author: MURRAY, Chief Justice.

text:
    MISSOURI PACIFIC RAILROAD COMPANY, Appellant, v. RIO BRAVO CATTLE COMPANY, Appellee.
    No. 14494.
    Court of Civil Appeals of Texas. San Antonio.
    June 22, 1966.
    Rehearing Denied July 20, 1966.
    J. G. Hornberger, Laredo, Boyle, Wheeler, Gresham, Davis & Gregory, San Antonio, for appellant.
    Hooper & Perry, Abilene, Robert O’Con- or, Jr., Laredo, for appellee.
   MURRAY, Chief Justice.

This suit was instituted by Rio Bravo Cattle Company, a Texas corporation, in the District Court, 49th Judicial District, Webb County, Texas, against Missouri Pacific Railroad Company, a Missouri corporation authorized to do business in Texas, seeking to recover for damages to 1,153 head of cattle allegedly caused by the failure of the Railroad Company to timely furnish railroad cars on February 24, 1963, for shipment of the cattle from the Mexican stock yard pens in Nuevo Laredo to the Union Stock Yards in Laredo, Texas.

The trial was to a jury and, based upon the verdict of the jury, judgment was rendered in plaintiff’s favor in the sum of $5,052.33, after a remittitur by plaintiff of $697.67; from which judgment Missouri Pacific Railroad Company has prosecuted this appeal.

Appellant’s first seven points are briefed together and present the contention that the trial court erred in submitting to the jury Special Issue No. 2, because it was duplicitous, multifarious, a comment on the weight of the evidence, and otherwise objectionable.

Appellee, Rio Bravo Cattle Company, contends that it entered into an oral contract with appellant, Missouri Pacific Railroad Company, to furnish it nineteen clean and sealed railway cattle cars, suitable for transporting 1,153 head of cattle from ap-pellee’s pens in Nuevo Laredo, Mexico, to Union Stock Yards in Laredo, Texas, a distance of some five miles.

The court’s Special Issue No. 1, reads as follows:

“Do you find from a preponderance of the evidence that the defendant railroad company agreed to furnish suitable stock cars for the transportation of plaintiff’s cattle from Nuevo Laredo, Mexico to Laredo, Texas?” The jury answered “Yes”.

The court then instructed the jury, “If you have answered Special Issue Number One ‘Yes’ and in that event only, you will answer Special Issue Number Two.”

Special Issue No. 2 reads as follows:

“Do you find from a preponderance of the evidence that the defendant railroad company failed to furnish railway stock cars at the agreed loading point in Nuevo Laredo, Mexico, at the agreed time for furnishing same, which were suitable for transportation of the plaintiff’s cattle from Nuevo Laredo, Mexico, to Laredo, Texas?” (Emphasis ours.)

It will be noticed that Issue No. 1 only inquired as to whether appellant agreed to furnish stock cars for the transportation of appellee’s cattle from Nuevo Laredo, Mexico, to Laredo, Texas, while Issue No. 2 asks whether appellant failed to, furnish the cars at the agreed loading point in Nuevo Laredo, Mexico, at the agreed time for furnishing same. The appellant had raised an issue of fact as to whether there was any agreed time and place for furnishing the cars, however, in Issue No. 2 the court assumes that there was an agreement as to time and place, and asks only whether appellant failed to furnish cars at the time and place agreed on; or asks the two questions of whether or not (1) there was an agreement as to the time and place, and (2) if there was a failure to so furnish the cars. Mr. Hastings, general manager for “Miss Jovita Perez, Customhouse Broker,” who handled appellee’s cattle, testified that he was the one who made the arrangements for the cars. He said that on Saturday, February 23, 1963, he called the yard office of appellant and had the following conversation with whoever it was that answered the phone at the office:

“Q Now, would you tell the Jury, Mr. Hastings, just what transpired in your own words here, insofar as your negotiations with the defendant, Missouri Pacific Railroad, on this occasion, are concerned?
A On the day before that Sunday, I believe it was February 25, I called the Missouri Pacific Railroad, the yard office — I don’t recall who the person I talked to was at the time— and requested nineteen empty, clean, sealed railroad cars, for first crossing to go to the Mexican side of the border, and also requested that several more cars be placed to assure that should any car be found to be mechanically not suitable, that there would be enough suitable cars for loading these cattle which we proposed to export from Mexico and import the following day.
Q Had you handled similar matters on other occasions for Rio Bravo Cattle Company or other clients?
A We have, sir.
Q In your estimate, would you say it was many times or just a few times, or how many occasions ?
A Many, many times.
Q You mentioned ‘first crossing’ of cattle, did you order these cars to be on the Mexican side or at the Mexican stockyards for first crossing in the morning?
A First crossing means to cross the American cars from the American side of the border to the Mexican side of the border at the first available moment, as early as possible the following morning, between 5:00, 6:00, 7:00 o’clock in the morning.
Q To the best of your ability to recall, did the agent or employee of Missouri Pacific Railroad agree to furnish such cars?
A They did, sir, or he did.
Q Mr. Hastings, were those cars available at first crossing the next morning?
A I don’t know the exact time they crossed, but they got to the Mexican stockyards the first time around noon — no, yes, sir, about 3:00 o’clock as I recall. We wanted them there by noon, but they got there at 3:00 o'clock the first time.”

This is all that appellee contends was said or done as to a contract with appellant to furnish cattle cars to it at the stock pens in Nuevo Laredo, Mexico, on February 24, 1963.

The evidence is insufficient to show that anyone authorized to make a contract on behalf of appellant agreed to furnish stock cars at the Mexican stock yard. Hastings does not say where the cars were to be furnished. It is not shown that the person to whom he talked was an agent authorized to- make the contract appellee now claims to have had with appellant. Certainly, this evidence does not establish as a matter of law, the contract now claimed by appellee; at most it was only evidence of such contract and therefore only raised a question of fact to be decided by the trier of facts, in this case the jury.

It is true that in answer to the first issue the jury had found that appellant did agree to furnish suitable stock cars for the transportation of appellee’s cattle from Nuevo Laredo, Mexico, to Laredo, Texas, but nothing more. When the court came to the submission of Issue No. 2, it asked about an entirely different contract than that described in Issue No. 1, that is, one to furnish such stock cars at the agreed loading point in Nuevo Laredo, Mexico, at the agreed time for furnishing same. Appellant contends there was no evidence to show that there was any agreed place to deliver the cars. This issue either assumes the fact that there was an agreement to furnish the stock cars at the Mexican stock yards at an agreed time, and inquires only as to whether there was a failure to so furnish such cars, or the issue asks two questions, one if there was an agreement to furnish the cars at the Mexican stock yards at a certain time, and another, if there was a failure to so furnish the same. In either event, Issue No. 2 was subject to the objections made by áppellant, and the court erred in not sustaining appellant’s objections to that issue. Rule 277, Texas Rules of Civil Procedure; Johnson v. Zurich General Acc. & Liability Ins. Co., 146 Tex. 232, 205 S.W.2d 353; Hornsby Heavy Hardware Co. v. Prichard, Tex.Civ.App., 119 S.W.2d 410, error dism.; Bonham Coca Cola Bottling Co. v. Jennings, Tex.Civ.App., 181 S.W. 97, error den. 143 Tex. 327, 184 S.W.2d 821.

We likewise sustain appellant’s objection to Special Issue No. 3, inquiring of the jury whether the failure of the railroad company to furnish suitable railway cars at the designated place and at the agreed time, was negligence, for the same reasons stated above relating to Issue No. 2.

Special Issues Nos. 4 and 5, which were submitted to the jury, read as follows: (4) “Do you find from a preponderance of the evidence that such failure on the part of the defendant railroad company caused the plaintiff’s cattle to shrink in weight?” (5) “Do you find from a preponderance of the evidence that the defendant’s negligence, if any you have found, was the proximate cause of the shrinkage in weight to the cattle, if any you have found ?”

The jury answered “Yes” to both of these issues. Appellant objected to the submission of these issues because there was insufficient evidence to support an affirmative answer to the issues.

The evidence shows that these cattle had been purchased in Durango, Mexico, by ap-pellee and shipped to Nuevo Laredo stockyards. There were 1,161 head of these cattle. They were weighed in at the Nuevo Laredo stockyards on or about February 12, 1963, and weighed 434,944 pounds. When these cattle were finally sold in Laredo, Texas, on February 25, 1963, they weighed ^22,851 pounds, and thus there was a loss in weight of 12,093 pounds between their arrival in Nuevo Laredo and their arrival in Laredo, Texas.

When these cattle were unloaded at the stockyards in Nuevo Laredo, three herds of them were found to have fever ticks and were ordered quarantined for a period of ten days by the U. S. Department of Agriculture. These three herds contained 451 head of cattle. Cattle cannot be imported into the United States from Mexico unless they are free from fever ticks.

It is not clear why the remaining cattle that were free from ticks were not immediately imported to the United States. Apparently, all of the cattle were put on feed consisting of cottonseed meal and hulls. The feed lot people were ordered to keep the feed troughs full of feed at all times, and inspections were made frequently to see that these orders were carried out. Appel-lee’s witness Samuel Glen Ball testified that he was president of Rio Bravo Cattle Company, and that he and his wife were the principal stockholders; he had been in the cattle business for some ten years, and, as a matter of fact, he had grown up in the cattle business. He had been buying and selling cattle for appellee for ten years; he had bought lots of cattle in Mexico and imported them to the United States and sold them. The 1153 head of cattle involved here were purchased in Durango, Mexico, and shipped by rail to Nuevo Laredo stock yards; they .were to be weighed when they arrived in Nuevo Laredo and were to be paid for by their weight in Nuevo Laredo. Four hundred fifty-one of these cattle arrived in Nuevo Laredo on or about Feb. 12, 1963, and were caught with ticks and placed in quarantine pens. Ball was not certain as to when the remainder of the cattle arrived. They were evidently tick free and were put in feed lots. All of the cattle were to be put on heavy feeding. There were 1161 head of cattle shipped by appellee from Durango to Nuevo Laredo and their total weight on arrival was 434,944 pounds. Some days later 1153 head of these cattle were shipped to Laredo, and when unloaded there weighed 422,851 pounds, thus there was a shrinkage of 12,093 pounds. Part of this shrinkage apparently can be accounted for by the fact that eight head of these cattle were rejected and never reached Laredo. Ball testified that the cattle should have gained weight, due to the heavy feeding, even though 451 head were caught with ticks and had to be dipped twice before they could be imported to the United States. He further testified that appellee had imported many cattle from Mexico and they had always gained weight while in the Nue-vo Laredo feeding pens. He undertook to give the details of some other shipments, as to the number of days the cattle were in the feed pens and the weight they gained but, as he did not have his books with him, this testimony was excluded and he was permitted to testify that the cattle always gained about 3% while in the feed lots. He did not state how many days these various heads of cattle were in the feed lots, whether or not they were caught with ticks and had to be dipped; and there was no description of the cattle, whether high breed cattle, horned cattle, or polls. The cattle here involved were weighed when they came to the stockyards in Nuevo Laredo but not at any time thereafter until they arrived at the Union Stock Yards in Laredo. There is no way to know how much these cattle gained, if any, while in the feed lots at Nuevo Laredo, or how much shrinkage was caused by the delayed arrival of the stock cars in Nuevo Laredo. There is no evidence herein from which a jury could compute with reasonable certainty the monetary loss caused by appellant’s failure to timely furnish the stock cars.

Dr. Spruiell, as representative of the United States Department of Agriculture, started scratching the 451 head of cattle for ticks at about 7:00 a. m. on February 24, and would have been ready to start loading them by noon, and would have completed loading them by three or four o’clock that day, if the cars had been ready at noon when appellee had called for them. The cars arrived about 3:00 p. m., but were unsealed, not clean, and otherwise unsuitable. Dr. Spruiell would not permit the cattle to be loaded in these unsuitable cars. The cars were returned to the American side and later returned to the Nuevo Laredo pens. They were again found to be unsuitable and were returned to the American side. The next time the cars brought back to Nuevo Laredo they were found to be suitable; this was about 9:00 p. m. Due to this delay, the last of the cattle were not finally unloaded and weighed in Laredo until about 4:00 a. m. the next morning, which was Feb. 25. When they began scratching the 451 head of cattle for ticks at 7:00 a. m. • on the morning of Feb. 24, they were taken off of feed and were not again put on feed until after they were unloaded and weighed in Laredo. It is not clear as to when the remaining 700 head of cattle were taken off of feed.

There would have been some shrinkage of the weight of the 451 head of cattle even if the stock cars had been spotted when needed, because these cattle had to be taken off of feed at 7:00 a. m., put through chutes ard scratched for ticks, then dipped and put in draining pens. After they were drained, the cattle were put in tick-free pens called “clean pens” from which they were loaded into clean stock cars for import into the United States. These cattle would have been kept off of feed only about eight or nine hours if the cars had been ready when needed, while due to the delay in furnishing the cars they were kept off feed for some twenty or twenty-one hours.

Under all of this testimony, it would only' be a guess as to how many pounds these cattle lost as a result of appellant’s delay in furnishing clean and suitable stock cars for their shipment to Laredo. The evidence was insufficient to support the jury’s answer to Special Issue No. 6, to the effect that $5,750.00, if paid now in cash, would fairly and reasonably compensate appellee for the damage suffered by it by reason of the loss of weight suffered by the cattle directly and proximately caused by appellant. The cattle were not weighed before they were taken off feed, and therefore there is no way to know with any reasonable certainty what the shrinkage was in pounds between the time the cattle were taken off feed and the time they were weighed in Laredo, or what portion of this shrinkage was caused by the normal operation of shipping cattle to Laredo and what portion was due to the delay caused by failure to have the stock cars ready when needed.

Appellee sued for damages based on the following items:

(2) Failure to gain weight 2,573.26
(3) Additional import costs 470.15
(4) Supplemental feed 277.50
Totaling $5,799.98

The verdict of the jury was $5,799.98, showing that the jury intended that appellee should recover for the above items. The verdict was not supported by the evidence. Appellant could not be held liable for the failure of the cattle to gain weight.

The trial court gave the following instruction in connection with Issue No. 6:

“In fixing the amount, you will take into consideration the following elements:
(1) Loss of weight, if any, to the cattle by reason of the delay, if any, in furnishing suitable railroad cars, if you have found such delay to have occurred.
(2) The difference in weight between the time the cattle were weighed at the Nuevo Laredo, Mexico, pens and the time that they were weighed in at Union Stock Yards in Laredo, Texas, less a reasonable amount for natural or ordinary shrinkage, during that time.
(3) The reasonable value per pound of the cattle after it was received at the Union Stock Yards in Laredo, Texas.”

This did not give the jury the correct measure of damages. The correct measure of damages for negligent delay in the shipment of cattle by the railroad is the difference in their market value in the condition in which they arrived at the point of destination, and in which they would have been but for the negligence complained of. Davis v. Hill, Tex.Civ.App., 271 S.W. 281.

In Kansas City, M. & O. Ry. Co. v. McMullen, Tex.Civ.App., 19 S.W.2d 98, 99, we find the following statement:

“The first proposition of appellant is that there is no evidence disclosed by the record upon which the jury could find the amount of damages awarded. After carefully reading the statement of facts, we sustain this contention. Nowhere do we find any evidence whatever of the market value of said cattle at Wichita, Kan., or at Big Lake, for that matter. There was evidence of negligence on the part of the railway company, of undue delay, and of shrinkage. It is elementary, however, that there must also be evidence upon which the jury can arrive at the amount of pecuniary damages resulting from the negligence shown. 17 C.J. 1023; Coulter v. Gulf, C. & S. F. R. Co. (Tex.Civ.App.) 286 S.W. 559.”

See also Panhandle & S. F. R. Co. v. Montgomery, Tex.Civ.App., 140 S.W.2d 241.

There is evidence as to what these cattle sold for per pound in Laredo, but no evidence that the price paid was the market value of the cattle; neither is there any ■evidence as to the difference in market value of the cattle in the condition in which they arrived and the market price in the condition in which they would have arrived but for the negligence of appellant.

For the error above pointed out, the judgment is reversed and the cause remanded.


source: Caselaw Access Project

author: CADENA, Justice.

license: Public Domain

text:
    Frank AVERSA, Appellant, v. Anna T. AVERSA, Appellee.
    No. 14454.
    Court of Civil Appeals of Texas. San Antonio.
    June 8, 1966.
    Rehearing Denied July 20, 1966.

      Southers & Mendelsohn, Les Mendelsohn, San Antonio, for appellant.
    Reid & Taylor, Robert P. Sims, San Antonio, for appellee.
   CADENA, Justice.

This is an appeal by Frank Aversa from an order of a district court of Bexar County modifying a previous divorce decree and ordering appellant to contribute the sum of $100.00 per month toward the support of an unmarried nineteen-year-old son of appellant and his former wife, Anna T. Aversa, appellee.

Ordinarily, the power of a court in a divorce proceeding to enforce by appropriate order the parental obligation to support children of the marriage is limited to orders relating to the support of children who are under eighteen years of age. Art. 4639a, Vernon’s Ann.Civ.St. The only authorization for the entry of an order compelling a divorced parent to support a child of the marriage who has attained his eighteenth birthday is found in Art. 4639a-l, Vernon’s Ann.Civ.St. This statute authorizes a court to enter and enforce orders requiring support payments for a child above the age of eighteen if it is established by full and satisfactory evidence that (1) the child is unmarried; (2) the child is physically or mentally unsound and requires custodial care; (3) such child cannot adequately take care of, or provide for, himself; and (4) the child has no personal estate or income sufficient to provide for his reasonable and necessary care.

The evidence in this case is sufficient to establish that the son is unmarried, is mentally unsound, and has no personal estate or income. Appellant contends, however, that the trial court’s finding that the boy requires custodial care is not supported by full and satisfactory evidence.

In November, 1964, the boy suffered what his mother described as a “mental breakdown.” On December 28, 1964, he was admitted as a patient at the Adult Mental Health Clinic, which is operated as a part of the Texas State Hospital and Special Schools system in San Antonio. He was released from the clinic on February 26, 1965, but continues to report there for treatment as an out-patient.

Dr. Robert Rast, Chief Clinical Psychologist at the clinic, described the boy’s condition as “schizophrenic reaction, paranoid type.” The term “schizophrenic reaction,” according to this witness, describes a form of mental disturbance characterized by a deterioration of a person’s thinking and reasoning processes to the extent that such processes become so illogical, inappropriate and unreasonable that he loses contact with reality. The witness characterized the schizophrenic reaction in this case as “paranoid type” because it is accompanied by delusions of grandeur. ,,

The boy’s progress in response to treatment was described as “moderate to slow.” However, his condition is not such as to require that he be placed in an institution.

It is the hope of the doctors that, at some time in the future, their treatment of the boy will progress to the point where his illogical thinking will be reduced to such an extent that he can be referred to an agency for vocational rehabilitation, so that he can be trained for employment in some field commensurate with his abilities. At the present time it is not possible for him to ventare into the employment market “and just get and hold a job” as most persons do. Much depends on the nature of the work and the attitude of the employer. The boy can retain employment only if it is in a special setting, such as that furnished by an organization known as “Goodwill Industries,” where he would receive adequate supervision. Because of this mental condition, he cannot “live alone and be out from under the wing of his mother” and still “make it.” He is incapable of managing his own money and financial affairs adequately, and requires supervision.

Since his release from the hospital, the boy has been unable to earn a livelihood, although he has attempted to support himself by working for a sign company, by selling television sets and by selling carpets. His job with the sign company lasted only two days, and his efforts as a salesman yielded no income whatever.

The mother testified that the boy is able, and is allowed, to leave his home, drive the family car, go out with male friends and have “dates” with female friends. There is no evidence that, as a result of his unsupervised social activities, he has ever created, or become involved in, situations with which he cannot cope.

While this evidence establishes that the boy is mentally ill and will, for some time, find it impossible, or, at least, extremely difficult, to support himself, it does not disclose a situation to which Art. 4639a-1 is applicable. The statute requires, in addition to evidence of a child’s mental unsoundness and inability to support himself, that it be established by full and satisfactory evidence that the child requires “custodial care,” and that he is financially unable to “provide for his reasonable and necessary care.”

We have found no decision by any court in which an attempt has been made to define the phrase, “custodial care.” Without creating additional problems by attempting a comprehensive definition of “custodial care,” and without implying that the statute requires evidence showing a necessity that the child in question be placed in a hospital or other institution, we hold that evidence which merely shows that a child, because of mental illness, is unable to support himself and requires “supervision” in the management of his financial affairs is insufficient to show that such child requires “custodial care.” Viewing the statute as a whole, it is reasonable to conclude that the Legislature had in mind a situation in which the child requires substantially that type of care which involves a degree of attention requiring more or less continuous personal supervision. The statute contemplates more than the furnishing of food, clothing and lodging. The custodial care which the child must require is such as is made necessary by his physical or mental infirmity, rather than by his lack of financial resources.

It appears, then, that the custodial care must be adapted to the physical or mental condition of the child and must involve, to some degree, the type of care which will conduce to the comfort of the child and will hasten the cure, or ameliorate the physical or mental illness, or help control it.

The requirement that the child must be financially unable to provide for his necessary and reasonable care must, when read in context, refer to the special care called for by his illness. There is nothing in the record to indicate that the child in this case requires any more of his mother’s time and attention than do her five other children, two of whom are more than eighteen years of age. The record does disclose that appellee, the boy’s mother, gave up her employment, but her testimony was to the effect that she did so because the job made her nervous. Nowhere in her testimony is there even a hint that the boy’s need for care and attention in any way influenced her in her decision to cease working.

Under these circumstances, it must be concluded that the trial court’s finding that the boy in question requires “custodial care” is without support in the evidence.

The judgment of the trial court is reversed and judgment is here rendered in favor of appellant.


author: WALTER, Justice.

text:
    James D. KNOX, Appellant, v. DONOVAN LOWERY INSURANCE AGENCY, Appellee.
    No. 4067.
    Court of Civil Appeals of Texas. ' Eastland.
    June 17, 1966.
    Martin & Knox, Jack R. Martin, Houston, for appellant.
    Baskin & Fakes, Stanley D. Baskin, Pasadena, for appellee.
   WALTER, Justice.

James D. Knox filed suit against Marine Office of America and Donovan Lowery Insurance Agency to recover for the loss of a boat that was sunk as a result of Hurricane Carla. Upon motion of Knox, Marine Office of America was dismissed and the plaintiff proceeded to trial against Donovan Lowery. The court rendered judgment that the plaintiff take nothing and he has appealed.

Knox’ cause of action accrued on September 11, 1961 and his petition was filed on August 23, 1963. When it was filed the plaintiff’s attorney instructed the Clerk not to issue citation. The stamp “Do not issue” was placed on the petition and the filing clerk wrote the words “per attorney” thereon.

The principal question presented by this appeal is whether the two year statute of limitation is applicable.

Special issues 5 and 5-A and the answers are as follows:

SPECIAL ISSUE NO. 5
“Do you find from a preponderance of the evidence that the Citation introduced in evidence in this case was not issued until September 19, 1963, was occasioned by any act or conduct of the Plaintiff’s attorneys, or either of them?
Answer: We do.
If you have answered Special Issue No. 5 ‘We do’, and only in that event, then answer:
SPECIAL ISSUE NO. S-A
Do you find from a preponderance of the evidence that at the time of the filing of this suit it was the intention of the plaintiff or his attorneys or either of them to forthwith secure issuance and service of citation ?
Answer: We do.”

In Reed v. Reed, 158 Tex. 298, 311 S.W.2d 628 (Tex.1958), the Supreme Court said:

“Now, turning to the limitations cases, these themselves sometimes state the rule in terms not altogether clear. In holding the statute not to have been tolled by suit, they sometimes speak as if the intent of the filer of the suit, at the time of filing, is what controls, and yet go on to ascertain his intent exclusively by reference to his conduct both after and at the time of filing. For example, in Ricker, Lee & Co. v. Shoemaker, supra [81 Tex. 22, 16 S.W. 645] in which the filer testified in effect to his intent, at the time of filing and, indeed, thereafter, to prosecute his case, but said he had been unable to get out citation for approximately a year because of lack of funds wherewith to pay the costs, we held that, as a matter of law, the statute was not interrupted, although referring to his original intent as the test. See also Owen v. City of Eastland, 124 Tex. 419, 78 S.W.2d 178. However, it now appears to be expressly settled that prosecution of the suit with diligence is necessary in order to toll the statute. Buie v. Couch, Tex.Civ.App., 126 S.W.2d 565, 566, wr. of er. refused; Adams v. Slattery, 156 Tex. 433, 295 S.W.2d 859. In the Buie case, in which a delay of nine months in getting out citation was held, as a matter of law, to prevent tolling the statute, the court quoted with approval the language of an earlier decision to the effect that ‘there must be a bona fide intention also that process be issued and served and due diligence exercised that such process issue and be served.’ ”

No excuse was offered by Knox’ attorney for the delay in having the clerk issue the citation. There is no evidence to support the jury’s answer to issue 5-A.

On the authority of Reed v. Reed, (supra), we hold that the court was compelled to render the judgment that was entered in this case. Also see Higginbotham Bros. & Co. v. Callaway, 170 S.W.2d 333, (Tex.Civ.App., 1943, no writ history); City of Gainesville et al. v. Harder et al. 139 Tex. 155, 162 S.W.2d 93 (1942).

We have examined all of appellant’s points and find no merit in them. They are overruled.

The judgment is affirmed.


author: RENFRO, Justice.

text:
    Henry FENN et ux., Appellants, v. ESTATE of S. B. BURNETT et al., d/b/a Tom L. Burnett Cattle Company, Appellee.
    No. 16749.
    Court of Civil Appeals of Texas. Fort Worth.
    June 24, 1966.

      Taylor Gandy, Fort Worth, and Peter Chase Neumann, Tucson, Ariz., for appellants.
    Cantey, Hanger, Gooch, Cravens & Scarborough, and Sloan B. Blair, Fort Worth, for appellee.
   OPINION

RENFRO, Justice.

The plaintiffs, Mr. and Mrs. Fenn, were owners of a race horse named Manor Man, valued by them in their petition at $250,000.00. After Manor Man had gained renown as a racer he was leased to defendant Burnett Cattle Company for a two year period for breeding purposes. The lease price was $10,000.00, which was paid by defendant to plaintiffs.

After Manor Man had been in defendant’s possession for approximately three months he died following the injection of iron dextran in his blood stream by one of defendant’s employees.

Plaintiffs sued defendant for the value of the horse, and also for the value of one of plaintiffs’ young colts which was found dead on defendant’s ranch. Negligence was alleged on the part of defendant.

The defendant moved for summary judgment, which was granted.

Made a part of the pleadings before the judge was the written lease contract between plaintiffs and defendant. Paragraphs 5 and 7 read as follows:

“5. During the term of this lease or any extended term, Lessor shall have the right to breed four of his own mares to the Horse per year. If Lessor desires to exercise such right, he shall at his own expense bring such mares to whatever place such Horse may be located, and Lessee will not be responsible for failure of such mares to conceive, and will not be liable for loss or death of such mares or their colts, if any, while in Lessee’s possession. Lessor shall, at his own expense, pick up and accept delivery of such mares and their colts, if any, at weaning time at such place as they may be then located.”

“7. During the term of this lease and any extended term, Lessee agrees to provide for the Horse substantially the same care and treatment, including veterinary services, as it provides, for its own horses, but in no event shall Lessee be responsible or liable for any loss, theft, injury or death of the Horse, and Lessor agrees to look solely to insurance, if any, which Lessor may at his own expense carry on the Horse.”

Plaintiffs filed a controverting affidavit in which they swore that it was not their intent to excuse defendant of its own negligence.

On appeal they contend the court erred in rendering judgment against them (1) because there was a genuine issue of fact regarding the intent of the parties to the lease, and (2) the exculpation clause did not conform to the law of the jurisdiction in that it did not mention the word “negligence” nor did it say the defendant would not exercise ordinary care toward plaintiffs’ horses.

It is apparent the trial court entered judgment for defendant under the following reasoning:

“ * * * under the plain and unequivocal terms of paragraphs five and seven of the lease agreement in question, the plaintiffs are barred from a recovery for loss of the stallion and colt described in their petition.

“The language of paragraph seven is definite and particular and creates no ambiguity in itself or when taken in connection with other provisions of the agreement. Addition of the word ‘negligence’ would merely serve to emphasize the language used. The intent of the parties is clear and obvious. The lessee agreed to provide the stallion with the same care and treatment, including veterinary services, as it provided for its own horses, but in no event would the lessee be liable for any loss, whether by theft, injury or death of the stallion, it being agreed that in the event of any of the above named contingencies, the lessor would look solely to his insurance for reimbursement. The fact that the lessor may have let his insurance lapse or that the insuror might have some defense to an action on the policy by reason of some particular exclusion can not be considered by the court in this action. These were matters entirely under the control of the lessor. Since there is no ambiguity in the language of paragraph seven, extraneous evidence is not admissible to show intent of the parties.

"As a general rule, a bailee for hire is liable for loss or damage to the property resulting from his negligence, but an agreement that such loss or damage shall be satisfied solely out of the bailor’s insurance is proper and does not contravene public policy.

“While paragraph five regarding the colt, does not mention insurance, it is equally-plain and unambiguous in its terms.

“If these clauses were intended to cover only injury or losses which might occur without negligence on the part of the lessee, such as calamity or act of God, such provisions would serve no useful purpose, because no liability would result in such instances in any event. As a matter of fact, injury or loss resulting from the bailee’s negligence is the only contingency to which paragraph seven can be properly applied. Actually, the bailee’s negligence is the sole subject matter of the provision in question, because the opening lines of the section simply require the bailee to exercise ordinary care, which is the test of negligence or lack of negligence. The same sentence then continues on and provides ‘but in no event shall the lessee be responsible or liable.’ The conclusion of the sentence contains the agreement of the parties that the lessor shall look solely to his insurance, if any, for reimbursement in the event of a loss.

“This case is readily distinguishable from the cases wherein the bailee seeks to limit his duty to exercise ordinary care by arbitrarily posting notices of non-liability for loss or damage to the property placed with him. The holding in such cases usually turns on the question of whether the bailor has assented or agreed to the limitation of liability. In the case at bar the parties not only agreed to waive every kind of claim for loss during the bailment, but also provided for the only method by which the bailor would be reimbursed in the event of a loss. The parties clearly intended to substitute a special contract in lieu of the usual liability of a bailee.”

The authorities support the court’s conclusions.

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 purpose of varying or adding to the contract but in order to find out the intention with which words are used. Spence & Howe Construction Company v. Gulf Oil Corporation, 365 S.W.2d 631 (Tex.Sup., 1963); Woods v. Sims, 154 Tex. 59, 273 S.W.2d 617 (1954).

The language used in the contract clearly shows the intent of the makers to be that defendant would not be held liable for damage or death of the horse but on the contrary defendant was to be exempt from liability for negligence, and that plaintiffs would look only to their insurance for damages in case anything happened to the horse.

Being clear and unambiguous, parol evidence was not admissible to show a different intent.

Contracts written or construed so as to allow indemnity for liability arising out of the indemnitee’s own negligence are not violative of the public policy. Northern Texas Traction Co. v. City of Polytechnic, 236 S.W. 73 (Tex.Com.App., 1922); James Stewart & Co. v. Mobley, 282 S.W.2d 290 (Dallas Tex.Civ.App., 1955, ref.). While the intent to indemnify against the results of the indemnitee’s negligence must be clear, it need not be expressed. Ohio Oil Company v. Smith, 365 S.W.2d 621 (Tex.Sup., 1963); Houston & T. C. R. Co. v. Diamond Press Brick Co., 111 Tex. 18, 222 S.W. 204, 226 S.W. 140; Northern Texas Traction Co. v. City of Polytechnic, supra; James Stewart & Co. v. Mobley, supra; Mitchell’s, Inc. v. Friedman, 157 Tex. 424, 303 S.W.2d 775 (1957).

The “express negligence” doctrine has, in effect, been rejected in this state not only in instances involving the rental or leasing of property, but also in cases where an owner-contractor relationship exists. Ohio Oil Company v. Smith, 365 S.W.2d 621 (Tex.Sup., 1963).

The parties had a legal right to agree that defendant “in no event” would be liable for the death of the horse. They did so agree.

We agree with the trial court that defendant is not liable for the death of the colt under the provisions of paragraph 5, and is not liable for the death of the horse under paragraph 7 of the contract.

Affirmed.


author: PHILLIPS, Justice.

text:
    GALA HOMES, INC., et al., Appellants, v. BOARD OF ADJUSTMENT OF the CITY OF KILLEEN et al., Appellees.
    No. 11416.
    Court of Civil Appeals of Texas. Austin.
    June 29, 1966.
    Rehearing Denied July 20, 1966.
    Gibson R. Randle, Howell Finch, Austin, for appellants.
    Jack W. Prescott, Temple, Bryan, Wilson, Olson & Stem, Wiley W. Stem, Jr., Waco, for appellees.
   PHILLIPS, Justice.

This was a suit by appellants, plaintiffs below, for a Writ of Certiorari to the Board of Adjustment of the City of Kil-leen, Texas, pursuant to the provisions of Article 101 lg of the Revised Civil Statutes of Texas in order to review a decision of the Board wherein it found certain building permits issued to appellants by the City of Killeen to be invalid.

The trial court, after reviewing the record and considering the argument and briefs of counsel, declined to reopen the case for additional testimony and held that the record before the court showed that there was substantial evidence before the Board of Adjustment to the effect that appellants’ building permits were invalid and that the Board did not act in an arbitrary, capricious, illegal or unreasonable manner in rendering its decision. From this judgment, appellants perfected their appeal to this Court.

We reverse the judgment of the trial court and render judgment herein.

Appellants are before this Court on seven points of error of which we grant the first, second, third and seventh. Consequently, it will not be necessary to pass on the remaining points.

Appellants’ first point of error is that of the trial court in not holding that the appeal to the Board of Adjustment by the intervenors was not filed within a reasonable time as required by Article 101 lg, V.C.S., and as a result the Board of Adjustment did not have jurisdiction to hear such appeal. Appellants’ second point of error is that of the trial court in not holding that appellants relied on intervenors’ failure to appeal to the Board of Adjustment and showed such reliance by starting construction and by expending $18,000.00 thereon, all prior to intervenors’ appeal to the Board. As a result, intervenors by estoppel, waiver and laches lost their right to appeal to the Board. Appellants’ third point of error is that of the trial court in holding that appellants had not started construction within 90 days after issuance of the building permits as required by city ordinance and in holding that legal construction of the term “start of construction” is governed by the substantial evidence rule. Point of error number seven is that of the trial court in failing to hold that the two year period within which the city ordinance requires that construction be completed should be tolled, commencing with filing of intervenors’ appeal with the Board and continuing until final judgment herein, for otherwise a validation of the building permits would be meaningless.

On February 20 and 24, 1964, three building permits were issued to appellants authorizing the construction of certain apartment houses.

On February 24, 1964, the City Council of Killeen passed an ordinance changing the zoning of this property to single family dwelling and provided that building permits issued on or prior to the passage date of the ordinance were valid provided construction started under such permits within 90 days of the passage date of the ordinance.

It is undisputed that appellants, within 90 days after the permit was issued, brought a bulldozer on the property and levelled a portion of it to grade in preparation for the erection of buildings thereon. In addition, appellants put up batter boards which are stakes driven into the ground to mark the corners of the buildings to be erected. In Security Stove & Manufacturing Co. v. Sellards, 133 Kan. 747, 3 P.2d 481, 76 A.L.R. 1397, the digging of an uncovered sewer ditch from an alley to the rear of a proposed building was held commencement of building. In Gulf Oil Corporation v. Vogel, 50 N.J.Super. 324, 142 A.2d 237, the Court found that an old building had to be removed before starting construction of a new one. The Court held that commencement of building had started where some pipes were disconnected and electrical fixtures removed from the old building. Some shrubbery had also been cleared away and a billboard removed.

We hold as a matter of law that building had commenced in the case at bar. Board of Adjustment v. Underwood, Tex.Civ.App., 332 S.W.2d 583, writ refused, n. r. e.

As stated above, the permits in question were issued February 20 and 24, 1964. In the middle of May, 1964, the 90 day period in which building had to. be commenced would have terminated and appellees would have had the right to attack the permits. They waited until April 14, 1965 to do so. During this 14 month period, from the time that the permits had been granted and the time the appeal had been taken by the intervenors in this case to the Board of Adjustment, appellants had spent in the neighborhood of $18,000.00 construction costs.

Article 101 lg, V.C.S., which authorizes appeals to the Board of Adjustment specifies that such appeal shall be taken within a reasonable time. We hold that 14 months delay is not a reasonable time and by virtue of such delay the Board of Adjustment had lost jurisdiction over the appeal.

Inasmuch as the permits were prima facie valid, we reverse the judgment of the trial court and render judgment validating the permits. Further, we hold that the two year period within which the city ordinance requires that construction be completed should be tolled, commencing with the filing of intervenors’ appeal with the Board and continuing until final judgment herein.

The judgment of the trial court is reversed and rendered.

Reversed and rendered.

      . “Chapter 9, Article 2, Subsection 18-5 ‘Nothing in these regulations nor in any amendments hereto which change district boundaries shall require any change in the plans, construction or designated use of a building which shall be completed in its entirety within two years from the date of the passage of this ordinance, provided such building was authorized by building permit before' the passage of this ordinance and further provided that construction shall have been started within 90 days of the passage of this ordinance.’ ”


text:
    Lorae B. HENRY, Appellant, v. LINCOLN INCOME LIFE INSURANCE COMPANY, Appellee.
    No. 16738.
    Court of Civil Appeals of Texas. Fort Worth.
    June 3, 1966.
    Rehearing Denied July 1, 1966.

      Elvin E. Tackett, Fort Worth, for appellant.
    W. A. Hawkins, Fort Worth, for ap-pellee.
   RENFRO, Justice.

Suit was brought by Lorae B. Henry against Lincoln Income Life Insurance Company to recover proceeds of an insurance contract on the life of her nephew Charlie C. Brown.

Judgment was rendered for defendant. Plaintiff appealed.

Defendant’s superintendent Wilson, and Holt, a soliciting agent, called upon plaintiff June 19, 1964, and learned that plaintiff wanted to procure a policy of insurance upon her nephew Brown because Brown was indebted to her for loans previously made by her to Brown. The agents assured her she could secure such insurance, whereupon she filled out an application. Detached from the application and left with her was a receipt dated June 19, 1964, which provided:

“THE PAYMENT ACKNOWLEDGED BY THIS RECEIPT IS MADE AND RECEIVED SUBJECT TO THE FOLLOWING CONDITIONS:

“(A) 1. If the medical examinations, if any, required by the Company are completed; and
“2. If the Company at its Home Office is satisfied that at the time of completing both Part I and Part II of the application the Proposed Insured was insurable under the Company’s rules for a policy on the plan, in the amount, at the class of risk and otherwise exactly as applied for in Part I of the application with the same number as this receipt; said receipt being in the amount at least equal to the first full premium.

“then, but- only after such conditions are met, the insurance will be effective from the date of Part I, the date of Part II, or the date specifically requested in the application, whichever is the latest, regardless of death or change of insurability of the Proposed Insured occurring after completion of both parts of the application.”

Brown died July 3, 1964. No policy had been issued.

It is undisputed that no medical examination was required and it is undisputed that Brown was insurable as of the date of the application and that the “home office” knew Brown was insurable.

After Brown’s death plaintiff made claim under her contract as shown in the receipt and heretofore set out.

Defendant denied liability on the sole ground that plaintiff had no insurable interest in Brown’s life.

Plaintiff made out a case for recovery on the contract under the holdings in United Founders Life Insurance Co. v. Carey, 363 S.W.2d 236 (Sup., 1962), and Great Southwest Life Insurance Co. v. Henson, 401 S.W.2d 89 (El Paso Civ.App., 1966).

The trial court rendered judgment for defendant on the ground that Brown did not sign the application for insurance.

The same contentions as here made were made by the insurance company in First Texas Prudential Insurance Co. v. Pipes, 56 S.W.2d 203 (El Paso Civ.App., 1932, dism.), and American Casualty & Life Co. v. Chambers, 172 S.W.2d 122 (Fort Worth Civ.App., 1943, dism.), and in both instances were overruled. This court said in the Chambers case: “The insurer had in its possession the application executed as the facts now show it to have been and it will not now be heard to say that the contract is void because of the manner in which the application was signed.”

In the instant case plaintiff made full disclosure of her reason for wanting the policy (the application showed that Brown was plaintiff’s nephew and the proposed policy was to secure a loan). She offered to go to Brown’s home to secure his signature but defendant’s agents assured her that would not be necessary, that the policy would be issued and would be in effect immediately.

Under similar circumstances the court in the Pipes case held that under the provisions of Art. 5056, R.C.S. (now Art. 21.02, Insurance Code, V.A.T.S.) the defense that insured did not sign the application would not defeat recovery.

Under the undisputed facts in this case the fact that Brown did not sign the application is not a defense to plaintiff’s suit.

Neither was the defense of no insurable interest available to defendant. The contract with plaintiff made no provision requiring insurable interest. It is not against public policy for a person with no insurable interest to be named beneficiary. V.A.T.S., Insurance Code, Art. 3.49-1, § 4; Art. 3.49.

On appeal defendant contends there was no enforceable contract between plaintiff and defendant because a full year’s premium was not paid at the time the application was signed.

The application shows “amount of premium paid with this application, $2.57.” The receipt acknowledged the receipt of $2.57. It was signed by an agent of the Company. The receipt recited that it, the receipt, was to be used only “if payment is made at the time the application is signed.” The money was received by the defendant.

It is undisputed the payment was made at the time the application was signed. Plaintiff paid all that she was required by defendant’s agents to pay for temporary insurance and was assured by them the insurance was in effect “as of now.”

As stated previously, defendant did not decline to issue a policy because of failure of Brown to sign the application but denied solely because of its claim plaintiff had no insurable interest.

The binding receipt itself evidences the authority of the agent to detach and deliver the same upon the condition that “payment is made at the time the application is signed.”

We hold that the terms of the receipt were met, and that plaintiff discharged her burden of proof to show the temporary insurance was in force and effect at the time of Brown’s death.

Judgment of the trial court is reversed to the extent plaintiff was denied any re-, covery, and judgment here rendered that plaintiff have judgment against defendant for the sum of $1,000, the amount contracted for as temporary insurance.

That part of the judgment denying plaintiff recovery of penalty and attorney’s fee is affirmed. United Founders Life Insurance Co. v. Carey, 363 S.W.2d 236 (Sup., 1962); Colorado Life Co. v. Teague, 117 S.W.2d 849 (Eastland Civ.App., 1938, dism.).

Affirmed in part; reversed and rendered in part as indicated.


author: DIXON, Chief Justice.

text:
    LONG FALLS REALTY COMPANY, Appellant, v. ANCHOR ELECTRIC CO., Inc., et al., Appellees.
    No. 16724.
    Court of Civil Appeals of Texas. Dallas.
    May 20, 1966.
    Rehearing Denied July 1, 1966.

      Goldberg, Akin, Gump, Strauss & Hauer and Robert L. Meyers, III, Dallas, for appellant.
    Turner, Atwood, Meer & Francis and Robert C. McGuire and Esir Tobolowsky, Dallas, for appellees.
   DIXON, Chief Justice.

This appeal requires us to determine the superiority between the claims of the holder of a recorded judgment lien and the as-signee of a recorded deed of trust lien.

The litigation originated when Anchor Electric Company, Inc., filed a garnishment suit against T. W. Blandin, Trustee, who was holder of funds in the sum of $19,-531.04. These funds were the amount collected at a trustee’s sale in excess of the amount needed to discharge a first mortgage on real estate.

Anchor Electric Company, Inc., was awarded judgment for $3,936.91. No one attacks Anchor’s judgment so it will be affirmed. But ownership of the balance of $15,594.13 is in dispute between the rival lien holders, who are appellant Long Falls Realty Company and appellee Sturbridge, Inc. Both of them are among the creditors impleaded by Anchor Electric Company, Inc., in its garnishment suit. Iij a nonjury trial judgment was rendered in favor of appellee Sturbridge, Inc.

FACTS

The facts are practically undisputed. The events in chronological order which gave rise to this controversy are as follows:

1. On July 8, 1959 L. A. Peterson, John T. Harris and R. F. Ford, Jr., owners of property known as 7135 Carpenter Freeway in Dallas, placed a first mortgage in the amount of $40,000 against their property. It was this mortgage which was foreclosed. Neither the first mortgage nor the foreclosure are in dispute.

2. In January 1961 John T. Harris, for a consideration of $5,000, conveyed his one-third interest to L. A. Peterson, who thus became owner of a two-thirds interest in the real estate. Peterson was engaged in business as a building contractor, with his principal office located on the property.

3. In May 1961 Peterson incorporated his business under the name L. A. Peterson, Inc. The corporation took possession of the property and continued the construction business with its principal office at the same location.

4. On May 31, 1961 L. A. Peterson by warranty deed conveyed his two-thirds interest in the real estate to L. A. Peterson, Inc. This deed was not recorded until some time later, a fact which has given rise to this controversy.

5. On January 18, 1962 R. F. Ford, Jr., by warranty deed conveyed his one-third interest in the property to L. A. Peterson, Inc. This deed was duly recorded.

6. On February 18, 1963 the corporation executed two deeds of trust: one to Business Funds, Inc., for $200,000, which deed of trust was filed for record on February 28, 1963; the other to Growth Capital, Inc., for $300,000, which instrument was not filed for record until February 10, 1964. These loans were secured by mortgages on several pieces of real estate, including the property here involved.

7. On June 19, 1963 the above mortgage to Business Funds, Inc., was assigned to appellee Sturbridge, Inc.

8. On January 6, 1964 an abstract of judgment in favor of Long Falls Realty Company against L. A. Peterson was filed in the Abstract of Judgment Records of Dallas County.

9. On April 6, 1965 the warranty deed of May 31, 1961 from L. A. Peterson to L. A. Peterson, Inc., was filed for record in the Deed Records of Dallas County. This was the deed by which Peterson conveyed his two-thirds interest in the real estate to the corporation.

L. A. Peterson testified that as of the date of the incorporation of L. A. Peterson, Inc., he owned all but two of its 25,000 shares of stock. His wife owned one share and his brother the other share. The original directors where L. A. Peterson, R. C. Peterson, Frank Zitzman of Growth Capital, Inc., James R. Cash and B. W. Morris.

The corporation immediately went into possession of the premises at 7135 Carpenter Freeway and continued in possession until the foreclosure.

In the main the business procedures of the corporation were much the same as when L. A. Peterson individually was the owner. However, Peterson testified that the deeds of trust to Business Funds, Inc., and Growth Capital, Inc., were signed by him as President upon instruction of the Board of Directors as reflected by the minutes of the corporation.

On April 6, 1964 Peterson’s stock, in fact all of the stock in the corporation, was foreclosed on by Growth Capital, Inc., and Stur-bridge, Inc., and they took title to the stock. Peterson was ousted as President. He again became President on June 30, 1965. At the time of the trial he owned 15,000 shares of stock which he had purchased for $5.00 and other considerations. Sturbridge, Inc., owned the other 10,000 shares.

OPINION

No findings- of fact and conclusions of law were requested and none were filed by the trial court. Therefore “we must assume that the court’s findings were all in support of its judgment; and the judgment must be affirmed if there is any evidence of probative force to support it upon any theory authorized by law.” City of Abilene v. Meek, Tex.Civ.App., 311 S.W.2d 654, 656 (Writ ref.).

It is appellant’s contention in this case that as a matter of law the abstract of judgment claim of appellant is superior to the deed of trust lien of Sturbridge, Inc., with respect to two-thirds of the fund in question, therefore we should reverse the trial court’s judgment and render judgment for two-thirds of the balance of $15,594.13.

Appellant relies on Art. 6627, Vernon’s Ann.Civ.St., which provides that “* * * all deeds of trust and mortgages shall be void as to all creditors * * * unless they shall be acknowledged or proved and filed with the clerk, to be recorded as required by law; * * *.” It will be noted that Peterson’s deed to the corporation of his two-thirds interest in the real estate was executed prior to the recording of appellant’s judgment and prior to the execution and recording of appellee’s deed of trust; but it was not recorded until after the recording of appellant’s judgment and after the execution and recording of appellee’s deed of trust.

Nevertheless, appellee contends that since the corporation had actual physical possession of all the premises at 7135 Carpenter Freeway prior to the recording of appellant’s judgment and at all times thereafter until the foreclosure sale, appellant was put on notice to inquire of L. A. Peterson, Inc., the occupant, concerning its claim. And if such inquiry had been made appellant would have learned that L. A. Peterson, Inc., claimed title to all the premises under its unrecorded deed from L. A. Peterson individually.

We agree with appellee. It is well established in our law that actual possession of real property is prima facie evidence of ownership and puts the world on notice to inquire of the person in possession concerning the latter’s claim. This is true even when the person in possession of the entire tract of land holds record title to only a portion of it. The rule is applicable to holders of recorded judgments. Wimberley v. Bailey, 58 Tex. 222; Collum v. Sanger Bros., 98 Tex. 162, 82 S.W. 459, 460, rehearing denied 98 Tex. 162, 83 S.W. 184; Newman v. Phalen et al., 214 S.W. 958 (Tex.Civ.App., no writ hist.); Kelly-Springfield Tire Co. et al. v. Walker, Tex.Civ.App., 149 S.W.2d 195 (error dism.); Garner v. McKinney, Tex.Civ.App., 255 S.W.2d 529. See also First State Bank of Amarillo v. Jones, 107 Tex. 623, 183 S.W. 874; Hayward Lumber Co. v. Bonner, 56 Tex.Civ.App. 208, 120 S.W. 577; Mattfeld v. Huntington, 17 Tex.Civ.App. 716, 43 S.W. 53; Garth v. Stuart, 59 Tex.Civ.App. 391, 125 S.W. 611 (wr. ref.); Boedefeld v. Johnson, Tex.Civ.App., 201 S.W. 1027.

In Collum v. Sanger Bros., supra, our Supreme Court said:

“In the recent case of Ramirez v. Smith, 94 Tex. 184, 59 S.W. 258, it was expressly stated as a general rule that the fact that the possession of one holding land is consistent with the recorded title does not exempt a purchaser from the duty of inquiring of him as to any other title. We think it a safe and salutary rule to require of a prospective purchaser of land to ascertain whether any other be in occupancy of it; and, if there be such possession, to go to the possessor and ascertain the nature and extent of his claim. Possession is evidence of title, and, it seems to us, that common prudence and common honesty demand this course. If so, the possession should be notice to him; and, if notice to a purchaser, it is notice to a creditor.”

Appellant asserts that L. A. Peterson, Inc., was nothing more than the alter ego of L. A. Peterson. . That fact, if it is a fact, does not help appellant’s cause. Alter ego corporations are not of themselves illegal. Commonwealth of Massachusetts v. Davis et al., 140 Tex. 398, 168 S.W.2d 216, 224. It is not alleged in this case that A. L. Peterson was guilty of fraud in changin'g his individually owned business into a corporation, or that his conveyance of his real estate to the corporation was for the purpose of defrauding his creditors, or that he deliberately or intentionally failed to record said conveyance. The evidence is that the deed was mislaid in a lawyer’s office when the lawyer moved his office from one building to another. The record does not show that appellant’s debt which furnished the basis for its judgment was in existence when Peterson conveyed his property to the corporation in May 1961.

Appellant’s brief presents only one point on appeal in which it takes the position that its abstract of judgment claim is superior as a matter of law to the lien of appellee because appellant had no notice, actual or constructive, “of the unrecorded claim of Sturbridge.” The assignment of the Business Funds, Inc., mortgage to Stur-bridge was not recorded, but the fact of the assignment is not disputed. The mortgage from L. A. Peterson, Inc., to Business Funds, under which Sturbridge claims by assignment, was filed for record prior to the recording of appellant’s judgment. It was Peterson’s deed of his two-thirds interest to the corporation which was not filed until after the recording of appellant’s judgment.

Appellant’s point on appeal is overruled.

The judgment of the trial court is

Affirmed.


text:
    YOUNG & COMPANY OF HOUSTON, Appellant, v. Robert S. CALVERT et al., Appellees.
    No. 11418.
    Court of Civil Appeals of Texas. Austin.
    June 22, 1966.
    Rehearing Denied July 13, 1966.
    Eikel & Goller, Robert Eikel, Houston, for appellant.
    Waggoner Carr, Atty. Gen., Hawthorne Phillips, First Asst. Atty. Gen., T. B. Wright, Executive Asst. Atty. Gen., H. Grady Chandler, Kerns B. Taylor, Asst. Attys. Gen., Don Bishop, Austin, for ap-pellees.
   PHILLIPS, Justice.

This is an appeal from a judgment of the District Court holding that taxes imposed by the Texas Limited Sales, Excise, and Use Tax Statute, Article 20.01 et seq., of Title 122A, Taxation-General, Vernon’s Civ.St., are lawfully collectible on the amounts paid by a contracting stevedore to lease machines and equipment used in loading and unloading deep sea vessels engaged in foreign commerce.

We affirm this judgment.

Appellant Young & Company of Houston are contracting stevedores who, under contracts with owners and operators of oceangoing cargo vessels, load and unload such vessels at the Port of Houston, Harris County, Texas. Manual laborers (longshoremen) physically handle these cargoes on and off the vessels. Appellant furnishes these men tools for loading and unloading such as fork-lift trucks to handle palletized cargoes, grain trimming machines to trim and stow grain cargoes, heavy-lift machines for cargoes weighing several tons and squeeze machines to handle bales of cotton.

All of these machines and equipment used by appellant in carrying on its business are leased and the lease cost is figured into and is a part of the cost of doing business.

The appellee Comptroller determined that the abovementioned tax was due upon the lease rental paid by appellant to the lessors of the machines and equipment and made a deficiency tax assessment accordingly. The tax plus accrued interest was paid under protest and suit was filed pursuant to statute to recover such amounts as unlawfully assessed and collected after refund was refused.

Appellant is before this Court on a single point of error, being that of the trial court in holding the tax lawful on the machines and equipment the lease cost of which is here taxed were used by the stevedore as a necessary adjunct to carrying on its business, a business which is an integral part of foreign commerce. The sales and use tax here imposed is therefore an impost upon foreign commerce and its imposition is unlawful because (a) an exercise by a State of a power granted exclusively to the Congress of the United States by the Commerce Clause of the Constitution of the United States and (b) an impost or duty on imports and exports also forbidden to the States by the Constitution. Since the Texas Statute recognizes and exempts from taxation subjects which are prohibited to it by the Constitution of the United States, the tax is unlawful under the Texas Statute also.

We overrule this point.

Art. 20.02 imposes “a limited sales tax at the rate of two per cent (2%) on the receipts from the sale at retail of all tangible personal property within this State.”

Article 20.01(D) defines “receipts” as meaning “the total amount of the sale or lease or rental price * * * of the rental sales of retailers * * * ”

Article 20.04(A) exempts “the receipts from the sale, lease or rental of and the storage, use or other consumption in this State of tangible personal property the gross receipts from the sale, lease or rental of which, or the storage, use or other consumption of which, this State is prohibited from taxing under the Constitution or laws of the United States or under the Constitution of this State.”

51 American Jurisprudence, Taxation, Sec. 206 states the following:

“The fact that property is used or employed in interstate or foreign commerce does not of itself render it immune or exempt from nondiscriminatory local taxation. This rule includes intangible as well as tangible property. * * * It is held, accordingly, that a state may levy taxes on property used in interstate or foreign commerce, located therein, by whatever name they may be called, that are fixed by reference to the value of the property, if they are not imposed because, of such use, and if they amount to no more than would be legitimate as an ordinary tax upon the property, valued with reference to the use in which it is employed.”

While generally a State is prohibited from imposing a tax upon the business or privilege of engaging in interstate or foreign commerce, a State excise tax which affects such commerce only incidentally or indirectly may be entirely valid “where it is clear that it is not imposed with the covert purpose or with the effect of defeating rights under the commerce clause. Thus, the fact that a state tax increases the cost of doing business * * * does not necessarily render it an unconstitutional burden on such commerce.” 51 Am.Jur. 268-270, Taxation, Sec. 207.

The tax here is not imposed upon appellant’s stevedoring operation or its receipts therefrom, hut the tax is imposed upon an independent transaction preparatory to such operation. This case is controlled by that line of decisions such as McGoldrick v. Berwind-White Coal Mining Company, 309 U.S. 33, 60 S.Ct. 388, 84 L.Ed. 565 (1940) and, more recently, Canton Company of Baltimore v. Comptroller of Treasury, Supreme Court of Maryland, 231 Md. 294, 190 A.2d. 92.

In McGoldrick the Court upheld the New York Sales Tax levied on coal shipped into New York from Pensylvania and construed the tax as being imposed on a local transaction which the State had a right to tax and not as an undue burden on interstate commerce as such. The Court held that it was not the purpose of the Commerce Clause to relieve those engaged in interstate commerce of their just share of the State tax burdens merely because the incidental or consequential effect of the tax is the increase of the cost of doing the business. That the tax imposed was for State purposes and that the State was not exercising any power which the Constitution has conferred upon the Congress. That it is only when the tax operates to regulate commerce between the States or with foreign nations to an extent which infringes the authority conferred upon Congress that the tax can be said to exceed the constitutional limitations. The Court further held that the tax was equal and that it did not aim at or discriminate against interstate commerce. That it was laid upon every purchaser within the State, of goods of consumption, regardless of whether they have been transported in interstate commerce.

In Canton Company of Baltimore, the Court upheld a State sales tax on the amount paid for leasing, loading and unloading equipment of a stevedoring company whose business was 98 percent foreign commerce and 2 percent interstate. The facts are similar to the case at bar. Here the Court held that the tax was not imposed directly upon the stevedoring operation. The Court held that the tax was on the continued right to possession of the leased property and was not a tax on the use of the property even though the amount of the tax was measured by the amount of the tonnage handled.

The tax in question here is a transaction tax and not a use tax. See Calvert v. Canteen Co., 371 S.W.2d 556, Supreme Court.

Appellant has cited cases such as Puget Sound Stevedoring Company v. Tax Commission of the State of Washington, 302 U. S. 90, 58 S.Ct. 72, 82 L.Ed. 68 (1937), and Joseph v. Carter & Weeks Stevedoring Co., 330 U.S. 422, 67 S.Ct. 815, 91 L.Ed. 993 (1947), in addition to others, which, in our opinion, are not applicable here. Both of these cases involved a general gross receipts tax on the privilege of doing the business of stevedoring.

Appellant is a domestic corporation doing business in Texas. Since it receives the same benefits as any other domestic corporation it must shoulder its share of the tax burdens. The tax in question is applicable to all lessees in Texas leasing equipment such as that used by appellant. The fact that appellant’s equipment is used in the furtherance of foreign commerce is not controlling here. The tax is imposed on a local transaction and is levied in a field remaining to the States for purposes of revenue.

The judgment of the trial court is affirmed.

Affirmed.


author: DAVIS, Commissioner.

text:
    Heman H. McGUIRE, Appellant, v. Roy HAMMOND et al., Appellees. W. E. STEVENS, d/b/a East End Motor Sales, Appellant, v. Roy HAMMOND et al., Appellees. W. L. GEARHART, Appellant, v. Roy HAMMOND et al., Appellees.
    Court of Appeals of Kentucky.
    July 1, 1966.

      H. R. Wilhoit, Grayson, for appellant McGuire.
    W. H. Counts, Olive Hill, for appellant Stevens.
    Ora F. Duval, Olive Hill, for appellant Gearhart.
    Thomas P. Bell, Fowler, Rouse, Measle & Bell, John Y. Brown, Lexington, for appellees.
   DAVIS, Commissioner.

Three separate appeals have been consolidated and will be disposed of in this opinion. The litigation before us arose from a taxpayers’ suit instituted against numerous defendants, including the members of the Board of Education of Carter County. The complaint and amendments to it presented numerous charges of illegal expenditures of school funds by the Board of Education, and sought recoupment of the alleged illegal expenditures in behalf of the Board. One of the defendants in the action was appellant Hernán H. McGuire, then superintendent of the Board of Education of Carter County. The special judge who tried the case heard the evidence without the intervention of a jury, and dismissed most of the claims which had been asserted. Judgments in substantial sums were awarded against the appellants on various facets of the case. These appeals challenge the judgments on several grounds which we shall discuss without first enumerating them.

At the outset of the case the appellants moved that the complaint be dismissed for its failure to allege that prior demand had been made of the Board of Education to prosecute the claims. An amended complaint was filed in which it was admitted that no prior demand for suit had been made, but in which it was asserted that such a demand would have been futile. The trial judge heard evidence touching the question of the futility of such a demand and concluded that the demand would have been futile. Our review of the voluminous record convinces us that the trial court was correct in this determination. It is apparent from the record that the Board was substantially under the domination of the appellant, McGuire, the superintendent. Inasmuch as McGuire was charged with deliberate misuse of his position for his own personal profit, it seems clear that a demand for the Board to institute the suit would have been unavailing. Farler v. Perry County Bd. of Ed., Ky., 355 S.W.2d 659, is urged by appellants as dispositive of this point in their favor. In Farler we observed that since the claims sued on included actions against persons and firms other than members of the Board, it could not be presumed that the Board would have declined to file suit. In this case the complaint sought recovery against persons other than Board members, but we have no matter of presumption that the Board would not sue. There is substantial evidence, supported by clear inferences, that the Board would not have undertaken any portion of the litigation. We hold that there is no merit in this assignment of error.

The next preliminary question presented by all appellants relates to their demand for trial by jury. CR 38.02. The trial judge denied the demand for trial by jury, and in doing so observed: “ * * * but because of the long period of time anticipated necessary to hear the case, and the many and complicated issues of fact involved, this motion was denied.” Appellants point to Section 7, Kentucky Constitution, in which it is provided:

“The ancient mode of trial by jury shall be held sacred, and the right thereof remain inviolate, subject to such modifications as may be authorized by this Constitution.”

Appellants also rely on Shatz v. American Surety Co. of N. Y., Ky., 295 S.W.2d 809 and Dairy Queen, Inc. v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44. We have no quarrel with those authorities. However, it is our view that by reason of the complicated issues involved in this proceeding, most of them interwoven with other phases of the litigation, and nearly all of them centering about alleged illegal acts by appellant McGuire, this action is one properly cognizable in equity rather than at common law. In a very definite sense this case may be designated as one involving complicated accounts and claimed violations of the fiduciary duties of appellant McGuire in his position as superintendent of the public schools of Carter County. In this posture, the case becomes one for determination by the judge without the intervention of a jury. See Hoaglin v. Carr’s Administratrix, Ky., 294 S.W.2d 935; Commercial Union Assur. Co. v. Howard, 256 Ky. 363, 76 S.W.2d 246 and cases there discussed.

We turn now to the assignments of error as designated by appellant, McGuire, individually :

THE EXPENSE ACCOUNT OF APPELLANT McGUIRE

The trial court awarded judgment for appellees against McGuire in the sum of $9,031.30, being the aggregate sum of travel expenses paid to McGuire by the Board for the period beginning September 30, 1955, to June 30, 1960. (A plea of the five-year statute of limitation was considered to preclude any claim for expense items prior to September 30, 1955, KRS 413.120.) At pain of over-simplification, it may be said that the record discloses that the Board did pay McGuire the stated sum for travel expenses, and that there had been no express previous authorization for McGuire to incur the specific expenses. Claim vouchers for the expenses had been duly filed with the Board by McGuire during the period. These claims had been approved and paid by the Board in normal course. Many of the written claims-as filed with the Board were no longer extant at the time of trial. It was explained that the Board’s practice had been to preserve the vouchers until after an audit by the Auditor of Public Accounts, after which the vouchers were destroyed.

Many of the claims reflected travel by McGuire outside of Carter County. Ap-pellees rely on Beauchamp v. Snider, 170 Ky. 220, 185 S.W. 868. That decision is not authoritative here because it was posited upon the then existing statute which precluded the Board’s paying expenses for the superintendent outside the county. The present statute contains no such inhibition. KRS 160.410. In the main, appellant McGuire admitted his inability to give specific detail as to the nature of the school business he had performed while incurring the expenses. However, he insisted that in each instance he was performing school business, and there is no substantive evidence to the contrary. In a few instances the expense accounts reflected that the Board had paid hotel bills carrying charges for persons in company with McGuire. One or two of these hotel bills indicated a registration for “Mr. and Mrs. McGuire” at times subsequent to McGuire’s divorce, and while he was unmarried. He disclaimed detailed information as to these, and in some instances it is not determinable from the record whether the Board had actually paid some of these items.

In this state of the record it is our view that the trial court erred in simply awarding the appellees full recovery of the entire claim of $9,031.30. The contract between McGuire and the Board, as well as the Board’s minutes, reflect that McGuire was to be reimbursed for expenses incident to school business. Manifestly it would have been impracticable, and in our view unnecessary, for McGuire to have obtained prior Board authority for every item of expense. We hold that the appellees did not prove illegal expenditure of school funds incident to the allowed travel expenses, and reverse so much of the judgment as permits recovery of appellant McGuire of the item of $9,031.30 for travel expenses.

THE AUTOMOBILE INSURANCE

Judgment went against appellant McGuire in the sum of $1,510 based on a showing that McGuire had received that sum from an insurance company which carried collision and liability insurance on a Dodge automobile owned by the Board. It appears that McGuire had obtained the insurance and paid the premiums for it. The car was damaged in a collision; McGuire was driving it at the time of the accident. It was shown that McGuire had paid $250 of the insurance proceeds to the person whose vehicle was involved in the collision. However, it was also shown that approximately $1,100 of the insurance proceeds was paid on the purchase price of a substitute automobile and title to the new car was in the Board. We do not reach the question whether McGuire had an insurable interest, as that is not before us. In any event we consider that any funds he received from the insurance company would have been impressed with a constructive trust in favor of the Board. Consequently, it was proper to award judgment against McGuire for any portion of the insurance proceeds which he did not pay over to the use and benefit of the Board. Inasmuch as the record reflects that he did pay about $1,100 for this purpose, it was error to award judgment against him for the entire sum of $1,510. The judgment is reversed as to this item, with directions to allow credit to McGuire of $1,100 on this phase of the judgment, plus premiums paid.

THE CARPENTER CHECKS

The trial judge, as part of his findings of facts, stated:

“(6) That the Carpenter Body Works, of Indiana, from whom the Carter County Board had purchased school bus bodies, made refunds on undelivered bodies as follows:
October 19, 1955 $4,079.80
November 19, 1956 $2,026.56
March 27, 1959 $2,147.89
and checks for these amounts were received by and cashed by the defendant, McGuire. Although defendant denied having seen the checks, the evidence including a handwriting expert was convincing.”

As a further part of the trial court’s findings of fact it was pointed out that during the course of the hearing, incident to a court-ordered physical inventory of school buses, “[A] clandestine, covert effort was made to defeat the true findings of the inventory order by hastily moving into Carter county (sic) four used school busses (sic) from Ohio and Michigan school districts and mingling them with the vehicles on hand. The four spurious vehicles were positively identified, by out of state witnesses, familiar with them.”

Pursuant to those factual findings, the trial judge awarded the appellees judgment against appellant McGuire for sums equal to the refunds, as above set out. As to the first two items of refund we find that the record abundantly supports the trial judge’s factual findings and the judgment based thereon. It is true that McGuire offered evidence to the contrary* but the circumstances as well as the affirmative testimony are quite ample to sustain the court’s finding.

With respect to the item of $2,147.89 the record indicates that the Board recovered that sum, on the very item, by voluntary payment to it of the money by appellant W. E. Stevens. In view of the uncontradicted testimony that the Board has already recouped that sum there is no basis for allowing a second recovery of it from McGuire. Accordingly, the judgment is reversed insofar as it allows recovery against McGuire for the $2,147.89, and is affirmed as to the recovery of the items of $4,079.80 and $2,026.56.

Appellants refer to alleged incompetent testimony of witnesses, Morris, Bass and Chase. We find no testimony in the record of these witnesses, hence we are unable to evaluate the claim of error as to their evidence.

THE WHITEHURST CLAIM

Evidence was heard to the effect that E. B. Whitehurst had made a claim against the Board for a sum greater than was due to him for services rendered. In fact, Whitehurst testified that he had done this and that he had made payment to McGuire of the excess in the sum of $6,178.60, by way of a “kick-back.” There was sufficient evidence to warrant the court’s finding of fact in connection with this incident, despite the denial by McGuire. The court awarded judgment against McGuire and Whitehurst in favor of appellees for the $6,178.60. Whitehurst has not appealed from the judgment as to him.

Appellant McGuire urges that the judgment must be reversed as to the White-hurst claim because the trial judge held a hearing outside the territorial limit of the circuit court district. CR 77.02. We hold that there was no “hearing” within the meaning of CR 77.02, despite the fact that the trial judge did attend the taking of the evidence of Whitehurst. It should be noted that Whitehurst was critically ill and under close care of physicians. It became apparent that his deposition should be taken at Ashland, Boyd County. Conflicting reports were received from the doctors as to whether Whitehurst could give his deposition. One of the doctors reported that the deposition could be taken if it were limited to two hours and done under appropriate limitations looking toward the welfare of the health of the witness. The trial judge announced that he intended to be present at the deposition and “control it as completely as possible” insofar as any harmful effect to the witness occurred. It is true that the judge ultimately said that the deposition would be a “hearing,” but we do not find that controlling. We consider that the judge exercised a sound discretion by being present in order to prevent any possible danger to the witness in these circumstances. There is no suggestion that appellant was in any manner prejudiced by the judge’s presence. Even if his being there could be called error, which we doubt, it certainly was not prejudicial. CR 61.01 precludes our using the incident as a basis for reversal. Accordingly, the judgment for $6,178.60 as to the Whitehurst claim is affirmed.

We turn to consideration of the separate assignments of error in behalf of appellants W. E. Stevens and W. L. Gearhart. We preface this phase of the opinion by noting that judgment was entered against McGuire, Whitehurst and Gearhart, jointly and severally, for $1,938.40, as the aggregate sum shown to have been illegally expended from the Board’s funds for services and supplies to a building owned by McGuire and Gearhart. Judgment was entered against Whitehurst and Gearhart for $175.18 for supplies furnished Gearhart and paid for from the' Board’s funds. Judgment was entered against W. E. Stevens for certain excess payments for buses and a truck; the aggregate of the judgment for these items is $8,821.62.

THE TESTIMONY OF WILLIAM S. DURHAM

Appellant Stevens contends that the testimony of William S. Durham was incompetent. Durham testified that he serves as a supervisor for Chrysler Corporation and his duties included “the supervisions of entries of dealers’ orders and posting the dealer record page when the order is shipped.” The original invoices of the company are printed on a data processing machine. According to the witness, there was no means for learning the identity of the personnel making the original entry upon the records. The records were used in the regular course of business of the corporation. In these circumstances we think it is plain that the evidence of the witness was competent. The authorities cited for appellant on this point recognize that evidence of this type is admissible if sufficient reason is shown why the person who made the original entries is unavailable. See Baskett, Nichols & Norment v. Rudy, 186 Ky. 208, 217 S.W. 112; In re Independent Distillers of Ky., D.C., 34 F.Supp. 724; and Edwards v. Whitley City Sales, Inc., Ky., 246 S.W.2d 1018.

SUFFICIENCY OF EVIDENCE AS TO STEVENS

Appellant Stevens asserts that the judgment against him relating to the overpayment for buses and a truck is not supported by the evidence. We conclude that there is no merit in this contention in view of the record, and particularly in view of the flagrant effort to foil the court’s physical inventory by the importation of spurious buses. Stevens’ own explanation that he did not keep his own books and did not understand about them is not of such high probative value as to refute the host of circumstantial and direct evidence against his position.

SUFFICIENCY OF EVIDENCE AS TO GEARHART

Appellant Gearhart urges that the evidence against him is insufficient to support the judgment against him. He testified that he had never requested that any money of the Board be paid in his behalf, and that he had no knowledge that any such money had been paid. Assuming this to be true, the fact remains that there was competent evidence reflecting that payments of the Board’s funds were indeed credited to the account of Gear-hart. He received the benefit of the payments and recovery of them from him is warranted under the theory of “unjust enrichment” or “money had and received.”

STATUTE OF LIMITATION AS TO CLAIM AGAINST STEVENS

It is contended that the five-year statute of limitation bars recovery from Stevens as to the alleged truck overpayment of $3,738. on July 10, 1956. The original complaint was filed within the five-year period, but it did not make specific reference to the truck overpayment. The language of the original complaint in this respect is:

“That during the fiscal year of 1955-56, the Board paid to Stevens the full purchase price for two dump trucks but that Stevens delivered a flat bed truck and a dump truck without the body which vehicles were approximately $2,000. less value in cost than the full amount received by him for said trucks.”

An amended complaint was filed December 14, 1961, in order to conform to the proof; in the amendment the exact details of the 1956 truck transaction were recited. It is our conclusion that CR 15.03 governs this situation, since the claim asserted in the amended complaint “arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading.” The essence of the original complaint as it related to Stevens had to do with alleged irregularities in the accounts between the Board and Stevens with respect to the trucks and buses. The original complaint “attempted” to set forth details of the transaction or occurrence, and the amended complaint merely perfected that statement. Thus, the amended complaint related back to the date of the original complaint.

CLAIMS AGAINST GEARHART

The trial judge entered judgment for various sums against appellant Gearhart arising out of services and materials allegedly furnished for a building owned by Gearhart and McGuire. We have heretofore discussed the question whether there was sufficient evidence to sustain the judgment. Gearhart levels other attacks upon the judgment against him. He contends that the five-year statute of limitation bars recovery of $708.95 of the judgment and that there was no pleading seeking recovery of $433.95 allowed against him. Additionally, he urges that he was not named as a party defendant, individually, but only in his capacity as a member of the Board of Education.

It is significant that early in the course of the trial it was disclosed that certain Board funds had found their way to Whitehurst in payment of obligations owed on the McGuire-Gearhart building. Gearhart specifically stated in the record that he had not known of this, but desired to repay any such sum or sums so paid. The original complaint did not seek specific recovery from Gearhart on these items, but an amended complaint did. The original complaint was well within the five-year period, but the amendment was too late. However, the representation by Gearhart of his desire to repay any such sums was made before the expiration of the limitation period. In light of the manner in which the parties treated these items, we conclude that CR 15.02 is controlling, and that the statute of limitations is inapplicable.

We note that there was never any pleading seeking recovery of $433.95 against Gearhart. To the extent that the judgment against him permits recovery of that sum it is reversed, but it is affirmed in all other respects.

We attach no significance to the claim that Gearhart was not named as a defendant. He was named. The fact that he was also designated as a member of the Board of Education did not serve to exclude his personal responsibility.

The judgments in the consolidated cases are affirmed in part and reversed in part, with directions to enter new judgments conforming to this opinion.


author: MOREMEN, Judge.

text:
    Harold MOBERLY et al., Members of and Constituting the Kentucky Alcoholic Beverage Control Board of the Commonwealth of Kentucky, Appellants, v. James R. BERRY et al., Appellees.
    Court of Appeals of Kentucky.
    July 1, 1966.

      Frank M. Dailey, Frankfort, James R. Watts, Brandenburg, for appellants.
    William A. Young, Frankfort, for appel-lees.
   MOREMEN, Judge.

Appellees, James R. Berry and Lucille Berry, made application for a retail package liquor license for premises to be located on Kentucky Highway 44 between Flaherty in Meade County and Vine Grove in dry Hardin County.

On May 11, 1964, the appellants, ABC Board, denied the application for a license.

On May 16, 1964, an appeal was had to the Franklin Circuit Court.

On August 4, 1964, judgment was entered reversing the Board’s order and directing that a license be issued to appellees.

On August 27, 1964, the court, upon its own motion, entered an order in which it was recited that the action had been submitted to the court without order and that all the attorneys of record had not been notified of the motion for submission, and it was adjudged that the order and judgment entered on August 4, 1964, reversing the decision of the ABC Board be set aside and held for naught.

On September 8, 1964, an order was entered docketing the case for submission for final judgment on September 16, 1964.

On October 10, 1964, appellees moved to set aside the order of August 27 upon the grounds that under CR 59.04, the court had lost control of the judgment after ten days had elapsed and that the order setting aside the judgment entered August 27 was void and of no effect.

On November 10, 1964, after a hearing, the court being of the opinion that it had lost control of the cause by August 27, 1964, under CR 59.04, declared the order entered on that date to be a nullity, the effect being that the judgment entered August 4, 1964, which reversed the Board, was restored to full force and effect.

On November 25, 1964, appellants filed notice of appeal from the order and judgment entered November 10, 1964.

It is argued by appellees that the notice of appeal was defective because under CR 73.03 it failed to “designate the judgment or part thereof appealed from” and that the order of November 10, 1964, from which the notice of appeal recited that the appeal had been taken, was no more a final judgment or appealable order than would have been an order overuling a motion for a new trial.

After a period of leniency following the adoption of the Civil Rules, and after several warnings (White v. Hardin County Board of Education, Ky., 307 S.W.2d 754; United Mine Workers of America v. Morris, Ky., 307 S.W.2d 763) in Hawks v. Wilbert, Ky., 355 S.W.2d 655, where a notice of appeal stated that the appeal was “from an order overruling the plaintiff’s motion for a new trial,” the Court held the notice to be defective, saying:

“In considering this and similar failures of counsel to follow the rules of appellate practice, the Court is confronted with many hard decisions. The choice presented is whether it is better to adhere strictly to the rules with some seemingly harsh decisions resulting, or to permit a substantial compliance when no prejudice is shown to have been occasioned by the dereliction. This problem has plagued the Court many times. However, rather than having to decide whether each dereliction is prejudicial, the Court has adopted the policy of strict compliance in the belief that the legal profession should by now be adequately informed on these rules.”

We agree with counsel for appellees that it is now well settled that ordinarily a notice of appeal, which designates as the object of the appeal the order overruling a motion for a new trial, will not be treated as valid by this Court; but we do not believe the foregoing cases or the language quoted above intends forever to exclude all attempts to appeal from an order which may not be the enforceable judgment in the case.

The judgment which was first entered on August 4 had vitality until August 27. The time in which a notice of appeal may be filed had not elapsed and, before the thirty days had run, the trial court erroneously set aside the judgment. The judgment of August 4 had reversed the Board’s order. The order of August 27 placed the parties in the same position in which they were when the case was appealed. It would be strange indeed if appellants should be required to serve notice of appeal from a judgment by which they were not aggrieved and which by order of the circuit court had been set aside.

The order of November 10 gave life to a judgment which had been in a state of suspended animation. Without that final order the judgment of August 4 would have no force. To deny appellants the right of appeal at this time when their only act had been to rely on the mistaken actions of the circuit court would be a miscarriage of justice not required by the Civil Rules. Therefore, we hold that the circuit court’s intervention suspended the running of the thirty-day-appeal period until November 10, when the court last acted on the case.

The primary substantive issue to be decided is whether the circuit court was justified in reversing the decision of the ABC Board which denied appellees the license for which they had filed application. The Board, which supported the finding of the Distilled Spirits Administrator, made these findings of fact:

“1. The proposed premises for which the license was sought was on a state highway and is an unincorporated isolated area.
2. There was inadequate police protection in the area where the licensed premises are proposed to be located.
3. Other alcoholic beverage outlets in the general area of the proposed premises are adequate to serve this sparsely populated portion of Meade County.
4. The officials of Meade County, Kentucky, including the County Judge, members of the Fiscal Court, and the County Court Clerk were present and objected to the issuance of said license.”

The foregoing findings of fact were amply supported by testimony. Within a five-mile radius of the proposed premises there were fourteen retail beer outlets and three whiskey outlets. It was shown that this was a sparsely settled farming community. Various county officials testified as to police problems with law enforcement in this area and told of the difficulties in connection with supervision of the various taverns spread throughout the county. ■

Appellees argued that since the quota for package liquor licenses in Meade County had not been filled and because the personal qualifications of appellees had been established it was an abuse of administrative discretion to have denied appellees the license which they sought.

In Alcoholic Beverage Control Board v. Woosley, Ky., 367 S.W.2d 127, we specifically held that the fact that a quota has not been filled does not restrict the discretionary power granted the administrator by the legislature and that reasonable and proper distribution of retail outlets within a given area is a material consideration in protecting the public interest. In that case it is said:

“With respect to retail distribution outlets, the legislature has specifically prescribed certain conditions of eligibility to obtain a license. If any such disqualifications exist, the state administrator has no authority to issue a license. On the other hand, the legislature has, by the enactment of KRS 243.450(2), taken cognizance of a twilight zone within which the administrative agency must determine if any particular license should be granted when substantial reasons exist why its issuance would not be in the public interest.”

Subsection (2) of KRS 243.450 is as follows:

“A license that might be issued under KRS 243.020 to 243.670 may be refused by a state administrator for any reason which he, in the exercise of his sound discretion, may deem sufficient.”

Under the facts presented we are of opinion that the State Administrator and the Board did not abuse sound discretion in refusing to issue a license in this case.

The judgment is reversed with directions to enter judgment sustaining the order of the Alcoholic Beverage Control Board.