text:
    NATIONS et al. v. ULMER et al.
    No. 3900.
    Court of Civil Appeals of Texas. El Paso.
    Jan. 25, 1940.
    Rehearing Denied April 4, 1940.

      Isaacks & Lattner, of El Paso, for appellants.
    Whitaker, Perkins & Turpin, of Midland, for appellees.
   PRICE, Chief Justice.

This suit was brought in the District Court of Midland County by Henry Clay Nations and others against M. C. Ulmer and Charles L. Klapproth, as independent executors and trustees of the last will of Emily E. Crier, deceased. A branch of this case has been before this Court once before. At that time the trial court sustained the plea in-abatement urged by defendants Ulmer and Klapproth, from which plaintiffs appealed, and upon appeal the case was reversed and remanded for error in sustaining the plea in abatement. Nations et al. v. Ulmer, 122 S.W.2d 700. The case is here upon a trial on the merits before the court in which the judgment was in favor of the defendants adjudging that plaintiffs take nothing by their suit. From this latter judgment plaintiffs duly perfected their appeal and the case is here for review.

Involved in the case was the construction of the last will of Mrs. Emily E. =Crier, deceased. It is claimed by the plaintiffs that defendants, as trustees and executors, have retained more fees than they were legally entitled to retain under the will.

In order to discuss the matters involved it will be necessary to set out the will at length and the codicil thereto. • .

“First: It is my will and wish that my Executors and Trustees hereinafter named, shall pay any and all indebtedness which I may owe at the date, of my death, including the expense of my last illness, if any, and my funeral expenses and a reasonable sum, not to exceed $500.00 to mark my last resting place, and for this purpose they shall have, power to sell so much of any assets of my estate as may be necessary to procure funds for that purpose.
“Second: And whereas, my estate consists in a large measure of producing oil royalties, the income from which is variable, and which may finally disappear altogether.
“And whereas my son, Harold Roland Bloom, in my opinion is unfit to receive and manage the properties of which I may die possessed, and I desire to so arrange the same as to care for him during his lifetime.
“Third: Now, therefore, it is my will that at my death, all my property of whatsoever nature, kind or character, real, personal or mixed, sháll pass to M. C. Ulmer and Charles L. Klapproth, Trustees, or their substitutes or successors, and that the same shall vest in them for the purposes of this trust and be administered by them or their successors, as hereinafter provided for under the terms and directions hereinafter contained.
“The terms and conditions of the trust herein created are as follows:
“(a) I desire the expense of this trust to be paid out of the income from my properties including a suitable compensation to the Trustees herein named, or their successors, as herein provided for, which compensation, however, shall never exceed ten per cent of the gross income.
“(b) After the expenses of this trust have been paid, I desire that my Trustees hereinabove named, or their successors in this trust, shall pay over to my beloved son, Harold Roland Bloom, the remainder of the income, until such payments amount to Three Hundred Dollars ($300.00) per month; that is to say, that they shall pay to him all of said income if less than $300.-00 per month, whatever the amount may be.
“If the income exceed $300.00 per month, after the payment of the expenses of this trust then I direct them to pay to my sister, Mrs. V. A. Shirk, the sum of Seventy-five Dollars ($75.00) per month, or so much thereof as said income may justify.
“In the event the income from my property should justify and be more than $375.-00 per month, after the expense of administering the trust is deducted, then I direct that my Trustees, or their successors, shall pay to-my son such additional amounts as may be earned, up to the sum of $500.00 per month.
“In the event that the income is greater than $500.00 per month, after deducting the expense as before provided, then the excess thereof shall be accumulated in the hands of the Trustees, or their successors and be disposed of as follows:
“Should the income at any time be less than $300.00 per month, after the payment of expenses, then such accumulation may be drawn on to supplement the income for such amount as added to the income will pay the $300.00 per month above provided for to my son> and this may continue from month to month until the accumulation is exhausted.
“The sum above provided to be paid to my sister, Mrs. V. A. Shirk, shall not at any time be paid out of the accumulation, if any, but shall only be payable when the income is sufficient as hereinbefore provided.
“Should there remain any part of the accumulation at the date of the death of my son, after application as hereinbefore directed, then the same shall become a part of my permanent estate.
“Fourth: (a) At the death of my son, should he leave' an heir of his body surviving, the trust herein created shall continue for the usé of said heir or heirs of his body until such heir or heirs become of age, at which time the body of the property shall be delivered over to such heir or heirs.
“(b) Should my said son die leaving no heir or heirs of his body, then it is my will that the principal of said trust be distributed as follows:
“One-third thereof shall pass to my beloved sister, Mrs. V. A. Shirk, and thereupon, of course, the provision hereinabove made for her shall cease.
“Two-ninths thereof shall pass to my beloved sister Mrs. Clara J. Looney, and the remaining four-ninths shall pass, share and share alike to the heirs of the body of O. C. Nations and to the heirs of the body of H. O. Nations.
“Fifth: I hereby nominate and appoint M. C. Ulmer and Charles L. Klapproth as Executors of this my last will and testament, and as Trustees hereinabove named hereunder. Should either of them fail or refuse to qualify, the other is hereby authorized to act as fully as if both had qualified.
“Should both of them fail or refuse to qualify then the County Court having jurisdiction of the probate of this will shall appoint two suitable trustees to act hereunder.
“In the event that the Trustees herein named or either of them, accept this trust and qualify herein, no bond shall be required of him or them, and no action shall be had in the probate court, in that event, except such as is necessary to probate my will and establish this trust.
“In the event of the appointment of substitute trustees or successors to the trustees herein named, then and in that event the said trustees so appointed shall give bond as required by law in the administration of estates.
“My Trustees herein appointed, or those named to succeed them, or named to fill the vacancy, should there become a vacancy in this trust, shall have full power to collect, receive and distribute all money income arising from my estate in accordance with the directions hereinabove stated.
“The trustees, or their successors as herein provided, shall have the power to control, manage and dispose of non-revenue producing properties belonging to my estate, if in their judgment it seems to the best interest of the trust estate so to do, and in that event, they shall have full power to invest and re-invest the full proceeds thereof, and the income therefrom of such investments and reinvestments shall become a part of my estate as hereinbefore defined and be applied to the uses hereinbefore directed.
“They shall further have the power, and they are hereby directed, that in the event the income from this trust estate and the .accumulation thereof should be insufficient to pay to my son the sum of $300.00 per month as hereinbefore directed, then they may in their discretion apply the principal derived from non-income bearing properties to the payment of said sum of $300.00 in order that my son may be provided for, but the payment of any and all sums out of the principal of my estate shall be within the sound discretion of my trustees herein named, or their successors.
“I direct, however, that none of the income producing royalties shall be sold during the life of this trust, except such as may be'required, if any, to pay my debts and funeral expenses.”

The codicil was dated April 23, 1931, and was as follows:

“That paragraph a on page 2 of said will is hereby revoked and the following substituted therefor:
“I direct" that the expenses of this trust be first paid out of the income and that the expense here directed to be paid shall consist of and include:
“Any and all items of court costs and commissions accruing under the law as in the administration of estates.
“Any and all attorney’s fees or other expense necessary to incur in maintaining the property or reducing the same to possession.
“An additional amount of ten per cent of the gross income which is hereby named as compensation to the trustees in addition to fees and commissions allowed by law in the administration of estates, which said commission and compensation the trustees may retain without any judicial ascertainment.”

At the time of the making of this will on April 10, 1931, Mrs. Crier was possessed of property of the same general nature and character as that possessed at the time of her death. Her property largely consisted of producing oil royalties. The rest of her property was of relatively small value. Among the assets, however, was a note in the sum of $6,000, signed by W. C. Looney, dated 2nd day of February, 1927, due five years after date. This note was inventoried as being without value. Clara J. Looney, the wife of W. C. Looney, had a contingent interest in the estate under the will in case of the death of Mrs. Crier’s son, Harold, leaving no heir or heirs of his body. Mrs. Crier was survived by one son, Harold Roland Bloom. This son was married and his wife afflicted with tuberculosis, and the son was a drug addict. He died, without an heir of his body, before the institution of this suit. The defendants Ulmer and Klapproth knew of the provisions of the will before the death of Mrs. Crier and before the making of the codicil thereto dated April 23, 1931, and it was perhaps at their suggestion or insistence that the codicil was added. On account of Harold Bloom’s unfortunate addiction it was anticipated that it might be harassing and vexatious to deal with him in the administration of the trust.

Shortly after the death of Mrs. Crier, which occurred sometime about 1932, defendants Ulmer and Klapproth qualified as independent executors and took charge of the administration of the estate. In the course of the administration they collected on producing royalty the sum of $30,665.82. These royalty payments were from runs of oil under land in Crane and Upton Counties. $13,520 was realized from the sale of 150 acres of royalties in Crane and Upton Counties. Two pieces of real estate in the town of Midland were sold for the sum of $3,500. The Looney note for $6,000 was renewed in the sum of $7,619, and Mrs. Clara J. Looney pledged one-half of her interest in Mrs. Crier’s estate to secure this note. There has been paid on this note the sum of $2,000 in cash, and the balance was paid by Mrs. Looney by conveyance of one-half of her interest in the estate of Mrs. Crier to the other beneficiaries under Mrs. Crier’s will. The amount realized on this note seemed to have been in cash and value the sum of $9,043.76.

On the $30,665.82 collected from royalty the defendants retained and hold fifteen per cent thereof, claimed as. compensation under the will; likewise as to. the sum of $13,520 realized as before mentioned; also on the sum of $3,500 from the sale of the Midland property. The defendants, on the transaction above mentioned in regard to the Looney note, retained as compensation for their services fifteen per cent of $9,-043.76.

Among'the findings of fact of the trial court the following appears: “In alloting to themselves the commissions and compensation as executors and trustees under said will, the said defendants, M. C. Ul-mer and Charles L. Klapproth, acted in good faith and their construction of the will is a reasonable and fair one and the true and correct interpretation as to the compensations due them as executors and trustees under said will, and that they have endeavored to follow the directions and instructions given them in-the-will’and have ‘fairly and in good faith used their best ■judgment'' hr the "determination of the amount of their compensation.”

-It- is elemental and fundamental that a will should be construed in accordance with. the. ‘ intention- expressed therein by the. .maker. In, arriving at this intention the entire instrument is to be taken into consideration. Further, as an aid to interpretation, 'the circumstances surrounding the maker and the nature and character of the property possessed may be considered. 44 Tex.Jur., Wills, § 141, p. 698; § 143 p. 701; § 156, p. 717; § 187 p. 754; Lindsey v. Rose, Tex.Civ.App., 175 S.W. 829; Bartlett v. Terrell, Tex.Civ.App., 292 S.W. 273; Jackson v. Templin, Tex.Com. App., 66 S.W.2d 666, 92 A.L.R. 873.

Appellees contend that under the findings of fact, they in good faith made a reasonable construction of the will in respect to their compensation, and the matter is legally foreclosed. We think this finding of fact is sustained by the evidence. We may add that in our opinion from the record appellees have administered this estate with great fidelity and efficiency.

If by the terms of the will defendants were made the arbiters of the amount of their compensation, we think a reasonable construction made in good faith would be binding on all concerned.

A provision in a will making the decision of the executor binding on disputed questions as to the construction thereof is a valid provision.- If such a decision is fairly and honestly made and the will is reasonably susceptible of such construction same is final.' Couts v. Holland et al., 48 Tex.Civ.App. 476, 107 S.W. 913; Grant et al. v. Stephens, Tex.Civ.App., 200 S.W. 893; 69 C.J. p. 124, § 1166.

. The provision relied on to confer arbitral powers on the trustees is to be found in the codicil. There it provides the trustees may retain as compensation in •addition to fees and commissions allowed by law in. administration of-estates ten per cent of “gross income without judicial ascertainment.” In our opinion this will does not confer arbitral p.ower on the trustees. In the cases above cited- the provisions conferring such power of construction were clear and. distinct. The word “ascertainment” in. the clause in question means, we think, determination. The whole phrase construed with,.the context means that they may- retain their compensation without first having., same judicially determined. It may, perhaps, be contended with some logic that, the provision as we have construed it ‘ renders same meaningless. However, the- construction given harmonizes with the will, in that an administration is contemplated with the minimum of judicial control. In order to confer the function of arbiter on a fiduciary in a matter in which his personal interest necessarily conflicts with the interest ■ of the beneficiaries, the intent to do so should clearly and unequivocally appear from the context of the will.

Considering this will as a whole, defendants served in a dual capacity: First, they were independent executors, bound to administer the estate in that respect in accordance with the directions of the will and the law; second, they were trustees • of the testamentary trust created by the will. The only limitation placed upon their power as independent executors was that oil producing royalty was not to be sold unless it was necessary to pay the debts. As testamentary trustees the legal title was vested in them for the purposes of the trust to all of the property of the estate. This title, was, of course, vested subject to the duty to administer. After the debts and expenses of the administration were paid the title to all property remaining vested in them for the purposes of the trust. McClelland v. McClelland, 46 Tex.Civ.App. 26, 101 S.W. 1171.

As in all cases where the same party is named independent executor in a will and trustee of a testamentary trust, it is difficult to distinguish between what power is intended to be conferred in the capacity of executor and what power as testamentary trustee. In this case, as in most cases where this situation exists, in the exercise of the powers it is hard to determine in which capacity the trustee or executor acted. Of course, when all the debts are paid, expenses of administration, the duties as executor are discharged. Henceforth the power is that granted to the trustee. But at times during the course of the administration it may be necessary for them to exercise the powers and assume the duties -of trustee. ■ In many respects their duties as executors and trustees were identical.

One thing is clear from this will: It was the paramount intention of the testatrix to provide for the support and maintenance of her son. The record does not show what payments were made to the son, nor at what time. However, there was no good reason why, with remaining property on hand sufficient to satisfy the creditors, that distribution should not have been made to the son in accordance with the provisions of the will before the completion of administration. These payments, we take it, were in the nature of a distribution.

These payments from royalty, it is conceded by both plaintiffs and defendants, were considered by the testatrix as part of the gross income of her estate referred to in the will and codicil. This construction is compelled by the fact that from no other source could these monthly payments be realized. The will refers to two classes of property possessed by the testatrix, income producing and non-revenue producing properties.

We think it fair to assume that the testatrix, as income producing property, had in mind the royalty and the Looney note; as non-revenue producing property, all other property possessed by her. This was the situation at the time of the making of the will and likewise at the time of her death. In regard to what is referred to in the will as non-revenue producing prop.-erti’es, the will confers the power on the trustees to sell same and to invest and reinvest the proceeds; the income from such investments and reinvestments to become part of her estate and be applied to the uses directed. The use directed was the. payment of the monthly stipend to her son. It was certainly contemplated that the earnings of these investments be part of the income of the estate. It seems clear to us that Mrs. Crier considered the possible income derived from the investments authorized and the proceeds of the royalty as the gross income of her estate, or rather, perhaps, the estate held by the trustees. There was no other,possible source of anything partaking of the nature of income accruing to the trust estate. The property consumed in the payment of debts was' gone. The only power defendants had as testamentary trustees was to sell the non-revenue producing property for the purpose of investment. They were not allowed to expend the principal of such investments unless it was necessary to make the monthly stipend equal $300. In such case the power was purely discretionary.

If this construction of the will -be correct, we think that the defendants were entitled to retain fifteen per cent of all moneys -realized from unsold royalty—the five per cent allowed, for administrators and the ten per cent additional provided for in the codicil; for property sold and the proceeds-devoted to-the payment of. debts, five per cent on the amount realized by the sale and five per cent additional on money paid out in satisfaction of debts and= ex-, penses of administration, other than for the. compensation of defendants.

From the will as originally written it. might have been contended with a basis of reason that ten- per cent of the gross income, was the only compensation, whether acting, as executors or trustees. The codicil renders it clear that compensation in both capacities was intended. Under the codicil, the fees as trustees were in addition to the compensation allowed by law to executors. This construction, in our opinion, gives them the ten per cent as contemplated by the testatrix and also in addition the fees allowed by law in administration.

There is not before us a complete statement of the amounts paid out on debts of Mrs. Crier, nor for expenses of administration, taxes, etc. In regard to the Looney note, we are of the opinion defendants are entitled to five per cent on the principal of $6,000. The Looney note was appraised as worthless. It is conceded that through the efforts of the defendants $9,043.76 was realized thereon. We are of the opinion that the above recited facts constitute a collection in that amount. The amount collected above six thousand is income and commission should be paid on same as such.

We are unable to determine from the record the date of the death of Harold Bloom. In a just decision of this case that fact may be important. Upon the death of Bloom the powers and title of defendants as testamentary trustees ceased. Upon his death the legal title to all property vested in the devisees under the will. If, on the date of his death, the administration was complete, distribution should then have been made; if administration was not complete, defendants had the right to hold possession thereof and dispose of same for that purpose only. Defendants’ estate expired by limitation upon the death of Bloom.

We think justice would be best subserved by remanding this case for a new trial in accordance with this opinion.

Reversed and remanded.

On Rehearing.

Appellants and appelless have each filed rtiotions for rehearing herein. Appellants pray that we ascertain the amount of commissions due and enter judgment for the amount of excess retained by. appellees. Appellees seek to have us set aside our former judgment and affirm the judgment of the trial court. We will first consider the motion of appellants.

It might be that we could, by reference to the statement of facts, get an idea of the total amount collected and disbursed. The pleadings of plaintiffs do not seek judgment against defendants personally. The gravamen of the action is for a construction of the will, and that there then be a distribution order.

Appellants further allege that since October, 1937, appellees have collected various sums of money, the amounts of which they do not know. Appellee’s answer referred to an audit attached thereto. If same was ever attached it does not appear in the transcript. Possibly it is in the statement of facts. We are in grave doubt as -to the sufficiency of plaintiffs’ pleading to support the judgment which it is sought to have us render. In order to award the relief now sought we would have to go beyond the relief prayed for in the petition. A judgment for the excess commissions retained would not represent appellants’ ultimate rights herein.

Appellants’ motion is overruled.

In appellees’ motion there is urged a ground which we did not discuss in the original opinion. It is stated in substance that plaintiffs, acting through their attorney, agreed that defendants might retain as compensation.fifteen per cent on the Looney note. There is no consideration pleaded for the accord and satisfaction urged. It is true plaintiffs do not plead want of consideration. The matter is urged as an estoppel. How and in what defendants have changed their position does not appear from the answer. Even on the hypothesis that the matter alleged under the proof is a defense, it is only a partial defense.

On another trial the respective parties might desire to amend their pleadings. On the whole we think it best to overrule each motion. It is so ordered.


source: Caselaw Access Project

author: WALTHALL, Justice.

license: Public Domain

text:
    KROSCHEWSKY v. NORTHSIDE INV. CO., Inc.
    No. 3938.
    Court of Civil Appeals of Texas. El Paso.
    April 11, 1940.
    Rehearing Denied April 25, 1940.

      Harry Hertzberg, Marion R. McClana-han, and Norman S. Davis, all of San Antonio, for appellant.
    T. W. Anderson, of San Antonio, for appellee.
   WALTHALL, Justice.

This suit was originally filed by Mrs. Marie Kroschewsky, joined by her husband, Gus A. Kroschewsky, and, after the death of Mrs. Kroschewsky, the suit was prosecuted by appellant, individually and as administrator of the estate of Mrs. Kroschewsky.

The suit was brought against the appellee, Northside Investment Company, a corporation, and H. C. Thorman, to rescind a contract of sale of real estate and described as Lot No. 20, Block No. 12, Olmos Park Estates, in Bexar County, Texas.

At the conclusion of the evidence each party filed a motion for an instructed verdict. The trial court overruled appellant’s motion and granted the motion of ap-pellee, Northside Investment Company, and of H. C. Thorman, and on the verdict as instructed the court rendered judgment that appellant take nothing by his suit “against either of the defendants,” and further adjudged and decreed as follows: “Nothing herein shall affect the right of the plaintiffs to accept from the Northside Investment Company the conveyance, release and title guaranty to the property described in plaintiff’s petition which they are tendering him upon payment of the balance owing therefor, all of which plaintiff is entitled to receive upon such payment.”

The court overruled appellant’s motion for a new trial, and appellant presents this appeal.

This appeal is prosecuted from the judgment rendered as to the Northside Investment Company only.

The full money consideration to be paid for the land was $10 paid upon the execution of the agreement, and a balance of $4,320 to be paid in stated semi-annual payments with interest from March 21, 1928, the date of the sale contract, at six per cent per annum, principal payments, plus accrued interest, -to be made on September 21st and March 21st, until the unpaid balance was fully paid.

The contract contained the following provision: “That when the purchaser shall have paid one-half of the purchase price, then the seller agrees to execute and deliver a general warranty deed to said purchaser.”

The sale contract provided the deferred payments to be evidenced by vendor’s lien notes executed by the purchaser and secured by a vendor’s lien expressly retained in the “power of sale, together with the usual covenants as to default, taxes, etc., upon the property.”

The sale contract provides that:

, “2. The seller at its option is to furnish purchasers with an authentic abstract of title or a title guaranty policy, showing good title to it to the property to be conveyed,, subject to the restrictions hereinafter set out. Should an abstract be furnished and title be found to be objectionable by the attorney for purchaser, then, in that event, seller may furnish to purchaser a guaranty title, which shall be accepted by the purchaser.
“3. The purchaser agrees to the foregoing terms and should the abstract or any amendment thereof show satisfactory title in the seller, purchaser agrees upon presentation of the deed for guaranty title certificate to pay the balance of the cash payment, and execute the notes for the deferred payments and the deed of trust, hereinbefore provided for to secure the deferred payments; but it is agreed and consented to by the purchaser that the deed executed and delivered in accordance with the terms of this contract shall contain the following stipulations, restrictions, conditions and covenants, viz.

Then follow statéments of stipulations, restrictions, conditions and covenants, to apply to and he binding upon the purchaser, his heirs, devisees, executors, administrators,' successors and assigns. We have not ■found in them anything material or necessary to be stated here. •

Appellant submits several propositions. They are to the effect: The court should not have granted appellee’s motion for an instructed verdict, and should not have instructed the jury to return a verdict for appellee, because the failure and refusal of appellee, after one-half of the purchase price had been paid by the Kroschewskys, to present and deliver to them an executed warranty deed to the property, as well as an abstract of title or title guaranty policy, showing good title free and clear of encumbrances, was a breach in a material respect by appellee of the executory contract of sale of real-estate;

Based on the above facts stated appellant submits that he was entitled t6 a rescission of the contract whether the contract itself or its breach was attended by any accident, fraud or mistake, or any other equity.

Appellant’s second . proposition submits that the instructed verdict for appellee should not have been given because, if appellant was not entitled to judgment as a matter of law, appellant’s right to judgment was at least a question of fact for the jury, whether it was necessary that appellant should have made a tender of the balance of the contract price in cash or. by executed vendor’s lien notes and deed of trust, in order to put appellee in default of performance of the contract, of whether appellee waived such tender, or whether appellant waived his right to require appellee to prepare and present the deed until appellant should notify appellee how and when they wanted to make payment of the balance of the purchase price of the land, and how they wanted the deed made.

We feel that it is unnecessary to discuss or to analyze separately and apart from the others each fact embraced in the propositions.

That appellant, before the filing of his suit, had paid to appellee more than one-half of the purchase price of the land is undisputed. Appellant was then entitled to demand and receive from appéllee a warranty deed to,the property on payment of the balance of the purchase price. The seller, at its option, agreed to furnish the buyer an abstract of title showing good title to the property, or a title guaranty policy. The contract recites: “Should an abstract be furnished and title be found to be objectionable by the attorney for purchaser, then in that event, seller may furnish to purchaser a guaranty title, which •shall1 be accepted by the purchaser.” The sale contract further provides that should the abstract show satisfactory title in the seller, purchaser agrees, upon presentation of the deed for guaranty title .certificate, to pay the balance of the cash payment or execute the notes for the deferred payments and the deed of trust provided to secure the deferred payments (evidenced by the notes). The deed when executed to embrace the stipulations, restrictions, conditions and covenants stated in the sale contract.

Appellee admits that under the terms, of the contract under which the property was purchased, Marie Kroschewsky was entitled to have delivered to her a deed to the property, together with an abstract of title or title policy showing good title, when one-half of the purchase price had been paid; or at any subsequent time, she had the right to execute the vendor’s lien notes for the balance of the purchase price, or pay said balance in cash. Appellee offered testimony to the effect that when one-half of the purchase price had been paid. Mrs. Kroschewsky was informed that she was entitled to the deed, and that such deed was prepared in December, 1931; that Mrs. Kroschewsky said to H-. C. Thorman, the president of appellee, in December, 1931, and in January, 1932, that she was undecided whether to pay the balance of the purchase price in cash or make the notes. The evidence sufficiently shows, we think, that while the property was encumbered by a lien with the San Antonio Loan & Trust Company, appellee was able to clear the property of the lien on the payment of the balancé of the purchase price, or the execution of the notes. The evidence shows that a large number of lots in the same property as that of the property involved here, had been sold and the lien released and cleared under a similar contract as here. We have concluded; under the evidence in the record, that appellee could deliver a good clear title.

The rule seems to be settled that for a breach of covenant contained in an executed contract, the remedy, is an action for damages and not for rescission. Bristow v. City Investment Co., Tex.Civ.App., 110 S.W.2d 1222, and authorities cited.

This suit was filed in February, 1932, by Marie Kroschewsky, joined pro forma by her husband. Mrs. Kroschewsky died .in 1937.

We have not found the above evidence controverted in the record.

There was no such breach and repudiation of the contract shown by the evidence as would justify a rescission of the contract in question by appellant.

Appellee pleaded a tender of the deed on payment of the balance of. -the purchase' price.

We have carefully reviewed the evidence and the authorities to which we are referred, and many other authorities, and have concluded the trial court was not 'in error in overruling appellant’s motion for an instructed verdict and instructing a verdict and rendering judgment for appel-lee.

The case is affirmed.


author: BOND, Chief Justice.

text:
    GOTCHER et ux. v. CITY OF FARMERSVILLE.
    No. 12858.
    Court of Civil Appeals of Texas. Dallas.
    March 23, 1940.
    Rehearing Denied April 20, 1940.

      Kennemer & Armstrong, of Dallas, and Wallace Hughston, of McKinney, for appellants.
    Touchstone, Wight, Gormley & Touchstone, of Dallas, for appellee.
   BOND, Chief Justice.

Olin Gotcher, acting for himself and wife, instituted this suit in the District Court of Collin County, Texas, against the City of Farmersville, a municipal corporation, to recover damages for the death of their minor child, resulting from alleged negligence of the City in the construction and maintenance of a cesspool for disposal of city sewerage, operated for the exclusive benefit of the inhabitants of the City who may avail themselves of such service by payment of a specific charge. The trial court sustained the City’s general demurrer to plaintiffs’ petition, and, plaintiffs refusing to amend, dismissed the suit.

Because of the court’s action on the demurrer, it becomes necessary to relate extensively the appropriate portions of plaintiffs’ petition:

It is alleged that the cesspool was an open structure, approximately 20 feet wide, 40 feet long, 9 or 10 feet deep, and divided into four or five compartments. The outside walls extended above the surface of the ground 6 or 8 inches, and no fence, or other safeguard or protection, was maintained around the pool. The compartments were filled with some character of acid used in the decomposition of sewerage, and of such consistency as to destroy such elements or objects as may come in contact with it. The process of decomposition caused a collection of sediment on the top of the acid and liquid, which, after a time, dried, cracked, and presented the appearance of a solid mass. Mrs. Gotcher, accompanied by three of her children, and other parties, went onto the premises of the defendant in the vicinity of the cesspool to gather persimmons, and, as they approached the pool, Richard Neil, one of plaintiffs’ minor children, about seven years of age, turned from the path they were traveling, made a dash for the cesspool, jumped into it, and was drowned. It is alleged that defendant knew, or should have known, that children customarily played in the vicinity of the cesspool; thus there was extended an implied invitation for the mother to enter upon the premises, and the deceased to play in the vicinity of the pool; and that, because of its location, construction, and the sediment having the general appearance of a baby pool or sand pile usually employed for the amusement of children of tender years, there was created a public and attractive nuisance which was especially attractive to plaintiffs’ child. Appropriate allegations were made for monetary damages for the death of the minor, resulting from negligence in the construction and maintenance ot the public and attractive nuisance, and specially for negligence, in the following particulars: (1) In not maintaining signs in the vicinity of the cesspool to apprise those passing near it of its location; (2) in failing to have a fence around the cesspool to exclude individuals, and particularly minors; (3) in failing to have a shed built over the cesspool to prevent individuals, and particularly minors, from going upon same; (4) in having the cesspool located at a place frequented by children; and (5) by not skimming off or removing the sediment collected in the pool, and permitting same to become thick, thus presenting the general appearance of sand.

The question as to whether the petition is good as against general demurrer is fraught with difficulty. Many authorities and text books are listed in appellants’ brief holding, to the effect, that municipal corporations creating or permitting nuisances by nonfeasance, or misfeasance, are guilty of tort and liable for damages, which torts cannot be avoided on the ground that the municipality was exercising governmental powers. McQuillin on Municipal Corporations, Vol. 6, Sec. 2871, p. 1235; 43 C.J., sec. 1734, p. 956; 30 T. J., Sec. 296, p. 537; Vanderford v. City of Houston, Tex. Civ.App., 286 S.W. 568; Wiggins v. City of Fort Worth, Tex.Civ.App., 299 S.W. 468. Id., Tex.Com.App., 5 S.W.2d 761. Indeed, the rules generally announced are in cases where the nuisances were created at a public place, or in the vicinity thereof, or in a public park where people generally resort for recreation or pleasure; however, the cities in such cases were exercising governmental functions. If the functions exercised in a public place create a nuisance and the city is not protected because of * the powers exercised, then, by the same token, it seems the governmental functions would not bar recovery for a nuisance at any private or secluded place. Cities are also held liable for depreciation in value of land and for physical discomfort resulting from nuisances in the exercise of governmental functions, in the operation of sewerage plants. City of Wylie v. Stone, Tex.Civ.App., 16 S.W.2d 862, Id., Tex.Com.App., 34 S.W.2d 842. But it will be noted in such cases, the decisions are bottomed on the inhibition of the Constitution, both Federal and State, that property cannot be appropriated without due compensation, even though appropriated in the exercise of governmental functions. Damage and depreciation of property is taking property, for which the governmental agents are held liable. Such is the case of Wylie v. Stone, supra, and authorities therein cited, wherein Judge Looney, speaking for this Court, said [16 S.W.2d 864]: “That damages for depreciation in value of land and for physical discomfort resulting from a nuisance may be recovered in the same action is well settled in this state.”

A rather exhaustive collation of authorities is presented by plaintiffs’ brief, holding that immunity of municipal corporations from liability, for things done in the performance of governmental functions, does not extend to injury or death resulting from nuisance created or maintained by a municipality. It would seem from some authorities that cities, exercising the powers conferred upon them for the purposes essentially public, pertaining to the construction and operation of water and light plants, building streets and sidewalks, constructing storm sewerage, and the like, where injury or death results from negligence, cannot escape liability because of such operation being exercised as governmental functions. Texas Employers’ Ins. Ass’n v. City of Tyler, Tex.Civ.App., 283 S.W. 929; Jones v. City of Texarkana, Tex.Civ.App., 100 S.W.2d 198; City of Amarillo v. Ware, 120 Tex. 456, 40 S.W. 2d 57; City of Pittsburg v. Smith, Tex. Civ. App., 230 S.W. 1113; City of Dallas v. Early, Tex.Civ.App., 281 S.W. 883; Brewster v. City of Forney, Tex.Civ.App., 196 S.W. 636; Lenzen v. City of New Braunfels, 13 Tex.Civ.App. 335, 35 S.W. 341.

Cities organized under the general law, as in the case at bar, acquire their rights to own and operate sewerage systems, as well as water, light and gas plants, by virtue of Art. 1015, R.C.S.1925. If the operation of a sewer system is governmental, then it seems that the operation of gas, light and water systems authorized by the same article of the statute, are likewise governmental. No useful purpose could be served here by discussing or citing other authorities.

We think the allegations in the case at bar are controlled by'the holdings in recent cases to the effect that, cities are exercising governmental powers when engaged in sanitation, the establishment and maintenance of sewerage, the operation of hospitals, the prevention of crime, the maintenance of fire departments, the enforcement of quarantine regulations, and thus are not liable to one injured by the negligence of the city employe engaged in the performance of such duties.

In the case of the City of Wichita Falls v. Robison, 121 Tex. 133, 46 S.W.2d 965, 966, Robison was injured while at work in the sanitation department of the City of Wichita Falls, resulting from alleged negligence on the part of the City in various particulars. A general demurrer was sustained to the petition. The Supreme Court, in passing on the appeal, said:

“The city contends that it is affirmatively shown upon the face of defendant in error’s petition that he was employed by the city to perform duties involving ' a governmental function of the city, that the sanitation of the city is a governmental function, and that the city is not liable for negligent acts of its officers and agents while discharging such governmental functions. * * *
“It is well settled by the decisions of this court, as well as by those in other jurisdictions, that sanitation for the public health of a city is a governmental function, and that, when a city is exercising such power, it is not liable for injuries inflicted through the negligence of its officers and employees. Whitfield v. City of Paris, 84 Tex. 431, 19 S.W. 566, 15 L.R.A. 783, 31 Am.St.Rep. 69; White v. City of San Antonio, 94 Tex. 313, 60 S.W. 426; McQuillin on Municipal Corporations (2d Ed.) vol. 6, pp. 775, 776, 784, 785, and 788.”

In the case of Ballard v. City of Fort Worth, Tex.Civ.App., 62 S.W.2d 594, Ballard received injuries while at work for the city in one of its pipes of the city sewerage line, through negligence of the city in the operation and maintenance of its sewerage system. Judge Conner, of the Fort Worth Court of Appeals, followed the Wichita-Robison decision. And then, too, in the City of Dallas v. Smith, 130 Tex. 225, 107 S.W.2d 872, 878, in which the plaintiffs sought damages on account of the death of their daughter, alleged to have been caused by the negligence of the superintendent and other employes of the city in a city-owned and operated hospital, for profit. Judge Smedley, for the court, collated many authorities holding, in effect, that the city was exercising governmental powers, engaged in a function intended for the health of those residing in the city, and the mere allegation that the hospital was operated by the City of Dallas for profit, that it made a charge to all patients entering the same for medical treatment and hospital service, does not change its status as .a charitable institution, and does not change the character of the hospital from governmental to proprietary. The court said: “ * * *■ the statutes [Art. 4478, etc.] relating generally to cities and article 1175 enumerating the powers of home-rule cities authorize cities in general terms to do all things necessary or expedient for the promotion of health and to establish and maintain hospitals, with no suggestion that they may establish or maintain hospitals as business institutions or for revenue purposes. We think that cities are given the power to establish and operate hospitals in order that they may efficiently act as agents of the public in the prpmotion of the public health and not to enable them to exploit for private and corporate gain the misfortunes of the physically afflicted, and that the statutes do not authorize them to establish or maim tain hospitals for revenue or for corporate gain.”

If cities, are exercising governmental powers when operating hospitals, for the sake of the citizens, then surely they are exercising governmental functions when they maintain and operate sewerage systems for the sanitation of the city and also for the health of its citizens.

There is' another fatal elemént involved in this " appeal. The mother and children were trespassers, or licensees on the premises of the -city. They entered upon the premises without the knowledge’ or consent of the city officials. . The. mere fact that children generally play at the place does not relieve trespassers of the assumption of the risk incident to their going onto the premises. A trespasser is' defined by 45 Corpus Juris, 740, as follows:“A person is a trespasser where he enters upon the property of another without any right, lawful authority, or express or implied invitation-, permission, or license, not in the performance of any duty to the owner or person in charge or on any business of such person, but merely for his own purposes, pleasure, or convenience, or out of curiosity, and without any enticement, allurement, inducement, or express or implied assurance of safety from the owner or person in charge.” Plaintiffs’ petition admits that the mother and child entered upon the premises without any express invitation of defendant, and while foraging for persimmons, a purpose of their own. The sewerage disposal plant was located on defendant’s premises, remote from plaintiffs’ residence and public places, and its location was unknown to the mother until the time of the unfortunate occurrence. Therefore, when they went upon the premises under the circumstances, the law is well settled that they assumed the risk of danger. Dobbins v. Missouri, K. & T. Ry. Co., 91 Tex. 60, 41 S.W. 62, 38 L.R.A. 573, 66 Am.St.Rep. 856; Mendoza v. Tex. & P. Ry. Co., Tex.Civ.App., 70 S.W.2d 261; Texas-Louisiana Power Co. v. Webster, 127 Tex. 126, 91 S.W.2d 302; City of Greenville v. Pitts, 102 Tex. 1, 107 S.W. 50, 14 L.R.A.,N.S., 979, 132 Am.St. Rep. 843.

In deference to the authorities, we believe no revérsible error is shown in the action of the trial court in sustaining the démurrer. The judgment is affirmed.

Affirmed.


author: PRICE, Chief Justice.

text:
    BROWN et al. v. NATIONAL LOAN & INVESTMENT CO.
    No. 3927.
    Court of Civil Appeals of Texas. El Paso.
    March 14, 1940.
    Rehearing Denied April 4, 1940.

      Brown ¿fc'Criss, of Harlingen (Paul H. ’Brown, of Harlingen, of counsel), for appellants.
    E. L. Davis, of Harlingen, for appellee.
   PRICE, Chief Justice.

'This is an action in trespass to try title filed by the National Loan & Investment Company, as plaintiff, against Paul H. Brown, trustee, and others, as defendants. The parties will be designated for convenience as they were in the trial court. Trial was befo’re the court and from a judgment in fávofi of the plaintiff, defendants have duly perfected an appeal.

Plaintiff claimed title under a 'foreclosure by power of sale of a deed of trust executed and delivered to one S'tandart, as trustee,'on’the 1st day of February, 1929, for the purpose of securing the plaintiff in the’’payment-of-a note ’aggregating somé $2,700. The deed -of trust gave -the trustee ■power of sale in case of default, and provided that plaintiff, its successors or assigns, had-the'-right, on the failure, refusal, disability,-or disqualification -of the-trustee named to act, io appoint a substitute ’trustee, such appointment- to be evidenced by instrument signed and acknowledged by plaintiff or its..successors or ’assigns. . On the 1st day of August, 1935, the obligation secured by the deed of trust was in default and Standart, who was then the plaintiff’s president, duly notified plaintiff in writing of his refusal to execute the power. On the 1st day of August, 1935, the plaintiff, purporting to act through its' vice president, such action being attested by the secretary and executed with the corporate seal, executed a' written appointment of Joe L. Penry as substitute trustee. At this time, and at all relevant times, plaintiff was the holder and owner of the obligation secured by the deed of trust.

The substitute trustee gave due and legal notice of the sale, and on the 3rd day of September, 1935, sold the property to plaintiff, it being the highest bidder therefor. A deed was delivered by the substitute trustee to plaintiff under which it went into possession of the property, and so held same on the date of the institution of this suit.

Defendants claim as judgment creditors of F. G. Gay, the grantor in the deed of trust aforesaid. The judgments under which they claim are all subsequent to the execution, delivery and filing for record of the deed of trust under which plaintiff claims. Defendant Brown, as trustee, duly filed an abstract of the judgment under which he claims and thereafter caused execution to issue thereon, and same was duly-levied upon the property in question and duly sold by the sheriff to said Brown, as trustee. This sale was subsequent to the sale by the substitute trustee to plaintiff. The judgment under which Brown, trustee, claims was abstracted and became a lien on the then interest of Gay in the property prior to the conveyance by the trustee to plaintiff. The abstracts of the judgments of the other defendants were, likewise, subsequent to the filing for record of the deed of trust in question.

There is but one question involved in this appeal. Defendants assert that the foreclosure of the deed of trust was void. The basis of this contention is that the deed of trust provided that plaintiff might appoint a substitute trustee, and under the showing made the substitute trustee was not appointed by the plaintiff, in that the vice presi- . dent was shown to be without authority to make the appointment in the name of the plaintiff. Hence that there was no valid sale and title never passed to the plaintiff.

The appointment made purported to be the act of the plaintiff, was executed and acknowledged by the vice president of the corporation and the corporate. seal was attached. It is shown, however, that the plaintiff’s president was present in its offices at the time of the execution of the appointment. It was further shown that no resolution was passed by the board of directors of plaintiff prior to the appointment of the substitute trustee authorizing such appointment or authorizing or directing the vice president to do so in the name of the corporation. A resolution of the board of directors dated September 10, 1935, is in evidence ratifying the appointment of the substitute trastee.

It seems well settled that the appointment of a substitute trustee by a corporation in the manner above set forth, in the absence of evidence of lack of authority, is prima facie the act of the corporation. To state the proposition in another way, the appointment of a substitute trustee by a corporation under a deed of trust authorizing it so to do is prima facie the act of the corporation, if such appointment is made in the name of the corporation purporting to be, acting by the president or vice president, and same is attested by the secretary and the corporate seal attached. 19 C.J. p. 509; Catlett & Malin v. Starr, 70 Tex. 485, 7 S.W. 844; Browne v. Investors’ Syndicate, Tex.Civ.App., 60 S.W. 2d 1047; Broach v. John Hancock Mut. Life Ins. Co., Tex.Civ.App., 122 S.W.2d 363,, and cases cited.

It likewise seems to be well established that the power of appointment may be delegated by such corporation to an officer other than its president. In the case of Broach against John Hancock Life Insurance Company, supra, written designation was executed there by an assistant treasurer and the corporate seal attached, and same was held to be prima facie the act of the corporation.

If the two foregoing propositions are correct, the question then narrows itself to this question: “Does the establishment of the fact that prior to the designation of the substitute -trustee in question in the .manner aforesaid, the board of directors of the plaintiff did not pass a resolution authorizing such vice president to make such designation, overcome the prima facie case established by plaintiff as aforesaid?”

If, under the showing made, it was still an issuable fact as to whether the power had been delegated, the judgment of the trial court must be affirmed. The finding was that such power was duly delegated.

In the consideration of this question it must be at all times borne in mind that clearly the corporation had the power to appoint a substitute trustee. The manner of the exercise of the power of the corporation is to be sought in the general law, the applicable statutes, its charter and valid bylaws. Here also the power is limited by the provision of the deed of trust as to its exercise, in that it must be the act of the corporation. An apt by-law could confer the authority in question on the vice president or president to exercise in the name of the corporation the power in question. San Antonio Joint Stock Land Bank v. Taylor, 129 Tex. 335, 105 S.W.2d 650.

A by-law is a permanent rule of action of the conduct of the corporate affairs; a resolution ordinarily applies only to a single act of the corporation. 10 Tex. Jur., Sect 274.

We think the burden was upon defendants to negative the existence of authority authorizing the action taken.

From the facts in evidence it appears that the business of plaintiff was the loaning of money, and incidental thereto obtaining security for the money loaned. Foreclosure on securities when necessary would seem likewise an ordinary incident of plaintiff’s business. An habitual exercise of the power to appoint substitute trustees by an officer of the corporation would, in our opinion, justify the exercise of the power without a resolution of the board of directors.

While it is the law that the power of appointment of a substitute trustee is to he strictly construed, it should not be so strictly construed that is will defeat the enforcement of honest obligations. With Standart, its president, trustee, the power of sale was practically conferred upon plaintiff. Standart may have thought he was disqualified from acting in the matter •of the appointment of the trustee' from the fact that he was president of the plaintiff. The evidence fails to cast the shadow of suspicion on the fairness of the sale. Plaintiff had the right to apply the property in question to the payment of its just •debt. This has been done, and no more. In our opinion, the implied finding of the . trial court is justified under the evidence.

Judgment is affirmed.

On Motion for Rehearing.

Appellant in his motion for a rehearing .calls our attention to two mistakes in the original opinion. It is not asserted that the same are of great importance. However, in the interest of accuracy, we will correct same.

In the second paragraph on page two of the opinion it is recited that Brown, trustee, “duly filed an abstract of the judgment under which he claims and thereafter caused execution to issue thereon.” The abstract of the judgment was filed out of the cause of Crane County v. Gay. Execution was later issued on that judgment and levy made on the property involved in this suit, and at the sheriff’s sale thereunder the purchaser was Brown, trustee.

In the next to the last sentence in the second paragraph on page two of the opinion it is said, “prior to the conveyance by the trustee to plaintiff.” This statement should read and the finding be, “prior to the conveyance by the substitute trustee to the plaintiff.”

We have given careful consideration to the motion of appellant, but still adhere to the views expressed in the original opinion.

The motion for rehearing is overruled.


author: PRICE, Chief Justice. .

text:
    LIPSCOMB v. RANKIN et al.
    No. 3929.
    Court of Civil Appeals of Texas. El Paso.
    March 14, 1940.
    Rehearing Denied April 11, 1940.

      E. P. Lipscomb, of San Antonio, for appellant.
    No brief for appellee.
    Louis D. Hill, of San Antonio, appeared on trial in lower court.
   PRICE, Chief Justice. .

The appellant, E. P. Lipscomb, sued appel-lees, Julian Rankin and wife, and Sara Bit-tick in one of the District Courts exercising jurisdiction in Bexar County. Appellees Rankin and wife in due time filed a plea of privilege to be sued in Travis County. This plea was in statutory form. Appellant filed controverting affidavit setting up his claim to sustain the venue in Bexar County. Upon hearing the plea was sustained and the venue was ordered chánged'to Travis County. Appeal was duly perfected.

Appellant sought in his petition to reco.ver from appellees for legal services rendered by him in the prosecution of a claim for damages against the Kerrville Bus Company for injuries alleged to have been -inflicted upon Mrs. Rankin, one of the appellees. From the allegations of the petition it seems that the Bus Company settled the damage suit with Rankin and wife for $3,-000. Appellant has never been paid for the legal services rendered. Appellant’s petition alleges a specific contract with ap-pellees whereby he was to receive one-half the amount realized on the claim, and there was an alternative claim on a quantum mer-uit. Upon the filing of this suit appellant sued out a writ of attathment and caused same to be levied upon Lots 25 and 26, in Block 12, City Block 1787, City of San Antonio, Bexar County: Sara Bittick, a feme sole, was made a party defendant because she holds a warranty deed from appellees to the said property, but on account of a vendor’s lien retained in the conveyance the superior title was in Mrs. Rankin. The attachment was sought to be foreclosed in the petition, and further that the rights of Sara Bittick be adjudicated. It was also alleged that through the agency of another apellees committed a fraud in Bexar County, in that to obtain the $3,000 from the Bus Company, it was represented that a portion of same would be paid by them to appellant. The exceptions invoked in the contesting affidavit seem to be Subdivisions 4, 7, 12 and 29a of Article 1995, R.S., Vernon’s Ann.Civ.St. art. 1995, subds. 4, 7, 12, 29a.

The case is before us without statement of facts. However,- the trial judge, on the motion of appellant, filed findings of fact and conclusions of law.

It is undisputed that the' residence of Sara Bittick is and was at all relevant times in Bexar County, and that of appellees in Travis County. Hence in order to sustain a cause of action under either Subdivision 4 or Subdivision 29a it was necessary for appellant to allege and offer proof of a cause of action against said defendant resident in Bexar County. 43 Tex.Jur. p. 752, sect. 36. .

There must be some joint relationship between the cause of action asserted against the resident and nonresident defendants. Sampson v. Gandy, Tex.Civ.App., 116 S.W.2d 767.

In our opinion, a cause of action was neither alleged nor proven against Sara Bittick. Such defendant was not a party to the alleged contract between appellant and appellees. It is not alleged that her purchase of the property in controversy was without consideration or made with the intention to defraud appellant.

The attachment could only affect the inr terests of appellees in the property. The attachment and the levy thereof is pot a cause of action against either Sara Bittick or the appellees. An attachment is an ancillary remedy in the nature of an anticipatory execution. Appellant, by the levy of the attachment, acquired no right as against Sara Bittick to have her interest determined in the property. It is true, that after the foreclosure of the writ of attachment was consummated, if ever, appellant might possibly acquire rights as to defendant Sara Bittick.

There is an allegation in appellant’s petition as to an equitable lien on the property involved, but such allegation is a mere conclusion, and is not sustained by either pleading or proof.

What we have said disposes of Subdivisions 4, 12 and 29a. In regard to Subdivision 7, involving fraud committed in Bexar County, suffice it to say that appellant’s cause of action was not founded on fraud. The petition sounds in contract, not in tort. . Further, the finding of the trial court was against any fraud in the matter alleged.

It is claimed that the venue should be retained in Bexar County to avoid a multiplicity of suits. Appellant’s petition shows no cause of action other than against appel-lees. If appellant should recover a judgment decreeing, a recovery and a foreclosure of his attachment lien, the court could enter- no final decree under the pleadings affecting the interest of defendant Sara Bittick. Defendant Sara Bittick was not' a proper party to the cause of action asserted by appellant.

We find no error in the record, and the judgment of the trial court is affirmed.


author: PRICE,' Chief Justice.

text:
    FRANKLIN FIRE INS. CO. OF PHILADELPHIA v. FULLEN.
    No. 3919.
    Court of Civil Appeals of Texas. El Paso.
    Feb. 29, 1940.
    Rehearing Denied April 4, 1940.
    R. D. Cox, Jr., and Strickland, Ewers & Wilkins, all of Mission (J. E. Wilkins and Orville I. Cox, both of Mission, of counsel), for appellant.
    Carter & Stiernberg, of Harlingen, for appellee.
   PRICE,' Chief Justice.

This is an action on an insurance policy for the destruction of a truck by fire filed-in the District Court of Cameron County by appellee, J. A. Fullen, hereinafter called plaintiff, against The^ Franklin Fire Insurance Company of Philadelphia, hereinafter called defendant. The parties joined issue and a trial was had before a jury. On the findings of the jury the court entered judgment in favor of plaintiff in the sum of $1,000. From such judgment defendant duly perfected appeal, and the case is here for review.

Plaintiff alleged the issuance of the policy, the destruction of the truck by fire, that its value was $1,000, the making of proper proof of loss, the waiver of such proof of loss by defendant, denying through its agent liability on the policy.

Defendant answered by general demurrer, general denial, and specially pleaded: Paragraph four of the answer alleged in substance that by the terms of the policy it was agreed that the automobile insured was free from encumbrance and nothing was owed by the insurer for the purchase price thereof; and it was agreed that the validity of the said policy was conditioned thereon; that in truth and in fact there were two encumbrances on the said automobile, one a chattel mortgage securing the sum of $795, representing the unpaid purchase money of the vehicle and upon which there remained unpaid at the time of the issuance of the policy the sum of $573; a second encumbrance in the sum of $250 evidenced by chattel mortgage; that at ail times prior to the alleged destruction of the truck it was without notice of said mortgages and the fact that the purchase money was unpaid. In short, a warranty as to the non-existence of encumbrances and of the full payment of the purchase price and a breach thereof was pleaded. Paragraph five of the answer was in the alternative and pleaded practically the same matters as paragraph four, but charged same as wilful misrepresentations and that same were material to the risk; reliance thereon by the defendant without notice as to the falsity of such representations. Paragraph six of the answer sets up the charges that in order to obtain the policy plaintiff represented that the purchase price of the automobile was fully paid, when some $573 was unpaid; that it was represented that the vehicle was unencumbered, when in truth and in fact it was encumbered in the manner and amounts alleged in paragraph five; sets up further that such representations were material to the risk, and defendant, as soon as it learned of the falsity of such representations, notified plaintiff of its refusal to be bound by the policy and tendered into court for the benefit of plaintiff the sum of $51.90, the amount of the premium, with 6% interest from the date of the payment thereof. The misrepresentations were charged to have been wilfully false and made with the intent of inducing defendant to issue the policy thereon. Paragraph seven charges, contrary to the provisions of the policy, the truck in question was, at the time it was destroyed, being used in a public livery service. Eight denied under oath that proof of loss had been filed in accordance with the terms of the policy; nine charged on information and belief that plaintiff caused or procured the truck to be destroyed by fire to obtain the insurance thereon.

Plaintiff filed supplemental petition in reply to the answer of defendant; among other matters, special exceptions were urged to paragraphs four, five and six of defendant’s answer. These special exceptions were sustained by the court and the said portions of the answer were stricken.

It is deemed unnecessary to set up the special exceptions in detail, as in reality they amounted to no more than general demurrers. The legal grounds for these special exceptions are Articles 4890, 5043 and 5046, of the Revised Statutes of 1925 — in fact each of said articles was copied in his exceptions. 1 ven .though it does somewhat lengthen this opinion we shall copy herein said articles.

“Art. 4890. Lien on insured property.— Any provision in any policy of insurance issued by any company subject to the provisions of this law to the effect thatj if said property is encumbered by a lien of any character or shall after the issuance of such policy become encumbered by a lien of any character then such encumbrance shall render such policy void shall be of no force and effect. Any such provision within or placed upon any such policy shall be null and void.”
“Art. 5043. * * * Misrepresentation by policy holder. — Any provision in any contract or policy jof insurance issued or contracted for in this State, which provides that the answers or statements made in the application for such contract or in the contract of insurance, if untrue or false, shall render the contract or policy void or voidable, shall be of no effect, and shall not constitute any defense to any suit brought upon such contract, unless it be shown upon the trial thereof that the matter or thing misrepresented was material to the risk or actually contributed to the contingency or event on which said policy became due and payable, and whether it was material and so contributed in any case shall be a question of fact to be determined by the coutt or jury trying such case.”
“Art. 5046. * * * Misrepresenting loss or death. — Any provision in any contract or policy of insurancé issued or contracted for in this State, which provides that the same shall be void or voidable, if any misrepresentations or false statements be made in proofs of loss or of death, as the case may be, shall be of no effect, and shall not constitute any defense to any suit brought upon such contract or policy, unless it be shown upon the trial of such suit that the false statement made in such proofs of loss or death was fraudulently made, and misrepresented a fact material to the question of the liability of the insurance company upon the contract of insurance sued on, and that the insurance company was thereby misled, and caused, to waive or lose some valid defense to the policy.”

' A copy of the policy in question is attached to plaintiff's petition as an exhibit, and by reference made a part thereof. It purports to be a Texas Uniform Standard Automobile Policy, Combination Form. The coverages of the contract in question are numerous, but the only one involved is as to- damage ' by fire. No written copy of an application accompanies the policy — in fact one was not made, and it was not contemplated that such written application be "made. Under the heading “Declarations” are the following: “Item 4. Description of the automobile and the facts respecting its purchase by the named insured.”

Under this item there are- numerous matters responsive thereto, among other things this question and reply thereto:

“Is automobile fully paid for?” “Yes.”
“Item 5. State amount of lien, mortgage or other encurñbráhce, if any.” “None.”
“Item 8. This policy is made and accepted subject to the provisions, . exclusions, conditions and declarations set forth in this policy.”

Further pertinent provisions of the policy -as to matters involved are as follows :

“The Home Indemnity Company, New York and The Franklin' Fire Insurance Company of Philadelphia, Pa. (Each a Stock Insurance Company hereinafter called the Company)
“Section 1. Do hereby severally agree with the Insured named in the Declarations made a part hereof, in consideration of the payment of' the premiums and of the statements contained in the Declarations and subject to the .limits of liability, exclusions, conditions and other terms of this policy * * - *
“To pay for any -direct loss or damage to the automobile-and its operating equipment * * * caused by (a) Fire, arising from any cause whatsoever, * *
“Misrepresentation and fraud. — This entire policy shall be void if the insured has concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof; or in case of any fraud, or false swearing by the insured touching any matters relating to this insurance or the subject thereof whether before or after a loss.”
“Declarations. — By acceptance of this policy the named Insured agrees that the statements in the Declarations are his agreements and ‘representation, that this policy is issued in reliance upon the truth of such representations, and that this policy embodies all agreements existing between himself and the Company or any of its agents relating to this insurance.’ ”

The above copied portions of the policy were the basis of paragraphs four, five and six of defendant’s answer, coupled with appropriate allegations to show the breach of the alleged warranties, the falsity of the representations and their materiality.

Under Article 4890 there can be little question as to the correctness of the court sustaining the special exceptions insofar as same set up a warranty as to encumbrances. The article in specific terms condemns such a provision. International Ind. Co. v. Duncan, Tex.Civ.App., 254 S.W. 233; Hartford Fire Ins. Co. v. Owens, Tex.Civ.App., 272 S.W. 611; Potomac Fire Ins. Co. v. Turner, Tex. Civ.App., 67 S.W.2d 1080.

Paragraph four invokes as a breach of warranty the declaration that the automobile was fully paid for. This, we think, is ruled by Article 5043, and the falsity thereof could only be urged in the event same was material to the risk. St. Paul Fire & Marine Ins. Co. v. Huff, Tex. Civ.App., 172 S.W. 755.

We think there was no error in the court sustaining the special exception to paragraph four.

Paragraphs five and six of defendant’s answer - plead in substance: first, that plaintiff represented in the policy that’the truck was paid for and was unencumbered —both were false and both were material to the risk; second, that to obtain the policy plaintiff intentionally and knowingly falsely represented the truck to be fully paid for and unencumbered; that such' representations were kfiowingly false and material to the risk; and a reliance thereon by defendant; tender of the return of the premiums promptly upon defendant’s obtaining knowledge of the fraud.

Neither of the above-claimed defenses come within the literal scope of the prohibition of the provisions of Article 5043. It would seem that both impliedly come within the right of defense preserved by the terms of the article in question.

For the purposes of this case it may be said that Article 5043 authorizes a defense to the policy for misrepresentations material to the risk. Let us then consider Article 4890, which by its very terms applies to encumbrances. We have already said that the provision in the policy voiding same if the property is encumbered is invalid under that article as a contractual provision. It is at all times to be borne in mind that the answer includes matter as to the non-payment of the truck in addition to the issue as to encumbrances. Limiting the discussion to encumbrance alone, the question posed is, despite Article 4890, may the provisions of the policy be relied upon as a representation rather than a warranty? The briefs of the parties direct our attention to no case by the courts of our State directly in point, and in our investigation we have not been able to find a satisfactory precedent discussing the principle involved. It is very clear that the provision cannot condition liability on the policy. However, we cannot believe that a false representation as to encumbrances, deliberately and deceitfully made for the purpose of obtaining the policy which is material to the risk, can be condoned by the article in question. Deliberate and intentional fraud in a matter material to the contract in ordinary contracts renders same voidable. 10 Tex. Jur. p. 63, sect. 35.

It is 'true the validity of the policy may not by the contract be made to depend upon a non-existence of an encumbrance. It is our opinion that the Legislature never intended by Article 4890 to prevent the insurer from relying on deliberate, intentional misrepresentation as a matter material to the risk. There is, however, another matter invoked by paragraphs five and six; that is, as to the declaration or representation that the purchase price of the truck in question had been fully paid. This question was before this court in the case of California Insurance Company v. Eads, Tex.Civ.App., 209 S.W. 216. Judge Harper there held that the question whether the representation had been made, was true or false, and if false, the materiality thereof,’was for the jury. We think that clearly the same questions were for the jury in the case at bar. In other words, that as pleaded, the question of misrepresentation, etc., as to the automobile having been fully paid for stated a defense. It was error on the part of the trial court to strike out on special exception paragraphs five and six of defendant’s answer.

By- counter proposition it is urged by plaintiff that if the court erred in this respect it was harmless error. The main basis of this contention is that the defendant’s agent at the time of the issuance of the policy was fully apprised of the fact that the purchase money of the truck had not been paid and the representation really made was that -there were no mortgages of record against the truck. If the statement of facts sustain this contention we think the counter proposition of plaintiff is sound. St. Paul Fire & Marine Ins. Co. v. Kitchen, Tex.Com.App., 271 S.W. 893.

This policy was issued without written application. Declarations and representations therein made áre those of the plaintiff only by adoption. This adoption is evidenced by the fact of the acceptance thereof and the existence of a claim thereunder. E. P. McCall, the agent soliciting the insurance for defendant, testified on behalf of the plaintiff here. His testimony and that of plaintiff are in substantial accord as to what took place at the time of the delivery of the policy. McCall says, in substance, that plaintiff, in answer to the interrogatories contained in the policy, told him that there were no mortgages of record against the car; that thereby he understood that there was no mortgage on it; that plaintiff stated to him that he owed a man some money on the car and he did not question plaintiff any further about it. McCall, was a witness for the plaintiff and we assume from the briefs he was at the time • of testifying an agent of the defendant. The witness was asked on direct-examination in substance as to whether he knew at the time of the issuance of the policy that there was a mortgage on the car. He said he did not; that plaintiff had said that there was no mortgage recorded against the car; that upon that.response he placed the word “No” at the proper place in the policy. He further testified that plaintiff told him he owed something on the purchase price of the truck. These statements were made on direct examination. The latter statement on redirect examination. This testimony tends very strongly to show that defendant’s agent, in soliciting and delivery of the policy in question, knew that the purchase price of the car had not been paid. The reply, “No recorded mortgage,” seems to us ought to have been sufficient to have provoked further inquiry. It might, however, have been insufficient to convey the information as to unrecorded mortgages.

However, it was not incumbent upon defendant to tender to the court testimony to prove the allegations made in the stricken portions of its answer. Upon the court striking these portions of the answer evidence on these points became irrelevant and immaterial. Under the theory of the trial court, if true, no defense or partial defense was stated in the stricken portions of the answer. Defendant had a right to preserve its exception to the rulings of the trial court, but did not have a right in the offering of evidence' to transgress, either in letter or spirit, the rulings of the court. With paragraphs five and six in the record a searching cross-examination might have been justified—with them stricken, such a course was .a waste of time.

Defendant had the right to plead and attempt to prove any matters that were a defense to the cause of action asserted by plaintiff. Pleading other than a general denial was necessary to make available the defenses alleged in paragraphs five and six. The manner and sources of proof were varied. We do not feel warranted in holding that under the evidence it clearly appears that at the time of the issuance of the policy McCall, defendant's agent, had notice of the existence of the mortgages and the fact that the truck was not fully paid for. In our opinion, the assignments as to the ruling on the pleading present reversible error. On another trial there may or may not be matter to submit to the jury as to the defenses urged in paragraphs five and six. It depends on the evidence then introduced.

The other matters assigned are not likely to arise on another trial. We are inclined to the opinion that the denial of liability by the insurer was an undisputed fact and proofs of loss were thus dispensed with. The assured testified, without contradiction, that defendant had so denied liability. Knowledge of the facts relating thereto was unquestionably in the possession of the defendant. Questions as to the extent of the damage to the truck will hardly arise on another trial. This trial seems to have been conducted on the theory of a total loss. It was so assumed in the issues submitted and defendant made no objection to the form of submission.

It is ordered that the case be reversed and remanded.

On Motion for Rehearing.

Appellee in his motion for rehearing has called attention to the inaccuracy of a statement in the original opinion. It was there stated in substance that E. P. McCall was asked on direct examination as to whether he knew at the time of the issuance of the policy that there was a mortgage on the car, and replied that he did not; that plaintiff had said that there was no mortgage recorded against the car; that upon that response he placed the word “no” in the proper place in the policy. These statements were made by the witness on redirect examination. Prior to the redirect examination one of the attorneys for the appellant had on cross-examination interrogated the witness McCall as to the conversation between McCall and’ plaintiff prior to the delivery of the policy,, and the witness had stated that appellee’s, statement to him was that there was no recorded mortgage against, the automobile.. On redirect examination the witness was. interrogated as above indicated, and, in addition, as to whether appellee had told him before the issuance of the policy that something was owed on the purchase price of the truck, to which- the witness responded in the affirmative.

Under the ruling of the court om the exception this was not relevant testimony. Giving the testimony due weight, we do not believe that it is of such conclusive nature as to establish notice on the part of the agent of appellant that the truck was-encumbered, and that the purchase price-was not paid, and that the fraudulent representations charged in the answer had not been made. While the testimony has bearing on the issues tendered by the pleadings-stricken, it amounts, in our opinion, to. nothing more than a rather casual reference thereto.

We are still of the opinion that appellant was entitled to have the allegations stricken remain in the pleadings, and entitled to the-opportunity to introduce such evidence as-jt might be able to produce thereon.

The motion for rehearing is overruled,.