author: ALEXANDER, J. .

text:
    FARM & HOME SAVINGS & LOAN ASS'N OF MISSOURI v. MUHL et ux.
    No. 1000.
    Court of Civil Appeals of Texas. Waco.
    March 12, 1931.
    Rehearing Denied April 9, 1931.

      Ross, Ross & Alexander, of Fort Worth, and D. Y. McDaniel, of Waco, for appellant.
    F. M. Fitzpatrick and W. Y. Dunnam, both of Waco, for appellees.
   ALEXANDER, J. .

This suit was instituted in the Nineteenth district court of McLennan county by E. A. Muhl and wife against Farm & Home Savings & Loan Association of Missouri, a building and loan association, and others to restrain the sale under deed of trust of their business homestead located at Third and Washington streets in the city of Waco. In October, 1926, the appellees, E. A. Muhl and wife, owned the property in question and used it as their business -homestead. They owned the Texas Life Insurance Company a sum in excess of $22,000, secured -by a valid lien on the property. They executed and delivered to C. A. Trautschold a mechanic’s lien contract and note for the sum of $8,000 for certain repairs and improvements to be made on the property in question, and shortly thereafter made application to the appellant Farm & Home Savings & Loan Association of Missouri for a loan on said property in the sum of $30,000 for the purpose of taking up and extending the mechanic’s lien inr debted-ness of $8,000 and the indebtedness to the Texas Life Insurance Company of $22,000. The loan was accepted by the appellant. The $8,000 note and contract lien held by Traut-schold and the $22,000 and lien held by the Texas Life Insurance Company were assigned by the respective owners thereof to the appellant, and the appellees then executed and delivered to the appellant a new note in lieu thereof in the sum -of $30,000 for the purpose of talcing up and extending the balance due on said notes. The $30,000 note was secured by deed of trust on the property in question, and the interest thereon was payable in monthly installments. At the time of the making of the loan in question the appellees subscribed for certain stock in the appellant association, as was required by its rules. In 1929 t-he appellant declared the note due for failure to pay the installments thereon and was proceeding to sell the property under the power given in the deed of trust. The appellees filed suit to restrain the sale under the deed of trust, and alleged, among other things, that the improvements called for in the mechanic’s lien contract securing the payment of the $8,000 payable to Trautschold were never fully completed as -therein provided; that there was no consideration for the transfer of said note from Trautschold to the appellant; that the money advanced by appellant to take up said note was not used to pay for the improvements on the premises in question, but that a part thereof was used for other- purposes and a part thereof converted by the appellant to its own use; and that the contract securing the payment of the $30,000 was tainted with usury.

A trial was had before a jury. At t-he conclusion of the evidence, the court, with the consent of the appellant but over the protest of the appellees, discharged the jury and rendered judgment thereon without the aid of the jury. The court, however, after discharging the jury and hearing argument in the case, concluded that out of the money advanced by appellant on the $30,000 note executed by Muhl and wife to the loan association, $22,000 was used to take up the loan held by the Texas Life Insurance Company and only the sum of $1,780.65 of the balance was used in paying for the improvements done under the mechanic’s lien contract in favor of Trautschold, and that .the balance thereof was used for other purposes and was therefore not secured by a valid lien on the property in question. After allowing credit for certain payments made by the appellees, the court rendered judgment for the appellant against the appellee E. A. Muhl for $17,793,28, together with foreclosure of the lien on the property in question against E. A. Muhl and wife, and rendered a personal judgment in favor of appellant against E. A. Muhl for the sum of $7,245 as unsecured by said lien, and ordered the property sold under order of sale for the purpose of paying that part of tne judgment secured by said lien. Tbe judgment was otherwise in favor of the appellees, in that it perpetually enjoined the appellant from selling the property in question under the power given in the deed of trust. The Farm & Home Savings & Loan Association of Missouri has appealed, and the appellees E. A. Muhl and wife have filed cross-assignments of error.

As stated above, the suit by Muhl and wife was for an injunction to restrain the sale of the property under the power given in the deed of trust. The appellant, in its answer, did not pray for a judgment against the appel-lees for its debt, nor for foreclosure of its lien, but merely asked that the amount of its debt be fixed and that it be allowed to sell the property under the deed of trust. Both parties complain of the action of the court in rendering personal judgment for the appellant against the appellee Muhl and in foreclosing the lien on the property in question. There were no pleadings to support such judgment. The appellant preferred to foreclose its lien under the deed of trust so as to cut oft the equities of any junior lienholders claiming an interest in the property. A sale under the deed of trust would cut off such claims, whereas, if the property was to be sold under an order of court, it would be necessary for the appellant to make such lienholders parties to the • suit in order to destroy their equities of redemption. The judgment of the trial court must find support both in the pleadings and in the evidence, and where there are no pleadings to support such judgment it is unauthorized. It was error, therefore, for the trial court to enter a personal judgment for appellant for its debt with foreclosure of its lien for a part thereof.

The evidence shows that the improvements as called for in the mechanic’s lien contract were never fully completed as therein provided, and the appellees contend that by reason thereof the lien never became fixed on the homestead property. The appellant contends that appellees are estopped to set up such defense herein. The mechanic’s lien contract in favor of Trautschold was in the regular form, signed and acknowledged by the husband and wife, and recited that it was given to secure the payment of the $8,000, and that the contractor, in consideration therefor, was to do certain improvements on the premises in question. The deed of trust subsequently executed by ap-pellees to the appellant to secure the payment of the $30,000, recited that said note was given at appellees’ request to take up and extend a balance of $22,000 held by the Texas Life Insurance Company and secured by a valid lien on the property, and the $8,000 due Traut-schold under the mechanic’s lien contract. It recited that the improvements as called for. in the mechanic’s lien contract had been completed as called for therein and had been accepted by the appellees and that the note was secured by a valid lien on the property. The transfer of the $8,000 note and lien from Trautschold to appellant recited that the improvements had been completed as provided in the contract and that they had been accepted by Muhl and wife. At the time the loan of $30,000 was secured from appellant, the ap-pellees, executed and delivered to appellant their affidavits in which they stated that they were the persons who had given the mechanic’s lien note and contract for improvements on their homestead, and that the material had been furnished and the work had been completed by the contractor in full compliance with the terms of said contract and accepted by them. Trautschold made a similar affidavit. The -officials of the association testified that they believed and relied on the representations made in the deed of trust and in the affidavits. Lee Lockwood, the local agent of the association, testified that he believed the' statements contained in the affidavits and thought they were the truth and that nothing had been said to him that would in any way cause him to believe that the improvements had not been so completed. There is nothing in the record to show that the association or its agents knew that the improvements had not been made as represented. E. A. Muhl testified that he knew the property was his homestead and that it was necessary to put the mechanic’s lien on the property, before the loan could be made. He could read and write, and there was nothing to prevent him from reading the various instruments. He further testified:

. “I signed that affidavit because we had to go ahead with the loan, and I figured to get the $30,000.00. That is the reason I signed it. I figured to get it.”

Mrs. Muhl testified that she could read and write and that she signed the papers. There was nothing to prevent her from reading them. The appellees did not allege that they were prevented from reading the papers nor that, they were caused to sign them through fraud, accident, or mistake. Wé think the evidence shows without dispute that the association purchased the $8,000 mechanic’s lien note and made the loan of $30,000 on the property in renewal of this note and the balance of $22,000 held by the Texas Life Insurance Company in the belief that the statements contained in the deed of trust and the affidavits were time and that the improvements had been made as provided for in the mechanic’s lien contract.

It is the contention of the appellees that since the improvements were never fully completed according to the contract, the attempt to create the lien on the homestead was void. This proposition, however, does not take into consideration the well established doctrine of estoppel. Ordinarily the erection of the improvements as per the terms of the contract is a necessary prerequisite to the creation of a valid mechanic’s lien on the homestead, but where the husband and wife have by their conduct led an innocent third party to believe that a valid lien has been created1 on the homestead and such a third party is; caused to invest his funds on the faith and credit of such lien, the husband and wife are estopped as to such third party to plead tha^ the lien is invalid. The homestead laws of; this state are favorites of the courts,'and a> liberal rule will be employed to protect the! homestead f-rom forced sale; but it was never intended by the framers of the Constitution that the homestead law 'should be used as an instrument to defraud an innocent third par-; ty. The appellees having, by their conduct,: led the appellant to believe that a valid lien existed on their homestead to secure the payment of the notes taken up by the association, and the association having purchased said note in good faith before maturity, are now estop-ped to plead that the lien is invalid. Garrett v. Katz (Tex. Civ. App.) 23 S.W.(2d) 436, and cases there cited; Pickett v. Dallas Trust & Savings Bank (Tex. Com. App.) 24 S.W.(2d), 354; Graves v. Kinney, 95 Tex. 210, 66 S. W. 293; Welborn v. Earle (Tex. Civ. App.) 268, S. W. 982; Barron v. Theophilakos (Tex. Civ. App.) 13 S.W.(2d) 739.

The appellees further contend that there was no consideration paid by the association to Trautsehold for the §8,000 note, and further that the appellees never received from the association the full $30,000. With reference to the first contention the evidence shows that' Trautsehold wa-s a kinsman of E. A. Muhl and that at the time he signed the assignment of the note to the appellant he stated that id would be satisfactory with him rto deliver the money directly to Mr. Muhl. In addition to this, Trautsehold is not a party to this suit and is not pleading failure of consideration fori the assignment of this note.

With reference to the second contention, that is, that the appellees did not receive from .the association the full benefit of the $30,000 evidenced by the note in question, the evidence shows that a check for $30,000 was made out, to E. A. Muhl, and R.- L. Dockwood, who was the local agent of the association, and for-; warded to Lockwood. Muhl indorsed the' check to Lockwood, who in turn, deposited the] same in his bank. Lockwood with Muhl’s con-| sent delivered a check in the sum of $22,000 to the Texas Life Insurance Company in pay-) ■ment of the balance of the loan held by that company and being taken up by the appellant. He gave Muhl checks for $6,500 and retained in his possession the balance of $1,500 to pay an account that he held against Muhli in the sum of $1,529.25. This account consistí ed, among other things, of two advance pay-; ments made to the association by Lockwood at' Muhl’s request, insurance, premiums, ab-j stracts, fees, etc. All the items of this account] were obligations of Muhl’s and he authorized] the payment of same.

The appellees claimed that after the checks for $6,500 were delivered to him, that Lockwood caused appellee Muhl to sign a ;blank check, and that afterwards, without his consent, this check was filled out for the sum of $4,719.35, and delivered to the Texas Life Insurance Company, and that by reason thereof Lockwood, as agent for the appellant, had enabled the life insurance company to convert said money to its own use, and that by reason .thereof he should have credit on the note here involved for that amount-. It seems that Muhl actually owed the Texas Life Insurance Company more -than $22,000. According to his own testimony, after he signed the blank check he went with Dockwood to the office of the insurance company for the purpose of taking up the loan held by the insurance compa'ny. He .stood there and saw the officials of ]the insurance company figuring up the amount '.that he actually owed the company. He says, however, that he did not know what they were doing. The parties all then went back to the bank where appellees’ money had been deposited. He testified:

“I went with Mr. Lockwood and someone out of that bank, the insurance company bank, back over to the Eirst State Bank and they cashed my check, that cheek there, the way I understand it. The First State Bank & Trust Company evidently cashed this check for $4719.35 and paid out the money because we went back and they gave me some notes and securities I had at that bank.”
He further testified:
"Relative to whether it is or is not a fact that I know, and knew at that time, that Mr. Dockwood paid the Texas Life Insurance Company $22,000.00, and that on the same day I paid them $4,719, and some odd cents .additional, as represented by the cheek that ⅞ identified which Mr. Dunnam introduced in evidence here, I will state that I was there with him when it was paid, but I didn’t pay it. I was there when it was paid, but I did not know that that amount was paid. I knew at that time that Mr. Mayfield was claiming that I owed the Texas National Bank more than $22,000.00. I saw part of this cheek madé out for $4,719.00.”

There is testimony in the record that ap-pellee gave the Check in question directly to .the Texas Lifel Insurance Company in payment of the additional indebtedness owing by him. It is apparent from appellees’ own .testimony that the money in question was used for his use and benefit by and with his consent. Moreover, all of the money so placed in appellees’ bank account consisting of the $6,500 above referred to was checked out by appellee Mu'hl and the hank account closed in 1927. The cheek for $4,719.35 had been given on this account. He made no complaint on account of this sum having been cheeked out of bis account until tbe year 1930. His long silence in this respect is strong evidence of bis acquiescence and approval thereof. We do not understand that it was incumbent on tbe appellant to see that every dollar of tbe identical money advanced by it was paid directly to tbe contractor who constructed- tbe improvements. Tbe appellee bad paid some of tbe bills for tbe work done and was entitled to reimburse bimself out of tbe funds in question. Turbeville v. Book (Tex. Civ. App.) 226 S. W. 814. Tbe appellees therefore received tbe full benefit of the $30,000 advanced by appellant.

Tbe appellees, by cross-assignments of error, contend that the loan in question was tainted with usury. As before stated, tbe appellant is a building and loan association and at tbe time of tbe making of tbe loan in question, tbe appellees subscribed for 30Q shares of stock in the appellant association. Tbe subscription contract bound tbe appel-lees to pay monthly installments of $150 on tbe purchase price of the stock, and under tbe rules of tbe association, if such installments were not paid as they matured, tbe purchaser was required to pay a charge of 1 per cent, per month assessed, on tbe amount of dues on each $100 par value of such stock delinquent and unpaid, and in addition tbe association was authorized to charge interest at the rate of 1 per cent, per month on delinquent interest due on tbe $30,000.

Tbe charge of 1 per cent, per month on delinquent installments on tbe stock purchased was authorized by article 869, Revised Civil Statutes 1925, and was entirely separate and distinct from tbe interest on tbe loan in question. It was not a penalty for tbe detention of tbe money borrowed by tbe appellees and did not in any sense constitute usury. Geisberg v. Mutual Building & Loan Association (Tex. Civ. App.) 60 S. W. 478; Interstate Building & Loan Association v. Goforth, 94 Tex. 259, 59 S. W. 871.

The charge of interest at tbe rate of 1 per cent, per month on delinquent interest, if standing alone, would be usurious. But this charge must be taken in connection with tbe rate of interest on tbe principal. Tbe principal bore interest at the rate of 7.8 per cent, per annum. Tbe monthly installments of interest as they matured became a part of the principal, and, if tbe contract bad not otherwise provided, would have borne tbe same rate as tbe principal. Bothwell v. Farmers’ & Merchants’ State Bank (Tex.Sup.) 30 S.W.(2d) 289, par. 2. By adding tbe sum to be collected as interest on tbe delinquent interest at 1 per cent, per month to tbe sum-to be collected as interest on tbe principal at 7.8 per cent, as provided in tbe contract, the total rate of interest on tbe entire loan will never exceed 10 per cent, peí-an num. Moreover, tbe deed of trust in question expressly provided that under no circumstances should tbe obligors ever be required to pay interest on tbe loan in excess of 10 per cent, per annum. Tbe contract was not usurious.

Appellees contend that the appellant was not entitled to maintain its cross-action herein, because it did not allege and prove that it had a permit to do business in Texas at the time the suit was filed, and further that it bad complied with all tbe provisions of title 24, Revised Civil Statutes 1925 (article 852 et seq.), regulating building and loan associations, and prescribing tbe prerequisite for tbe securing of such permits. The appellant was a foreign building and loan association incorporated under tbe laws of tbe state of Missouri. Appellant did allege and prove that it toad a permit to do business in this state from tbe year 1919 to 1929. The contract sued on was made in 1926. The statute does not require a foreign corporation to have such a permit at tbe time of tbe filing of tbe suit, but only requires that it have such permit at tbe time the “contract was made or tort committed.” Revised Civil Statutes 1925, article 1536 ; Kingman Texas Implement Co. v. Borders (Tex. Civ. App.) 156 S. W. 614; Security Co. v. Panhandle National Bank, 93 Tex. 580, 57 S. W. 22. Where a sworn public official, acting within line of bis duty, does an act which presupposes tbe existence of certain facts necessary to make bis act legal, bis act is presumptive proof of tbe existence of such fact. He will be presumed to have acted lawfully. Lewis v. Heath (Tex. Civ. App.) 12 S.W.(2d) 641, par. 4; Miller Mfg. Co. v. Coleman (Tex. Com. App.) 29 S.W.(2d) 991, par. 1; 22 R. C. L., page 474. Since tbe secretary of state issued to appellant a permit to do business in this state, it will be presumed that tbe appellant complied with all tbe necessary prerequisites as prescribed by Revised Civil Statutes 1925, title 24, regulat- • ing building and loan associations. If tbe question could be raised at all in this proceeding, the burden was clearly on tbe ap-pellees to both allege and prove tbe absence of tbe necessary facts authorizing tbe secretary of state to issue tbe permit. Supreme Council v. Story, 97 Tex. 264, 78 S. W. 1; Independent Order of Puritans v. Brown (Tex. Civ. App.) 229 S. W. 939, at page 944.

At the time appellees secured tbe loan in question, they assigned to appellant tbe rents to accrue from.tbe mortgaged property to secure the payment of the loan. Tbe appellant alleged the execution and delivery of tbe assignment;. that the property was inadequate to pay its debt; and that if a receiver was not appointed, appellant would suffer irreparable injury. There was no proof, however, as to the value of tbe security. Tbe appellant prayed for tbe appointment. of a receiver to take charge of the rents. Since the rents were pledged as security for the payment of the debt, and the appellees had defaulted in the payment thereof, the appellant was entitled to have a receiver appointed to take charge of and hold the rents for the purpose of liquidating its claim. Revised Civil Statutes 1925, article 2293; De Barrera v. Erost, 33 Tex. Civ. App. 580, 77 S. W. 637; Citizens’ State Bank v. First National Bank, 56 Tex. Civ. App. 515, 120 S. W. 1141; Cotton v. Rand (Tex. Civ. App.) 92 S. W. 266. 42 C. J., page 123, § 1688.

. It is apparent from what has been said that the appellant is entitled to have the amount of its debt established and that it should be permitted to sell the property in question under its deed of trust in satisfaction of its indebtedness. The amount of appellant’s debt is the $30,000 as evidenced by. the note in question, together with the accrued interest thereon, and insurance premiums advanced by it, less the payments heretofore made by the appellees. The trial court found that the appellees had paid the sum of $8,688. This was the maximum amount claimed by appellees. Applying these payments as they were mlade, appellant’s debt on January 28, 1930, at the time the last payment was made and after deducting all credits to which appellees were entitled, amounted to $30,715. Appellant is entitled to interest from that date at the rate of 7.8 per cent, per annum.

The judgment of the trial court is therefore reversed, and j'udgment here rendered for appellant fixing its indebtedness at the sum of $30,715, with interest thereon from January 28, 1930, to date at the rate of 7.8 per cent, per annum and that appellees take nothing. The temporary injunction heretofore issued by the trial court restraining the sale of said property under the deed of trust is hereby dissolved. The trial cburt will, upon application of the appellant, appoint a receiver for the purposes hereinabove indicated.

On Motion for Rehearing.

At a former date, we reversed and rendered this cause in favor of the appellant on the ground that the undisputed testimony showed that the appellant had purchased the mechanic’s lien note in good faith, believing that the improvements had been completed according to.the terms of the contract. On motion for rehearing, and a more careful examination of the 'record, we find that we were in error. It is undisputed that the improvements called for in the mechanic’s lien contract were never completed according to the terms of the contract. The appellant alleged that the appellees had represented that the improvements had been completed according to the'terms of the contract and that appellant had purchased said note and lien believing that said representations were true. The burden was on the appellant to prove this defense. The only evidence offered by the appellant on this issue was that of its agents and employees. They were interested witnesses and their credibility and the weight of their evidence was for the jury to determine. In H. E. & W. T. Ry. Co. v. Runnels, 92 Tex. 307, 47 S. W. 971, at page 972, the court said:

“It is the province of the jury to pass upon the credibility of the witnesses, and they may disregard the testimony of a witness who has neither been impeached nor contradicted, if they believe his statements to be untrue from his manner of testifying, prejudice exhibited towards the opposite party, or his interest in the result of the litigation, or other things indicating that the evidence is not reliable.” Pope v. Beauchamp, 110 Tex. 271, 219 S. W. 447; Moore v. Moore (Tex. Civ. App.) 259 S. W. 322; Crosby v. First Presbyterian Church, 45 Tex. Civ. App. 111, 99 S. W. 584; Burleson v. Tinnin (Tex. Civ. App.) 100 S. W. 350.

The witness Washington testified that Bee Boekwood, ,the agent of appellant, visited the premises from time to time and that the witness, at about the time the loan papers were signed, probably told Boekwood that the improvements had not been fully completed. These statements were denied by Boekwood. Under the state of the record, the appellees were entitled to have submitted to the jury the question of whether or not the appellant took up the note and lien from Trautschold in good faith, believing that the improvements had been fully completed, it therefore becomes necessary to reverse and remand the case for a new trial.

In view of another trial, we deem it proper to discuss other assignments of error presented by appellant. The appellant complains of the refusal of the trial court to admit the testimony of the witness Washington to prove the amount necessary to complete the improvements according to the contract. The mechanic’s lien contract provided:

“It is further agreed that a failure to complete said improvements or a failure to complete the same according to contract shall not defeat said indebtedness and lien, but in such case the indebtedness and lien upon said premises and improvements shall exist in favor of said party of the second part (meaning Trautschold), his heirs and assigns, for said contract price, less such an amount as would be reasonably necessary to complete said improvements according to the plans and specifications.”

If the appellant purchased the note and lien on the representations of the appellees that the improvements had been completed according to the contract and if appellant actually believed and relied on such representations and did not know that the improvements had not been so completed, then the amount necessary to complete the improvements would be immaterial; but if appellant did not so purchase said note and lien, then the appellees, in view of the above stipulation in the mechanic’s lien contract, would not be entitled to defeat the entire lien, but would be entitled to a credit on the note for the amount necessary to complete the improvements according to the terms of the conract. Galbraith-Foxworth Lumber Co. v. Long (Tex. Civ. App.) 5 S.W.(2d) 162 (writ refused). The evidence of the witness Washington, if offered on another trial, should be admitted.

The appellees sought to recover from appellant damages for the loss of the use of the premises on account of the failure to complete the improvements according to the terms of the mechanic’s lien contract. The appellant, by the purchase of the note and lien, did not assume the obligation to construct the improvements, and therefore the appellant would not be liable in damages for failure to so construct such improvements. Gollnick v. Fry (Tex. Com. App.) 23 S.W.(2d) 677, at page 681; Galbraith-Foxworth Lumber Co. v. Long (Tex. Civ. App.) 5 S.W.(2d) 162, supra; Lancaster v. Whaley Lumber Co. (Tex. Civ. App.) 18 S.W.(2d) 796.

The appellees made various allegations to the effect that at the time they signed the loan papers they did not know that the contract provided for the purchase of stock in the appellants’ association, nor that the contract provided for certain penalties and the manner of the application of the payments to be made thereunder, and further alleged that they did not know the contents of the affidavits signed by them. They offered evidence to support these allegations. The appellant directed special exceptions to appel-lees’ pleading on the ground that the appel-lees did not allege that they were in any wise overreached nor that they were prevented from reading said papers, nor that any fraud was perpetrated which induced them to execute the instruments without knowing the contents thereof. Without discussing these exceptions in detail, it is sufficient to state that in the absence of allegations that the appellees were in some way prevented from reading the instruments, or from knowing the contents thereof through the fraud, misrepresentations or overreaching of the appellant, or its agents, the court should have sustained said exceptions, and excluded the evidence. National Union Fire Ins. Co. v. Peck (Tex. Civ. App.) 296 S. W. 338; Petterson v. Yellow Cab Co. (Tex. Civ. App.) 298 S. W. 918; Keystone Pipe & Sup. Co. v. Kleeden (Tex. Civ. App.) 299 S. W. 671.

The motion for rehearing is granted, and the judgment heretofore entered is set aside, and the judgment of the trial' .court is reversed and the cause remanded for a new trial.


source: Caselaw Access Project

author: LEVY, J.

license: Public Domain

text:
    MILLER v. GOOD MARBLE & TILE CO. et al.
    No. 3907.
    Court of Civil Appeals of Texas. Texarkana.
    April 3, 1931.
    Rehearing Denied April 9, 1931.
    Hamilton & Hamilton and D. A. Frank, all of Dallas, for appellant.
    Peyton A. Ellison, Hoyt A. Armstrong, and Robertson, Robertson & Payne, all of Dallas, for appellees.
   LEVY, J.

By its original petition filed January 20, 1928, the Architectural Tile Company, a private corporation, sued the Good Marble & Tile Company, a corporation, and C. R. Miller, to recover against them jointly and severally the sum of $621.27, being the balance claimed to be due and unpaid for tile furnished and used in the building of the house, and to establish and foreclose a material-man’s lien upon the house and lot at 5112 Swiss avenue in thé city of Dallas. Thereafter on February 15, 1929, the Architectural Tile Company filed its first amended original petition, and by which personal judgment was sought against the Good Marble & Tile Company alone, upon the ground that such company was the buyer in the regular course of business of the amount of tile shown in Exhibit A. This amended petition did not set up a lien for the tiling furnished and used in the building.

The Good Marble & Tile Company made answer to the suit of general denial and by way of cross-action sought to recover against the Architectural Tile Company $1,103.65 as damages for the alleged failure to ship and deliver within a reasonable time the tile contracted to be delivered. The Good Marble & Tile Company further, by cross-plea, sought to recover against C. R. Miller, the present appellant, $1,103.65 with interest, as the balance claimed to be due and unpaid upon a contract in writing to pay to the Good Marble & Tile Company the sum of $3,194 for labor and materials in doing the tile work in his residence that was being erected.

C. R.. Miller, after plea in abatement and of misjoinder of actions, answered specially denying that he or any one with authority from him ever agreed to pay $3,194 sued for, and specially pleading full accord and satisfaction by payment by cheek for all tiling furnished in the construction of his home. O. R. Miller further sought by way of cross-action to recover damages alleged to have been occasioned to him through delay in completing and giving possession to him of his residence then being constructed because of the alleged delay on the part of the Good Marble & Tile Company in furnishing the tile necessary to be used in the house.

The Good Marble & Tile Company denied under oath that there was any consideration for the accord and satisfaction or settlement set up by C. R. Miller.

There was’ a trial before a jury upon special issues, and in keeping with the answers of the jury, the court entered judgment, viz.: (1) In favor of the Architectural Tile Company for the sum sued for with interest of $692.11 against the Good Marble <& Tile Company; (2) in favor of 'the Good Marble & Tile Company 'for the sum sued for with interest of $1,274.53 against O. R. Miller; (3) denying any recovery to the Good Marble & Tile Company on its cross-action against the Architectural Tile Company; (4) denying any recovery to C. R. Miller on his cross-action for damages against the Good Marble & Tile Company.

The issues submitted, as bearing upon the appeal, were:

“Special Issue No. 1: On April 29, 1927, and prior to the execution of the check introduced in evidence dated April 29, 1927, was there a dispute in good faith between C. R. Miller and Good Marble & Tile Company as to the amount due Good Marble & Tile Company?” Answer by jury: “No.”

“Special Issue No. 2: Was the Churchill-Humphreys Company authorized by C. R. Miller to execute for C. R. Miller the instrument introduced in evidence dated November 8, 1926, and signed by Churchill-Hum-phreys Company on November 18, 1926?” Answer by jury: “Yes.”
“Special Issue No. 3: Was Good Marble & Tile Company, its agents and representatives led by the words, act or conduct of C. R. Miller to believe that Churchill-Humphreys Company had authority to execute as the obligation of O. R. Miller the instrument introduced in evidence, dated 'November 8, 1926, and signed by Churchill-Humphreys Company on November 18, 1926?” Answer by jury: “Yes.”
“Special Issue No. 4: Do you find and believe from a preponderance of the evidence that there was an unreasonable delay upon the part of the defendant Good Marble & Tile Company, in the matter of carrying out the tile contract on the O. R. Miller home?” Answer by jury: “No.”
“Special Issue No. 6: Did Good Marble & Tile Company comply with their alleged contract in furnishing and installing the kind and character and colors of materials which they agreed to furnish and install in the C. R. Miller home?” Answer by jury: “Yes.”
“Special Issue No. 8: Do you find from a preponderance of the evidence that C. R. Miller is entitled to recover from Good Marble & Tile Company the sum of $60.10 incurred in connection with the plumbing job referred to in C. R. Miller’s pleading?” Answer by jury: “No.”

C. R. Miller appeals from the judgment against him in favor of the Good Marble & Tile Company, claiming that the evidence established without controversy that upon a bona fide dispute of the amount owing for the tiling a complete settlement was made between him and Mr. Good of the Good Marble & Tile Company.

' In view of all the evidence it is believed there arises a question of fact for submission to the jury as to whether or not a bona fide dispute existed. 1 Tex. Jur. § 31, p. 272; 1 C. J. p. 554.

In the early fall of 1926, O. R. Miller let a contract to Churchill-Humphreys Company, a corporation, general contractors, to rebuild or remodel a residence according to prepared plans and specifications and for a stated price. According to the plans; and as a part of the contract, tile was to be furnished and put in the kitchen, bathrooms, sun room, and breakfast room. This building contract stipulated that C. R. Miller should have the right to “select the tile and hardware and fixtures” that were to go into the house. The cost of the tile selected was not to exceed the price of $2,200, and if it did, then C. R. Miller, as he admitted, was to pay the greater price, and if less tlian $2,200, then C. R. Miller was to receive credit or refund in the difference of the amount.

In the latter part of October the work on the residence had progressed to the point of putting in the tile, and O. R. Miller undertook to make his selection of the tile to be used. After visiting tile firms in Dallas and Waco, the Good Marble & Tile Company of Port Worth was finally agreed upon to furnish the tile according to the plans and specifications. On October 25th the following requisition was sent to and received by the Good Marble & Tile Company, viz.:

“Requisition
“Churehill-Humphrey Company
"Gen. Contractors and Engineers
“Construction Finance
“207 Magnolia Bldg.
“Order No. 363
“Dallas, Tex., Oct. 25, 1926
“Job No. Miller Res.
“Lang & Witchell.
“M, Good Marble & Tile Company,
“Port Worth, Texas.
“Enter our order for the following and ship to Churehill-Humphrey Co., Inc., 5012 Swiss Ave., Dallas, Texas.
“(Here follows description.)
“Furnish and install all tile, terrazzo and slate floors, or tile substitutes, in accordance with the plans and specifications of Lang & Witchell, Architects, and in accordance with your agreement with Mr. and Mrs. C. R. Miller.
“It is our understanding that you have visited this building and know what material remains and also what new material is required to make a complete job, and that you will furnish the color of tile, trim, etc., of size and height selected by Mr. and Mrs. C. R. Miller and that you will complete this work in six weeks as per your agreement with Mr. and Mrs. C. R. Miller. The tile wainscoting is to be 6'0" high.
“Price $2500.00.
“Churehill-Humphrey Co.,
“By D. E. Humphrey [Signed]”

Mr. Miller admits that the original contract price was $2,500. Later, on November 8, 1926, the following proposal was sent to and received by Churchill-Humphreys Company :

“Good Marble & Tile Company
“Fort Worth, Tex. Nov. 8th, 1926.
“Churchill & Humphries,
“5112 Swiss Ave.,
“Dallas, Texas.
“Re Miller Residence Dallas, Texas.
“G.entlemen:
“Since submitting our original proposal in connection with the tile work on the above mentioned residence at Mrs. Miller’s suggestion several changes have been made effecting our original quotation, and we are, therefore, submitting today in detail our proposal based upon different selections of tiles made by Mrs. Miller.
“(Here follows description.)
“The above fixtures to be distributed throughout bathrooms wherever indicated by the owner.
“All of the above mentioned work set in place complete for the sum of two thousand nine hundred and nineteen ($2,919.00) dollars.
“Kitchen:
“We propose to furnish and install a 4'-3 tile wainscot to kitchen walls using a six inch blue bright glazed base, 4%X4/4 white glazed wall tile and 6X2 blue bright glazed cap for the additional sum of two hundred and seventy five ($275.00) dollars.
“Kindly return one sign copy to us, retaining duplicate copy for your files.
“Yours very truly,
“Good Marble & Tile Company
“By H. G. Good.”
On November 18,1926, there was written on the proposal and returned to the Good Marble & Tile Company the following:
“Date 11 — 18—26
“Accepted Churehill-Humphrey Co.
“By S. J. Churchill for Clarence Miller.”

Mrs. Miller does not deny that these several changes had been made as stated in the proposal. There is evidence tending to show that Mr. Miller was furnished with a copy of the proposal setting out the price of $3,194. Mr. Miller, though, denies that he knew of that price until after the present suit was filed, and he further denied that he authorized Mr. Churchill to sign the proposal for him. On April 29, 1927, the following check was given: “No. 599 Dallas, Texas, April 29, 1927. “North Texas National Bank 32—11 Pay to the order of Good Marble & Tile Company $2090.35 two thousand and ninety & 3¾00 dollars.

“[Signed] C. R. Miller.”

In ink across the top of check appears the following figures:

Aect. • 2565.43 less

Plumber 60.10

Escrow 350.00

“ 65.00

"475.10

2090.35

On, reverse side of cheek appears the following:

“Covering Account, accord and satisfaction in full to date.
“Upon ^replacing colored tile $65.00 more to be paid.
“Plumbing bill of $60.10 deducted.”

Mr. Good, for the Good Marble & Tile Company, indorsed that check and received the money thereon. At the time of giving this check, Mr. Miller claimed that the contract price was only $2,500, and Mr. Good for the Good Marble & Tile Company claimed .that the contract price was $3,194. Mr. Miller further claimed that he was entitled to damages from the Good Marble & Tile Company for delay in furnishing the tile and to have the same installed promptly. Mr. Good denied that he was liable or responsible for the damages, There was evidence going to show that there was a delay in furnishing the tile, and there was evidence authorizing the jury to find, as they did do, there was not an unreasonable delay in providing the tile for the building on the part of the Good Marble & Tile Company. There is evidence which would authorize a jury to find that the Good Marble & Tile Company complied with their agreement in furnishing and installing the kind and colors of tile which they agreed to deliver and provide. There was much correspondence between the parties showing and explaining the existence of the delays in shipping the tile. At the time Mr. Miller first gave the check to Mr. Good, it was made payable to the order of Good Marble & Tile Company and the contractors, Churchill-Humphreys Company.. Mr. Good took the check to the Churchill-Humphreys Company, who refused to indorse it, whereupon Mr. Good returned the check to Mr. Miller, and .then Mr. Miller called Mr. Humphreys and induced him to accept $350 in settlement of a damage claim of the Churchill-Humphreys Company. After-wards the check was changed to read as above set out and having the notation on the back of it. Mr. Good denied that he was liable for any damages. It is unnecessary to set out all the evidence in detail. It is sufficient that the jury was authorized to find that the proposal in evidence of $3,194 was known and authorized by Mr. C. R. Miller in view of the fact that there was some evidence that a copy was given him and he stated that he was to be responsible and pay for the tiling in amounts above $2,200 in the event the price of the tiling was above $2,200.

We have carefully considered all the other assignments of error, and think each of them should be overruled.

The judgment is affirmed.

On Motion for Rehearing.

Upon a reconsideration of the record, we have concluded that we were in error in not sustaining the assignment of error complaining of the refusal to give peremptory instruction to the jury to return a verdict in favor of the appellant. We have concluded that the evidence conclusively shows that there was a real dispute between the parties which was grounded on facts sufficient to furnish a basis. for applying the doctrine- of accord and satisfaction. O. R. Miller tendered his check to the Good Marble & Tile Company upon condition that it be accepted in full payment, and the Good Marble & Tile Company accepted it with the notation appearing on it that it was in full satisfaction of the debt and cashed the same. There is an absence of any allegation and evidence that the check was given in ignorance of its purport or in circumstances constituting duress, fraud, or mistake.

The appellant denied liability on the contract upon which the demand in this suit was based, claiming that the debt was not his. I-Ie denied that the price stipulated in the contract was the price which he and the Good Marble & Tile Company had agreed on. He repeatedly claimed that he had been damaged in the sum of $300 by the delay of the Good Marble & Tile Company in failing to complete the contract of installing the tiling in the house within the time that he had been told by the Good Marble & Tile Company that it would be completed. He further contended that this delay was due entirely to the failure of the Good Marble & Tile Company to promptly and properly perform the services had contracted to perform in installing the tiling. He also claimed that the tiling in one of the bathrooms in the house was not of the kind and duality called for in the contract and should be replaced with the proper kind and quality. He claimed the right to deduct or withhold the sum of $65 until that replacement was made; that replacement had never been made, and the tiling objected to and admitted to be a different kind and quality was still there. He claimed that a plumber’s bill for repairing a water pipe which had been damaged by an employee of the Good Marble & Tile Company, in preparing the floor of the bathroom for laying the tile, had been charged to him, and for which he was not responsible. All of the above items and counterclaims were fully discussed between the appellant Miller and Mr. Good of the Good Marble & Tile Company in April, 1927, when the check in evidence was given. We find no evidence upon which the jury could fairly conclude that the appellant Miller’s claim at the time the check was given was insincere and simulated for the purpose of obtaining a reduction in the price. It is believed that this court should hold, as a matter of law, that the settlement was fairly made and is, binding on the parties. Root & Fehl v. Murray Tool Co. (Tex. Com. App.) 26 S.W.(2d) 189; 1 Ruling Case Law pp. 194, 195.

The former judgment of affirmance is therefore Set aside, and the judgment of the district court so far as between C. R. Miller and the Good Marble & Tile Company is reversed, and judgment here rendered in favor of O. R. Miller that the Good Marble & Tile Company take nothing- in its cross-action against C. R. Miller; tie Good Marble & Tile Company to pay tbe costs of appeal and all costs in tbe trial court incurred by O. R. Miller.


author: BLAIR, J. -

text:
    JONES v. L. E. WHITHAM & CO.
    No. 7548.
    Court of Civil Appeals of Texas. Austin.
    Feb. 25, 1931.
    Rehearing Denied March 18, 1931.
    Upton & Upton, of San Angelo, for appellant.
    Milburn E. Nutt, of Wichita Falls, for ap-pellee.
   BLAIR, J. -

Appellee, L. E. Whitham & Company, sued appellant C. H. Jones, seeking*a personal judgment and to foreclose a special reassessment certificate or paving lien against the property described in the petition; and Dudley Jones was likewise sued. Judgment was for appellee as prayed against C. H. Jones, and by default against Dudley Jones, served as a nonresident, for foreclosure of the assessment lien only; hence this appeal by C. H. Jones.

On December 10, 1927, the city of San Angelo, operating under a home-rule charter and under the provisions of the Street Improvement Law, chapter 9, title 28, R. S. (article 1086 et seq.), which it had adopted, contracted with appellee to pave the street abutting on the property in question. The original assessment was made by the city of San Angelo on January 24, 1928, and the paving project was completed and accepted and a special assessment certificate issued to appellee on June 5, 1928, against Dudley Jones. For a number of years prior to any of the aforesaid proceedings, and during the time the paving was being done and after-same was completed and accepted, and at the time the assessment certificate was issued, the property in question was used and occupied as the homestead of Dudley Jones and his family, and continued to be so used until July 13, 1928, when he and his wife conveyed the same to O. H. Jones, and thereafter Dudley Jones and family ceased to use the property as their homestead, and C. H. Jones never at any time used the same as his homestead. Dudley Jones and wife did not execute any character of contract for the paving. On November 20, 1928, after giving the statutory notice of its intention to do so, the city of San Angelo expresssly repealed the original assessment ordinance cause of mistakes and irregularities, and passed a reassessment ordinance, and issued to appellee a special reassessment certificate against O: H. Jones, dated November 24, 1928, which reassessment certificate the trial court decreed to be valid, and rendered the judgment above stated.

The municipality had no power to make the original assessinent against this homestead for the improvement of the abutting street, and its proceedings against the then owners attempting to do so furnish no basis for the reassessment establishing a lien against the property or a personal liability against appellant, as purchaser of the property after the improvements had been completed and accepted. The universal rule that no reassessment can be authorized where the Legislature or municipality lacked the constitutional power to make the original assessment is stated in 44 C. J. 772, § 3346 (3), as follows:

“Subject to the limitation that no reassessment can be authorized by the legislature or made by*the municipality where the legislature was without constitutional power to make or to authorize the making of the original assessment, it has generally been held that a reassessment may be made under proper statutory authorization.”

Article 16, § 50, of the Texas Constitution, exempts the homestead of a family from liability to a special assessment for improvement of an abutting street. Dallas v. Atkins, 110 Tex. 627, 223 S. W. 170. This construction of the Constitution is based on the theory that such special assessment is not a tax within the meaning of the constitutional provisions that a homestead is not exempt from sale for taxes due thereon. Higgins v. Bordages, 88 Tex. 458, 31 S. W. 52, 803, 53 Am. St. Rep. 770. And further in this connection, it has been held that since the homestead is thus protected by the Constitution, it cannot be affected by any failure on the part of the owners to appear and contest proceedings to impose special assessments on it for public improvements. Spears v. San Antonio, 110 Tex. 618, 223 S. W. 166. We therefore conclude that since the improvements of the abutting street had been completed and accepted during the period the property was exempt as a homestead for such improvements, and since the Legislature was without constitutional power to make or to authorize the municipality to make the original assessment against' this homestead, there was no authority or basis for the reassessment sought to be enforced in this case under the rule above quoted.

Not only were the Legislature and the city of San Angelo inhibited by the preceding provisions of the Constitution from making the original assessment against this homestead, but the city was also inhibited from doing so under provisions of article 1091 of the Street Improvement Law, which reads as follows:

“Exempt property. — Nothing herein shall be construed to empower any city to fix a lien by assessment against any property exempt by law from sale under execution; but the owner of such exempt property shall nevertheless be personally liable for the cost of improvements constructed in front of. his property, which may be assessed against him. The fact that any improvement is omitted in front of exempt property shall not invalidate the lien of assessments made against other property on the highway improved, not so exempt.”

This statute must be read into appellee’s contract with the city of San Angelo, and when that is done no lien could have attached to the homestead of Dudley Jones for the street improvement in question; and therefore no authority or basis for the reassessment sought to be enforced here existed under the rule above quoted, and we pass to a consideration of whether appellant is personally liable for the improvement of the street in question,

It is indisputable that since the improvement of the abutting street was completed and accepted while the property was homestead, and since no lien attached to the homestead for the improvement of the abutting street, the owner could thereafter dispose of same free of any claim or lien for the street improvement. The fact that the municipality attempted to establish a lien on this homestead for the street improvement is not material, because the purchaser with or without notice of the attempted lien is not bound thereby; and in fact, as was held by the Commission of Appeals in the case of J. P. Wooten Motor Co. v. First National Bank of Swenson, 281 S. W. 196, the attempted lien on the homestead was in law knowledge that same was void, and therefore no impediment of the right of the owner to sell at will. Willis v. Mike, 76 Tex. 82, 13 S. W. 58; Miller v. Menke, 56 Tex. 539; Inge v. Cain, 65 Tex. 81; Wood v. Chambers, 20 Tex. 247, 70 Am. Dec. 382; Cox v. Shropshire, 25 Tex. 113; Martel v. Somers, 26 Tex. 559; Hargadene v. Whitfield, 71 Tex. 488, 9 S. W. 475.

Nor can there be any question, in view of the holding of the preceding authorities, that appellant did not become personally liable for the personal indebtedness or liability of Dudley Jones for the paving. To so hold would be to require a purchaser of a homestead' to pay the general debts of the owner.

Nor did the Legislature intend by the enactment of the reassessment statute (article 1095) to authorize a municipality to reassess the cost of improvement of a street abutting a homestead against one who purchases same subsequent to the completion and acceptance of the improvement. In such cases the municipality and contractor simply accept the personal liability of the homestead owner for the improvement under the provisions of the street improvement statutes themselves, and a imrcha'ser simply buys and pays for the property and the improvement free of any claim or lien therefor, and certainly there could be no basis for establishing a personal liability against the purchaser for the improvement completed and accepted at the time of purchase. It is true that a proceeding to reassess property for public improvements is a proceeding de novo and effective as of the date of reassessment, but the basis for the reassessment is authority to make the original assessment, and the basis of personal liability for improvement of an abutting street is incident to the ownership of the property, which must at least be during some period of time before final completion and acceptance by proper authority of the improvement; or which personal liability of purchaser may arise under some character of assumption agreement with the seller; but this character of personal liability does not arise in this case.

The judgment of the trial court will be reversed and judgment is here rendered for appellant, and that appellee take nothing by its suit.

Reversed and rendered.

On Motion for Rehearing.

By its motion ior a rehearing appellee contends that -we have apparently taken no cognizance of articles 1097 and 109&, relating to special reassessment of paving costs against abutting property. We carefully construed all the reassessment statutes in our original opinion as having no application where the abutting property was at the time of the original assessment and at the time the paving was completed and accepted and the assessment Certificate issued a homestead, because such homestead is exempt by both the paving statute and the constitution from the assessment. To hold as contended for by appellee that the broad language “if for any reason, no part of the cost of such improvement has been borne by the abutting property or paid by the owner or owners thereof,” as used in article 1097, is sufficient authority for the reassessment of the cost against a homestead sold after the paving had been completed and accepted, but within the very indefinite period of reassessment, would render nugatory both the statute and the Constitution which exempt such a homestead from the paving assessment. The effect of such construction of these reassessment statutes would be to subject every homestead sold within the reassessment period, which period the statutes do not fix, but which has been construed to be for a reasonable time as the facts may disclose, to such assessment lien notwithstanding the statutory and constitutional inhibitions against such assessment against a homestead. In other words, the owner of a homestead could not alienate it within the reassessment period without subjecting it to the reassessment lien, because if the statutes authorized the reassessment so as to fix the lien on the alienated homestead, the purchaser would be charged with notice of the provisions of the statutes as a matter of law, and would be compelled to deduct the paving cost from the purchase price of the homestead thereby indirectly charging it with a lien for the paving in violation of the Constitution which renders void any and all attempts to create, either directly or indirectly, a lien upon the homestead.

The motion is overruled.

Overruled.


text:
    LONE STAR GAS CO. v. HUTTON et ux.
    No. 3972.
    Court of Civil Appeals of Texas. Texarkana.
    March 25, 1931.
    Rehearing Denied April 2, 1931.
    ICarl F. Griffith, Roy C. Coffee, and Marshall Newcomb, all of Dallas, for appellant.
    A. P. Dohoney, of Paris, for appellees.
   LEVY, J.

The suit was by the appellees, owners of 297 acres of land, for damages caused to the land and crops through the alleged diversion of the natural flow of the waters of certain streams. The defendant answered by general and special denial, and specially pleaded that the injury was caused by agencies and circumstances beyond its control and through no act or omission on its part and through negligence on the part of the plaintiffs. The defendant further pleaded a conveyance by the plaintiffs of the right of way and easement in the land with stipulations of liability for damages from the construction, operation, and maintenance of the pipe line.

There was trial before the court without a jury and a judgment for the plaintiffs.

The trial judge’s findings of fact fully reflect the case and the evidence. His findings follow:

“The court finds that the Plaintiffs, J. R. Hutton and wife, Clara Hutton, did, on September 21,1928, for a consideration of Eorty-three and %0 ⅛43.75) Dollars, execute, grant and convey a right-of-way and easement to the Defendant, Done Star Gas Company, for the purpose of constructing, maintaining and operating pipes lines and appurtenances thereto, including telegraph and telephone lines over and across 308 acres, more or less, out of the Thomas Askins Survey in Lamar County, Texas, and said tract of land includes the tract of land for which Plaintiffs seek to recover damages in this action.
“The court finds that the Defendant, Lone Star Gas Company, buried its pipe line to a sufficient depth so as not to interfere with the cultivation of the soil by Plaintiffs.
“The court finds that the Defendant was and is obligated pursuant to the right-of-way deed and contract to pay any damages that might arise to growing crops and fences on the land of Plaintiffs by reason of the construction, operation and maintenance of its pipe line.
“The court finds that immediately west and north of Plaintiffs’ land is located Lake Paris, which contains and holds a large body of water supplying the City of Paris, Texas, and that said lake of water has a large spillway whereby the overflow water from Lake Paris flows into Pine Creek.
“I find at the time the damages sued for occurred plaintiffs owned the land referred to in the right-of-way granted to defendant September 21, 1928, and that Pine Creek is the north boundary line of said land.
“In November and December 1928, defendant constructed its pipe line across the western portion of plaintiffs’ land crossing Pine Creek about sixty-seven poles east of the boundary line between plaintiffs’ land and property owned by the City of Paris upon which is situated the lake referred to in defendant’s requested finding of fact No. Fourteen, and extending in a southwesterly direction crossing plaintiffs’ south boundary line about eighteen poles east of their southwest corner. At the point where the pipe line crosses the channel of Pine Creek said channel is near the hills on the north side, there being a narrow strip of bottom land, between the channel and the hills, covered with timber. At the point where said pipe line crosses said plaintiffs’ south boundary line plaintiffs had a levee which protected their land from water flowing from the south and along the public road adjoining their land on the south. A short distance south of said point said pipe line crosses another creek which flows in a northeasterly direction across plaintiffs’ land and into Pine Creek below plaintiffs’ land.
“In constructing its pipe line defendant cleared a strip of land 30 feet wide across the narrow strip of bottom north of the creek above referred to and piled the fallen timber and brush along their right-of-way across said narrow bottom, and placed logs and other obstructions in the channel of the creek for the purpose of crossing same with their tractor and ditching machine. At the point where the pipe line crosses plaintiffs’ south boundary line defendant cut plaintiffs’ levee and left an opening therein; and in crossing the creek south of plaintiffs’ land cut down the bank thereof. It was raining at the time defendant began its operations across plaintiffs’ land and heavy rains fell during and immediately after the time such work was going on. By reason of the rainfall and the obstructions placed in the channel of Pine Creek and across the narrow strip of bottom north thereof said Creek was caused to ovérflow and water was diverted from the creek and adjacent bottom lands on the north side and caused to flow across plaintiffs’ land creating currents which washed some of the soil from about 30 acres of plantiffs’ land east of and below the. pipe line, filled up ditches and washed down levies below the pipe line. The creek south of plaintiffs’ land overflowed and water was diverted therefrom where defendant cut down its banks and caused to flow in a northern direction through the opening made in plaintiffs’ levee on their south boundary line and across plaintiffs’ land west of the pipe line washing the soil on 'and damaging about 2.18 acres of plaintiffs’ said land.
“By reason of the washing of the 30 acres of land above referred to below the pipe line and the condition in which it was left plaintiffs were unable to cultivate said 30 acres during the year 1929 and failed to raise a crop thereon in said year. At the time defendant was constructing said pipe line across plaintiffs’ land plaintiffs had thereon a matured cotton crop a part of which was un-gathered, and in the prosecution of said work defendant’s employees knocked out and tramped down ungathered cotton to plaintiffs’ damage.
“I find that as a result of tlie diversion of waters by defendant and causing the same to flow across plaintiffs’ lands plaintiffs suf-ered damages as follows:
“Permanent injury to the 30 acres- of land above referred t-o, $600.00.
“Loss of crop on said 30 acres for the year 1929, $500.00.
“Injury to the 2.18 acres of land west of the pipe line above referred to, $75.00.
“Destruction of matured cotton in the field during construction of its pipe line by defendant’s employees,-$40.00.
“Cost of restoring levees and ditches where pipe line crossed same, $75.00, making a total of $1,290.00.
“I find that on account of continuous rains and the water diverted by the defendant and caused to flow across plaintiffs’ land, it was impossible for them to have avoided the resulting damages by any. effort on their part. After the cessation of the rain and after the water had run off and the land sufficiently dried to have permitted the doing of anything in the way of removing obstructions and repairing levees, the injuries complained of had already been done and the resulting damages accrued.
“Conclusions of Law.
“From the facts found I conclude that defendant is liable to plaintiffs by reason of diversion of water and causing the same to flow across plaintiffs’ lands in the resulting damages as above found in the sum of $1,290.-00, for which judgment has been rendered.”

We have carefully considered all of the propositions submitted by the appellant, and conclude that reversible error does not appear in the record.

It is believed that the averments of the petition are not insufficient to show a cause of action, and it is concluded that the evidence supports the findings of fact made by the trial court.

In the light of the evidence and of the court’s findings of fact, the waters of two different streams were diverted, and each diversion resulted in injury or hurt to the appellees’ land. According to the findings,the diversion of the waters of Pine creek caused hurt or injury to “about thirty acres” lying east of the pipe line, and the diversion of the waters of “the Branch” or creek on the south of plaintiffs’ land caused hurt or injury to “about 2.18 acres” west of the pipe line. The injury or hurt to the “30 acres” consisted of (1) washing “some of the soil”; and (2) through the 30 acres remaining too wet “to cultivate” during the season of 1929. Allowing the damages for the injury, to the land and for the loss of the crop thereon in 1929 was not, in the circumstances, the equivalent of allowing double damages. The hurt to the land was not that of a total or permanent injury to the land, as is evident from the court’s finding, for farming purposes. There was only partial injury to the land. Its usefulness as agricultural land was not totally destroyed, neither were the alleged obstructions of a permanent nature. ' The damages for the partial injury to the land were separate and distinct from the special damages of being temporarily deprived of its use for the year 1929. There was not any overlapping of damages for the same injury. International & G. N. R. Co. v. Walker (Tex. Civ. App.) 97 S. W. 1081; Gulf, C. & S. F. R. Co. v. Coffman (Tex. Civ. App.) 11 S.W(2d) 631, 633.

The judgment is affirmed.


author: WILLSON, C. J. UEVY, J.

text:
    TEXAS COTTON CO-OP. ASS’N v. LENNOX et al.
    No. 3968.
    Court of Civil Appeals of Texas. Texarkana.
    March 16, 1931.
    Rehearing Denied April 9, 1931.

      O. K. Bullard, of Dallas, Long & Wortham, of Paris, and Bobbins & Bailey, of Clarks-ville, for appellant.
    Lennox & Lennox, of Clarksville, and King, Mahaffey, Wheeler & Bryson, of Texarkana, for appellees.
   WILLSON, C. J.

(after stating the case as above).

In opinions heretofore handed down by this court, 283 S. W. 619, 16 S.W.(2d) 413, it was directly held that appellees H. H. Lennox and O. D. Lennox by force of the written contract dated June 30, 1921, referred to in the statement above, became members of the appellant association. In the same opinions, it was held in effect that appellees as such members became bound by the terms of said contract as executed, unless such terms were thereafter effectually modified by the alleged oral agreement, in which event they became bound by the .terms as modified. The holdings specified are believed to be so obviously correct as to not need any further discussion than they have already received in the opinions referred to. Contentions of the parties based on the view that appellees never became members of said association and that the oral agreement did not become a part of the written contract are therefore overruled.

A term of the written agreement required appellant to buy and appellees to sell and deliver to appellant “all of the cotton produced or acquired by or for him (them) in Texas during the years 1921, 1922, 1923, 1924 and 1925”; and another term thereof (paragraph 17) required appellees, if they had- on hand on July 1, 1921, “any cotton of the 1920 or previous crops free of liens and capable of delivery,” to deliver such cotton to appellant as it might direct, to be graded and marketed by it “in pools wholly separate from all other deliveries” appellees were to make.

I.t will be noted, on referring to the statement above, that appellees’ suit, according to the allegations in their second amended petition, was for damages for breach of an alleged' oral contract entered into between them and appellant January 7, 1922, whereby appellant undertook to sell for appellees 1,-095 bales (559,402 pounds) of cotton of which “they were (quoting) the owners and lien-holders in actual possession,” and which “had been grown (quoting further) upon their farms in Red River County, Texas, during the years 1919, 1920 and 1921.”

It wfill be noted, further, that appellant’s cross-action against appellees was for damages for breach of the written contract referred to.

As we view the matter, the oral agreement set up by appellees should be treated as a modification of the written agreement and not as a contract independent of it. In that view, the rights and liabilities of the parties were determinable by the stipulations in the written contract as modified (if they were) by the oral agreement.

Waiving a question which arose, it might plausibly have been contended (Mt. Vernon Car Mfg. Co. v. Hirsch Rolling Mill Co., 285 Mo. 669, 227 S. W. 67; Ostrander v. Messmer (Mo. App.) 223 S. W. 438; Ross-Saskatoon Lumber Co. v. Turner, Dennis & Lowry Lumber Co. (Mo. App.) 253 S. W. 119; Koons v. St. Louis Car Co., 203 Mo. 227, 101 S. W. 49; Gifford v. Willman, 187 Mo. App. 29, 173 S. W. 53), as to whether appellees’ suit should not have been on the written contract .'as modified, instead of on the modification, *,we will look to the record and from it undertake to determine, , first, whether it appeared appellees were entitled to recover anything of appellant on account of the 1,095 bales of cotton because of a breach by it of the written contract as modified by the alleged oral agreement.

The provision numbered 17 in the written contract, heretofore referred to, required ap-pellees to deliver to appellant any cotton they had on hand July 1, 1921, of the 1920 or previous crops, “to be graded (quoting) by the association (appellant) and marketed by it in pools wholly separate from all other deliveries here made, but generally in the manner hereinabove set forth.” The manner so set forth was as follows:

“5a. The Association shall pool or mingle the cotton of the grower with cotton of a like variety, grade and staple delivered by other growers. The Association shall classify the cotton and its classification shall be conclusive. Each pool shall be for a full season.
“5b. The Association will endeavor to sell the cotton gradually as the spinning industry requires it at the best possible price before another crop is produced, but in case prices are not satisfactory or production is greater than consumption, or there are abnormal trade or financial conditions, the Association will, in its discretion, hold such part of the cotton as may not be sold at a satisfactory price, until there is a fair demand for it.
“6. The Association agrees to resell such cotton, together with cotton of like variety, grade and staple, delivered by other growers under similar contracts, at the best prices obtainable by it under market conditions; and to pay over the net amount received therefrom, (less freight, insurance and interest) as payment in full to the grower and growers named in contracts similar hereto, according to the cotton delivered by each of them, after deducting therefrom, within the discretion of the Association, the costs of maintaining the Association, organization fee and annual membership dues to the Texas Farm Bureau Federation (unless otherwise paid), and costs of handling, grading and marketing such cotton; and of reserves for credits and other general purposes (said reserves not to exceed one per cent of the (gross resale -price). The annual surplus from such deductions must be prorated among the growers delivering cotton in that year on the basis of deliveries.
“7. The grower agrees that the Association may handle, in ⅜ discretion, some of the cotton in one way and some in another; but the net proceeds of all cotton of like quality, grade and staple, less charge, cost and advances, shall be divided ratably among the growers in proportion to their deliveries to each pool, payments to he made from time to time until all the accounts of each pool ' are settled.
“8. The Association may sell the said cot- • ton, within or without this State, directly to spinners or exporters, or otherwise, at such times and upon such conditions and terms as it may deem profitable, fair and advantageous to the growers; and it may sell all or any part of the cotton to or through any agency, now established or to he hereafter established, for the co-operative marketing of the cotton of growers in other states throughout the United States, under such conditions as will serve the joint interest of the growers and the public; and any proportionate expense connected therewith shall be deemed marketing costs under Paragraph 6.”

The oral contract as alleged, and as proven at the trial, is set out in the quotation in the statement above from appellees’ second amended original petition. It will be noted that the terms thereof were not materially different from the terms set out in paragraphs 5a, 5b, 6, 7, and 8 of the written contract, copied above, except that by the terms of the oral contract appellant was not to sell the 1,095 bales of cotton without first consulting appellees as to the price to be paid therefor. It was undisputed in the evidence that appellant did not so consult appellees, but, instead, sold the cotton without first consulting them.

As we view the matter, if appellees were entitled to recover anything of appellant on account of its breach of the contract as modified, it was damages that accrued to them because of appellant’s failure to consult them before selling the 1,095 bales of cotton. The trial court concluded, “in keeping with findings of the jury,” he said, that the damages to appellees from such failure amounted to 832,623.20, and in the judgment awarded ap-pellees a recovery of that amount against appellant. We think the evidence warranted such finding and award, and overrule appellant’s contention to the contrary.

The questions which will be considered next relate to the judgment so far as it was in- appellees’ favor for damages on account of the matters set up in their second amended first supplemental petition.

It will be "seen on referring to the statement above that the matters referred to were acts of appellant in procuring the issuance and service on appellees of certain writs of injunction restraining them from selling cotton appellant claimed was within the terms of the written contract. Appellant insists 'that such damages, if recoverable at all, were not recoverable when not claimed otherwise than in a supplemental petition.

As we view it, the record discloses no reason why Hules 5 and 15 for the government of district and county courts, invoked by appellant, should not be applied to the case. Said Hule 5 is as follows:

“The plaintiff’s supplemental petitions may contain exceptions, general denials, and the allegations of new facts not before alleged by him, in reply to those which have been alleged by the defendant.”

Hule 15 is as follows:

“When either party may have occasion to plead new facts, additional to those formerly pleaded by him,’ which constitute an additional cause of action or defense permissible in •the suit, he shall present it as an amendment to the original petition, or original answer (unless it is in its nature a response to some pleading of the opposite party), by substitution, with proper number, name and indorsement, in the same manner as other amendments.”

The allegations in said second amended first supplemental petition, setting up appel-lees’ claim for damages because of the restraint imposed by the writs of injunction, were not in reply to any allegations in appellant’s fifth amended original answer and cross-bill, but were about matters which, giving effect to Rule 15, appellees were not entitled to set up in a supplemental petition, but were required to present by an amendment of their original petition. Crescent Insurance Co. v. Camp, 64 Tex. 521; May v. Anthony (Tex. Civ. App.) 151 S. W. 602; Gossett v. Vaughan (Tex. Civ. App.) 173 S. W. 933; Paving Co. v. McKay (Tex. Civ. App.) 234 S. W. 587; Sparkman v. Bank (Tex. Civ. App.) 246 S. W. 724; Bank v. Rice (Tex. Civ. App.) 251 S. W. 284; Schaff v. Perdue (Tex. Civ. App.) 254 S. W. 151; Kiehn v. Willmann (Tex. Civ. App.) 218 S. W. 15; Mann v. Trinity Farm Co. (Tex. Civ. App.) 270 S. W. 923; Oak Cliff Ice Delivery Co. v. Peterson (Tex. Civ. App.) 300 S. W. 107; Henderson v. Jones (Tex. Civ. App.) 227 S. W. 736; Ry. Co. v. Larkin (Tex. Civ. App.) 34 S.W.(2d) 693; 49 C. J. 571 et seq. As the claim for such damages must have been and was not otherwise set up than in a supplemental petition, as stated, it follows that under the rules and authorities cited, such damages were not recoverable by appellee, and that the judgment was erroneous so far as it awarded a recovery thereof.

But we think the damages awarded ap-pellees on account of the writ of injunction granted by the district judge August 31, 1925, would not have been recoverable had they been claimed in appellees’ original petition or an amendment thereof duly filed by appellees.

By the terms of the contract appellees undertook to sell and deliver to appellant all of the cotton produced or acquired by or for them in Texas during the years 1921, 1922, 1923, 1924, and 1925, and agreed appellant should be entitled to an injunction to prevent a breach of said undertaking by them, ^phe writ granted August 31, 1925, as stated, did no more than to restrain appellees “from selling, consigning or otherwise disposing of (quoting) all or any part of the cotton produced or acquired” by or for appellees during the year 1925, to any one except appellant. As the cotton the writ was to operate on was not otherwise described than as stated, it is plain, we think, appellees were not restrained from selling or otherwise disposing of any cotton they may have had not “produced or acquired” by them during said year 1925. If they had such cotton and could have disposed of it without violating the command in the writ, but did not, certainly they were not entitled to look to appellant for damages they may have suffered because of their failure to dispose of same. As certainly, we think, if the cotton was cotton they were bound to sell and deliver to appellant, appel-lees were not entitled to recover damages of appellant for procuring the issuance and service of the writ they in that event had agreed appellant might procure.

Whether appellees, if they had properly pleaded same, would have been entitled to recover damages of appellant because of the injunction granted by the Supreme Gourt September 16, 1929, is another question. It appeared that injunction restrained appellees “from selling, consigning, mortgaging or otherwise disposing” of 1,664 bales of cotton, then “in storage (appellant alleged in its application for the writ) in a warehouse at Clarksville, Red River County, Texas.” It appeared from the evidence heard at the trial that there were 1,559 bales, weighing 818,423 pounds, belonging to appellees, instead of 1,664 bales, in the warehouse.

If the 1,559 bales was cotton produced or acquired by appellees jointly, it was cotton they were bound by their contract to sell and deliver to appellant, and they were not entitled to recover damages because of the injunction granted by the Supreme Court restraining them from otherwise disposing of same.

It appeared that appellees were indebted to a bank in a sum in excess of $188,000, and .that the indebtedness was secured by a verbal lien and by warehouse receipts or certificates issued on the cotton and delivered to the bank. It was not claimed that appellees had “produced” the cotton, and,' according to the holding of the majority of this court when the- cause was last before it, 16 S.W.(2d) 413, appellees, because of said liens, had not “acquired” the cotton within the meaning of the marketing agreement. There was testimony that the 818,423 pounds of cotton was worth 2 cents a pound more on the market September 16,1929, when the Supreme Court granted the writ of injunction than it was worth October 23,1929, when the writ was dissolved. Hence, conforming to the ruling referred to, which the members of this court other than the writer still think is correct, it would be held, if the claim therefor had( been pleaded as required by the rules, that appellees were entitled to recover said difference of 2 cents a pound and storage and insurance as damages suffered by them as a result of the restraint imposed upon them by said writ granted by the Supreme Court. Such a recovery, however, must be denied because of the way the claim therefor was pleaded.

On the last appeal of the cause, this court, while remanding same for a new trial, held, 16 S.W.(2d) 413, that the judgment was not erroneous so far as it was in appellant’s favor for $37,783.15 as liquidated damages, and refused to disturb same in that respect. On the trial from which this appeal is prosecuted, the court below instructed the jury to find for appellant said sum ($37,783.15) as isuch damages. In so instructing -the jury and in awarding appellant a recovery of the $37,-783.15 and of $7,500’as attorney’s fees and $782.99 on account of other expenses it incurred, provided for in the marketing contract, a total of $46,066.14, we think said court did not err.

Contentions of the parties not in effect dis7 - posed of by what has been said are overruled.

As we understand the record, the judgment should have been in appellant’s favor against appellees for $13,442.94, the difference between $32,623.20, the amount awarded appellees on account of appellant’s breach of the contract as stated, and $46,066.14, the amount awarded appellant as liquidated damages it was entitled to and on account of attorney’s fees and other expenses it incurred. The judgment will not be disturbed so far as it denied appellant specific performance of the -contract sued upon, but it will be reversed so far as it was in appellees’ favor for a sum of money, and judgment will be here rendered in appellant’s favor on its cross-action against appellees for said sum of $13,442.94.

UEVY, J.

(dissenting).

The .plaintiff’s supplemental pleadings in this case do not purport to supply omissions or defects in the original petition or to introduce facts, as grounds for additional affirmative recovery, which occurred prior to the filing of the original petition. It set up the issuance of injunctions and -their subsequent dissolution, and asked for judgment for resulting damages. Technically and in strict accordance with the prescribed court rules of this state governing pleadings, it is not permissible for a supplemental pleading to be filed and .considered which sets up material facts, as grounds for additional recovery or -additional cause of action, or as supplying defects which strengthen or reinforce the cause of action, and omitted in the preparation of the original pleading. That end must be attained and accomplished by an amendment of the original petition. The distinction here stated, however, cannot, as I see it, be insisted upon and regarded, where, without abandoning his original cause of action, the plaintiff, by supplemental pleading, seeks to set up matters as distinct grounds for recovery which have occurred since the filing of his original petition. Pleading of such character is not included within the terms and intendment of Rule 15. 4s regard such new facts, the court, as within its authority and not in violation of the court rules, can properly treat such supplemental petition as pleading of a character sufficient to form the basis and support of a judgment for affirmative relief. The supplemental petition here is not absolutely a void irregularity against the prescribed court rules governing pleading. Brooks v. Kennedy (Tex. Civ. App.) 28 S. W.(2d) 214. Quoting, as applicable here, from Barnes v. Patrick, 105 Tex. 146, 146 S. W. 154, 155: “No technical rules of pleading can be allowed to defeat a right substantially alleged.”

The terms of the two injunctions were broad enough to support a claim for damages as set up in the supplemental pleadings, and therefore the evidence in the case would have to be looked to to determine extent of damages.