language of the proviso concerning the warning is given full effect in a manner which prevents any conflict with Paragraph 2 of Article 5463.

Our conclusion finds support in the holding by the Texarkana Court of Civil Appeals in Texas Northern Ry. Co. v. Logwood, 401 S.W.2d 886 (1966, no writ). There, one of the reasons for denying a subcontractor’s claim of a lien was the fact that the notice given to the owner “was not couched in the language requiring [him] to withhold retainage * * 401 S.W.2d at p. 890. See also Berry v. McAdams, 93 Tex. 431, 55 S.W. 1112 (1900); Eldridge v. Poirer, 50 S.W.2d 888, 889 (Tex.Civ.App., 1955, no writ); Cox v. State, Tex.Cr.App., 274 S.W.2d 844; Marek v. Goyen, 346 S.W.2d 926 (Tex.Civ.App., 1961, no writ).

Palmer calls our attention to the following language in Article 5454: “The demand herein provided for may accompany the original notice of nonpayment or of a past-due claim; may be stamped or written on the face of said notice in legible form; or may be subsequently given by claimant, provided, however, that no such demand shall be made after the time has expired within which the claimant may secure his lien under this Act unless a lien for such demand has been secured.”

We do not agree that the provision allowing the “demand” to be made after the claimant has secured his lien reflects, as Palmer contends, a legislative contemplation of instances where the lien has been secured before the claimant has demanded a retention of funds. Article 5454 merely provides a method by which an owner may pay the undisputed claim of a person other than the original contractor. By its express terms it is applicable only where “an owner has withheld a payment or payments from the original contractor pursuant to the provisions of Article 5463 * * We have already pointed out that, under Article 5463, the owner in this case was not authorized to withhold funds unless he had been given the statutory warning. The “demand” which, under Article 5454, may he made after the lien has been secured, is obviously the demand for payment and not a demand for withholding of funds. This conclusion is strengthened by the fact that Article 5454 requires that a copy of the “demand” be sent to the original contractor, while Paragraph 2b (2) of Article 5453 expressly provides that, where the claim is that of a subcontractor, no notice need be given to the original contractor.

It is true that under Paragraph 2 of Article 5463, where a lien affidavit has been filed by a subcontractor, the original contractor must, at his own expense, defend any action brought thereon. In case judgment is rendered against the owner or his property, he is entitled to deduct, from the amount due the contractor, the amount of such judgment, and, if the owner has settled with the contractor in full he is entitled to recover from the contractor any amount so paid for which the contractor was originally liable. But nothing in this provision supports the inference that a lien may be affixed by a subcontractor without the giving of the statutory warning. The very next sentence of Paragraph 2 contains the provision, already noted, which, in effect, limits the liability of the owner and his property to money paid to the original contractor after receipt of the warning.

Next, it is argued that the filing of the lien affidavit by Palmer, in and of itself, was sufficient to perfect a mechanic’s lien on the property of the owner. This suggestion flies in the teeth of Paragraph 2 of Article 5453, wherein it is provided that the giving of the notices required by Paragraph 2b (2) of that Article shall be conditions precedent to the validity of the lien claim of a subcontractor.

Palmer insists that, under the facts of this case, he can qualify as an “original contractor,” since the original contractor, Frieden, was also the president of F. B. & D., Inc., the owner. If Palmer was, in fact, an original contractor, then the mere filing of the lien affidavit was sufficient to create a lien. Paragraph 1, Article 5453. Paragraph 2e of Article 5452 defines an original contractor as “one contracting with an owner, directly [or indirectly] through his agent.” Although this is a summary judgment proceeding, we find in the record an instrument, signed by the trial judge, designated “Findings of Fact.” One of these so-called findings is to the effect that Palmer entered into an agreement with Frieden, “as general contractor,” to perform the landscaping services in question. Whatever may be the propriety of findings of fact in a summary judgment case, this instrument is approved by counsel for both Palmer and Trinity, and we treat it as stipulations of fact. In effect, then, Palmer has stipulated that he contracted with Frie-den as general contractor, and not as agent of the owner.

We overrule Palmer’s contention based on the applicability of Paragraph 1 of Article 5452-1, relating to “sham” construction contracts. That statute became effective August 30, 1965, after all the transactions in question had taken place and this suit had been filed. Even if we were inclined to give retroactive effect to that enactment, we find nothing in the record which establishes, as a matter of law, that the contract between F. B. & D., Inc., and Frieden was entered into “without a good faith intention on the part of the parties that it was to be performed” by Frieden.

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

      . All statutory references are to Vernon’s Ann.Civ.St.

      . This construction, is also consistent with decisions holding that a subcontractor, since he has no contractual relations with the owner, may only claim payment from the owner from funds due and owing to the contractor which are still in the hands of the owner, and then only if the subcontractor has authorized the owner to withhold such funds. See Lonergan v. San Antonio Loan & Trust Co., 101 Tex. 63, 104 S.W. 1061 (1907); McConnel v. Frost, 45 S.W.2d 777 (Tex.Civ.App., 1932, no writ).


text:
    FOREMOST INSURANCE COMPANY, Appellant, v. Grady WILLIS et al., Appellees.
    No. 16845.
    Court of Civil Appeals of Texas. Dallas.
    Jan. 20, 1967.
    Rehearing Denied Feb. 24, 1967.
    Joe Bruce Cunningham, of Hudson, Kelt-ner, Smith & Cunningham, Ft. Worth, for appellant.
    Robert K. Ramsey, Terrell, for appellees.
   DIXON, Chief Justice.

Foremost Insurance Company, hereinafter called Foremost, has appealed from a judgment against it in favor of appellee Grady Willis in the sum of $2,656 alleged to be the amount of storage charges due on a mobile home stored on appellee’s premises. Foremost asked for judgment over against Hawkins should judgment be rendered against Foremost. Judgment was rendered in favor of Hawkins. Only Foremost has appealed.

The long and involved events leading up to this appeal began on or about June 15, 1958 when V. O. Hawkins, of Glen Rose, Texas, purchased a new mobile home trailer and at the same time took out a collision and upset policy of insurance with Foremost. On or about June 20, 1958 an accident occurred in which the trailer was upset and sustained serious damage.

The policy of insurance under the heading “Limit of Liability; Settlement Options; No Abandonment” provided as follows : “The Company may pay for the loss in money or may repair or replace the mobile home(s) or such part thereof, as aforesaid, * * * but there shall be no abandonment to the Company.”

Following the accident Hawkins filed his proof of claim and Crawford & Company, whom appellee Willis himself describes as a firm of independent adjusters, handled the claim. Crawford & Company invited bids for the repair of the mobile home and the contract was awarded to National Associated Home Service of Terrell, Texas, hereinafter called Associated, for a consideration of $1,234.49.

Associated was a partnership composed of Jack Johansen and Fred Randolph.

Associated proceeded to repair the mobile home and some time prior to August 11, 1958 the repaired vehicle was transported to Glen Rose, Texas for delivery to V. O. Hawkins, its owner, the insured under Foremost’s policy. Hawkins refused to accept delivery of the trailer. He testified that delivery was tendered on condition that he sign a release of his claim, which he was unwilling to do. On August 11, 1958 the mobile home was taken back to Terrell, Texas and placed on the premises of Associated.

On August 18, 1958 Associated wrote a letter to Hawkins demanding payment for the repairs. This letter is too long to copy here. Suffice it to say that it was addressed by Associated to Hawkins, demanding payment for repairing the trailer, payment of the $50 deductible under the policy, payment for expense of towing the trailer to Glen Rose and back and payment of $2.50 per day for storage on Associated premises beginning August 11, 1958. The significance of the letter lies in the fact that it nowhere mentioned or made any claim against Foremost for storage charges, or for towing the trailer back to Terrell. It is addressed to Hawkins only and contains these statements:

“As the case stands now the following costs are involved between you and us:
“1. $50.00 is due from you to us to cover the ‘deductible’ part of your policy. This must be paid before we release the coach to you.
“2. $35.00 is the charge to you for towing the trailer back to Terrell. * * * This must be paid before we release the coach to you.
“3. The coach must be stored on our premises. We must watch it. We must move it sometimes to adjust our working areas. We must guard against fire and theft. Our daily storage charge for a trailer like this is $2.50 per day. We will let the first week go by without charge, but beginning last August 11, 1958 this storage charge has been and will be applied to your trailer. This must be paid before we release the coach to you.
* * * * * *
“Sincerely yours
“John H. Johansen”

(Emphasis ours.)

Certainly under no theory could it be said that Associated looked to Foremost to pay the $50 deductible. It was on Associated’s own account that it was withholding delivery until Hawkins paid the $50 deductible.

Meantime, according to appellee Willis himself, everything humanly possible was done to convince Foremost that the mobile home had been put back in proper condition — as good as new. To induce Foremost “to come on and pay this money” for the repairs without obtaining a release from Hawkins, Associated on August 20, 1958 gave Foremost a written instrument described by Willis as a guarantee. That document is as follows:

“August 20, 1958
“This will certify that we, John H. Johan-sen and Fred W. Randolph, have completed repairs to a 1958 Midway Trailer owned by V. O. Hawkins of Glen Rose, Texas.
“We further would like to give warranty that we will guarantee repairs in the same respect as if they had been done at the factory, and that the trailer is in ‘as new’ condition.
“Any corrections that may be necessary in this repair job will be done at our expense to the satisfaction of all concerned.
“Signed John H. Johansen
“JOHN H. JOHANSEN
“We extend this guarantee on materials and workmanship for a period of 90 days from this date.”

Upon receipt of the above instrument Foremost decided to go ahead and pay Associated for cost of the repairs less the $50 deductible under the policy without obtaining a release from Hawkins. The record contains copies of Foremost’s check dated August 22, 1958 in the amount of $1,278.49 payable to “Southeastern Fund” and “John H. Johansen and Fred W. Randolph % Crawford and Company.” Southeastern Fund was the holder of a mortgage against the mobile home. There is nothing in the record to indicate that after August 22, 1958 Foremost demanded a release from Hawkins as a condition for the delivery of the mobile home to Hawkins.

On the back of the above check is the endorsement of Southeastern Fund and John H. Johansen and Fred Randolph. Directly above said endorsements is the following statement:

“Payee (s) by endorsement of this check acknowledge (s) settlement in full of the claim or account described on the face hereof and assigns and grants to the maker subrogation of any and all rights, titles and causes of action to which maker is entitled under said policy by reason of this payment.”

Willis himself testified that this check was in settlement of all claims against Foremost at that time. There is nothing in the record to indicate that thereafter Foremost objected to delivery of the mobile home to Hawkins without obtaining a release.

Notwithstanding receipt of payment of its charges for repairing the home trailer Associated was in financial difficulties. One of the partners, John H. Johansen, departed for parts unknown, perhaps Oregon or Missouri. Fred Randolph was left alone and, according to Willis, on November 11, 1958 he too abandoned the business and left for Fort Worth, Texas.

At this point in our narrative one might well ask when, where and how did appellee Grady Willis become involved in this controversy. Willis had his own business in Terrell, Texas. He was engaged in the buying and selling of mobile homes. He loaned money to Associated whose business was to repair mobile homes. He testified that he had loaned them $800 to enable them to do the repairs on Hawkins’ mobile home. Naturally as a creditor of Associated he was interested in seeing them paid so he could get his money back. It was his employee, B. W. Brooks, driving his truck, who had towed the mobile home to Glen Rose after it had been repaired and who towed it back to Associated’s repair shop after Hawkins refused to accept delivery.

According to appellee Willis when Randolph abandoned the business of Associated on November 11, 1958 he moved his equipment and Hawkins’ mobile home to Willis’ place of business and left them in Willis’ possession under an oral agreement that Willis would “take over” Associated’s liabilities and assets. No written assignment or other instrument was executed from Johansen to Willis.

OPINION

In answer to special issues the jury found that (1) Foremost delivered the mobile home to Willis for storage (2) beginning August 11, 1958; (3) such storage was continuous to the date of trial; and (4) a fair and reasonable rental was $1.00 per day.

Appellant has presented twenty-six points on appeal. Points three to seven inclusive assert that there was no evidence to sustain the jury’s answers to Issues Nos. 1, 2 and 3; and the court erred in overruling appellant’s motions for instructed verdict and for judgment non obstante veredicto.

We sustain the above points for these reasons:

(1) The evidence shows that the decision not to deliver the trailer to Hawkins unless he would accept it and sign a release and the decision to take the trailer back to Terrell were made both by Associated on its own account and by an employee of Crawford & Company, the independent adjusters. Willis was not certain, but thought this employee was a man named Bohannon.

(2) The undisputed evidence shows that the mobile home, after Hawkins refused to accept it, was returned to Associated, not to Willis, and Associated on its own account continued to keep possession of it even after Foremost had paid the repair bill on August 22, 1958. Associated retained possession because of Hawkins’ failure to pay the $50 deductible, the towing charges, and the alleged accrued storage charges at $2.50 per day beginning August 11, 1958. This is plainly shown by Associated’s letter of August 18, 1958.

(3) Associated by its written guarantee of August 20, 1958 and its acceptance of payment and endorsement of Foremost’s check of August 22, 1958, released Foremost from all claims in connection with Associated’s repair of the vehicle.

(4) When Willis “took over” on November 11, 1958, according to his own testimony, it was not because Hawkins asked him to or because Foremost asked him to. It was solely an agreement between him and Fred Randolph. Willis also testified that he personally had never had anything to do with Foremost, and Associated had not been in contact with Foremost since the latter part of August 1958.

Appellant’s tenth, twelfth, fourteenth and sixteenth points are to the effect that by accepting Foremost’s check of August 22, 1958 Associated waived any rights it may have had, if it had any, for storage charges against Foremost; that acceptance of said check was an accord and satisfaction; that said acceptance was a release of any alleged storage charges, and estopped Associated to claim storage charges. We think these points are well taken and they are sustained as to Associated. And since Willis claims that after he “took over” on November 11, 1958 he “stood in the shoes” of Associated they are equally applicable to Willis.

Appellant has presented other points which complain of the insufficiency of appellees’ pleadings, of the court’s refusal to submit requested issues, of the refusal to admit evidence, of the failure of the court to sustain appellant’s plea of privilege, the failure of the court to sustain appellant’s plea of limitations, and of the failure of the court to render judgment in favor of appellant Foremost oyer against V. O. Hawkins, the owner of the mobile home. Since we have concluded that judgment should be reversed and rendered in favor of Foremost and because of our sustaining other points we shall not prolong this opinion by passing on the above described points on appeal.

The judgment of the trial court in favor of Willis against Foremost is reversed and judgment is here rendered that appellee Willis take nothing by his suit against Foremost. The judgment in favor of Hawkins is affirmed. Costs will be taxed against appellee Willis.

Reversed and rendered in part and affirmed in part.

      . A question apparently arose as to whether the trailer was a total loss entitling Hawkins to a new trailer by way of replacement, or whether the damaged vehicle was repairable. Hawkins further contended that even if the mobile home was repairable the repairs made were defective.
      Hawkins eventually sued Foremost and recovered a judgment of $3,100 in a trial at Glen Rose, Texas on the theory that the mobile home was a total loss. This judgment was reversed on appeal in 1960 and the cause remanded for another trial. Foremost Ins. Co. v. Hawkins, 336 S.W.2d 901 (wr. ref. n. r. e.). On a second trial a jury found that the trailer was repairable, was of a value of $3,000 before the upset and of a value of $2,100 after the upset. The court thereafter on March 26, 1965 rendered judgment in favor of Hawkins for $1,000. Foremost paid this judgment in full and on July 2, 1965 Hawkins executed a release declaring his judgment fully satisfied.


author: HUGHES, Justice.

text:
    Orren L. NIXON et al., Appellants, v. James O. GERST, Savings and Loan Commissioner of Texas, Appellee.
    No. 11505.
    Court of Civil Appeals of Texas. Austin.
    Feb. 1, 1967.
    Rehearing Denied March 1, 1967.
    Second Motion for Rehearing Denied March 22, 1967.

      Heath & Davis, Dudley D. McCalla, Alvis & Carssow, Austin, for appellants.
    Waggoner Carr, Atty. Gen., Hawthorne Phillips, First Asst. Atty. Gen., T. B. Wright, Executive Atty. Gen., Robert C. Flowers, Asst. Atty. Gen., Austin, Zbranek & Friend, J. C. Zbranek, Liberty, for ap-pellee.
   HUGHES, Justice.

Orren L. Nixon, J. R. McDonald, Thomas I. Fetzer, Benjamin C. Lively, J. M. Wind-ham and Sidney R. Smith, individually and as proposed directors and shareholders of the Livingston Savings and Loan Association of Livington, Texas, appellants, brought suit against James O. Gerst, Savings and Loan Commissioner of Texas, in the nature of an appeal from an order of the Commissioner entered September 24, 1965, approving an application for a charter for Trinity Valley Savings and Loan Association of Cleveland, Texas, which location is about 28 miles from Livingston.

Intervening in the trial court and aligned with the Commissioner were John W. Miller, M. E. Enloe, A. H. Duncan, Glendon D. Toler, James H. Sewell, Carl Williams, W. D. Dunman, Jack McKellar and J. C. Zbranek. Intervenors appeared as representatives of the incorporators and shareholders of the Trinity Association of Cleveland.

Trial below resulted in an affirmance of the order of the Commissioner.

Appellants’ single point of error, very general in nature, is that the trial court erred in holding the order of the Commissioner to be valid, legal and binding.

Our decision will be made solely from the record made before the Commissioner. Gerst v. Nixon, Tex.Sup., 411 S.W.2d 350. (11-30-66)

The appellants here are the proposed directors and shareholders of the Livingston Association the charter for which was approved by the trial court, this Court and the Supreme Court in Gerst v. Nixon, supra.

Appellants’ principal complaint here seems to be that the Commissioner did not recognize the existence of the Livingston Association in entering the order approving the charter for Trinity in Cleveland.

At the time the hearing on the Trinity application was conducted by the Commissioner, the trial court had sustained the charter application of Livingston but neither this Court nor the Supreme Court had acted in the matter. We consider the status of the Livingston Association at the time of the hearing on the application for the Trinity Association to be immaterial for the reason that appellants were notified by the Commissioner of the hearing and appeared at the hearing and participated therein through counsel and protested approval of the Trinity application.

It seems to us that the record of the proceedings before the Commissioner refutes the contention of appellants that the Commissioner ignored the existence of Livingston.

Appellants also argue under this point that the order of the Commissioner did not comply with the provisions of Sec. 11.11(4) Art. 852a, Vernon’s Ann.Tex.Civ.St., which require a contested order to contain findings of fact and conclusions of law and if the findings of fact are stated in statutory language that there be an accompanying concise and explicit statement of the underlying facts supporting the findings.

The order contains the following specific findings in support of its statutory findings:

“This application for Trinity Valley Savings and Loan Association is for a charter to be located in the town of Cleveland which is in the extreme northwest corner of Liberty County, Texas. The area shown by the testimony as the normal trade area for the majority of the businesses established in the town of Cleveland extends approximately 27 miles. East, 12i/2 miles West, 30 miles North and 20 miles South and contains approximately 1,500 sq. miles with a present estimated population of around 35,000 people. The town of Cleveland itself shows census figures as follows:
1940 — 1,783
1950 — 5,183
1960 — 5,838
The present estimation of the population of the town of Cleveland is in excess of 6,100 and other economic indicators such as the water, gas, light and telephone connections, and school enrollments also indicate that the area is growing. The town is located on the East Texas Freeway which connects it with Houston, Texas, and it was shown that very substantial progress towards completion of this segment of the East Texas Freeway has already been accomplished. The new Houston International Airport facility is also located near this freeway and is within a shorter driving time of Cleveland and the many subdivisions being developed close thereto, than the driving time to many areas of Houston. All of these factors, as well as others adduced by the testimony, are contributing to the expansion and growth of Cleveland and should furnish considerable emphasis to the future growth of Cleveland and the area which applicants propose to serve. No existing associations protested this application, which existing associations are located at distances of 22 to 30 miles distant. The only protest was from the incorporators of a proposed association which is seeking to be established in the town of Livingston, some 28 miles distant, and which have not received a final charter nor commenced business. All of the evidence adduced at the hearing pertaining to mortgage loan activity such as the deed of trust records, mechanics lien records and building permit figures from various portions of the proposed area indicate a substantial and sufficient volume of loan business and the testimony showing the income and savings of residents of the area also indicates sufficient volume in this regard. It was also shown that long term real estate financing is not conveniently or locally available to Cleveland, and the efforts of nearby institutions in this area are not sufficient to meet the needs demonstrated, especially since institutions in other areas are able to serve this area only during times when they have a surplus of funds on hand.”

It is our opinion that these specific findings of the Commissioner show compliance with his duty under Sec. 11.11(4), supra, and that such specific findings are adequate to sustain the statutory findings to which they refer.

Appellants have no point to the effect, and do not argue, that the order of the Commissioner, about which they complain, is not reasonably supported by substantial evidence.

We affirm the judgment of the trial court.

Affirmed.

O’QUINN, J., not sitting.

ON MOTION FOR REHEARING

We quote from appellants’ motion for rehearing:

“We agree that the Commissioner recognized and considered Livingston Savings, and Loan Association prior to the hearing: and permitted its representatives to appear at such hearing.
But there is no real dispute over the fact that the Commissioner failed and refused to recognize or consider Livingston Savings and Loan Association when he entered his order of September 24, approving the Trinity Valley charter application.”

In its original brief appellants quote the following testimony of Commissioner Gerst given on appeal in the District Court to sustain its position that the Commissioner did not recognize or consider Livingston when he entered the order approving the Trinity Valley charter application:

“Q Well, to get back to the original question, Mr. Commissioner: In making the finding that there was no undue harm, did you or did you not consider and weigh the matter of the existing judgment ordering a charter to be granted to Livingston?
“A Well, I wouldn’t think so, because it wasn’t an existing association at the time.”

Other testimony by the Commissioner on this point is as follows:

“Q Now, with respect to your order and decision in granting the Cleveland or Trinity Valley application, and in overruling the motion for rehearing of the protestants, the Livingston group, in considering the matter of undue harm did you take into consideration the order and judgment of the Court ordering the charter to be issued for the Livingston Association ?
⅝ ⅜ sjc ⅜ ⅜ if:
A Mr. Alvis, I might have taken that into consideration; I really don’t recall. But I think the main consideration was that Cleveland was some twenty-eight or thirty miles from Livingston and really wasn’t considered the same area.”

The Commissioner also testified:

“Well, it could very well be that if there had been a charter granted for Livingston, one could have very well still been granted for Cleveland. They are far enough apart to where I think it is two different areas, two different neighborhoods ; and if there had been a need for one in Livingston, it might have had some effect, but I don’t think it would preclude one from having been granted in Cleveland.”

Appellants contend that notwithstanding the rule that the trial on appeal is limited to the record made before the Commissioner that they are entitled on appeal to the district court to offer evidence of alleged irregularities in procedure before the Commissioner.

We overrule this contention here on two grounds (1) that the testimony of the Commissioner, fairly interpreted, is that he did consider Livingston when he entered his order approving the Trinity Valley charter application, and (2) no irregularity in procedure before the Commissioner is shown.

The most that appellants attempt to show is the mental process of the Commissioner in reaching his conclusions on the matters before him. This is not permissible.

In R. R. Comm. of Texas v. Galveston Chamber of Commerce, 105 Tex. 101, 116, 145 S.W. 573, 580, the court in reviewing a rate order of the Railroad Commission stated:

“It is not within the language nor the spirit of the 'law, which authorizes the courts to review the action of the Railroad Commission, that any court should investigate the methods adopted by the Commission in fixing its rates, nor the motives or purposes which prompted such action. The result and its effect upon the rights of railroads and shippers mark the limit of judicial inquiry.”

In State Banking Board v. McCulloch, Tex.Civ.App., 316 S.W.2d 259, writ ref., n.r.e., this Court in discussing the validity of an order of the State Banking Board stated:

“It is not our province to search out reasons that prompted a member to vote as he did but only to determine whether there is evidence to support the vote.”

We believe,' by analogy, the rule prohibiting inquiry into the mental processes of a juror employed in reaching a verdict is applicable here.

We believe that it was improper to subject the Commissioner to the type of examination conducted here and that the Commissioner should not be called upon to explain the mental processes by which he made the findings or reached the conclusions required of him.

The motion is overruled.