author: DUNKLIN, Chief Justice.

text:
    DALLAS JOINT STOCK LAND BANK OF DALLAS v. HARRISON et al.
    No. 13983.
    Court of Civil Appeals of Texas. Port Worth.
    Dec. 1, 1939.
    Rehearing Denied Jan. 12, 1940.

      Lawther, Cramer, Perry & Johnson, of Dallas, for appellant.
    Stine, Bunting & Stine, of Henrietta, for appellees.
   DUNKLIN, Chief Justice.

At a regular meeting of the Board of Directors of the Dallas Joint Stock Land Bank of Dallas, a corporation, held on November 14th, 1934, the following resolution was passed:

“Resolved, that H. W. Ferguson, the President, and H. O. Pool, the Treasurer of this Bank, or either of them, be and they are hereby authorized to sell and. dispose of, to rent or lease for mineral development, any and all lands now owned by the Bank, or which may hereafter be acquired by the Bank, at such price or consideration as they deem' most advantageous to the Bank and upon such terms as may be agreed upon, and to execute such title papers as may be necessary to sell, convey, rent or lease any and all of said lands; and
“Be it further resolved, that either of them be and they are hereby authorized to execute releases, transfers or assignments of any notes held by the Bank; and
“Be it further resolved, that the Secretary or any Assistant Secretary of this Bank be and they are hereby authorized to attest any document so executed by the President or Treasurer and to affix thereto the corporate seal of this Bank.”

On July 15th, 1936, the Dallas Joint Stock Land Bank oP Dallas, by H. W. Ferguson, its president, as seller, and W. B. Allen and M. E. Harrison, of Byers, Clay County, as buyers, executed a sales contract, by the terms of which the Bank agreed ' to sell • and Allen and Harrison .agreed to buy a tract of -440 acres in Clay County, for a total consideration of $15,000, of which $1,500 was to be paid in cash and the balance evidenced by three promissory notes, one for $12,000 payable in 20 annual instalments, and two notes for $750 each, one maturing November 1st, 1936, and the other November 1st, 1937.

The contract embodied these provisions: “The seller agrees to furnish an abstract of title showing a marketable title to said land free of all liens not specifically mentioned» in the consideration for use in examining the title to said land. The buyer agrees to submit in writing his objections, if any, to said title within fifteen days from receipt thereof, and the seller agrees to perfect said title within a reasonable time thereafter. In the event the seller does not own all the minerals, it shall not be required to warrant the title to more than it owns, but the purchaser shall have the option to accept the title without all the minerals or reject the title if the seller does not acquire all the mineral rights within a reasonable time. The abstract shall be returned to the seller to be retained until all the purchase price is paid.

“This contract shall l)e closed on or before the. 15th day of August, 1936, subject to the other provisions hereof.

“The seller shall pay all taxes up to and including the year 1935. All taxes thereafter shall be paid by the buyer.

“If there is any insurance on the property same shall be prorated as of the date of closing.

“The buyer has deposited the sum of $500.00 and a copy of this contract with Dallas Joint Stock Land Bank, which said sum shall be applied at the date of closing as a part of the cash consideration, but in the event the buyer fails or refuses to perform this contract then such sum shall be paid to the seller as liquidated damages.”

Thereafter, the Bank executed to Allen and Harrison its deed, dated August 4th, 1936,' but not delivered until September 21st, 1936, stipulating that for the consideration expressed in the sales contract, it “has granted, sold and conveyed, and by these presents does grant, sell and convey unto the said W. B. Allen and M. E. Harrison, of the County of Clay, State of Texas, except as below stated, all that certain lot, tract or parcel of land situated .in the County of Clay, State of Texas, and described as follows: (Here follows description of the 440 acres covered by the sales contract).

“To have and to hold the above described premises, together with all and singular the rights and appurtenances thereto in any wise belonging unto the said W. B. Allen and M. E. Harrison, their heirs and assigns forever, and said grantor does hereby bind itself, its successors and assigns, against every person whomsoever lawfully claiming, or to claim the same, or any part thereof, except any mineral interest which grantor does not own.

“There is reserved and excepted from this conveyance one-fourth of the minerals in and under the land hereby conveyed, but if none is produced from said land within ten years from the date hereof this conveyance shall cover the entire interest owned by grantor. Grantor’s reserved interest is limited to the royalty payments and does not participate in bonus or delay rental payments. Grantor expressly gives to grantee, his heirs, administrators or assigns, the right to. lease without the joinder of grantor seven-eighths of the grantor’s reserved undivided mineral interest under a standard form of lease providing for a royalty of at least one-eighth of the undivided interest reserved by grantor.

“But it is expressly agreed and stipulated that the Vendor’s Lien is retained against the above described property, premises and improvements, until the above described notes, and all interest thereon are fully paid according to their face and tenor, effect and reading, when this deed shall become absolute.

“Executed by authority of the Board of Directors of the Bank as evidenced by certified copy of resolution hereto attached this the 4th day of August, 1936.

“(Signed) The Dallas Joint Stock Land Bank of Dallas, by H. O. Pool, Treasurer.

“Attest: J. A. Mounts, Assistant Secretary.” And duly acknowledged (as the evidence introduced showed).

W. B. Allen and M. E. Harrison instituted this suit against the Bank to recover damages for alleged fraud and deceit, which induced them to purchase the 440 acres in controversy. The sales contract and deed were averred, followed by allegations that plaintiffs’ execution and acceptance of same was induced by representations made to them by certain duly authorized agents of the Bank, including one J. A. Mounts, that 340 acres of the land was free of any oil and gas lease, while in fact there was then an outstanding, valid and duly recorded oil and gas lease on the entire 440 acre triact, in favor of the Texas Company, executed by the Bank of date October, 1932, running for ten years from its date and as long thereafter as. oil is found in paying quantities. That plaintiffs paid the defendant the cash consideration of $1,500 and executed the notes, as stipulated in the sales contract; that had the 340 acres been free of the prior outstanding oil and gas lease, it would have been worth $10 per acre more than it is worth with said lease outstanding; by reason of all of which plaintiffs have sustained damages in the sum of $3,-400, for which a recovery was sought.

The answer of the defendant included a general and special demurrer, general denial and specific verified denial of agency of any of the persons alleged by plaintiffs to have made the misrepresentations which induced them to enter into the sales contract and to accept defendant’s deed to the 440 acres in controversy.

Trial was before a jury, and in connection with special issues submitted, the court gave these general instructions and definitions:

“For representations of a fact to become an ‘inducing cause’ of the purchase of property, it is necessary that the person to whom the representations were made would not have bought the property had not such representations been made.

“By the term ‘within the authority’ is meant that an agent has been empowered and given the right by the principal to do the things in question.

“By the term ‘apparent authority’ is meant such authority as a reasonably prudent man, using diligence and discretion, in view of the principal’s conduct, would naturally and reasonably suppose the agent to possess.

“By the term ‘market value’ is meant the amount of money that a person desiring to sell, but not bound to do so, could, within a reasonable time, procure for such property, from a person who desires to buy, but is not bound to purchase the property.”

Findings of the jury in answer to certain special issues were adverse to plaintiffs’ asserted right to bind the defendant by misrepresentations of C. E. Harding, C. W. Filey and C. B. Harder, alleged to have been made by them while acting as the duly authorized agents of the defendant. Hence, the pleadings and evidence relating to those persons need not be further noticed.

But in answer to special issues Nos. 13 to 18, inclusive, the jury found that J. A. Mounts, as agent of defendant, represented to plaintiffs that only 100 acres of the 440 acres described in the deed wag under an oil and gas lease; that the statement so made to plaintiffs by Mounts was within his actual authority, and also within the apparent scope of his authority; that plaintiffs believed said statement of J. A. Mounts that only 100 acres of the 440 acre tract was under an oil and gas lease, to be true, and were induced thereby to buy the land from the defendant.

According to further findings of the jury, the market value of the 340 acres in controversy in September, 1936, with the oil .and gas lease then outstanding in favor of the Texas Company, was $25 per acre; but had the same been then free of said lease, its market value would have been $35 per acre, a difference of $10 per acre.

Upon that verdict, judgment was rendered in plaintiffs’ favor for such difference, with accrued interest, aggregating $3,863.53, from which defendant has prosecuted this appeal.

The findings of the jury that the misrepresentation of J. A. Mounts that 340 acres of the tract covered by the deed were free of any oil or gas lease, was within his authority and apparent authority as defendant’s agent, were duly challenged by the defendant in its motion for instructed verdict, in its motion for new trial, and also in this court as being without support of competent evidence.

According to a well settled rule of decisions, the test to be applied in determining the merits of that proposition is, was there any testimony which of itself was sufficient to support the finding, all testimony of a contrary effect being excluded. The following announcement in 2 Tex.Jur. para. 109, page 506, is supported by many decisions there cited:

“In the absence of proof that the agent’s authority was conferred by writing, oral testimony is admissible to establish the extent of the agent’s authority. And, even if the contract when reduced to writing places limitations upon the agent’s authority, the admission of oral evidence to prove fraudulent representations of the agent by which the contract was induced does not violate the rule.' that a written contract may not he varied by parol evidence. ■

“The fact of agency may be established by circumstantial evidence, and proof may be made of all the facts and circumstances that show the relations of the parties and throw light upon the character of such relations.”

In Bradstreet Co. v. Robert Gill, 72 Tex. 115, 9 S.W. 753, 754, 2 L.R.A. 405, 13 Am. St.Rep. 768, this is said:

“The court refused a charge asked by defendant to the effect that if it was not the intention of defendant to make Finney its agent, and if it was not the intention of Finney to become its agent, to find for defendant on the plea in abatement. The refusal to give, the charge is assigned as-errar. The intention of the parties, it is true, must control; but that intention is gathered from what was actually done or agreed by the parties, not from what they may have privately meant or supposed they meant. Agency or not is a question of law, to be determined by the relations of the parties as they in fact exist under their agreements or acts.- If relations exist which will constitute an agency, it will be an agency, whether the parties understood it to be or not. Their private intention will not affect it. It was not error to refuse the charge.”

“Corporations, in the conduct of their business, can only act by agents so placed as to represent them and to transact their business, and held out as being legally authorized agents. Therefore, persons dealing with them may assume that they are authorized to exercise at such places the powers necessary in the conduct and direction of the company’s affairs. In other words an agent of a corporation has apparent authority commensurate with the business entrusted to him; a person may ordinarily deal with him in matters within such authority without regard to limitations on his authority that are not brought to notice. Illustrative of this principle, proof of the character of the corporation, the office and the official act by which the corporation is sought to be bound — if within the customary powers of the officer — is sufficient, at least prima facie, to establish the official act as that of the corporation.” 2 Tex.Jur. páges 427r 428; Helms v. Home Owners’ Loan Corporation, 129 Tex. 121, 103 S.W.2d 128; San Antonio Joint Stock Land Bank v. Taylor, 129 Tex. 335, 105 S.W.2d 650; Waggoner v. Zundelowitz, Tex.Com.App., 231 S.W. 721; Evans v. Beard, Tex.Civ.App., 70 S.W.2d 253; Brooks v. Mitchell, Tex.Civ.App., 27 S.W.2d 371; Wardlaw v. Pace, Tex.Civ.App., 66 S.W.2d 350. See also opinion of Justice Speer of this court in George Kadane et al v. C. W. Clark, Tex.Civ.App., 134 S.W.2d 448, decided September 29th, 1939.

It is. ¾ further familiar rule that innocence 'of wrongful intent will not remove or lessen actual damages resulting from the acts of the wrong-doer nor relieve him from liability for such damages. In appellees’ briefs, many facts and circumstances reflected in .the statement of facts are noted as tending to show that the statement made to plaintiffs by J. A. Mounts, which the jury found induced them to purchase the 440 acresi in controversy, was within the apparent scope of his authority to bind defendant thereby, notwithstanding his official designation was that of Assistant Secretary. It would unduly extend this opinion to -review all the circumstances related; only a few of them will be noted.

Plaintiffs had been cultivating the land, and for more than a year had contemplated a purchase of it and had visited defendant’s office in Dallas several times for a discussion of matters pertaining to their tenancy of the land and had had letters from the bank, written on letterheads naming J. A. Mounts, as its assistant secretary.

Mounts testified, in part, as follows:

“Q. By whom are you employed? A. Dallas Joint Stock Land Bank.
“Q. In what capacity? A. Assistant Secretary.
“Q. Do you have charge of any particular field department? A. I have numerous departments; I have a department in the accounting department with field men and collections and general correspondence.
“Q. You might say, generally, it is the accounting department; the real estate operating and field-men? A. Yes.
“Q. Are you familiar with the Dean Loan, known as No. 0363? A. Yes.
. “Q. When did you first meet Mr. Harrison or Mr. Allen? A. It was either in the fall of 1935 or spring of , 1936.
“Q. At that time were they tenants on the land? A. Yes, they were authorized or instructed to take charge of the property in question about July or August, 1935.
“Q. As tenants of the land bank, are the lands which are operated by the bank through their tenants, are those in the department known as the real estate operations? A. Yes.
“Q. The relations with the tenants, are therefore in your charge? A. Yes.
“Q. These gentlemen were tenants of yours at that time? A. They had been told to take charge of the land in the spring of 1936. I came up here and was out to the property and saw the land and endeavored to get rental contract for that year.
“Q. Is it part of your duties to see whether tenants on land of the bank are good tenants so you can make a report as to the advisability of renting to them for another year? A. Partly, yes.
“Q. Is that the reason you came up here ? A. I came on that duty as well as other duties. I came up here and they came in the office about the middle of May and signed the rental contract.
“Q. At that time was the question of selling this land to these gentlemen discussed? A. At the time they were in'the office, I think I suggested that they buy the land. They remarked that they had thought of it, but it passed, so on June 14th, 1936, I wrote one of them or both of them that I would be in Clay County and I would like to talk to them about the crop and asked them to meet me at the Kemp Hotel, and I believe Mr. Allen came in Saturday afternoon and we talked briefly and I was out on the land on Sunday following and suggested that they buy the land and they talked interested and I went back to the office and made, a report and wrote these gentlemen that Mr. Riley and I would be- up on June 20th, and we, in turn, came to see them.”

C. W. Riley, introduced as a witness for defendant, testified he was employed in the bank in. its real estate department; that H. W. Ferguson was president of the bank and head of its land department, and all the field men in the land department were directly under him. He further testified he accompanied J.-A. Mounts back to the land on Sunday, about June 21st, 1936; and on that occasion there was considerable discussion between Mr. Allen and Mr. Mounts and Mr. Harrison, also employees of defendant’s bank, with regard to the sale of the land and whether or not it was leased, and witness said he told them it was his understanding a part of it was under lease but he could not say how much.

Testimony of plaintiff, Allen, was that on that.occasion Mounts told him only 100 acres put of the north of the 440 acres was under lease, and that the remainder was free of a lease; he so informed plaintiff, Harrison. Both believed the statement to be true and but for reliance on the statement would not have agreed to the purchase of the land.

While the sales contract embodied a stipulation that it would not be valid until signed by the president or vice-president of the bank, and the resolution of defendant’s Board of Directors authorized the sale of the land-to be made by either its president, H. W. Ferguson, or its treasurer, H. O. Pool, yet there is an absence of any evidence to show that either the president, vice-president or treasurer of defendant conducted any of the negotiations with plaintiffs, which resulted in their contract to purchase or their acceptance of the deed.It is reasonably inferable that they executed the sales contract and also the deed without making any inquiry as to prior negotiations concerning the same.

From their failure to testify or introduce any evidence on that point, the jury would be warranted in indulging the inference, which would be of probative force, that the contract and sale were executed solely as the result of the negotiations therefor by J. A. Mounts.

“Usually the force of evidence, though slight, is greatly increased by the failure of the opposite party to rebut it, where it is obvious that the means are readily accessible to him. The failure of a party to take advantage of an opportunity to explain inculpatory circumstances is evidence against him, and his failure to produce evidence in his possession which might have rebutted a presumption against him strengthens such presumption. Where a party does not in any way seek to contradict the testimony of his adversary on a particular point, the presumption is that he has no testimony to controvert it; and when the proof tends to establish a fact, and at the same time discloses that it is within the power and the interest of the opposite party to disprove it, the silence of the opposing party not only strengthens the probative force of the affirmative proof but of itself is clothed with a certain probative force.” 17 Tex.Jur. para. 87, page 306.

Many authorities might be cited to the same effect, such as Barrera v. Gannaway, 130 Tex. 142, 105 S.W.2d 876, opinion by Justice Martin, Commission of Appeals; Farmers’ Guaranty State Bank v. Burrus Mill & Elevator Co., Tex.Civ.App., 207 S.W. 400, and cases cited; Galveston H. & S. A. R. Co. v. Watson, Tex.Civ.App., 3 S.W.2d 921, and cases cited; 22 C.J. pages 115 to 118.

Appellant cites Dallas Joint Stock Land Bank v. Colbert, Tex.Civ.App., 98 S.W.2d 239, in which it was held that.a vice-president has no inherent power, by virtue of his official position, to bind the corporation by a contract entered into by him for the corporation. Also Dallas Joint Stock Land Bank v. Cavitt, Tex.Civ.App., 93 S.W.2d 207, to the same effect. And other authorities of like effect are also cited, such as Southern Surety Co. v. Nalle & Co., Tex.Com.App., 242 S.W. 197; Cannel Coal Co. v. Luna, Tex.Civ.App., 144 S.W. 721; Wainwright-West Oils v. Cooke, Tex. Civ.App., 103 S.W.2d 847; Stockyards Natl. Bank of Fort Worth v. Alexander, Tex.Civ.App., 113 S.W.2d 288.

It is true that the position held by Mounts as assistant secretary did not of itself empower him to bind the defendant by his misrepresentations, but that fact did not preclude the bank from delegating to him authority to negotiate with plaintiffs for the sale of the land, subject to the approval of those officers who were by the Board of Directors given full power to make the sale on such terms as they might deem best.

It is sufficient to say that the facts involved in those cases distinguish them from this case.

For the reasons stated, we overrule the assignment of error now under discussion.

The record here shows the following agreement of the parties on the trial of the case:

“Mr. Andress (for defendant): It is agreed and stipulated between the parties-that the defendant furnished to the plaintiffs, on or about July 14th, 1936, complete abstract of title showing all instruments of record affecting the title to the land in question, including therein Supplemental Abstract No. 5626, certified by Henrietta Abstract Company, on October 19th, 1933, containing at page two (2) thereof a full abstract copy of an oil and gas lease from the Dallas Joint Stock Land Bank to The Texas Company, dated October 13th, 1932, and showing such lease to have been filed for record February 15th, 1933, and recorded in Volume 109, page 414, of the Deed Records of Clay County, Texas.
“Mr. Stine (for plaintiff): May it be further stipulated that the abstracts delivered consisted of .an original and a number of supplements, including this one, and that the entire abstract covered, or included or was composed of several hundred pages?.
“Mr. Andress: I am sure of that.
“Mr.’ Andress: Such abstract showing this oil and gas lease to have covered the entire 440 acres, being the subject matter of the contract between the parties hereto, for a primary period of ten years, with delay rentals after the expiration of one year from its date, in the amount of $110.00 semi-annually.
“Mr. Stine: And that the lease was of record in the Deed Records of Clay County, Texas, at the time we acquired our deed from the defendant.
“Mr. Stine: To make it perfectly plain. I would, like it further stipulated that those delay rentals of twenty-five cents per acre, semi-annually, were to be paid in lieu of drilling operations, so that the commencement of a well might be deferred for six months at a time by the payment of rentals of '$110.00 semi-annually.”

Plaintiff, Harrison, testified that he read the sales contract before he signed it, and the deed before accepting it, including the provisions quoted above near the beginning of this opinion; he submitted no objections in writing or orally to the title; had the abstracts for more than 15 days; and when the bank notified him of its readiness to close the deal he did not call the contract off, nor reject the title; never examined the abtracts furnished nor the deed records; and did nothing at all to determine whether or not the title to the land was good. According to his further testimony, he did not discover that the lease in favor of The Texas Company covered the entire 440 acre tract until some six months after delivery of the deed; he was induced to accept the deed and execute the notes given in consideration therefor, relying upon the representation of J. A. Mounts that only 100 acres out of the north portion of the tract was under an oil and gas lease.

Testimony of plaintiff Allen was substantially to the same effect as that of Harrison, just noted.

Appellant presents this, its first, proposition: “An abstract of title having been furnished the appellees who were the buyers of the real estate under a contract providing that the seller furnish such abstract of title and where the contract further provides : ‘The buyer agrees to submit in writing his objections, if any, to said title within fifteen days from the receipt thereof’ and ‘in the event the seller does not own all the minerals it shall not be required to warrant the title to more than it owns * * * And the buyer made no objections but returned the contract after some two weeks and the sale is closed, the appellees, buyers, have no cause of action based on alleged misrepresentations, as to the amount of land covered by an oil lease, made months before the contract was signed.”

In Labbe v. Corbett, 69 Tex. 503, 6 S.W. 808, 811, this is said: “When once it is established that there has been any fraudulent misrepresentation * * * by which a person has been induced to enter into a contract, it is no answer to his claim to be relieved from it to tell him that he might have known the truth by proper inquiry. He has a right to retort upon his objector: ‘You, at least, who have stated what is untrue, * * * for the purpose of driving me into a contract, cannot accuse me of want of caution because I relied implicitly upon your fairness and honesty.’ ”

That announcement has been quoted and followed in a vast number of decisions cited in 20 Tex.Jur., under para. 34, page 58, including: Buchanan v. Burnett, 102 Tex. 492, 119 S.W. 1141, 132 Am.St.Rep. 900; Thrower v. Brownlee, Tex.Com.App., 12 S.W.2d 184; Al Parker Securities Co. v. Owen, Tex.Com.App., 1 S.W.2d 271; Graves v. Haynes, Tex.Com.App., 231 S. W. 383; Griffeth v. Hanks & Collins, 46 Tex. 217; Gardner v. Dorsey, Tex.Civ.App., 272 S.W. 266, error dismissed; Hull-Tex. Oil Ass’n v. Pipes, Tex.Civ.App., 240 S.W. 994; Wisegarver v. Yinger, Tex.Civ.App., 128 S.W. 1190, error refused; Western Cottage Piano & Organ Co. v. Anderson, 45 Tex.Civ.App. 513, 101 S.W. 1061, error refused, and numerous other decisions to the same effect, cited in support of the announcement of the same rule in 20 Tex. Jur. para. 35, page 60.

And in a suit for actual damages, only, as in the suit at bar, that rule is applicable even though the representation was innocently made. Guaranty Bond State Bank v. Kelley, Tex.Com.App., 13 S.W.2d 69; Freshwater v. Hoyt, Tex.Com.App., 259 S.W. 923, and other decisions cited in 20 Tex.Jur,, page 59.

We quote the following from para. 45, 20 Tex.Jur. page 75: “An unqualified ex-' pression of ownership is an affirmation of fact, notwithstanding it may involve an opinion as to the legal sufficiency of the evidence of title. Particularly is this true where the representation is made to one ignorant on the subject of land titles and in order to prevent inquiry. That the representation was innocently made does not affect the right to relief. With respect to the-purchaser’s right to rely on the representations, no legal duty rests on him to search the records or otherwise to exercise diligence in ascertaining their falsity, unless the facts show that he was charged with notice as to the adverse rights.”

We quote also the following from 43 Tex. Jur. para. 39, page 64: “With respect to-its subject matter, a representation made-in connection with a contract for the sale-of real property may have reference to any matter which is material to the transaction. * * *

“On the part of the vendor, a misrepresentation of consequence may consist in a statement as to the condition, location, quality, or quantity of the property sold. It may pertain to the accessibility of the property to a highway, street or railroad, or to the availability of water or the right of the purchaser thereto. Or it may refer to the cost or value of the property, the title of the vendor, or the non-existence of encumbrances.”

In support of the assignment, appellant cites Donoho v. Hunter, Tex.Com.App., 287 S.W. 47; Stern v. Maxwell, Tex.Civ.App., 44 S.W.2d 482; Jones v. Herring, Tex.Civ.App., 16 S.W.2d 325; Staben v. Hernandez, Tex.Civ.App., 292 S.W. 259.

In some of those cases it appeared that at the time of the transaction the party complaining of fraudulent representation had knowledge of facts which- in law amounted to notice of the falsity of the representation; in others, that the complainant undertook an investigation of the truth of the representation before acting thereon. In either of which instances they could not be heard to say they relied solely on the misrepresentation of the other party. Announcement of that rule appears in 20 Tex. Jur. pages 60 to 68, inclusive, and decisions there cited.

But it is our conclusion that the decisions in Labbe v. Corbett, 69 Tex. 503, 6 S.W. 808; Buchanan v. Burnett, 102 Tex. 472, 119 S.W. 1141, 132 Am.St.Rep. 900; Al Parker Securities Co. v. Owen, Tex.Com.App., 1 S.W.2d 271; Graves v. Haynes, Tex.Com.App., 231 S.W. 383; Smith v. Fort, Tex.Civ.App., 58 S.W.2d 1080, and numerous other decisions cited in 20 Tex. Jur. para. 34, page 58, are controlling here.

Article 1297, Rev.Civ.St., reads: “From the use of the word ‘grant’ or ‘convey,’ in any conveyance by which an estate of inheritance or fee simple is to be passed, the following covenants, and none other, on the part of the grantor for himself and his heirs to the grantee, his heirs or assigns, are implied, unless restrained by express terms contained in such conveyance :

“1. That previous to the time of the execution of such conveyance the grantor has not conveyed the same estate, or any right, title or interest therein, to any person other than the grantee.
“2. That such estate is at the time of the execution of such conveyance free from incumbrances.
“Such covenants may be sued upon in the same manner as if they had been expressly inserted in. the conveyance.”

Defendant’s deed to plaintiffs stipulated that it “granted, sold and conveyed” the 440 acres in controversy without excepting therefrom the oil lease it had executed to The Texas Company. The general warranty of title “against any person whomsoever claiming or to claim the same or any part thereof, except any mineral interest which grantor does not own”, did not operate to except from the conveyance that oil lease. Texas & Pacific R. Co. v. El Paso & N. E. R. Co., Tex.Civ.App., 156 S.W. 561, error refused; 12 Tex.Jur., pages 36 to 41, inclusive, and decisions cited; Parish v. White, 5 Tex.Civ.App. 71, 24 S.W. 572; Askew v. Bruner, Tex.Civ.App., 205 S.W. 152.

Nor can it be said that that reservation from the warranty of title in the deed to them was notice that the representation by J. A. Mounts to the effect that 340 acres of the tract was free of any oil lease, was untrue. On the contrary, plaintiffs could reasonably assume that even though the whole 440 acre tract had theretofore been covered by the lease made more than four years prior, it was no longer effective as to 340 acres, by reason of nonpayment of rentals or as the result of an unrecorded release good as between the parties, and that the exception from the warranty clause had reference only to the 100 acres which Mounts represented was still covered by that lease.

It is a well recognized general rule that possession of real estate is prima facie notice to a- proposed purchaser of claim of- title thereto, as announced in Payton v. Loustalott, Tex.Com.App., 53. S.W.2d 1012; Perminan Oil Co. v. Smith, 129 Tex. 413, 107 S.W.2d 564; Humble Oil & Refining Co. v. Wilcoxon, Tex.Civ.App., 70 S.W.2d 218.

And in a suit of trespass to try title, plaintiff makes out a prima facie case by showing prior possession in absence of evidence to show title in the defendant. 41 Tex.Jur. para. 61, page 506. Notwithstanding that rule of decisions in Olschewske v. King, 43 Tex.Civ.App. 474, 96 S.W. 665, 666, error refused, the Court of Appeals affirmed a judgment in- favor of plaintiff for rescission of a sale to him by the defendant, for recovery of consideration paid and cancellation of money notes, because of misrepresentation of the seller that he had a perfect title to the land and could deliver immediate possession, which induced the plaintiff to buy. It appeared that at the time of the conveyance, Mrs. Somervill and her minor children were in possession of the land, and subsequently in their suit against plaintiff, title was awarded to the minors, following which plaintiff’s suit against the seller was instituted. We quote the following from the opinion in that case:

“It is well settled that one who buys land in possession of another will not, as to such possessor, be heard to say that he purchased without notice of the possessor’s title, but is charged with constructive notice of whatever right or title the possessor has in the property; possession being as qonclusive evidence of notice as is the registration of a deed under the statute. Under this rule appellee could not claim as against the Somerville heirs that he did not purchase with notice of their title, but it cannot be held as matter of law that, because he was charged with notice of their title, he could not have relied upon the representation of appellant that he owned the property and would put him in possession of it The trial court found that such representations were made by the appellant and were relied on by the ap-pellee. There is no statement of facts in the record, and the findings of fact by the trial court must be conclusively presumed to be supported by the evidence.”

Under the authorities cited, there is no merit in 'the assignment now under discussion.

For the reasons noted, all assignments of error are overruled, and the judgment of the trial court is affirmed.


source: Caselaw Access Project

author: SPEER, Justice.

license: Public Domain

text:
    C. V. HILL & CO., Inc., v. FRICKE.
    No. 13999.
    Court of Civil Appeals of Texas. Fort Worth.
    Dec. 15, 1939.
    Rehearing Denied Jan. 19, 1940.

      Webb, Bransford & Matthews, of Fort Worth, for appellant.
    G. G. Tunstill and Richard Owens, both of Fort Worth, for appellee.
   SPEER, Justice.

Plaintiff, Eric C. Fricke, sued defendant, C. V. Hill & Co., a private foreign corporation, with permit to do business in Texas, for rescission of an oral contract, whereby he purchased from defendant a refrigerated show case and other equipment in connection therewith.

Plaintiff’s action was based on fraudulent representations made by defendant, acting through its agent and salesman, H. A. Padgett. He alleged that he was engaged in the butcher business in Fort Worth, Texas, where he kept on hand fresh meats for sale to the retail trade for human consumption. He knew noth,ing about the merits of the show case which defendant proposed to sell him, and relied upon the representations of the agent who displayed a large catalogue colored picture and described its merits. He alleged that defendant, through its agent, represented that the show case was “mechanically perfect, was the best new show case made and would keep the plaintiff’s meats chilled and would maintain such a low temperature as to prevent the spoiling thereof.” That it was further represented by said agent that said show case would not sweat and was in every way suitable for the requirements of plaintiff's business in the storage and display of riieats for human consumption. It is alleged that relying upon said representations he purchased the show case, agreeing to pay $1,-395 for it. That the amount was to be paid by a sale by him of two used show cases then in the store, at an agreed price of $610, and executing a series of twenty-four notes for the remainder. That at the same time plaintiff executed to defendant his chattel mortgage lien on the new show' case, to secure the instalment notes.

Allegations were made that the new show case was not mechanically perfect, claiming that the electric current extended to the metal 'show case and shocked those who touched it; the electric light inside would not burn; the sweat accumulated in the case and water dripped into the pans, saturating the meats stored therein, causing it to spoil, resulting in the loss of the meat; that the temperature maintained was inadequate to preserve the meats; that the value of meats lost by plaintiff because of the defective show case was greater than the value of its use during the time he retained it in his store; that the equipment was wholly worthless to him for the purposes for which it was sold by defendant and purchased by him.

Frequent complaints were made by plaintiff to the agent during the time between its date of installation and when it was taken out. The agents and a factory representative tried many times to correct the alleged defects, but failed. Whereupon he notified defendant he would not retain the equipment, but had rescinded the contract. Prayer was for rescission of the contract, cancellation of the notes and for $610, alleged to be the agreed value of the two show cases delivered by plaintiff in part payment for the new one. There is what plaintiff calls an alternative prayer for damages in the value of the two show cases and the cancellation of his notes.

Defendant answered by general demurrer and many special exceptions, all of which were overruled by the court, a general denial, special pleas denying the agency of Padgett, and that he had any authority to make oral representations concerning the equipment, but that it issued to plaintiff a written warranty which did not cover the matters complained of by plaintiff. That such purchase as plaintiff made was from-Padgett and not from defendant and that plaintiff inspected the show case and relied upon his own knowledge in such matters and not upon oral representations made by Padgett. That plaintiff accepted the equipment on March 28th, 1938, retained and used it until Au-. gust 18th, 1938, thereby waiving any breach of warranty thereon and was now estopped to plead the same.

Defendant filed a cross action against plaintiff, alleging the series of notes and chattel mortgage lien; it was shown that by the terms of the chattel mortgage, defendant repossessed the fixtures and sold them out for $550 and credited the amount on the debt, and prayed for judgment in the sum of $378.69, the remaining amount unpaid. The pleadings are lengthy but we believe enough has been said about them to enable us to discuss this appeal.

A jury trial was had upon special issues. The answers were favorable to plaintiff. The court overruled the motion of defendant for judgment non obstante veredicto, and entered judgment for plaintiff cancelling and rescinding the contract of purchase, the notes and chattel mortgage executed by plaintiff, and for judgment for $503 the amount found by the jury to have been the agreed value of the two second hand show cases delivered by plaintiff to defendant as part payment on the new fixtures. Judgment was entered against defendant in its cross action.

Motion for new trial was overruled and defendant has appealed.

Defendant’s first two propositions challenge the action of the court in overruling its general demurrer to plaintiff’s petition. It is argued that the allegations which relate to representations made by Padgett, the sales agent, did not constitute actionable fraud. .Counsel quotes well recognized rules in support of the contention, such as: “To be actionable a false representation must be the affirmation of a fact as distinguished from mere expressions of opinion, intention or promise.” Citing 20 Tex. Jur. page 23, sect. 11. Likewise, counsel urges as a controlling rule in the instant case, the principles announced by the courts relating to dealer’s and seller’s talk, or “puffing” of one’s property by a salesman.

It is insisted by defendant in its, brief that the general demurrer should have been sustained because an improper measure of damages was plead by plaintiff. It is contended that since the deal between the parties here was one of exchange of property, the proper measure of damages would necessarily be the difference between the reasonable cash market value of the property given in exchange for that received, or the amount the purchaser obligated himself to pay for such article. Many authorities are cited in support of the proposition. In cases which involve that question the proposition is sound, but we shall presently show that is not the case before us.

This is not a case in which it is sought to recover damages for breach of warranty in a contract, nor is it one to recover damages for fraudulent representations growing out of the exchange of property. The rules applicable in such cases do not control the rights of the parties here.

As disclosed by our statement of the nature of plaintiff’s petition, this suit was instituted to rescind a contract of purchase of a refrigerated show case for which plaintiff had agreed to pay $1,395, to recover the down payment alleged to have been $610, by the delivery of two second hand cases, and to cancel the notes and mortgage executed for the remainder of the purchase price. The grounds alleged were, in effect, that defendant, acting through its sales agent, had presented to plaintiff a picture of the fixtures and represented that it was mechanically perfect, would maintain a temperature sufficient to preserve meats to be sold for human consumption, would not sweat, and in every way was suitable for the purposes plaintiff desired to use it; that plaintiff was not familiar with the fixture contracted for; that he relied upon the representations of the salesman and but for which he would not have made the purchase; that the representations were false and that the equipment was wholly worthless to him for the uses intended when the sale was made.

If Padgett had a legal right to sell the equipment for defendant to plaintiff, he had the right to bind defendant for representations made concerning it, which induced the plaintiff to buy. It is, we think, fundamentally true that if plaintiff was defrauded into making the purchase by false and fraudulent representations made by defendant or its agent, he would have a right to rescind, if seasonably exercised. Henderson v. Railroad Company, 17 Tex. 560; C. Aultman & Co. v. York, 71 Tex. 261, 9 S.W. 127; Jesse French Piano & Organ Co. v. Costley, Tex.Civ.App., 116 S.W. 135; Johnson County Savings Bank v. Renfro, 57 Tex.Civ.App. 160, 122 S.W. 37.

In Way v. Siddall, Tex.Civ.App., 299 S.W. 313, writ refused, a very similar situation to the one here was involved. There, plaintiff sued to rescind a contract of purchase of a refrigeration machine, and alleged that the seller had made certain representations as to the capacity of the machine; that plaintiff was ignorant concerning such things and relied upon the representations of the seller; that they were false, and that the machine was worthless to plaintiff in his business. Such allegations were held to state a cause of action.

As applicable to defendant’s contention that the court erred in overruling its general demurrer to plaintiff’s petition because it alleged an improper measure of damages, we think the proposition unsound in such cases as this. While it is true that the pleadings disclose part payment was made on the new show case by a sale to defendant of two second hand cases, yet the price at which the latter were taken was agreed upon between the parties, and is equivalent to a payment in cash or other property to that extent and takes the transaction out of the rule governing exchange of property. In an action for rescission and cancellation of instruments, where the price at which other property is taken in on a deal is agreed upon at the time of the transaction, as in this case, no necessity exists for allegations of any other measure of damages than that of the price agreed upon. 55 C.J. page 41, sect. 8; Alamo Automobile Co. v. Schmidt, Tex.Civ.App., 211 S.W. 804, writ refused. The petition was sufficient to state a cause of action and there was no error in overruling the general demurrer.

The third proposition and the assignment of error upon which it is based, complain of the first special issue, upon the ground that it was multifarious. The special issue reads: “Do you find from a preponderance of the evidence that on or about March 28th, 1938, the defendant, acting through H. A. Padgett, represented to the plaintiff, Eric C. Fricke, that the counter manufactured by defendant was mechanically perfect and would keep plaintiff’s meats chilled and maintain such a low temperature as to prevent spoiling?” The answer was “Yes”.

The contention is made that the inquiry covers: (a) did the salesman represent that the counter was mechanically per-feet; (b) - did he represent that the counter, would keep plaintiff’s meats chilled; and (c) did he represent that the equipment would maintain such a low temperature as to prevent plaintiff’s meats from spoiling. We ‘ think this assignment is well taken. As we have seen, this action was to rescind a sale contract because of fraudulent representations which were believed by plaintiff and induced him to make the deal. The issue as propounded was required by the court to be answered yes or no. It embraced' at least three alleged fraudulent statements which constituted substantially all of- the grounds relied upon by plaintiff. •It gave the jury no opportunity to answer whether or not each was made. Certainly if all the alleged representations were made the issue could have been answered in the affirmative, but if it was found that either was not made then the whole issue would have -to be answered in the negative. This would appear to be most favorable to the defendant, who is here complaining. However, the manner in which this issue was submitted is not in keeping with the letter or the spirit of Article 2189, R.C.S. Among other things, that article provides that issues shall be submitted distinctly and separately. We do not consider that the na.ture of the special issue is such as to bring it within the class where it requires a grouping of facts to present a single or ultimate issue as announced in Speer’s Special Issues, page 128, sect. 94. It has been held by our courts that the article of the statute referred to should be liberally construed so as to enable the losing party to know with certainty the facts found by the jury which constitute the basis for the judgment entered against him. Gulf States Utilities Co. v. Wooldridge, Tex.Civ.App., 90 S.W.2d 325.

In Theobalt v. Wiemann, Tex.Civ.App., 104 S.W.2d 589, 590, plaintiff sued to rescind a contract of purchase of an automobile and to cancel certain notes given in the deal. It was alleged that, a number of false and fraudulent statements were made by the seller which induced the sale. The •following special issue was propounded to the jury and complained of by the defendant under the assertion that it was multifarious: “Do you find from a preponderance of the evidence that material false representations were made to the plaintiff, Carroll Wiemann, about the condition of the Tefraplane automobile prior to the sale thereof.” ‘ The jury was 'instructed to answer, “yes” or “no”. The charge was condemned and the court reasoned: “The issue covered the whole cause of action asserted on the basis of fraud, and required the jury to answer them all in one word, ‘yes’ or ‘no’. This placed the jury where it could not find that part of the representations were false, and part true.” The court cites Meinecke v. Fidelity Inv. Co., Tex.Civ.App., 62 S.W.2d 623, writ refused; and Brammer & Wilder v. Limestone County, Tex.Civ.App., 24 S.W.2d 99, writ dismissed. The opinion from which we have quoted further adds: “Again, the issue was multifarious. It contained the issues of whether the car had ever been wrecked; whether it was in good condition and would perform as an unused car; whether it had ever been used for other than demonstrator purposes. These issues should have been submitted separately. Brammer & Wilder, [supra]; Metropolitan Life Ins. Co. v. Greene, (Tex.Civ.App.) 75 S.W.(2d) 703; Missouri K. & T. Ry. Co. v. Long (Tex.Com.App.) 299 S.W. 854 [and 20 Tex.Jur. sect. 126, pp. 179-181].” The assignment raising the question must be sustained.

Defendant’s fourth proposition is to the effect that no judgment in this case could be properly rendered against it under the pleadings and evidence until a jury finding was had on the question of whether or not Padgett, upon whose representations plaintiff relied, was its agent. In the brief defendant says the proposition is germane to its 4th, 5th and 6th assignments of error. By reference to the assignments mentioned, we find that no such complaint is made of the action of the trial court in either. By the fourth assignment it is urged that the court erred in entering judgment against defendant because, if any representations were made about the show case, they were made by Padgett, and were mere sales talk. The fifth and sixth assignments simply claim that it was error to enter the judgment against defendant under the pleadings and testimony offered. The assignments as such were not such as we could consider since they do not distinctly point out the actions of the court complained of. Vernon’s Texas Civil Statutes, Article 1844.

If the proposition contained in the brief could be considered as an assignment of error (although not presented or treated as such by defendant), then, as worded, it would fall short of the rule for the reasons mentioned concerning the assignments to which it is claimed to be germane. No action or ruling of the court is complained of, but simply asserts that, as a matter of law, plaintiff was not entitled to recover until he had alleged, proved and procured a jury finding that Padgett was the agent of defendant.

In view of the fact that this case must be tried again, doubtless much of the testimony will be the same as it was upon the previous trial. Aside from the written order for the equipment, the question of agency of Padgett depends largely upon the testimony of plaintiff. We do not believe that the order adds much to plaintiff’s contention of agency. It shows to be addressed to defendant at its home office; that merchandise was sold to plaintiff and that Padgett was the salesman; yet the instrument requests shipment to Padgett at Fort Worth, Texas. Padgett testified, and in this he is uncontradicted, that he bought from defendant and sold its merchandise on commission ; that when goods were consigned to him, he was required to pay defendant a stipulated price when they were sold and such sum as he received above the price at which it was charged to him, was his commission for making the sale. Whether or not the relationship between defendant and Padgett was one of principal and agent must be determined from all the facts and circumstances in evidence. It is often difficult for one dealing with a purported agent to make clear and concise proof of that relation. Where, as in this case, the principal does not testify, a great deal of leniency is indulged in favor of the sufficiency of the evidence offered by a plaintiff dealing with one claimed to be the agent of another. This court discussed that point in the recent case of Dallas Joint Stock Land Bank of Dallas v. M. E. Harrison et al., Tex. Civ. App., 135 S.W.2d 573, opinion written by Chief Justice Dunklin. We also cite 2 Tex. Jur. p. 388, sect. 8, as bearing upon the distinction between agency and that of those receiving goods on consignment to be sold.

If it should appear upon another trial that there is any substantial testimony offered by defendant tending to show a lack of agency in Padgett, then it becomes an issue of fact for determination by the jury, and should be submitted, placing the burden upon the plaintiff. 2 Tex.Jur. sect. 103, p. 499, et seq. See, also, Williamson v. Patterson, Tex.Civ.App., 106 S.W.2d 753.

It is insisted by the fifth proposition that from the length of time plaintiff retained the fixtures after learning of their alleged defects, he was guilty of laches and was estopped as a matter of law to sue for a rescission of the contract. The facts and circumstances surrounding the whole transaction were before the jury and under proper issues they were determined against the contention made. We do not consider that as matter of law he was estopped, and the point is overruled.

It is complained in the sixth proposition, that the value of the second hand show cases traded in on the new one was inflated for purposes of the trade, and should not have been made the criterion for the amount of recovery by plaintiff.

By its seventh proposition, defendant asserts that if plaintiff should be permitted to recover at all the measure of his damages was the difference between -the value of what he received and the reasonable cash market value of what he gave. The jury found in response to the sixth special issue that the parties agreed at the time of the sale that the second hand show cases were worth $503. We have discusssed these two points under the assignments complaining of the court’s action in overruling the general demurrer. The authorities there cited are against defendant’s contention; they hold that' where the parties agree upon a value, as they did in this case, they are bound by it. Both propositions must ,be overruléd.

This suit was instituted to rescind the contract of purchase and to cancel the’ obligations made for payment and to recover what had been paid. It is contended by defendant under its eighth proposition that plaintiff only sought a partial cancellation and rescission, and based upon that theory, it argues that no such recovery could be had. As stated, this suit is not of that character and we see no merit in the contention.

It is denied by defendant under its ninth proposition that plaintiff had alleged or proved that he had elected to rescind the purchase of the show case. The testimony shows that plaintiff had his attorney write a letter to defendant on July 27th, 1938,. that he was rescinding the contract. The jury found in response to the 16th special issue that plaintiff notified defendant of his intention to rescind the contract within a reasonable time after he discovered the defects in the refrigerator counter. A similar finding under other facts brought out in-the testimony was given in response to the 21st special issue. We find evidence in the record to support the verdict in these respects, and the proposition is overruled.

By its tenth proposition defendant contends that in any event* the court should have rendered judgment for it upon the notes sued on in its cross action. This proposition, of course, is predicated upon the theory that plaintiff should not have prevailed in the suit. From what we have said, this contention cannot be sustained.

'• For the reasons assigned, this cause must be reversed and remanded for another trial. But such assignments not herein sustained are expressly overruled. Reversed and remanded.


author: WILLIAMS, Justice.

text:
    DAVIS et al. v. VOLUNTEER STATE LIFE INS. CO.
    No. 5458.
    Court of Civil Appeals of Texas. Texarkana.
    Dec. 27, 1939.
    Rehearing Denied Jan. 18, 1940.

      Wilkinson & Wilkinson and F. B. ■Caudle, all of Mt. Vernon, for appellants.
    Lee A. & Allen Clark, of Greenville, and 'Medona Bonner, of Dallas, for appellee.
   WILLIAMS, Justice.

This litigation involves the question of usury. Mrs. Ruby Davis and husband, plaintiffs below, executed and delivered to Bonner Loan & Investment Company a ■series of notes dated November 1, 1925, in the sums of $100, $150, $150 and $1,100, due November 1, 1926, 1927, 1928, and 1935, respectively, bearing 7% interest per. annum ■evidenced by coupons attached to the notes. This series, secured by a first .deed of trust lien on 75 acres of land in Franklin County, was, with the lien, promptly assigned to -.the Volunteer State Life Insurance Company, defendant below. As part of the loan transaction plaintiffs also executed a note for $237, payable in installments, and secured by a second deed of trust lien on same land. This represented an additional interest charge of 2% per annum. This note was retained by and subsequently paid to rthe Bonner Company, and the installment payments made on this note are not here in-volved. The notes for $100, $150, and $150 were paid as they matured. Plaintiffs paid to defendant accrued interest of $49.50 on the first three notes, and $77 interest annually on the $1100 note for nine years, or .■a total of $752.50. The principal on the last •note and the interest due on November 1, 1935, and 1936, all being past due and unpaid, the land was sold on June 1, 1937, by .a substitute trustee under provisions of the deed of trust. Defendant became the pur--■chaser at the bid price of $1,000.

Plaintiff seeks to set aside the foreclosure •sale and to have the interest payments of $752.50 credited now on the principal. And in the alternative, if the foreclosure sale be held valid, they seek judgment against defendant for the sum of $1,000, the value of the property taken, less $347.50 they now claim to be due on the principal. No claim was made that usurious interest was actually paid.

Upon trial to the court the relief •sought was in all things denied. The charge of usury here urged "is grounded up■on the acceleration clause in the $237 note and the second deed of trust lien. The provision in the $237 note reads:

“If. any of said installments shall not be paid when due then all sums herein agreed to be paid shall become due and payable at the option of the holders hereof without notice, and bear interest at the rate of ten per cent per annum from maturity until paid * *
“This note is secured by a Deed of Trust on Real Estate in Franklin County, Texas, and is made and executed under and is to be construed in accordance with the laws of the State of Texas.”

The clause in the $237 note reading “all sums herein agreed to be paid shall become due and payable” did not authorize the collection of unearned interest. Phrases of similar import supporting this conclusion are discussed in Donley v. Travelers Ins. Co., Tex.Civ.App., 84 S.W.2d 815; Zapalac v. Travelers Ins. Co., Tex.Civ.App., 84 S.W.2d 818; Welfare v. Realty Trust Co., Tex.Civ.App., 85 S.W.2d 1067; Lincoln Nat. Life Ins. Co. v. Anderson, 124 Tex. 556, 80 S.W.2d 294.

In that paragraph of the second deed of trust providing for the sale of the property and distribution of the proceeds is found the clause set in parenthesis in the original instrument (as so shown below) upon which appellant also relies to hold the contract as tainted with usury, which paragraph reads as follows:

“But if any default shall be made in the' payment of any .part of said indebtedness, or of any of said installments, or in the performance of any covenants * * * herein or of said First Deed of Trust, then, in any such event, the Trustee shall * * * at the request of the holder of any past due and unpaid installment on said note, * * * sell the property hereby conveyed, subject to the lien of said Deed of Trust and subject also to the lien of this instrument for unmatured installments, if any, on the note hereby secured (it being agreed that the holder of this note may at .his opt.ion declare the entire note due and payable) to the highest bidder for cash, * * * subject, however, to the Hern of said First Deed of Trust and to the lien of this .instrument for unmatured installments, if any, on the note hereby secured, and shall receive the proceeds of such sale', which he shall pay and disburse as follows, to-wit:

“* * * Second,'to the payment of the amount due and delinquent on the note hereby secured.-:'■. ...
“Third, to the payment of any delinquent notes or interest, or any taxes, * * * or other sums due under the terms of said First Deed of Trust, according to the terms thereof * *

Plaintiffs recognize that in the construction of contracts all written instruments whereby a single transaction is consummated are to be taken and construed together. 10 Tex.Jur. p. 286, Sec. 166. And, “if there be inconsistencies and conflicts, they should be construed together so as to give effect to the intention of the parties as collected from the whole contract.” Clement v. Scott, Tex.Civ.App., 60 S.W.2d 258, 260, and cases therein cited.

With the above rules in mind, it is to be observed that in the same paragraph-of the second deed of trust which contains the acceleration clause we find the further provision in event of sale to apply the proceeds, “Second, to the payment of the amount, due and delinquent on the note hereby secured; and Third, to the payment of any delinquent notes or interest due under the first D. T.” These clauses if not contradictory to the acceleration clause therein, at least are evidentiary of the intent and explanatory of the phrase used in the acceleration clause. The use of the term “delinquent” is of probative force as indicating the intent not to collect on any installment prior to its due date. Ordinarily a debtor would not become delinquent on a payment prior to its due date.

Pursuing the inquiry further to ascertain the intent of the parties as collected from the whole contract, the acceleration clause in the first deed of trust provides that in case of default; “each of said notes secured hereby shall at the option of the legal holder or holders thereof at once become due and payable with all interest accrued.” And in case of sale the trustee is directed to apply the proceeds, “Third, to the payment of the full amount due on said note or notes, including principal, interest and attorney’s fees * * *.” The acceleration clause in the principal notes are of like import. These provisions would not authorize the application of the proceeds under a sale to the payment of unearned interest. The intent is here clearly expressed to collect only the principal and accrued interest earned to the date the option is exercised.

The foregoing provision with the intent so disclosed, which also throws light upon the use of the word “delinquent”, became a part of the second deed of trust, being specially adopted in the second deed of trust by clauses therein which read:

“This deed of trust is subject to a first deed of trust of even date herewith executed by the undersigned to * * * securing the payment of four notes aggregating $1500. This note is given for a part of the agreed interest on the notes secured by said first deed of trust. * * *
“All the covenants, stipulations and agreements-of said first deed of trust, all of which are adopted and made a part of this instrument as fully to all intents and purposes as if written at length herein. * * * ¡f

If the provisions herein discussed be susceptible of more than one reasonable construction under the rule stated in Walker v. Temple Trust Co., 124 Tex. 575, 80 S. W.2d 935, the court will adopt the construction which comports with legality. It is presumed that in contracting, parties intend to observe and obey the law. To the same effect see the holdings in all the cases above cited and authorities therein in each discussed.

Under the 6th, 7th and 8th propositions plaintiffs contend that the sale under the first deed of trust by the substitute trustee is void because the request to sell was made by the assignee of the note and not by the Bonner Company, the original holder and payee. This will not be sustained because this deed of trust grants to the holder of said note the right to request such sale and the appointment of a substitute trustee. In the trial litigants agreed that Rúbey, the original trustee, refused to act and duly resigned as such; that all the proceedings relating to his resignation and the appointment of the substitute trustee, 'the demand by defendant that this substitute trustee proceed to sell the property, the notice of sale and “in fact everything from the demand that Rubey sell, to the execution of the substitute trustee deed, inclusive, were done and performed in exact accordance with the terms 'of the deed of trust.”

Under the 9th proposition plaintiffs assert “that because of negotiation between litigants preceding the sale they were reasonably led to believe that no foreclosure sale would be made of the land without personal notice to them, and such notice not being given them the sale was invalid,” citing John Hancock Ins. Co. v. Howard, Tex.Civ.App., 85 S.W.2d 986. Considerable correspondence passed between litigants after maturity of the $1,100 note and prior to the sale, which reflects the efforts of plaintiffs to refinance the loan with another company, in which efforts defendant cooperated. The correspondence further reflects the efforts of defendant to help plaintiffs negotiate a sale to a third party. Plaintiffs testified that they knew nothing of the land being posted for sale or of the sale until several days subsequent thereto. They do not contend that defendant promised to give them a personal notice of the posting of the land for sale. The trial court heard the foregoing and other evidence bearing upon this proposition and by the judgment rendered has found adversely to plaintiffs’ contention. In support thereof it is sufficient to point out that in a letter of April 30, 1937, addressed to plaintiffs’ attorney defendant wrote, “We have declared the entire debt due and payable without further notice and have referred the papers to our legal department for immediate action. * * * ” And then on April 21, 1937, Davis was advised by letter that the writer had “been instructed to post this property shortly after the first of the month for sale on the first Tuesday in June.” In the Hancock case, supra, there was a finding of a promise to give a personal notice •of the sale, inadequacy of price, and ability to meet the indebtedness, all of which are absent here.

In view of the conclusions reached, it becomes unnecessary to discuss the other propositions raised.

The judgment of the trial court is affirmed.


author: ALEXANDER, Justice.

text:
    UNIVERSAL ATLAS CEMENT CO. v. OSWALD et ux.
    No. 2154.
    Court of Civil Appeals of Texas. Waco.
    Oct. 26, 1939.
    Rehearing Denied Jan. 18, 1940.

      Nat Harris, Mabel Grey Howell, and Margaret Harris Gordon, all of Waco, for appellant.
    W. V. Dunnam and Frank Fitzpatrick, both of Waco, for appellees.
   ALEXANDER, Justice.

This suit was brought by Joe Oswald and wife against the Universal Atlas Cement Company for damages. The plaintiffs alleged, in substance, that the defendant in blasting rock for use in its cement plant set off an unnecessarily large quantity of explosives and that the blast therefrom cracked the rock foundation under plaintiff's’ adjoining farm in such manner as to cause two water wells thereon to go dry and the subterranean moisture under the soil to drain off in such manner as to render the land less productive. The jury, in answer to special issues, found in favor of the plaintiffs,, and, based on such answers, the court entered judgment in their favor for the sum of $6,900. The defendant appealed.

\ The evidence shews that the plaintiffs own a farm of 138 acres adjoining defendant’s cement plant. The cement company uses rock from' its quarry near its plant for making cement. ‘ The rock is quarried by blasting. It is the practice of the company to so blast the rock from its quarry as to leave a perpendicular face or wall approximately fifty feet high. • Two rows of holes are used in blasting. The first row of holes consists of about six in number set back twelve feet from the edge of the perpendicular wall and twelve feet apart and are drilled to a depth of approximately fifty feet. The second row of holes of a similar number is set back twenty-four feet from the edge of the perpendicular wall and drilled the same depth. Three charges of dynamite are placed in each hole, one in the bottom, another in the middle, and another near the top of the hole. Appellant’s superintendent testified that on the occasion in question, July IS, 1935, approximately 2,600 pounds of dynamite of 40% nitroglycerine was used in blasting; that approximately 250 pounds of this explosive was placed in each hole; that about 150 pounds was placed in the bottom of the hole, and the balance of the charge was distributed between the middle and top of the hole; that the dynamite was caused to explode by the use of an electric wire attached to a cordo fuse, about l/20th of a second being required for the explosion of all of the shots; that the blast was sufficient to break down from eight to ten thousand tons of rock at a time, the rock being crushed into pieces from the size of a man’s fist to that of a desk. The place where the blasting was being carried on was considerably lower than plaintiffs’ farm. There were two large wells or cisterns on plaintiffs’ farm that had been dug in the rock. One of them was near the barn and was about 30 feet deep and 17 feet across at the bottom. The other well situated nearer the residence was a smaller one. Oswald testified that these wells were about 900 feet from where the cement company was blasting, but a map introduced in evidence tended to show that they were about 1,200 feet from the defendant’s quarry at the time of the incident in question. The formation under the farm and the adjoining rock quarry was solid limestone rock up to about seven or eight feet of the surface. Plaintiffs’ wells were filled by rainwater percolating through the surface of the ground to the solid rock and from thence it seeped into the wells. There was evidence that these wells had been 'in use for a number of years and had never gone dry. They supplied a large quantity of water for household use and the watering of livestock. The plaintiff, Joe Oswald, and his son testified that on July 15, 1935, they were at the large well drawing water for a cow. At that time the well was approximately fifteen feet deep in water. They testified that they heard a loud blast that had been set off by the cement company; that the earth shook, the trees quivered and the water in the well rippled or shook; and on the next day they went to the well and found it empty. Neither of the wells has held water since that time. These and other witnesses testified that they later found small cracks in the rock wall of the large well. There was testimony by various experts that the practice followed by the defendant was the usual and customarily approved method for the quarrying of rock under the existing circumstances. There was evidence, however, that although the company had been quarrying rock from this same quarry for four or five years it had not usually used as large a quantity of explosives as was used on this occasion. In fact, on only six previous occasions had it ever used as much explosives as was used on this particular occasion, and on these occasions the blasting was being done at places much farther away from plaintiffs’ wells than it was on the occasion here involved. A witness for appellant testified on cross examination' that after the explosion on the occasion in question, the rock wall in the quarry was cracked so that water used in drilling new holes would seep out onto the floor of the quarry. It had not done so on previous occasions. ’One of appellant’s witnesses, who operated a cement plant at another place, testified that at the plant operated by him only one row of holes was used for blasting; that under such method less rock was kicked off at a time and the kick-back or earth tremor was in proportion to the load kicked off; that the one row method could be used in appellant’s plant, but as the amount of rock that would be kicked off at a time would be less, the expense of quarrying would be increased. The plaintiffs introduced testimony to prove that their land has been drier and less productive since the blasting in question. Some of the witnesses testified that previously, during the rainy season, the water would percolate through to the hard rock and then seep out on the sides of the hill, but that since the heavy blasting had been carried on, there were no more seeps, the inference being that the water was allowed to escape through the deep cracks created in the rock by the blast. Experts testified that ordinarily on land such as plaintiffs the rainwater which percolated through the surface of the land to the hard rock would remain there for use in feeding plant life, but that if the rock foundation was cracked, the water would escape through the cracks and cause the subsoil to dry out quicker. The jury found that on the occasion in question the defendant negligently used an excessive quantity of dynamite in blasting in its quarry, and as a proximate result thereof, plaintiffs’ wells were destroyed and the solid structure under the farm was cracked and ,the farm rendered less productive, to plaintiffs’ damage in the sum of $6,900. The jury further found that the defendant did not exercise ordinary care and did not adopt the usual and customary practice in its blasting operations.

Appellant’s main ■ contention is that the findings of the jury that the defendant used an excessive quantity of dynamite- in its quarry and that it was negligent in so doing is contrary to and unsupported by the evidence. There is a conflict of authority as to whether one, who by blasting by powerful explosives produces severe concussions or vibfations in surrounding earth and air and so materially damages property belonging to others, is liable, irrespective of negligence on his part. All authorities hold that where there is an actual invasion of the premises of another by the throwing of dirt, stone or dé-bris, proof of negligence is unnecessary to a recovery of damages. Others hold that in the absence of an actual physical invasion of the premises, no recovery can be had unless negligence is shown. 22 Amer.Jur. 180; 25 C.J. 192. There are some cases in Texas which seem to support this latter view. Comanche Duke Oil Co. v. Texas Pacific Coal & Oil Co., Tex.Com.App., 298 S.W. 554; City of Dallas v. Newberg, Tex.Civ.App., 116 S.W.2d 476. This theory seems to have some reasonable foundation in those cases where the damage or annoyance is caused solely by noise or concussion of the air, for in those cases there is in fact no physical invasion of the premises; but in cases like the one at bar, where the parties own adjoining property, and one of them intentionally sets off an explosion that rents the earth under the premises of his neighbor, there is an actual physical destruction of the property of the adjoining owner, and it would appear to be more reasonable to hold that the one who set Off the blast should be liable for the damages caused thereby, regardless of negligence, in the same manner as he would if he should invade the premises by the throwing of stones. However, a decision of this question is not absolutely necessary in this case. Here, the jury found negligence and it only remains for us to determine whether there is evidence to support this finding. Negligence, like any other fact, need not be proved by direct evidence but may be inferred where the surrounding facts and circumstances in evidence are such as to reasonably justify the inference. Houston E. & W. T. Ry. Co. v. Boone, 105 Tex. 188, 146 S.W. 533; English v. Miller, Tex.Civ.App., 43 S.W.2d 642; Shell Petroleum Corp. v. Magnolia Pipe Line Co., Tex.Civ.App., 85 S.W.2d 829, par. 6. It is a very well established rule that “where the particular .thing causing' the injury has been shown to be under the management [and control] of the defendant, or his servants, and the accident is such as in the ordinary course of things does not happen, if those who have the management use proper care, it affords reasonable evidence, in the absence of explanation, that the accident arose from want of care.” Washington v. Missouri K. & T. Ry. Co., 90 Tex. 314, 38 S.W. 764, 765. See also Texas & Pacific Coal Co. v. Kowsikowsiki, 103 Tex. 173, 125 S.W. 3; International-Great Northern Ry. Co. v. Lucas, 128 Tex. 480, 99 S.W.2d 297; Edwards v. Hawkins, Tex.Civ.App., 77 S.W. 2d 1098. In the case at bar the thing which caused the injury to plaintiffs’ property was the setting off of the blast on defendant’s premises. These blasting operations were exclusively under the management and control of the defendant. The evidence was sufficient to justify the jury’s finding that the blast set off by the defendant cracked the rock under plaintiffs’ farm and caused the wells to go dry. In fact, the correctness of these findings does not appear to be seriously challenged. The injury sustained by plaintiffs is one that ordinarily would not have occurred if proper care had been used. Whether the defendant used proper care depended on the surrounding circumstances. ' The evidence shows that the defendant was using a powerful explosive in large enough quantities to move a tremendous amount of stone. This necessarily called for precaution. It ought to have known that the kick-back on the adjoining rock and resulting earth tremor would be very great. It is true, there was testimony by experts that the method pursued by the defendant was the one customarily used in quarrying rock, but this has reference to the feasibility of the practice for the purpose of securing the most rock at the least expense and not the injurious effect to the adjoining land owners. There was evidence that in, at least one other quarry smaller shots of dynamite were used. In fact, the defendant itself had not generally used as much dynamite as was used on the occasion in question. It is also true that the expense of quarrying rock is greater where smaller shots are used, but the defendant would not have the right to sacrifice its neighbors’ property merely to reduce its own expense. It had a right to quarry its rock, but it was under obligation to use diligence to so conduct its operations as not to injure plaintiffs’ property. As said by the Commission of Appeals in Comanche Duke Oil Co. v. Texas Pacific Coal & Oil Co., 298 S.W. 554, 562: “Manifestly, a jury would be authorized to find the means of successive ‘shots’ of smaller amounts (as contrasted with one large ‘shot’) to be a possible way of accomplishing the purpose in mind; i. e., of ‘exploiting’ a given ‘formation.’ ” It has been said that negligence may be inferred from the mere fact that an explosion intentionally set off is attended with violence and unusual results. 25 C.J. 196; Rafferty v. Davis, 260 Pa. 563, 103 A. 951. Under the circumstances, we cannot say that the jury was not justified in inferring that the defendant was pursuing a course in negligent disregard of the plaintiffs’ rights. This assignment is overruled.

Appellant’s witness Hamilton testified as an expert on a former trial. He died prior to the second trial and his evidence, taken at the former hearing, was read to the jury on the last trial. On motion for new trial three jurors testified that they did not give any consideration to Hamilton’s testimony because, according to their understanding of the court’s charge, they were not allowed to consider anything that had occurred at the former trial. In our opinion, this did not require the granting of a new trial. While'new trials should be granted because of the happening of improper overt acts in the jury room, jurors, after they have been discharged and allowed to go from under the supervision of the court, should not be allowed to return and impeach their verdict upon a mere showing that they misunderstood the charge or misconceived or failed to give due consideration to the testimony. Kindle v. Armstrong Packing Co., Tex.Civ.App., 103 S.W.2d 471; Kuykendall v. Johnson Funeral Parlor, Tex.Civ.App., 38 S.W.2d 601; Wood v. Gulf C. & S. F. Ry. Co., 15 Tex.Civ.App. 322, 40 S.W. 24; Meyer v. Gillespie County, Tex.Civ.App., 109 S. W.2d 220, 221. This case comes within this latter class and the trial court properly refused to grant a new trial because of the alleged misconduct of the jury.

We have considered all other assignments of error and find no reversible error.

The judgment of the trial court is affirmed.


author: LOONEY, Justice.

text:
    FERGUSON v. HARRIS.
    No. 12811.
    Court of Civil Appeals of Texas. Dallas.
    Dec. 9, 1939.
    Rehearing Denied Jan. 6, 1940.
    John W. Pope, Sr., and Hugh W. Ferguson, Jr., both of Dallas, for appellant.
    W. B. Harrell and Russell Allen, both of Dallas, for appellee.
   LOONEY, Justice.

Felix. Harris, as receiver of the Dallas Mortgage Securities Company (a corporation in dissolution), brought this suit against H. W. Ferguson and H. O. Pool, alleging in first count, of the petition, that: “Plaintiff would show that heretofore and on and prior to the 29th day of November 1929,' defendants, H. W. Ferguson and H. O. Pool, having' devised, and intending to devise a scheme and artifice to defraud the said Dallas Mortgage Securities Company, did on the said 29th day of November 1929, unlawfully, wilfully and without authority, convert $5,000 of the monies and funds of said corporation, and appropriated the same to the use and benefit of said H. W. Ferguson. That the object of such scheme and artifice to defraud was affected and such conversion accomplished' in the following manner;”, followed by detailed allegations in regard to the conduct of the parties involved in the alleged conversion of $5,000; and, alternatively, in a second count, alleged, “that on and prior to the 28th day of October 1929, the defendants H. W. Ferguson and H. O. Pool, having devised and intending to devise a scheme and artifice 'to defraud said corporation, did on the said 28th day of October 1929, unlawfully, wrongfully and without authority, convert and misappropriate 500 shares of the capital stock of said corporation, of the value then of $5,000 to the use and benefit of the said H. W. Ferguson. That the object of said scheme and artifice was affected by, and such unlawful conversion and misappropriation accomplished by, the following means:”, followed by detailed allegations as to the conduct of the parties involved in the alleged fraudulent conversion and misappropriation of 500 shares of the capital stock of the company, and further, in the alternative, alleged in a third count, “that heretofore on about the 21st day of July 1926 the said defendant, H. W. Ferguson, subscribed for, among other shares of the stock of said corporation, 500‘ shares of such stock at $10.00 per share, which subscription is evidenced by an instrument in writing, and by such subscription promised and agreed and became bound and obligated, to pay to said corporation the sum of $5,000 * * * ”, alleging, in connection with and as a part of the third count, the conduct of the parties involved in the issuance to Ferguson of a certificate for 500 shares of stock, and his failure and refusal to pay for same.

The defendant Ferguson answered,, denying-plaintiff’s allegations and, at great length, combatted his allegations as to fraud and conversion, specially pleading that he had paid for all stock for which he had subscribed.

When plaintiff rested, Ferguson moved for an instructed verdict, on the ground that the evidence was insufficient to sustain either count, which was overruled by the court; and, at the conclusion of the evidence, again moved for an instructed verdict for the same reason, which was also overruled. In addition to requests for an instructed verdict, Ferguson excepted to the charge as given, on the ground that the undisputed evidence showed that he had paid the company for all stock for which he had subscribed.

The case was submitted on only one issue, framed and requested by plaintiff, as follows : “Do you find from a preponderance of the evidence that H. W. Ferguson is indebted to Farmers Fund of Texas (or its successor, Dallas Mortgage Securities Company) in the sum of $5,000.00 on his subscription to the capital stock of said corporation?’, which, being answered in the affirmative, the court rendered judgment for plaintiff against Ferguson, and his motion for a new trial being overruled, he excepted, gave notice of, and perfected, this appeal.

(As judgment was rendered in favor of the defendant Pool, and no appeal therefrom taken, his connection with the case will not be given further notice.) ,

In his motion for a new trial, defendant Ferguson assigned error on the action of the court in denying his requests for an instructed verdict and in submitting the cause, because of the insufficiency of the evidence; these alleged errors are brought forward in appropriate assignments and urged in propositions, which, in our opinion, present but one question, that is, whether or not the evidence authorized the issue and sustains the verdict of the jury.

It is obvious, we think, that the first two counts of plaintiff’s petition are based upon alleged torts, (1) involving the alleged fraudulent conversion of $5,000 of the company’s money, and (2) the alleged fraudulent conversion of 500 shares of its capital stock, of the value of $5,000. The court refused to submit either of these issues, but submitted the case on the issue, presented in the third count, alleging breach by the defendant of his subscription contract, that is, that he had failed and refused to pay for .500 .shares of the capital stock of the company, of the value of $5,000.

The facts bearing on the issues sub' mitted are few, and undisputed, as follows: On October 28, 1929, all of the capital stock of the Dallas Mortgage Securities Company -had previously been issued and paid for, except 688 shares (par value of $10 per share), being a part of the stock subscribed for by defendant, Ferguson, who, it seems, on that day, had issued to himself certificate number 141, for 188 shares, and certificate number 142, for 500 shares, and in payment therefor, on the same day, drew his check on the Republic National Bank of Dallas, Texas, for $6,-880, payable to the order of the Securities Company, which later (on November 30, 1929) was presented by the Company to the Bank, and was paid. These stark undisputed facts, in our opinion, show conclusively that Ferguson paid for all stock for which he had subscribed, hence fully discharged his subscription contract.

It will be observed that the three counts of plaintiff’s petition are neither cumulative nor interchangeable, but that each presented a distinct and separate cause of action: (1) that Ferguson had fraudulently converted $5,000 of the Securities Company’s money; (2) that he had fraudulently converted 500 shares of the capital stock of the Company, of the value of $5,000; and (3), that he had failed and refused to pay the Company $5,000⅛ the amount due for stock. We think it perfectly obvious that the how or from whom Ferguson obtained the money deposited in the bank and later checked out, for the purpose of paying for the stock, presents another and a distinct story, allegedly disclosed in and forms the basis of count No. 1, wherein he is sought to be held liable for the conversion of $5,000 of the Company’s money. That issue, although supported by evidence .(which was disputed), was not submitted; but we do not think that, because there was evidence tending to establish a conversion of money, it authorized the submission of the.issue in regard to the failure to pay for stock, or that it supported the finding of the jury on that issue, therefore, sustain appellant’s assignments and proposition.

This brings us to the cross assignments. Appellee cross assigned error on the refusal of the court to submit his requested issue No. 1, as follows: “Do you find from a preponderance of the evidence that on about November 29th, 1929,_ H. W. Ferguson converted $5,000.00 of the moneys and funds of Farmers Fund of Texas (or its successor, Dallas Mortgage .'Securities Company) ? Answer yes or no. Answer -”. As the case will be remanded for further proceedings, we do not •deem it proper to comment upon the evi■dence bearing upon this issue, except to say that, in our 'opinion, it should have been submitted, hence that the court erred .in its refusal.

Appellee also assigns error on the ■refusal of the court to submit its requested issue, as follows: “Do you find from a preponderance of the evidence that H. W. Ferguson did on about October 28th, 1929, ■convert 500 shares qf the capital stock of Farmers Fund of Texas? Answer Yes or Flo. Answer -”. Holding as we ■do, that the evidence showed conclusively that Ferguson discharged his stock subscription, it follows that he could not be held liable for converting stock, for which '.he had paid, therefore, find no error in the ■refusal of the court to submit the issue tin-kler consideration.

For errors heretofore indicated, the 'judgment will be reversed and the cause remanded for further proceedings, with instructions that, if the pleadings remain substantially as they now exist, the case should be tried álone under count No. 1, ^alleging fraudulent conversion of $5,000 of the Company’s money. While the evidence ■on that issue is conflicting, it is the only issue that, in our opinion, the evidence tends to establish.

Reversed and remanded, with instructions.