author: COLEMAN, Justice.

text:
    Albert Theodore MOSIMANN, Jr., Appellant, v. EMPLOYERS CASUALTY COMPANY, Appellee.
    No. 13914.
    Court of Civil Appeals of Texas. Houston.
    Feb. 8, 1962.

      Wayne Carter, Houston, for appellant.
    Ben G. Sewell, Atty., Houston, McGreg- or, Sewell & Junell, Houston, of counsel, for appellee.
   COLEMAN, Justice.

This is an appeal from a judgment temporarily enjoining appellant from selling certain kinds of insurance in Harris County, Texas.

Appellant entered into an employment contract with appellee by the terms of which he agreed to “ * * * refrain from soliciting for * * * himself or any other insurer * * * any class of insurance business in which the companies shall be engaged, within * * * any district * * * to which salesman was * * * assigned * * * ” for a period of two years from the date of the termination of his employment.

After working for appellee for approximately six years in Harris County, appellant resigned and began selling insurance of a class competitive with that offered by appel-lee. Appellant testified at the trial that he would continue to sell such insurance unless he should be restrained from doing so.

Appellant urges that the temporary injunction should be dissolved because appel-lee failed to show that the provisions of the contract restricting appellant’s right to work were reasonably necessary for the protection of appellee’s business. He further contends that the contract violates public policy in that it imposes an unreasonable and unnecessary restraint on competition and that it imposed on appellant a greater restraint than was reasonably necessary for the protection of appellee’s business and good will.

Since this is an appeal from an order granting a temporary injunction, the judgment of the trial court cannot be disturbed on appeal unless the record shows that the trial court has abused his discretion by granting the injunction. Miller v. Texsteam Corp., Tex.Civ.App., 327 S.W.2d 465.

The evidence is undisputed that the parties agreed on the provision of the contract made the basis of the suit and that appellant had violated this provision of the contract, and threatened to do so in the future unless restrained. The evidence was sufficient to support an implied finding of the trial court that irreparable injury would result to appellee unless the threatened action was enjoined. The evidence fails to disclose an abuse of discretion.

This Court has previously held, in McAnally v. Person, Tex.Civ.App., 57 S.W.2d 945, writ ref., that unless an employment contract restricting competition is unreasonable on its face as a matter of law, the contract will not be presumed to be illegal, and the burden to plead and prove facts making it unlawful rests on the party seeking to avoid liability under it.

The testimony found in the record of this case does not establish as a matter of law an unreasonable restraint on competition or a greater restraint than was reasonably necessary for the protection of appel-lee’s business and good will. The contract was not unreasonable on its face. Fort v. Moore, Tex.Civ.App., 33 S.W.2d 807, writ dism.; Krueger, Hutchinson & Overton Clinic v. Lewis, Tex.Civ.App., 266 S.W.2d 885, aff’d 153 Tex. 363, 269 S.W.2d 798; Weatherford Oil Tool Co. v. Campbell, 340 S.W.2d 950, Tex.S.Ct.

The judgment of the trial court is affirmed.


source: Caselaw Access Project

author: HUGHES, Justice.

license: Public Domain

text:
    Adela C. FLORES, Appellant, v. Roy D. BARLOW, Appellee.
    No. 10922.
    Court of Civil Appeals of Texas. Austin.
    Jan. 17, 1962.
    Rehearing Denied Feb. 7, 1962.
    Edwards & Yturri, McDonald, Spann & De Anda, Corpus Christi, for appellant.
    Keys, Russell, Keys & Watson, Corpus Christi, for appellee.
   HUGHES, Justice.

Adela C. Flores, appellant, brought this suit as sole survivor of her deceased son, Cecilio Flores, under Arts. 4671-4678, Vernon’s Ann.Civ.St. (Wrongful Death Statutes).

The wrongful death of appellant’s son is alleged to have occurred in the collision of a flatbed truck operated by Cecilio Flores, and a 1954 Chevrolet Pickup Truck operated by appellee, Roy D. Barlow, on U. S. Highway 77 in Driscoll, Nueces County, at approximately 10:50 A.M., September 28, 195.6.

At the time just preceding the collision, both vehicles were traveling in the same southerly direction on Highway 77, which, at the place of the collision, is fifty feet wide and is not a laned highway.

Appellee’s vehicle was in the lead and was in the process of making a right turn at a street intersection with the highway when the Flores vehicle struck the right side of appellee’s pickup truck. Both vehicles slid into a telephone pole located on the southwest corner of the highway — street intersection. There were no skid marks from braking made by either vehicle and no evidence that the driver of either vehicle applied the brakes before or after the collision. Cecilio Flores died almost immediately.

Trial to a jury resulted in a verdict finding the operators of both vehicles guilty of acts of negligence which were proximate causes of the collision. Upon this verdict, judgment was rendered for appellee.

Point One is that the Court erred in permitting the witness, J. D. West, to give his opinion of the speed of the vehicles at the time of their collision when such opinion was based entirely upon the damaged condition of the vehicles after the collision. J. D. West was a highway patrolman employed by the Department of Public Safety. He had investigated highway accidents for the Department for nine years. He had been trained for this work. He investigated this collision and was called as a witness by appellant.

Following a number of questions to the witness, objections of counsel, rulings of the Coúrt and voir dire examination of the witness, he gave his opinion, on cross examination, to the speed of the vehicles at the time of their impact as follows:

“A My opinion the truck was not exceeding the legal limit, which is 45 — 45 is the maximum speed limit in Driscoll — my opinion the truck was not exceeding the 45 mile an hour speed limit, and the pickup was not exceeding 15 to 20 miles an hour.
"Q All right. Now, that is based on your observation of the scene of the accident itself?
“A Yes, sir.
“Q You are not qualified and cannot express a relative rate of speed, assuming the pickup standing still and the flat bed truck running into it?
“A I would still say the truck was not exceeding 45.
“Q Based on that, now you base that upon the condition of the pickup truck on the right side and proceeding in front of the flat bed truck?
“A Yes, sir, I would still say it.
“Q All right, so that under those circumstances whether the pickup truck would be standing still or running would make no difference because you only consider the right-hand damage to the pickup truck and front end damage of the stake bed truck ?
“A I base that, sir, on the damage in the point of impact, was not exceeding the speed limit, and that is also for the pickup truck speed still would be the same thing, that is with the truck, and I still say would not be exceeding the speed limit.
“Q Not going over 45 miles an hour?
“A Yes, sir.
“Q You say that is the basis of your opinion of the speed in the vicinity of this accident?
"A Yes, sir.”

The jury was asked and found that just prior to the collision Cecilio Flores operated the flat-bed truck, the following vehicle, at a greater rate of speed than was prudent under the circumstances, and that this was a proximate cause of the collision.

Appellee contends that there was no proper objection to the above testimony. We disagree. We quote from the record:

“Q All right, give us your opinion of the speed of the pickup truck at the point of impact with the telephone pole?
“MR. EDWARDS: Your Honor, we note our objection that the question calls for a conclusion that the witness is not qualified to give.
“MR. WATSON: Your Honor, I think it is the same predicate laid for expression of other opinions.
“THE COURT: I think that same situation goes to the, probably to the weight more than admissibility. I will permit him to answer.”

This question was withdrawn.

“Q Based upon the metal damage between the pickup and flatbed truck, are you qualified to express an opinion as to relative speed?
“A I could give an opinion on it.
“Q All right, what is your opinion of the speed of the flatbed truck in relation to the pickup truck?
“MR. EDWARDS : We again interpose objection to the qualification of the witness to give the conclusion. The question, as re-worded, it calls for a conclusion for which he is not qualified, and may I have him on voir dire a minute to clarify my position?
“THE COURT: All right.”

During such voir dire examination, the following transpired:

“Q Do you know whether or not you can make an estimate of speed based solely on the metal damage without taking into consideration the weight of the vehicles involved?
“A No, sir. I am basing my opinion on the other accidents I have worked estimating speeds.
MR. EDWARDS: Your Honor, we renew our objection to any opinion as to actual speed of these vehicles based on the metal damage on the basis that the voir dire examination shows he is not qualified to give such opinion.”

Further cross examination was resumed, from which we quote:

“Q All right, is your opinion that you could express on speeds here based upon the same type of information that your opinion of point of impact was based upon?
“A My experience would be the only way I could estimate the speed.
“Q And is that the only thing you are relying on in establishing the point of impact, the debris you found at the time, based upon your experience?
“A Yes, sir.
“MR. EDWARDS: I think the point we objected to, what he testified to, that is, he had had no training in determining the point of impact.
“MR. WATSON: We submit it goes to the weight rather than the admissibility of his testimony.
“THE COURT: I will overrule the ob j ection.
“Q But based upon the damage to the pickup and flatbed, based on your experience, are you qualified to express an opinion of the rate of speed of the flatbed truck relative to the pickup truck?
“MR. EDWARDS: Also, T object On the ground of assumption that the pickup truck was in a stationary position, as phrased in Counsel’s question, and my point is, my objection because you don’t know how to estimate, you don’t know the speed of the pickup truck, so you have to assume it was standing still, and that is contrary to the facts, and I object on that ground.
“MR. WATSON: We can assume an hypothetical situation in putting the interrogation.
“THE COURT: I think the jury would probably—
“A I can give you my opinion of how fast I think the pickup was going and how fast I think the truck was going. ■
“Q If that is the way you could answer it give it to us.
“A . I could state—
“MR. EDWARDS: Your Honor, may we have for the record, may we have the objection, same objection to this particular type of evidence?
“THE COURT: Yes, sir.”

We believe a fair appraisal of the above record is that the Court and counsel knew and understood that the basic objection of appellant to the testimony of the witness was that he was not qualified to express an opinion as to the speed of the vehicles based solely on their damaged conditions after the collision.

It has been held that such opinion testimony is inadmissible. Union Bus Lines v. Moulder, 180 S.W.2d 509, San Antonio Civil Appeals, Fisher v. Leach, 221 S.W.2d 384, San Antonio Civil Appeals, writ ref., N. R. E. and Anderson v. Broome, 233 S.W.2d 901, El Paso Civil Appeals.

In Moulder, Justice Norvell, in rejecting opinion testimony of speed based on impact damage alone, and in reversing the case because of the admission of such testimony, noted that there was an absence of evidence of technical or scientific support for such opinion. There is a similar absence of such evidence here.

We follow the above decisions and hold that such opinion evidence was inadmissible.

Appellee testified that his speed was 8 or 10 miles per hour at the time of impact. He testified that Flores’ truck was “going fast” when it overtook him, and that it was going “faster” than he was going. Mrs. D. C. Lee testified that the “back (Flores) truck flew into the front one.”

We are of the opinion that this evidence as to speed was not of such cumulative nature as to be harmless under the rule that the presence of other admissible evidence sufficient to determine the issue renders the admission of incompetent opinion evidence harmless. This testimony of this officer, an impartial witness whose credibility was vouchsafed by appellant, was the only specific testimony as to the speed of the Flores vehicle. Under these circumstances the jury was entitled to accord it unusual weight. We believe its admission to be harmful error under Rule 434, Texas Rules of Civil Procedure.

Appellee also seeks an affirmance under the following jury finding:

“19. Do you find from a preponderance of the evidence that immediately before the collision in question Cecilio Flores was following the pickup more closely than was reasonable and prudent, having due regard for the speed of both vehicles and the traffic upon and condition of the highway?
• “Answer: He was.”

Subordinate issues as to negligence and proximate cause were found favorably to appellee.

It is to be observed that the jury was asked to answer this issue “having due regard for the speed of both vehicles.” The inadmissible opinion evidence as to speed of the vehicles probably influenced the jury in its answer to this issue for the reasons above given. The answer, therefore, is tainted with the same error which invalidates the jury answer to the issue finding deceased guilty of driving with imprudent speed at the time of impact.

Appellant objected to the submission of the issue inquiring whether Flores was following too closely, copied above, for these reasons:

“1. That there is no evidence to support the submission of such issue.
“2. That there is insufficient evidence to support the submission of such issue.
“3. For the reason that such issue as framed is a comment upon the weight of the evidence, in that it assumes that Cecilio Flores did or was following the pickup when there is no evidence in the record to indicate that Cecilio Flores was following the pickup, or in the alternative insufficient evidence in the record to create an issue of fact as to whether or not Cecilio Flores was following the pickup, and further indicates to the jury that the court believes that the vehicles were traveling in the same lane of traffic.”

Art. 670Id, Sec. 61(a), V.A.C.S., provides :

“Following too closely — Sec. 61(a) The driver of a motor vehicle shall not follow another vehicle more closely than is reasonable and prudent, having due regard for the speed of such vehicles and the traffic upon and the conditions of the highway.”

The issue submitted was substantially in the language of the statute, and was correct. Swann v. Wheeler, 126 Tex. 167, 86 S.W.2d 735, Tex.Com. of Appeals.

Appellant contends that there is evidence in the record to the effect that the Flores vehicle was not completely and directly in the rear of appellee’s vehicle and hence it was not “following” the preceding vehicle and the issue submitted so assuming was a comment on the weight of the evidence.

Bearing in mind that the highway here was not laned and that statutes specifically regulating traffic on laned highways are inapplicable here, we are of the opinion that appellant’s construction of Sec. 61(a) is incorrect. It would lead to practical absurdities. A vehicle, under such construction, would not be “following” a preceding vehicle if it were one inch to the right, or left, of such vehicle even though it was only one inch behind such vehicle. We are loath to hold such conduct lawful.

It is our opinion that a vehicle traveling on an unlaned highway in the same direction as a vehicle preceding it on such highway is traveling, is “following” such vehicle within the meaning of Sec. 61(a), supra.

Other points made by appellant are with reference to matters not likely to recur on retrial, or at least not in the manner now presented, and a discussion of them would not be useful to the Trial Court.

We wish to point out, however, in view of several points made by appellant that there is no competent evidence of speed of the Flores vehicle, that speed may be proved by circumstantial evidence, and that force of impact etc. is admissible for this purpose. Sec. 6233 — 4, Vol. 9C, Blashfield, Cyclopedia of Automotive Law and Practice, Moulder case, supra.

The judgment of the Trial Court is reversed and this cause is remanded.

Reversed and remanded.

ON APPELLEE’S MOTION FOR REHEARING

Appellee asserts that we are in error in stating that the opinion of officer West as to the speed of the vehicles was based solely on their damaged condition after the collision, and refers to his testimony that he based his opinion on his experience, training and observations made at the scene of the wreck.

Of course, testimony qualifying an expert to express an opinion is not substantive evidence, and has no relevancy to the issues being tried.

All observations made by officer West at the scene are subject to the same infirmities as those discussed in our original opinion relating to use of the extent of damage to the vehicles as a basis for forming an opinion as to their speed.

The motion is overruled.

Motion overruled.


author: FANNING, Justice.

text:
    TRADERS AND GENERAL INSURANCE COMPANY, Appellant, v. Edward Glenn LANGE, Appellee.
    No. 7351.
    Court of Civil Appeals of Texas. Texarkana.
    Jan. 30, 1962.
    Rehearing Denied Jan. 30, 1962.
    Kenley, Sharp, Ritter & Boyland, Long-view, for appellant.
    Rex Houston, Law Offices of Gordon R. Wellborn, Henderson, for appellee.
   FANNING, Justice.

The opinion rendered in this cause on January 16, 1962 is withdrawn and the following opinion is substituted in lieu thereof.

Appellant insurance company has appealed from a total permanent disability judgment rendered against it in a workmen’s compensation insurance case tried before a jury upon special issues.

Appellant by its first point contends that there was no competent evidence establishing a workmen’s compensation policy, or workmen’s compensation coverage inuring to the benefit of plaintiff-appellee by way of contract, estoppel or waiver. By its fourth point appellant contends to the effect that there was no evidence that Neil Cooper (the local recording agent of appellant) had apparent authority to advise Paul Lange that the policy would remain in force and effect.

E. H. Lange, prior to World War II, commenced doing business in Glade-water, Texas, under the trade name of E. H. Lange & Sons, which was a partnership, consisting of E. H. Lange and his sons, Paul, Dale and Edward Glenn Lange. The father died in 1955 — after that time (and until a later time in 1959 hereinafter explained) the business was operated by Paul Lange, Dale Lange and Edward Glenn Lange for themselves, their mother and their sister. During the major portion of this time the insurance business of the concern had been handled by Neil Cooper, a local recording agent of appellant insurance company in Gladewater.

Appellant insurance company issued a workmen’s compensation insurance policy (on a standard form as prescribed by the State and approved by the State Board of Insurance) to E. H. Lange & Sons, a partnership, on July 13, 1959, effective as of August 8, 1959, and covering a period of one year therefrom. This policy was delivered by Neil Cooper to the partnership. The policy contained the following provisions :

“12. Changes Notice to any agent or knowledge possessed by an agent or by any other person shall not effect a waiver or a change in any part of this policy or estop the company from asserting any right under the terms of this policy, nor, shall the terms of this policy be waived or changed, except by endorsement issued to form a part of this policy, signed by an authorized representative of the company.
“13. Assignment Assignment of interest under this policy shall not bind the company until its consent is endorsed thereon. If, however, during the policy period the insured shall die, and written notice is given to the company within thirty days after the date of such death, this policy shall cover the insured’s legal representative as insured.
“17. Declarations By acceptance of this policy the insured agrees that the statements in the declarations are his agreements and representations, that this policy is issued in reliance upon the truth of such representations and that this policy embodies all agreements existing between himself and the company or any of its agents relating to this insurance.”

D. E. (Dale) Lange had been a partner until his death in March, 1959. On August 5, 1959, appellant insurance company issued a written endorsement deleting the name of D. E. Lange as a partner in the firm of E. H. Lange & Sons.

At the time of the issuance of the above referred to policy, appellee Edward Glenn Lange, among other persons, was a partner in the business concern of E. H. Lange & Sons, and was one of the employers, and a written endorsement excluded him from coverage in Louisiana because he was a partner, which written endorsement was signed by him as of the effective date of August 25, 1959, and said endorsement was signed and countersigned by authorized representatives of appellant company.

Plaintiff’s Exhibit No. 23 is a written bill of sale from Sarah Lange, E. Glenn Lange, and Doris Lange Smith joined by her husband, Marvin Smith, Jr., which conveys their interest in the business and assets of the firm of E. H. Lange & Sons to H. Paul Lange. The instrument (which is an unrecorded instrument) bears date of November 9, 1959, and states that the assignment is effective as of October 1st, 1959. Paul Lange testified to the effect that he acquired the interests of the other partners by “swapping” to them his interest in the other property of the E. H. Lange Estate, and that effective as of October 1st, 1959, he became the sole owner of the business of E. H. Lange & Sons.

There is considerable conflict in the main in the testimony of Paul Lange and Neil Cooper as to their respective versions of what happened after October 1st, 1959, with reference to the conversations between them with respect to insurance coverage on the policy in question. Mr. Paul Lange testified to the effect that after October 1st, 1959, he immediately notified Mr. Cooper of his purchase of the interests from the other partners and of his sole ownership of the business, and that Neil Cooper at that time advised him that the workmen’s compensation insurance policy would remain in full force and effect, that he believed and relied on such advice from Cooper, that after giving Cooper such notice in October, 1959 that Cooper continued to regularly service the policy and that thereafter Cooper and his agency continued to receive the monthly premiums on the policy in question.

Mr. Cooper testified to the effect that he had a conversation with Paul Lange regarding a proposed transfer (but not an actual transfer) of the interests in question to Paul Lange and was requested by Paul Lange to check and see if the previous experience credit on the policy would follow him if he acquired the other interests of the company. Mr. Cooper further testified to the effect that he reported to Paul Lange that he would not be able to keep the discount unless he owned 331/$% of the company prior to the transfer, and that Mr. Paul Lange did not tell him .anything more about the matter then and did not tell him anything about it until after appellee was injured on March 14, 1960, which was the first time that Mr. Paul Lange told him that he had acquired the interests of the other partners.

The jury apparently believed Paul Lange’s version of his conversation with Neil Cooper rather than Mr. Cooper’s version. The jury answered all issues favorably to appellee and among other answers, found to the following effect. That Paul Lange notified Neil Cooper that he had acquired the interests of the other partners of the business; that Neil Cooper at that time advised Paul Lange that the workmen’s compensation insurance policy would remain in force and effect; that at the time of giving such advice, Neil Cooper was acting within the apparent scope of his authority for the insurance company; that Paul Lange believed such advice; that Paul Lange relied upon such advice; that after Paul Lange notified Neil Cooper that he had acquired the interests of the other partners, Cooper continued to regularly service the workmen’s compensation insurance policy; and that after such time Cooper and his agency continued to receive the monthly premiums on the workmen’s compensation insurance policy.

Mr. Paul Lange however did testify that he learned that the premium rates would go up if the policy was changed to show him as sole owner, which conversation with Mr. Cooper he said took place about three months prior to appellee’s injury.

Mr. Paul Lange testified to the effect that on March 14, 1960, when his brother, Edward Glenn Lange, got hurt, that ap-pellee was an employee of the business owned solely by Paul Lange.

Paul Lange did not change the bank account from E. H. Lange & Sons until after his brother, appellee herein, got hurt.

Premiums on the policy in question were paid monthly and calculated on forms furnished by appellant. The reports would be forwarded to the insured, filled out, and returned to Mr. Cooper for transmittal to appellant. There was undisputed evidence that the premiums after October 1st, 1959, were paid in the same manner, by company check of E. H. Lange & Sons and the monthly payroll reports, originating in the home office of defendant and containing information that the partnership still existed were returned unchanged and signed by an employee of E. H. Lange & Sons.

No endorsement or other change was made on the policy after October 1, 1959.

No notice of the termination of the partnership had been filed with the Industrial Accident Board prior to May 5, 1960.

On May 18, 1960, an assumed name certificate was filed with the County Clerk of Gregg County, Texas, for Paul Lange, d/b/a Lange Casing Pulling.

There is no evidence in the record that Neil Cooper had actual authority from appellant insurance company to make the representations that the jury found that he made.

There is no evidence in the record that Neil Cooper had actual authority from appellant insurance company to orally contract with Paul Lange to extend to him workmen’s compensation coverage under the old policy at the same rates as the old policy and to remove the exclusion of ap-pellee Edward Glenn Lange from the policy as a partner and place him as a covered employee of Paul Lange, sole owner, d/b/a Lange Casing Pulling, without making a 'written endorsement thereon to be approved by appellant or without writing a new and proper written policy approved by appellant.

Insurance policies, the forms, coverages and rates are controlled by law. It is stated by the Supreme Court of Texas in United States Insurance Co. of Waco v. Boyer, 153 Tex. 415, 269 S.W.2d 340, 341, in part as follows: “It is unlawful to issue a policy in words other than those expressly approved by the Insurance Commission, and every insurance company selling [its policies] is required to word its policies precisely alike. Art. 5.06 Insurance Code, V.A.C.S. Uniform policies are necessary to a uniform rate structure, which in turn resulted from the public injury caused by highly competitive wildcat insurance schemes. * *

Art. 8308, Sec. 18a, Vernon’s Ann.Civ. St., provides:

“Whenever any employer of labor in this State becomes a subscriber to this law, he shall immediately notify the board of such fact, stating in such notice his name, place of business, character of the business, approximate number of employés, estimated amount of his payroll and the name of the insurance company carrying his insurance, the date of issuing the policy and the date when the same will expire, and whenever any policy is renewed that fact shall contain the above facts. The association shall also report the same to the board, giving the name of the employer, place of business, character of the business, approximate number of employés, estimated amount of payroll, date of issuance and the date of expiration of said policy. Any employer or association willfully, failing or refusing to make any such report shall be liable for and shall pay to the State of Texas a penalty of not more than one thousand dollars for each offense, and the same to be recovered by suit in Travis County by the Attorney General or by the district or county attorney under his direction in the district court thereof”.

Paul Lange, after acquiring sole ownership of E. H. Lange & Sons, on October 1, 1959, did not thereafter comply with Art. 8308, Sec. 18a, until after his brother Edward Glenn Lange got hurt, as it was not until May 5, 1960, that notice of termination of the partnership was given to the Industrial Accident Board.

Art. 8309, Sec. 1, V.A.C.S., provides in part: “ * * * ‘Employer’ shall mean any * * * partnership * * * 'Subscriber’ shall mean any employer who has become a member of the association by paying the required premium.”

Art. 21.14, Sec. 22, Insurance Code, V.A. C.S., provides in part as follows :

“It shall be unlawful for any local recording agent to pay, allow, give or offer to pay, allow or give, directly, or indirectly, any rebate of premium payable * * * or any valuable consideration or inducement whatever, not specified in the policy or contract of insurance * *

Art. 5.56, Insurance Code, V.A.C.S., provides :

“The Board shall prescribe standard policy forms to be used by all companies or associations writing workmen’s compensation insurance in this State. No company or association authorized to write workmen’s compensation insurance in this State shall, except as hereinafter provided for, use any classifications of hazards, rates of premium, or policy forms other than those made, established and promulgated and prescribed by the Board.”

Art. 5.57, Insurance Code, V.A.C.S., provides :

“The Board shall prescribe a uniform policy for workmen’s compensation insurance and no company or association shall thereafter use any other form in writing workmen’s compensation insurance in this State, provided that any company or association may use any form of endorsement appropriate to its plan of operation, if such endorsement shall be first submitted to and approved by the Board, and any contract or agreement not written into the application and policy shall be void and of no effect and in violation of the provisions of this subchapter, and shall be sufficient cause for revocation of license to write workmen’s compensation insurance within this State.”

It is our view that an examination of the above referred to statutes will reveal that the conduct of Paul Lange in keeping his new operation secret from the Industrial Accident Board in not complying with Art. 8308, Sec. 18a, V.A.C.S., was not in accordance with law. Likewise if Neil Cooper made the representations that Paul Lange said that he made to him, and which the jury found that Cooper made to him, then it is our view that Neil Cooper’s actions in such respects were not in accordance with law as well as being unauthorized by his principal, the appellant insurance company.

It is clear that appellee Edward Glenn Lange who had been a partner and was still listed as a partner on the written policy in question could not collect on said written policy as an employee.

There is no evidence of probative force in the record that appellant insurance company ever ratified or attempted to ratify the alleged conduct of Neil Cooper in question, which conduct if true as found by the jury, was illegal, improper, and unauthorized conduct on his part.

We hold that under the rather unusual and peculiar facts of this case that there was no competent evidence establishing a workmen’s compensation policy or workmen’s compensation coverage inuring to the benefit of plaintiff-appellee by way of contract, estoppel or waiver. Appellant’s first point is sustained. While we have not found any case directly in point with the unusual and peculiar fact situation we have here, we do think that the rationale of our decision here is supported in various respects by the insurance statutes above referred to and by the following cases: Traders’ & General Insurance Company v. Emmert, Tex.Civ.App., 76 S.W.2d 208, 209, wr. refused; Wade v. Superior Insurance Company, Tex.Civ.App., 244 S.W.2d 893, writ refused; Southern Surety-Company v. Inabnit, et al., 119 Tex. 67, 24 S.W.2d 375; Service Mutual Insurance Company of Texas v. Blain et al., 140 Tex. 541, 168 S.W.2d 854; Mulkey v. Traders St General Ins. Co., Tex.Civ.App., 93 S.W.2d 582, writ refused.

Appellee, among other cases cited in his brief, heavily relies upon the case of Southern Underwriters v. Mahan, et al., Tex.Civ.App., 126 S.W.2d 802, err. dism., judg. corr. This case holds that the mere withdrawal of one partner from a business, without the introduction of a third party into the business, did not avoid the policy as to the employees of the remaining partner who continued to operate the business in the absence of increase of risk. In said ■case it was stated in part as follows:

“The reasoning above quoted is equally, if not more applicable, to the circumstances here presented; for the mere withdrawal of Murphy violated no letter of the provision, and no reason has been advanced, and we see none, for holding that it violated the purpose of the provision. There was no addition made to the personnel of the subscriber. The risk based upon the nature of the business being operated is not claimed to have been changed or increased. The subject matter of the policy, the employees doing the work of the business, remained the same. We see no reason why a provision against assignment of interest when contained in a policy of workmen’s compensation insurance should be given a different meaning than when contained in a fire insurance policy.” (Emphasis added).

The distinguishing features between the Southern Underwriters v. Mahan case and the case at bar are clearly apparent. In the Southern Underwriters case the person injured had been an employee of the partnership, and when one partner withdrew from the firm, the other partner continued to operate the business with said employee still working for him, and the withdrawal of the partner did not increase the risk. However, in the case at bar in the written policy Edward Glenn Lange was a partner and one of the employers in the business, no premiums of course were paid on him as an employee, and he was also specifically deleted from coverage by a written endorsement to the policy; when his brother Paul Lange and Neil Cooper had their conversations about insurance coverage after October 1st, 1959, no written policy of insurance was ever thereafter written between Paul Lange and appellant insurance company which would cover Edward Glenn Lange (a former partner) as an employee of Paul Lange, d/b/a Lange Casing Pulling. When the partner and employer, Edward Glenn Lange, became an employee he became an addition to the personnel of the employer Paul Lange, d/b/a Lange Casing Pulling, and any purported oral insurance contract between Paul Lange and Neil Cooper which attempted to cover the former partner Edward Glenn Lange as an employee without paying any additional premium therefor would constitute an increased risk and as hereinbefore held such character or oral contract would also be unauthorized, and one which there is no evidence to show that appellant insurance company ever authorized or ratified in any manner.

We also hold that there was no evidence of probative force in the record to show that Neil Cooper had apparent authority to advise Paul Lange that the policy would remain in force and effect. Appellant’s fourth point is sustained.

Regardless of what Neil Cooper said, or did, there is no evidence in the record to show that his principal, the appellant insurance company, did any act or made any omission which would indicate that the principal knew about Cooper’s representations or acts, or ever ratified such acts, and under this record there is no pertinent act or omission traceable directly to the principal. In Great American Casualty Co. v. Eichelberger, Tex.Civ.App., 37 S.W.2d 1050, writ refused, it was stated in part as follows:

“Apparent authority is based on es-toppel, and can rise from but two sources: First, the principal may knowingly permit the agent to so hold himself out as having such authority, and in this way the principal becomes estopped to claim that the agent does not have such authority. * * * Second, the principal may so clothe the agent with the indicia of authority as to lead a reasonably prudent person to believe that he actually has that authority.
“The mere fact that the company had conferred on the agent the actual authority to execute and deliver the written policy referred to would not create the apparent authority to make an entirely different oral contract.”

Also see the following authorities dealing with the question of “apparent authority” of an agent: General & Excess Underwriters v. Harrelson, Tex.Civ.App., 327 S.W.2d 78, err. ref., n. r. e.; Banker’s Protective Life Ins. Co. v. Addison, Tex.Civ.App., 237 S.W.2d 694; Glens Falls Indemnity Company v. Roberson, Tex.Civ.App., 282 S.W.2d 438.

Furthermore Neil Cooper’s authority to make the type of oral contract of insurance contended for by appellee was prohibited by the policy. Both Paul Lange and Edward Glenn Lange who were partners at the time the written policy was taken out are properly chargeable with notice of the provisions of such written policy. In Home Ins. Co. of New York v. Lake Dallas Gin Co., Tex.Com.App., 93 S.W.2d 388, 391, it was held that one could not bind the principal when dealing with an agent whom he knows had limited authority and was acting beyond the scope of his authority. To the same effect is the case of Texas State Mutual Fire Ins. Co. v. Richbourg, Tex.Com.App., 257 S.W. 1089.

Finding from the record in this case that plaintiff-appellee Edward Glenn Lange was not covered by any binding insurance coverage of appellant insurance company at the time of his injury of March 14, 1960, the judgment of the trial court is reversed and judgment is here rendered in favor of appellant insurance company that appellee take nothing from appellant.

Reversed and rendered.


author: LANGDON, Chief Justice.

text:
    SOUTHLAND ROYALTY COMPANY et al., Appellants, v. PAN AMERICAN PETROLEUM CORPORATION et al., Appellees.
    No. 5501.
    Court of Civil Appeals of Texas. El Paso.
    Jan. 31, 1962.
    Rehearing Denied Feb. 21, 1962.

      Jackson, Walker, Winstead, Cantwell & Miller, Kilgore & Kilgore, Charles B. Wallace, Dallas, Stubbeman, McRae, Sealy & Laughlin, Jack Vickrey, Midland, for appellants.
    Turner, Rodgers, Winn, Scurlock & Terry, Dallas, Richard C. Milstead, Kermit, J. K. Smith, Fort Worth, L. A. Thompson, Tulsa, Old., for appellees.
    Archie E. Groff, Houston, for North Central Oil Corp.
   LANGDON, Chief Justice.

This is an appeal from a summary judgment out of the District Court of Winkler County, which decreed that appellants (plaintiffs below) “take nothing” in a suit brought by appellants for the recovery of gas royalties allegedly due them under the terms of an oil and gas lease on lands in Winkler County. Declaratory judgment relief was also granted to appellees upon a ■ cross-action.

Appellants (Southland Royalty Company, Avoca Corporation and Socony Mobil Oil Company, Inc.) had each filed separate suits in the district court against appellees (Pan American Petroleum Corporation and Westbrook-Thompson Holding Corporation). The three petitions were substantially the same. The suits were consolidated, and a single petition was filed by all three appellants in the consolidated cause. Thereafter, appellants joined in a motion for summary judgment, incorporating therein the pleadings, exhibits and admissions on file. Appellees filed an answer and a cross-action, and also a motion for summary judgment in which they likewise incorporated the pleadings, admissions and a large number of affidavits and exhibits in support thereof.

After hearing and argument on the motions for summary judgment, the trial court sustained the motion of appellees, denied the motion of appellants, and decreed that appellants take nothing. Upon appel-lees’ cross-action, the court further decreed (1), that the cloud be removed from appel-lees’ leasehold title, cast thereon by the filing of this suit; and (2), that the oil and gas lease, by its own terms, provided separately for the royalties to be paid for each of the separate substances which the parties thereto contemplated might be discovered and produced thereunder, including:

“To pay to the lessor One Hundred Dollars, each year in advance for the gas from each well where gas only is found, while the same is being used off the premises.”

From such judgment this appeal has been duly perfected.

The lease involved in this controversy is on a printed form in which the blanks have been filled in with a typewriter and certain interlineations made in long-hand on the printed portions thereof. It is dated March 27, 1925, covers 10,240 acres of land in Winkler County, and was executed April 1, 1925 by T. G. Hendrick and wife, Ida Hendrick, lessors, to J. W. Grant, lessee (appellees’ predecessor in title). Appellees are the present owners of the lease in so far as it covers three quarter-sections of land (480 acres) of the 10,240 acres included therein, and appellants are the owners of varying mineral interests in the lands covered by the lease, including the 480 acres of land with which we are here concerned.

Under the terms of the lease, T. G. Hendrick and wife, Ida Hendrick, granted and leased the premises to appellees’ predecessor in title “for the sole and only purpose of mining and operating for oil and gas potash or other minerals”. Among other provisions, the lease contract specified, “It is agreed that this lease shall remain in force for a term of 20 years from this date, and as long thereafter as oil or gas, potash or other minerals or either of them is produced from said land by the lessee.” A nominal consideration was recited and, in addition thereto, three covenants were specified as follows:

“In consideration of the premises the said lessee covenants and agrees:
“1st. To deliver to the credit of lessor, free of cost, in the pipe line to which they may connect thei_ wells, the equal one-eighth part of all oil produced and saved from the leased premises, and of the net proceeds of potash and other minerals at the mine.
“2nd. To pay the lessor One Hundred Dollars, each year in advance for the gas from each well where gas only is found, while the same is being used off the premises, and lessor to have gas free of cost from any such well for all stoves and all inside lights in the principal dwelling house on said land during the time by making their own connections with the well at their own risk and expense.
“3rd. To pay lesssor for gas produced from any oil well and used off the premises at the rate of Fifty and No/100 Dollars per year, for the time during which such gas shall be used, said payments to be made each three months in advance.” (Emphasis ours.)

We have italicized all hand-written in-terlineations in the printed portions of the lease from which we have quoted above.

The principal question presented by this appeal is whether the words, “and ⅛ of the net proceeds of potash and other minerals at the mine”, added in long-hand to the first royalty paragraph of the lease, entitles appellants to receive from appellees, their alleged proportionate part of ⅛ of the proceeds realized from the sale of gas and distillate produced by appellees from three deep wells on the 480 acres of land involved here.

Appellants have predicated their appeal upon four points. Points One and Two are based upon the contentions that the amounts received by appellees from the sale of gas from the three deep wells are proceeds of minerals within the meaning of the first royalty provision of the oil and gas lease, on which appellants are entitled to be paid their part of the ⅛ royalty; and that such gas was sold and was therefore not “being used off the premises” within the meaning of the second royalty paragraph of the lease.

In support of their contentions, appellants rely heavily upon the case of Reynolds v. McMan Oil & Gas Co., 11 S.W.2d 778, decided by the Commission of Appeals in 1928, in which it was said:

“ * * * The words 'used off the premises’ in covenants 2 and 3 are very significant. They indicate an acquaintance with the custom of using gas for developing such leases, and indicate that this was the extent of the right (or perhaps the probable desire) of the lessees to use gas from the lease. ‘Used’ in this connection is not necessarily synonymous with ‘disposed of’ or ‘sold.’ Rather, it is synonymous with ‘employed’ or ‘consumed.’ Meaning must be given to the word according to the nature of the thing to be used and according to the subject-matter of the agreement for use. The fair meaning of the third clause of the royalty covenant in the light of the other parts of the instrument simply is that, in the event the lessee uses gas produced from an oil well off the premises, he shall pay to lessor the rate of $100 per year for the time it is so used.”

The royalty covenants in the oil and gas lease construed in the Reynolds case are very similar to those contained in the lease now before us.

In December of 1928, three cases involving substantially the same questions of law were decided by Section B of the Commission of Appeals. These cases were Reynolds v. McMan Oil & Gas Co. (supra); Magnolia Petroleum Co. v. Akin, 11 S.W.2d 1113; and Magnolia Petroleum Co. v. Connellee, 11 S.W.2d 158. In each of these cases the lessor, or mineral owner, sought to recover from the oil and gas lessee, under the stipulation for the Y% royalty on oil produced and saved, a like royalty on gasoline manufactured from gas produced from oil wells (casinghead gas). Lessor was allowed recovery of an oil royalty on gasoline manufactured from casinghead gas in the Reynolds case, but the lessors in both the Connellee and the Akin cases were denied any such recovery. The Reynolds and Akin cases were handed down December 12, 1928 and, although the Connellee case appears to have been handed down on December 5, 1928, the opinion in the Akin case states: “The instrument of lease involved in this case is identical with that this day construed by us in Magnolia Petroleum Co. v. Earn T. Connellee, [Tex.Com.App.,] 11 S.W.2d 158, and the decision of that case controls the disposition of this one.”

The only real distinction between the three cases is that second and third royalty provisions contained in the Connellee and Akin leases employed the words, “sold or used off the premises”, while in the same numbered royalty paragraphs of the Reynolds lease, the word “sold” was omitted, and only the words “used off the premises” were employed.

Since the decisions in the Reynolds, Akin and Connellee cases, the Supreme Court has had the opportunity to express itself on at least two different occasions with respect to the meaning of the term “used off the premises.” In the case of Humble Oil & Refining Co. v. Poe, 29 S.W.2d 1019, decided by the Commission of Appeals in 1930, the court was confronted with a royalty clause almost identical to the second royalty clause of the Hendrick lease. In the Poe case the lease provided:

“ * * * lessee agrees to pay the lessor at the rate of $250 each year, payable quarterly in advance, for the gas from each well where gas only is found, while the same is being used off the premises.” (Emphasis ours.)

In the Poe case, while there was no evidence as to what disposition was being made of the gas, and particularly whether such gas was being “sold”, or otherwise disposed of at a profit, the court laid the question at rest in the following unequivocal language:

“Plaintiff in error acquired the right to use the gas produced from a gas well it might drill on the premises covered by the lease by the payment of the agreed rental of $250 per annum. Having bought and paid for such gas it owned the same, including all of its constituent elements, and therefore had the lawful right to make such use of it as it might deem proper.” (Emphasis ours.)

The court, in the Poe case, refused to make the distinction between the words “sold” and “used” that was made by the court in the Reynolds case; but, on the contrary, cited and followed the Connellee decision.

In 1932 the same point was again before the courts of this state. In the case of Lone Star Gas Co. v. Harris, 45 S.W.2d 664 (writ refused), the Eastland Court of Civil Appeals had before it an oil and gas lease in which the second and third royalty clauses are identical to those contained in the Hendrick lease involved in this case. The court repudiated the holding in the Reynolds case; followed the Connellee, Akin and Poe cases (all involving oil and gas leases), and also cited and followed Lone Star Gas Co. v. Stine, 41 S.W.2d 48, decided by the Commission of Appeals in 1931. The Stine case involved a deed and an operating agreement under which title to the natural gas was actually conveyed to the grantee therein. In passing on the question of title to the gas, the Eastland court made the observation that the deeds and operating agreement in the Stine case did not more certainly convey to the lessee the gas produced from gas wells than the lease contract, and then proceeded to hold as follows:

“In the Stine Case the gas company had the right to 'drill for and develop gas and take the same free from any charge or royalty,’ having paid a large consideration for ‘natural gas’ developed under the contract, while in the instant case the lessee acquired the right to all gas from each well where gas only is found by paying $300 each year for the same.” (Emphasis ours.)

The Hendrick lease involved here contains the same words of grant as the lease involved in Lone Star Gas v. Harris, supra. The products or substances which the parties contemplated might be found on the leased premises were separately identified and conveyed in the granting clause. Again, in the royalty provisions of the lease, each substance was separately treated and a separate royalty provided for each such substance. The Hendrick lease conveyed the “oil and gas, potash or other minerals”, and provided for a definite and specific royalty on each, as follows:

(a) On oil “free of cost, in the pipe line to which they may connect theif wells, the equal one-eighth part”;
(b) and “⅛ of the net proceeds of potash- and other minerals at the mine” ;
(c) “One Hundred Dollars each year in advance for the gas from each . well where gas only is found”;
(d) “For gas produced from any oil well” “Fifty and No/100 Dollars per year”.

At the time of the execution of the oil and gas lease in question, the terms “oil”, “gas” and “potash” were familiar words in common usage, particularly in the area of the location of the lands that were the subject of this contract. It is in the record (and undisputed) that potash was discovered relatively near the lands involved in this case, in 1925, the same year in which the lease contract was executed. The north line of Winkler County forms a common boundary line with the State of New Mexico at its southeast corner, and there was a potash mine near Carlsbad, New Mexico, near to the Winkler County line. The method of mining potash in this mine is similar to the methods used in mining coal, in that they use the room and pillar method.

Under these circumstances, the terms' used in the lease having acquired a definite, fixed and popular meaning, and not being otherwise defined—then, in the absence of fraud, accident or mistake, it will be conclusively presumed that the parties to the contract were familiar with and understood the subject matter about which they undertook to contract, and that the terms used by them in the contract were intended to be given their ordinary and popular meaning. Magnolia Petroleum Co. v. Connellee, Tex.Com.App., 11 S.W.2d 158; Heinatz v. Allen, 147 Tex. 512, 217 S.W.2d 994.

The parties to this lease stipulated a specific royalty on all oil produced from wells', a specific royalty was stipulated for the gas produced from any oil well, and another and separate royalty was specified for the gas produced from wells where gas only is found. The term “at the mine”, used in connection with the royalty fixed upon “potash and other minerals”, as that term is employed in the instant lease contract, clearly separates and distinguished the substances (oil and gas) which the parties contemplated would be produced from wells, and the substances (potash and other minerals) which the parties contemplated would be produced from a mine.

Further, we believe the rule of ejusdem generis has application here, so as to preclude a court from construing the term, “potash and other minerals”, as that term is used in the instant lease in context with other terms employed there, to include gas, a substance completely different from a species of minerals such as potash. Gladys City Oil, Gas & Mfg. Co. v. Right of Way Oil Co., Tex.Civ.App., 137 S.W. 171; Right of Way Oil Co. v. Gladys City Oil, Gas & Mfg. Co., 106 Tex. 94, 157 S.W. 737.

We construe the lease in this case to vest a determinable fee title in the lessee to the gas estate in the land involved here, subject to the lessees’ obligation (when such gas is used off the premises) to pay $100 per year, in advance, for the gas from each well where gas only is found; $50.00 per year, quarterly in advance, for gas produced from any oil well; and the obligation to permit the lessor to have gas free of cost, from wells producing gas only, for all stoves and inside light in the principal dwelling house on said land.

Appellants have made no contention that they are entitled to receive a royalty on casinghead gas (gas produced from oil wells), which appellees admit they have produced and sold from the leased premises. Their pleadings and allegations are confined to the gas from three deep wells (wells from which gas only is produced). It is contended by appellants, and admitted by appellees, that $929,938.55 has been realized from the sale of the gross proceeds of the natural gas from these three deep wells, as of September 30, 1959.

Assuming that we are correct in holding as we do, that the title to the natural gas passed to the lessees, it remained the property of the lessees, whether on or off the lease, until the lessees in some manner divested themselves of the title, by sale or otherwise, or until the gas itself ceased to exist by virtue of being consumed in some useful manner, or escaped, or was simply wasted by flaring. We believe the term “used off the premises”, when that term is not expressly restricted in clear language to some particular use or uses, is broad enough to include, and does include, any use or disposition that the owner of such gas might wish to make of it, including the right of sale.

In a case decided in 1924 by the Supreme Court of Oklahoma, an oil and gas lease, which we believe to be identical with the printed provisions of the Hendrick lease, was construed. (Mussellem v. Magnolia Petroleum Co., 107 Okl. 183, 231 P. 526). In that case, the meaning of the words “used off the premises” was in dispute. The court there held that the lessee (Magnolia Petroleum Company) was vested with the title to the gas, and made this interpretation of what is meant by “off the premises”, as well as “on the premises”:

“The words 'on’ and ‘off’ are correlatives, and to determine what the latter means, might be best reached by a proper conception of what the word ‘on’ as used in the lease, conveyed. It had no other meaning than used in connection with the development of the premises. The words ‘off the premises’ had no other meaning to the parties, than if the gas was appropriated to a purpose foreign to utilization for the benefit of development of the property itself. In other words, it did not have particular reference to place where used, but the purpose and objects of its use, to-wit, one foreign to the development of the premises in question.”

From what we have said, it follows that we believe that appellants’ Points One and Two should be overruled.

Appellants’ third point is based on the contention that the royalty provisions of the Hendrick lease are plain and certain, without conflict or ambiguity, and parol evidence of an allegedly inconsistent course of dealing was not admissible or entitled to consideration to create an ambiguity or to explain or construe the lease, and that the trial court erroneously granted appellees’ motion for summary judgment.

In passing upon appellants’ first two points, we concluded that the trial court did not err in holding that the oil and gas lease, by its own terms, provided separately for the royalties to be paid for each of the separate substances which the parties thereto contemplated might be discovered and produced thereunder. We also held that the title to the natural gas in controversy passed to the lessee under the terms of the lease, subject to the payment of the $100 per year royalty specified under express provisions of the second royalty paragraph; and, finally, we held that the term “used off the premises” imposed no restriction upon appellees, as the owners of such gas, from using or disposing of the gas in any manner they might wish, including its sale.

We believe the parties to this instrument have clearly revealed their purposes and intent by the language actually used; however, if it be conceded that the oil and gas lease is ambiguous as to whether it was intended to include an additional Ys royalty on natural gas by the addition of the words, “and ⅛ of the net proceeds of potash and other minerals at the mine”, the most cogent evidence that the trial court did, in fact, correctly interpret the oil and gas lease is the practical construction placed upon the lease by the parties themselves, as evidenced by their acts and conduct for a period of thirty-two years before the instant controversy arose. In such cases the construction placed thereon by the parties themselves will be given controlling effect. Superior Oil Co. v. Stanolind Oil & Gas So., Tex.Civ.App., 230 S.W.2d 346, aff’d. 150 Tex. 317, 240 S.W.2d 281; Rio Bravo Oil Co. v. Weed, 121 Tex. 427, 50 S.W.2d 1080, 85 A.L.R. 391; Bowden v. Patterson, 51 Tex.Civ.App. 173, 111 S.W. 182 (wr. ref.); Livingston Oil Corp. v. Waggoner, Tex.Civ.App., 273 S.W. 903 (wr. ref.). Appellants have admitted that they each knew that gas was being produced by appellees from the leasehold premises for many years before this suit was filed, and they admit that they knew that much of such gas was being “used” off the leasehold premises; they also admit having received and accepted the flat-rate royalty checks payable under the second and third royalty provisions of the lease, for such gas. They deny, however, that they knew that such gas was being “sold” when they accepted the flat-rate royalty checks from appellants for gas “used off the premises”.

Following the execution of the lease in 1925, oil was discovered in the area in 1926. In 1927, production of oil was obtained from appellees’ portion of the leased premises. Thereafter, a number of oil wells were completed on appellees’ portion of the lease, at depths ranging from 2800 to 3800 feet. From these oil wells some gas was produced. In 1928, one of these wells ceased producing oil, and was converted from an oil well producing some gas to a gas well producing gas only. Prior to 1928 the only gas produced from the leased premises was the gas (casing-head gas) produced along with the oil from the oil wells. In 1942 a second well ceased producing oil, and was converted from an oil well producing some gas to a gas well producing gas only. In each instance, the record reflects that the lessor or his assigns were notified of the changes in the classification of the wells, and each knew that such wells could no longer be considered as oil wells producing some gas upon which a royalty of only $50.00 per well per year was payable, but that such wells must be considered as gas wells producing gas only, entitling the lessor or his assigns to a flat royalty of $100 per year per well for the gas when used off the premises. The record before us also reflects (without dispute) that the gas from oil wells producing some gas was paid for by appellees on the basis of $50.00 per well per year when used off the premises, and that the gas from gas wells producing gas only was paid for by appellees on the basis of $100 per well per year when used off the premises, and that such payments had been accepted by appellants and their predecessors in title for approximately 32 consecutive years before the filing of this suit.

It is undisputed that soon after gas was discovered and’ developed on the leasehold premises, Southern Crude Oil Purchasing Company (appellee Pan American’s predecessor in title), and Westbrook-Thompson Holding Corporation, the then owners of a substantial portion of the entire Hend-rick lease, constructed a pipeline gathering system, and that gas from wells on the T. G. Hendrick lease here involved, as well as another lease identified in the record as the Ida Hendrick lease, was gathered and commingled in this pipeline. Part of this gas was used on appellees’ portion of the Hendrick lease involved in this suit, and part of it was used on the other Hendrick lease (not involved here) as fuel for boilers, machine shops, garages, ancl in the operation of camps on both lease?. During such period, gas from the gather' ing system was sold to other operators of portions of both leases. In 1942, C. V. Lyman erected a gasoline plant in the area, which was located on land not covered by either of the two Hendrick leases.

Lyman maintained and operated the plant until 1956, when he sold it to Rycade Oil Company. Rycade operated the plant until January 1960, when it was sold to Phillips Petroleum Company. The plant is connected to pipelines from the wells on both Hendrick leases, including the 480 acres owned by appellees. Casinghead gas was transferred from these wells to the Lyman gasoline plant, where the gasoline was extracted from the casinghead gas, and the residue gas was then sold or disposed of. In 1949 appellees entered into a written contract to sell Lyman gas produced from the shallow wells for use in the gasoline plant, and during all of such time, and for several years thereafter, appellees paid royalties on the gas they sold to Lyman and his successors at the flat-rate royalty provided in the second and third paragraphs of the oil and gas lease. The flat-rate royalty payments were accepted by each of the appellants, none of whom, at any time down through the years, made any inquiry of appellees as to how or in what manner the gas from any of the wells was being used off the premises. Appellees have continuously sold gas from their wells on the subject lease since the date of the original contract with Lyman in 1949, and to each of his successors.

While appellees have admittedly sold casinghead gas, as well as natural gas, from the shallow wells located on the lands covered by the lease in question, appellants have not sued to recover a proportionate part of the royalty on either natural gas or casinghead gas produced and sold from the shallow wells, but have confined their pleadings to, and apparently seek only to recover, a proportionate part of the royalties allegedly due each appellant solely from the gas, distillate or mineral sales from the deep wells, identified in the record as the Area “A”, “B” and “C” wells, it being undisputed that these wells are gas wells from which gas only is produced.

Drilling of the first of the three deep wells was commenced April 13, 1956 and was completed as a pure natural gas well on September 15, 1956. This well, known as the Area “B” well, produces tremendous volumes of natural gas from a Devonian Formation at approximately 9100 feet, and from an Ellenburger Formation at approximately 11,525 feet. The second well (Area “C” well) was commenced January 22, 1958 and was completed July 23, 1958, as a pure natural gas well. The Area “A” well, the third deep test to be drilled on the land here involved, was commenced July 15, 1958 and was completed January 31, 1959. All three wells were dually completed in both the Devonian and Ellenburger Formations, at approximately the same depth, as pure natural gas wells. Each of these wells produces tremendous volumes of natural gas from both formations.

The appellees began to market and sell the gas from the first of the three deep wells in January of 1958. Flat-rate royalty checks on the basis of $100 per well per year were sent to each of the appellants and were accepted by them, just as they had in previous years received and accepted the flat-rate royalty checks on the casinghead and natural gas produced from the shallow wells located on the same premises.

Appellants now contend that they accepted the checks without knowledge of the fact that the gas from the leased premises was being sold. We think this contention must be rejected. They admit knowing that the gas was being “used” off the premises, and admit that if they had made proper inquiry the full truth could have been ascertained, but say they did not do so, and that they were under no duty to make such inquiry.

Appellants are not in the position of the usual or ordinary landowner dealing with an oil and gas lessee. Each of the appellants are also engaged in the oil and gas industry and have been so engaged for many years. They each own substantial mineral interests, not only in the particular land involved here, but in other lands included in both the Hendrick leases. The development of the area covered by both leases, as reflected by the oil maps of the area in evidence, has been extensive. Correspondence between appellants, their predecessors in title, and the appellees reflects that a meticulous and continuing interest was maintained by each of the appellants in the properties throughout the years. Each appellant was familiar with the duty imposed upon the operators of oil and gas leases to file drilling reports, well logs, production reports, completion reports and a variety of other reports and documents with the Railroad Commission and the State Comptroller’s office, an examination of which would have .revealed the amount of casinghead and natural gas that was being produced by appellees from the leased premises, and exactly how it was being “used” by them off the leased premises. We believe, also, that a physical inspection of the premises, by anyone familiar with the oil and gas industry, would have revealed the truth.

If a proper inquiry or investigation had been made by appellants for the purpose of ascertaining how the gas from the leased premises was being used, it would have led to a knowledge of all the facts, and of the previous construction placed upon the lease by their predecessors and the original lessee; and this, in equity, is equivalent to actual notice. Hexter v. Pratt, 10 S.W.2d 692 (Tex.Com.App.); Superior Oil Co. v. Stanolind Oil & Gas Co., Tex.Civ.App., 230 S.W.2d 346 (aff’d. 150 Tex. 317, 240 S.W.2d 281).

In the Superior Oil Company case cited above, Superior and the royalty owners, claiming subject to the lease, were contending that they had no notice of a prior construction that had been placed on the lease by their predecessors. In rejecting this contention, the Court of Civil Appeals held:

“The records of the Railroad Commission show the date of the dry hole. Since the dry hole provision of the lease put Superior and Intex on notice that drilling of a dry hole might change the date for payment of rentals they were required to make inquiry. We sustain the trial court’s conclusion that if proper inquiry had been made, appellants would have learned the facts.
‘In law whatever fairly puts a person on inquiry is sufficient notice, where the means of knowledge are at hand, which if pursued by the proper inquiry the full truth might have been ascertained. Means of knowledge with the duty of using them are in equity equivalent to knowledge itself.’ Hexter v. Pratt, Tex.Com.App., 10 S.W.2d 692, 693. See also 66 C.J. 1115; Hill v. Stanolind Oil & Gas Co., 119 Colo. 477, 205 P.2d 643, 650; Brown v. Hart, Tex.Civ.App., 43 S.W.2d 274; 31 Tex.Jur. 362.”

At the time the oil and gas lease here involved was executed, casinghead and natural gas had little or no market value. The usual practice in the oil industry at that time, as reflected by the printed provisions of the Producer’s 88 Special-Texas Form of lease actually employed by the original parties to the lease now before us, (as well as the terms and provisions of the various leases of that general period, and construed by the courts in the Akin, Poe, Connellee, Harris, Mussellem (Okla.), and the Reynolds cases, all of which have been cited by the parties to this suit and discussed in this opinion), show that there was only a casual interest in gas at that time. Each of the leases in the cited cases provided only a nominal flat-rate per well royalty on gas, regardless of whether the royalty provision of the respective leases employed the term “used or sold off the leased premises” or merely the term “used off the premises”. Except in the Reynolds case, the terms have been held to be synonymous.

Assuming that the term “used off the premises”, as that term is employed in the second royalty clause of the Hendrick lease, is unambiguous, as contended by appellants, but that the right to “sell” such gas is but one of the many “uses” to which said gas might be subjected, as we believe the case to be — then it follows that appellants must either add to, or in some manner detract from, the plain import of the language of the instrument in order to sustain their contention (some thirty-four years after the execution of the instrument) that the right to sell natural gas produced from the lease did not pass to appellees upon payment of the flat royalty thereon.

The mere fact that gas, since the execution of the lease, has ceased to be a product of little value and is today of considerable value cannot operate to change the contract.

■“As men bind themselves, so must they stand bound.” Menard v. Sydnor, 29 Tex. 257.

For years, appellants have accepted a single flat-rate royalty on natural gas, and now contend they are entitled to two royalties — a flat-rate royalty when the gas is used off the premises, but not sold; and another royalty of ⅛ of the net proceeds thereof when the gas is sold off the premises. Under such circumstances, we believe appellants were under a duty to make some inquiry, either at the time they received, or before they accepted, the numerous gas royalty checks sent to them over the years, for the purpose of determining whether the gas was being sold or was otherwise being used off the leased premises. This they failed to do. Since a duty to inquire existed, and because a proper inquiry would have revealed the truth, they may not now complain that they had no notice of the fact that the gas was being sold off the leased premises.

Appellants’ third point is accordingly overruled.

Appellants’ fourth point is based on the contention that there are issues of material facts on appellees’ defense of “practical construction”, and that the district court wrongfully sustained appellees’ motion for summary judgment.

After having carefully considered appellants’ Point Four, and the argument and authorities cited in support thereof, we have concluded that this question has been resolved by our discussion of other points, and that a further discussion of this particular question would serve no useful purpose. In any event, in the trial court appellants, as well as the appellees, contended that there were no issues of material facts on the evidence presented before the trial court, and with this contention we are inclined to agree. Appellants’ Point Four is accordingly overruled.

Finding no error, the judgment of the trial court is in all things affirmed.


author: POPE, Justice.

text:
    TEXAS EMPLOYERS’ INSURANCE ASSOCIATION, Appellant, v. Juan G. TIJERINA, Appellee.
    No. 13879.
    Court of Civil Appeals of Texas. San Antonio.
    Jan. 31, 1962.
    Rehearing Denied Feb. 28, 1962.

      Groce & Hebdon, Charles L. Smith, San Antonio, for appellant.
    O’Conor & Freed, Laredo, for appellee.
   POPE, Justice.

Texas Employers’ Insurance Association asserts that the trial court erred in granting judgment for Juan G. Tijerina for total and permanent incapacity. It urges that the jury finding that Tijerina was an employee instead of an independent contractor, has no support in the evidence and is against the great weight of the evidence. We overrule those contentions. It also urges that there was prejudicial error in permitting Tijerina to read pleadings about attorney’s fees, and to prove hardship, when those matters were admitted. We sustain that point.

The Association’s claim that Tijer-ina was an independent contractor was fully denied. The Association claimed that Ti-jerina had a masonry sub-contract on what is called the Nye job in Laredo. Tijerina consistently and repeatedly denied that an oral agreement had been made, and certainly he had not executed a written agreement. He stated that no agreement on the final consideration was ever reached. Moreover, he testified that he was at home on a rainy day when he could not perform masonry work and prior to the time that work was to begin. He was called to the job by the contractor’s foreman and arrived about 9:30 in the morning. Only two other men were working at the job and both were employees of the contractor. Tijerina had no tools, but was provided with a sawhorse, a rule, square, and a measured stick. One employee located reference points and directed Tijerina, standing on the sawhorse, to make marks on the steel posts of the building under construction. He fell on a pipe and suffered serious injuries. The Association claimed that Tijerina was locating his masonry courses in line with a completed sub-contract. Tijerina denied this and said that he was doing a thing he, as a mason, had never done before. The evidence supports the idea that he was helping the contractor’s two employees locate reference points for anchors to the steel posts. The evidence is that masons do not begin their work until the welders fix these anchors, which had not yet been done. In other words, Tijerina was not executing the work of a mason but was helping the contractor do something else. We have read the entire statement of facts and, without detailing all the evidence, it shows that Tijerina fully raised and amply proved that he was an employee.

We must, however, reverse the case by reason of harmful matters which were presented to the jury. At the beginning of the trial, the Association stated in open court that Tijerina would be entitled to a lump sum judgment if the verdict permitted such a recovery. Upon this unqualified admission, the Association moved that Tijerina not read those parts of the pleadings which alleged hardship and also those which alleged attorney’s fees. The court overruled the motion, and Tijerina’s counsel then read those portions of the pleadings and called Tijerina’s wife as the first witness. She testified that she and plaintiff have eight children who live at home, that three weeks before the lawsuit they lost one child in an accident, that they pay rent, owe about $2,-000.00 for hospital and medical bills, and could not live on $35.00 a week since the attorney will receive a part of that. Though the Association admitted that hardship existed and the facts about attorney’s fees, those matters were presented to the jury.

Tijerina reasons that the case of Muro v. Houston Fire and Casualty Insurance Co., Tex.Civ.App., 310 S.W.2d 420, authorizes such a procedure. It does not. Evidence is admissible on disputed issues. If hardship is denied, there is an issue. If hardship is admitted, but the insurer later proves that the employee is able to work and has worked, then hardship is yet an issue to prove that the work was done under the whip of necessity. It was in this latter instance that evidence of hardship was admissible in the Muro case, because, though agreed upon for one issue, it later became material by way of rebuttal to explain why the injured employee had worked. In introducing this evidence in this case, however, it was neither to prove hardship, which was admitted, nor to rebut the claim that the employee was able to work. It was produced not in proof of any disputed issue, and was error.

The pleadings and proof of attorney’s fees should not have been presented to the jury. This alone requires a reversal, for the reasons which have been fully explained in Texas Employers’ Ins. Ass’n v. Hatton, 152 Tex. 199, 255 S.W.2d 848. Accord, Texas Employers’ Ins. Ass’n v. Lee, 152 Tex. 227, 256 S.W.2d 569.

The judgment is reversed and the cause remanded.


text:
    Martin BRANDT, Appellant, v. Ernest BERRY, Appellee.
    No. 13878.
    Court of Civil Appeals of Texas. San Antonio.
    Feb. 7, 1962.

      Earle Cobb, Jr., San Antonio, for appellant.
    Bruce Waitz, Leslie J. Bretz, San Antonio, for appellee.
   POPE, Justice.

Martin Brandt appeals from a judgment for $3,066.39, which held that he converted turkeys which were mortgaged to Ernest Berry. Berry also recovered judgment against the mortgagor who did not appeal. Brandt urges that the trial court erred (1) in failing to submit several requested issues concerning the status of the account between the mortgagor and Berry, the mortgagee; (2) in failing to admit evidence about a local custom with respect to the sale of mortgaged turkeys, and (3) in failing to admit evidence of loss of profits to the mortgagor by reason of Berry’s breach of contract with the mortgagor. We affirm the judgment.

The mortgagor raised turkeys in Bexar County. During 1954, Berry supplied the mortgagor with turkeys and feed. To secure the account, on July 13, 1954, the mortgagor executed a note and mortgage to Berry in the sum of $12,000. The mortgage was recorded in Bexar County on that date. The mortgage covered future advancements for turkeys, feed and supplies. The mortgagor reduced the debt by several payments, some of which were disputed, and some of which were not. The jury, upon the basis of the evidence, found that the mortgagor had made payments of $1,000, $500, and $5,222.68. The last sum was paid in December, 1954, when the mortgagor sold more than a thousand turkeys to a processor who made his check payable to both the mortgagor and mortgagee. During that same month, the mortgagor sold 470 turkeys to Brandt for $2,-952.39, but Brandt did not make his checks payable to the mortgagee. The mortgage was at that time recorded and Berry, the mortgagee, lost that sum. Berry had an action for conversion against Brandt, the purchaser of the mortgaged turkeys, because Brandt had constructive notice of the mortgage. Moore v. Carey Bros. Oil Co., Tex.Com.App., 269 S.W. 75, 39 A.L.R. 1247; Scaling v. First National Bank, 39 Tex.Civ.App. 154, 87 S.W. 715.

Brandt’s first complaint is that the court failed to submit certain requested issues, with respect to the items which Berry advanced to the mortgagor. It is his contention that the mortgagor had discharged a greater part of the debt and did not owe as much as the turkeys were worth. The court did not submit an issue upon each item revealed by the account. It submitted issues upon seven items. Those matters were the only ones which were disputed. The reason it did not submit issues on the others is that the mortgagor admitted receipt of those advances, and there was no dispute about them. The evidence supports the findings and the judgment that the mortgagor owed the mortgagee the amount which he received from Brandt for the turkeys. The additional $54.00 is interest.

Brandt complains because the court excluded evidence that, by custom in the San Antonio area, holders of mortgages inform turkey processors in writing that they hold a mortgage. This was offered as justification for the purchase of the mortgaged turkeys without recognizing the rights of the mortgagee. The objection to the evidence was that Brandt did not plead local custom. The exclusion was proper. Cohen v. Hailey, Tex.Civ.App., 280 S.W.2d 300; Thannisch Chevrolet Company v. Kline, Tex.Civ.App., 134 S.W.2d 433; 42 Tex.Jur., Usage and Custom, § 26.

Brandt also urges that Berry breached his contract with the mortgagor in failing to send him an additional 400 turkeys, and that the mortgagor lost profits by reason of this failure. He seeks to offset these lost profits by the mortgagor against the debt owed by the mortgagor. In the record before us, we find no pleadings which suggest .or raise the issue.

We have examined and overrule the other points.

The judgment is affirmed.