author: GRISSOM, Justice.

text:
    CREWS v. TEXAS & P. RY. CO.
    No. 2111.
    Court of Civil Appeals of Texas. Eastland.
    Feb. 28, 1941.
    Rehearing Denied March 28, 1941.
    Thomas & Thomas, of Big Spring, and B. F. Russell, of Baird, for appellant.

      H. C. Shropshire, of Weatherford, for appellee.
   GRISSOM, Justice.

A. D. Crews sued the Texas & Pacific Railway Company for damages alleged to have been sustained in a fall from defendant’s engine while he was lubricating it in the nighttime in defendant’s roundhouse yards at Baird. Plaintiff alleged he was an assistant hostler and that it was his duty when the engine, from which he fell, came into the yard to take a gallon can of hot oil, climb the side of the engine, with a flashlight in one hand and the oil in the other, and, clinging to the side of the engine, pour the oil into the lubricator. That the place at which he was required to climb the engine and lubricate it was dark; that defendant at its other roundhouses usually furnished a stool upon which the assistant hostler could stand, and that the defendant on this occasion should have furnished plaintiff a hostler’s stool, or ladder, or similar device, to assist him in climbing to the point on the engine where he was to lubricate it and on which he could stand while he was performing his work. That defendant failed to furnish a hostler’s stool, or similar device; that such failure was negligence and the proximate cause of plaintiff’s injury.

Plaintiff alleged that prior to his injury he requested defendant to furnish a hostler’s stool; that defendant promised to provide it; that plaintiff depended upon such promise and continued to work for defendant until May 17, 1939, when he was injured; that if defendant had refused to furnish such stool he would not have continued to do said work. “That in such awkward position plaintiff slipped off the guide yoke step, and, losing his hold, fell to the ground.” There followed allegations of resulting injuries. Plaintiff alleged that defendant’s failure “to furnish proper and safe support upon which to work while lubricating the engine” was negligence and the proximate cause of his injuries.

Defendant’s answer, among other things, alleged contributory negligence; that plaintiff’s negligence was the sole proximate cause of his injuries; that defendant was engaged in interstate commerce; that plaintiff’s injuries were due to risks assumed by him; that he had full knowledge of all the matters and things alleged by him in his petition as constituting negligence; that such things were open and obvious, and well known to plaintiff, and plaintiff appreciated the ' danger arising' therefrom; that plaintiff continued in the employment of the defendant with such knowledge and appreciation of danger, and, therefore, assumed all risks of injury arising therefrom.

At the close of the plaintiff’s testimony, the court instructed the jury to return a verdict for defendant, which it did, and judgment was entered for defendant. Plaintiff has appealed.

Plaintiff says the court instructed the jury to return a verdict for the defendant upon the theory that the evidence showed as a matter of law that plaintiff assumed the risk.

It was agreed defendant was engaged in interstate commerce at the time of his injury.

Plaintiff’s. testimony was to the effect that he had worked for defendant “off and on” since 1923; that he had worked as assistant hostler for defendant at Big Spring and Baird. That his duties required him to fill the lubricators with valve oil and to supply the engine with fuel oil, water and sand in order to get them in shape to go out on the road; that the cans furnished by defendant to plaintiff to carry hot oil to the engine were one-gallon cans. That the place 'on the engine where the oil was put in was 7½ or 8 feet from the ground. To fill the lubricator with hot oil required climbing up and down the side of the engine three times. He was asked how high his feet were off the ground at the time he was attempting to pour oil in the engine. He answered: “My right foot was approximately 2 foot and a half or three foot from the ground.” He said that the ground there was sloping and rocky. He described the method of ascending the engine for the purpose of lubricating it and the places upon which plaintiff was supposed to stand and climb as follows:

“There was a step. It is a piece of iron, called a step on the bottom of the guide, called the guide step. That’s where my right foot was. And there is a guide yoke step, that’s approximately foot and one-half or four foot higher than the guide step and that’s where my left foot was when my foot slipped off of the guide step throwing me backwards.
“Q. About how far apart, not height, but about how far apart running from the front to the back of the engine is the lower-step and the- yoke step ? A. About four feet.
“Q. In what position were your legs if you had to stand with both feet, one. on one step and one on the other? A. They were just about as far as I could reach apart.
“Q. In a ‘Y’ shape? A. Yes sir.
“Q. Spraddled? A. Yes sir. Sprad-dled out.
“Q. Where were your hands when you were operating the job of pouring this oil into the engine? A. Had a gallon can in my left one and my arm was around the guide rod, guide rod, I believe that’s what they call it. Anyhow it is a rod. It is put up there to — a valve rod iá what it is and I had a flash light in my right hand and my arm was around that rod, holding me up there.
******
“Q. Now just describe to the jury briefly, you might have already partly done so, the position in which you were when you fell? A. I was standing up on the guide yoke step, guide step with my right foot and guide — my left foot on the guide yoke step and my arm around the valve rod and a flash light in my right hand and a gallon can of valve oil in my left hand and my foot slipped off of the guide step; that’s the lower step, throwing me backwards on the ballast out there by the side of the track.”
Plaintiff testified that the hand holds and steps on the side of the engine put there for use in filling the lubricator are open and obvious “in day light”; “you can’t use them hand holds and pour oil with this hand; * * * you can’t find them in the dark.”
“Q. You could take your flash light and find them couldn’t you? A. And hold up there?
“Q. Yes sir. A. How you going to hold with your other hand; you can’t do it.
“Q. All right. You could take your flash light and with your knowledge of the presence of them there locate any of them couldn’t you? A. No, sir.
“Q. You couldn’t? A. No, sir.”

That the steps on the side of the engine were “Black, oil covered steps.”

With reference to a request for a hostler’s stool, defendant’s promise and plaintiff’s reliance thereon, he testified, substantially, as follows." That he requested Mr. J. E. Friend, defendant’s master mechanic at Big Spring, who had supervision and charge and gave orders at Baird relative to such matters, to furnish him a hostler’s stool for the purpose of lubricating engines. That the request was made about a month prior to plaintiff’s injury; that Mr. Friend said “Go tell Mr. Fetterly, the roundhouse foreman, to make you a stool to stand on to fill those lubricators.” That Mr. Fetterly was the roundhouse foreman at Baird, where plaintiff was employed. That plaintiff delivered the message to Mr. Fetterly; that Mr. Fetterly said “We will make no changes. We will do it just like we have been doing it. Climb up there and fill them.” Plaintiff said he again spoke to Mr. Friend and that Mr. Friend said “I will go down there and see about it myself.” That this conversation occurred approximately thirty days prior to plaintiff’s injury. Plaintiff'testified that he continued to work because he was expecting a stool to stand on “everyday” to be built to fill that lubricator, or to use in his work supplying engines. That plaintiff didn’t make one himself because he didn’t have the authority and would not have been permitted to use it if he had. That during said thir ty-day period if plaintiff had known he was not going to get a stool he would not have continued to work because “it was dangerous. I was afraid I would get killed.” That plaintiff had worked at said position prior to his fall, without a stool, “about four months, the last time”; that he had worked before that without a stool at Baird; that he had never worked at any other place than Baird without such a stool; that plaintiff had been an assistant hostler off and on ever since he had “hired out”; that all of the time he had worked in such position except at Baird, he had been furnished a three-legged hostler’s stool for said purpose, but had never been furnished one at Baird. That when he was engaged, other than as assistant hostler, he saw- what the hostlers and their helpers were doing, at Baird; that they were doing such work in the same way as plaintiff did. That when he worked for defendant at Big Spring he was furnished a hostler's stool for the purpose of filling the lubricators on the engines. That he held such a job at Big Spring about a year or year and a half “steady”; that the ground from which the hostler stepped on to the engine for the.purpose of lubricating it was smoother at Big Spring than Baird. He described the manner in which he could have used a three-legged stool on . the ground at Baird as follows: “The fill, under these engines doesn’t come out past the guide over two, three or four inches and the rest of the .rocks scattered and if you had this stool about three and one half feet high, which they make them, and I will say about eighteen inches in diameter at the top, you could set one leg there next to the rock ballast the other two hit the side and you could step up on it and fill your lubricator with the engine—

Plaintiff testified he was not furnished a ladder or any other device, other than those attached to the engine, for the purposes of assisting him in climbing the engine and servicing it. Plaintiff testified he knew it was “very dangerous to do that work” and with such knowledge after being promised the stool he continued to do that work in the same .way for about a month after he was promised a stool.

With reference to whether or not the evidence showed conclusively that plaintiff assumed the risk incident to doing his work, under the conditions alleged and indicated by the evidence, we call attention to the following authorities:

In Texas & N. O. R. Co. v. Bingle, 91 Tex. 287, 288, 42 S.W. 971, Chief Justice Gaines said: “The servant, by entering the employment of the master, assumes all the ordinary risks incident to the business, but not those arising from the master’s neglect. It is the duty of the master to exercise ordinary care to furnish him a safe place in which to work, safe machinery and appliances, to select careful and skillful co-workers, and, in case of a dangerous and complicated business, to make such reasonable rules for its conduct as may be proper to protect the servants employed therein. The servant has the right to rely upon the assumption that the master has done his duty; but if he1 becomes apprised that he has not, and learns that the machinery is defective, the place unnecessarily dangerous, or that proper rules are not enforced, he assumes the risk incident to that condition of affairs, unless he informs the master, and the latter promises to correct the evil. In this latter event, so long as he has reasonable grounds to expect, and does expect, that the master will fulfill his promise, he does not, by continuing in the employment, assume the additional risk arising from the master’s neglect.” (Italics ours.)

In Hilje v. Hettich, 95 Tex. 321, 325, 67 S.W. 90, 91, Associate Justice Williams said: “Another objection' made to the charge is that it involves the proposition that, if a promise had been made to supply more light, all question of assumption of risk by the servant was removed from the case, although it should appear, from lapse of time or otherwise, that before he received his injury plaintiff should have known that the promise would not be fulfilled. The idea of the charge seems to be that after a promise, on the part of the master, to remedy a defect, has been made, there can be no assumption of risk by the servant, but only contributory negligence would defeat his action for injuries sustained from the defective and dangerous condition which the master had promised to remove. We do not think this is true. The authorities which treat of the effect of such a promise to repair generally limit its operation, as preventing the conclusion that the servant has assumed the risk, to a reasonable time for the master to comply; and lay it down that, when it is or should be manifest to the servant that the defect will .not be remedied, a further continuance in the service will be an assumption of the risk. [Texas & N. O.] Railway Co. v. Bingle, 91 Tex. 287, 42 S.W. 971. This is only an application of the general principle that a servant who knows of a dangerous condition, brought about by the negligence of the master, assumes the risk of it if he continues in the employment. When he knows, .or ought to know, that a promise to repair will not be performed, and yet remains in the service, he can not be longer regarded as acting upon the promise. The failure to fulfill the promise is negligence of the master, and the servant, knowing definitely that any purpose to perform it has been abandoned by the master, does not thereafter rely on it. The testimony of plaintiff was that he made his complaint to the foreman, and received his promise three days before he was injured, and that the next evening he again mentioned the matter, and the foreman told him he would fix the lights the next morning. The testimony on this point is a little obscure, and leaves the impression that the witness may have meant that the last conversation was in the evening before he was hurt at night; but the jury could have found that it was on the day previous, and that the lights were not improved the next morning, as promised. The seed room was lighted by electricity, and all that was necessary, according to plaintiff’s evidence, was to put globes in some of the sockets which were empty, and remove the dust from such as were in place, which could have been done in a very short time. It cannot be said that» these facts showed conclusively that there was no purpose to carry out the promise with respect to the lights; nor can it, we think, be said that the jury should have been virtually instructed that the promise removed all question of assumption of risk by the servant. The evidence was sufficient to make it proper for. the court to submit to the jury the view of the law which we have just stated.”

In Taylor v. White, Tex.Com.App., 212 S.W. 656, 658, the court said: “A servant is not relieved of the assumption of the risks of a known defect by reason of a promise to remedy or repair unless it appears that his continuance in the service was in reliance on such promise. The authorities on this subject generally limit the operation of the promise, as preventing the conclusion that the servant has assumed the risk, to a reasonable time for the master to comply, and, when it is or should be manifest to the servant that the defect will not be remedied, a further continuance in the service will be ah assumption of the risk. Hilje v. Hettich, 95 Tex. 321, 67 S.W. 90. Plaintiff testified that he first requested defendant’s superintendent to provide a guard rail about eight months before he was injured, and received his promise that he would attend to it ‘right away’; that he renewed the request about four months later, the superintendent saying he would fix it as soon as he could get to it; that he mentioned the matter the last time about six weeks or two months before he was injured, and the superintendent replied, T will fix it as soon as I can get to it, right away.’ Plaintiff did not testify that he remained in the service relying on the promise to provide a guard rail, and we think it clearly appears from his testimony that he did not. He must have known, from the many promises made and broken covering a period of eight months, that defendant had no intention of remedying the alleged defect. To be relieved of the assumption of the risks of a known defect by reason of a promise to remedy, the servant must have reasonable grounds to expect that the promise will be fulfilled. [Texas & N. O.] Railway [Co.] v. Bingle, 91 Tex. 287, 42 S.W. 971.”

Also, see Taylor v. White, Tex.Civ.App., 156 S.W. 349, 353.

In Detroit Crude-Oil Co. v. Grable, 6 Cir., 94 F. 73, 78, the United States Circuit Court of Appeals announced the rule with reference to the period of time within which a servant might continue to rely upon an unfulfilled promise of his master to remedy a defect, as follows: “An exception to the rule of exemption or immunity of the master from liability under such circumstances arises when the master expressly or impliedly promises or assures the servant that the defect shall be remedied, or the danger removed. During the running of such a promise, the servant may rely upon the master’s promise or assurance, and recover in case of an accident resulting from the defect, although obvious, if the claim to damage is otherwise good. This liability of the master in consequence of a promise or assurance continues only for such period of time as might reasonably be allowed or required to remedy the defect or for removal of the danger. ‘After the prescribed period has elapsed without change, or if the master has refused to remedy the defect, the servant cannot rely upon his expectation of a remedy as an excuse for remaining, whatever •rights he may have upon other grounds; and in many cases it has been held that he “assumed the risk.” ’ ”

Also, see McPeck v. Central, etc., R. Co., 1 Cir., 79 F. 590, 593.

In Missouri, K. & T. R. Co. v. Baker, 35 Tex.Civ.App. 542, 81 S.W. 67, 68, writ refused, the rule with reference to time was announced as follows: “In all such cases the master has a reasonable time within which to comply with such promise, and until it is or should be manifest to the servant that the promise to repair would not be complied with, and that the defect would not be remedied, a further continuance by him in the master’s service will not impose upon him the assumption of the risk occasioned by such defect. The question as to what would be a reasonable time, under the particular facts of this case, was a question of fact for the jury to determine.”

To the same effect is the holding in Southwestern States Portland Cement Co. v. Young, Tex.Civ.App., 140 S.W. 378, 381, writ refused. Also, see International & G. N. R. Co. v. Williams, 82 Tex. 342, 344, 18 S.W. 700.

In Galveston, H. & H. R. Co. v. Hodnett, 106 Tex. 190, 194, 163 S.W. 13, IS, the rule announced in the Bingle case, supra, was interpreted by Justice Phillips, as follows: “ * * * where the servant has informed the master of the defect or unsafe condition, and has received his promise to correct the condition. In such event, so long as he has reasonable grounds to expect and does expect that the promise will be fulfilled, he does not, by continuing in the service in reliance upon the promise, ■assume the risk.’1 (^Italics ours.) With reference to the opinion in the Bingle case, he said: “The opinion makes it plain that the risk is not assumed by continuance in the service in reliance upon the master’s promise for such a time as the servant has reasonable grounds to believe and does believe it will be fulfilled, and a finding to such effect would dispose of that issue.”

“Where the master or his representative promises to remedy the defect, the servant by continuing in his employment for a reasonable time after such promise does not assume the risk of injury from the defect unless the danger was so patent that no person of ordinary prudence would have continued to work * * *39 C.J. p. 786, § 986.

“Where the danger is so obvious and imminent that no prudent person would undertake to perform the service, the servant is not justified in continuing in the performance of his services and assumes the risk of any injury which he may sustain.” 39 C.J. p. 790, § 989.

“Where no definite time is fixed for making repairs, if the servant remains in the service longer than a reasonable time after the master’s promise to. repair the defect, he will be held to have assumed the risk. In some Cases it is held that what is a reasonable time is to be determined by the time which might reasonably be required by the master in which to make the repairs; while in others it is held that the servant is entitled to remain for any period which will not preclude the reasonable expectation that the promise will be kept. Cases illustrative of what is, or is not, a reasonable time are set out in the notes hereto.” 39 C.J. p. 793, § 995.

See, also, 39 C.J. p. 794, Notes; Hough v. Texas & P. R. Co., 100 U.S. 213, 225, 25 L.Ed. 612; Illinois Steel Co. v. Mann, 170 Ill. 200; 48 N.E. 417, 40 L.R.A. 781, 62 Am. St.Rep. 370; Plowman Construction Co. v. Garrison’s Adm’r, 157 Ky. 462, 163 S.W. 486; Stonega Coke & Coal Co. v. Busch 176 Ky. 690, 197 S.W. 389; A. L. Clark Lumber Co. v. Hurst, 124 Ark. 599, 186 S.W. 619; Consolidation Coal Co. v. Hamilton, 170 Ky. 393, 186 S.W. 197; Graves v. Metropolitan Street Ry. Co., 175 Mo.App. 337, 162 S.W. 298; Jones v. Walker County Lumber Co., Tex.Civ.App., 162 S.W. 420; American Tobacco Co. v. Adams, 137 Ky. 414, 125 S.W. 1067; Cheek v. Eyth, 149 Kan. 586, 89 P.2d 11, 13; Reader R. R. v. Sanders, 192 Ark. 28, 90 S.W.2d 762, 764; Odell v. St. Louis-San Francisco R. Co., Mo.App., 281 S.W. 456; Bevin v. Oregon, etc., Co., 136 Or. 18, 298 P. 204, 208; Baker v. Augusta Veneer Co., 44 Ga.App. 383, 161 S.E. 676; Braden v. Friederichsen, etc., Tile Co., 223 Mo.App. 700, 15 S.W.2d 923, 927; Southern Pac. Co. v. Lasch, 2 Tex.Civ.App. 68, 21 S.W. 563; Hudgins v. Kansas City, M. & O. R. Co., Tex.Civ.App., 2 S.W.2d 958, 10 L.R.A.,N. S., 1044, Notes; 40 L.R.A. 790, Notes; 87 Am.St.Rep. 581, Notes; 119 Am.St.Rep. 440, Notes; Toledo, St. L. & W. R. Co. v. Allen, 276 U.S. 165, 48 S.Ct. 215, 72 L.Ed. 513; Kansas City Southern R. Co. v. Williford, 5 Cir., 65 F.2d 223; Keys v. Pennsylvania R. Co., 2 Cir., 104 F.2d 663; Butler v. Frazee, 211 U.S. 459, 29 S.Ct. 136, 53 L.Ed. 281; Hamilton v. St. Louis, S. F. & T. R. Co., 115 Tex. 455, 283 S.W. 475; Missouri Pac. R. Co. v. David, 284 U.S. 460, 52 S.Ct. 242, 76 L.Ed. 399; Boldt v. Pennsylvania R. Co., 245 U.S. 441, 38 S.Ct. 139, 62 L.Ed. 385; Gulf, C. & S. F. R. Co. v. Garren, 96 Tex. 605, 614, 74 S.W. 897, 97 Am.St.Rep. 939.

In Seaboard, etc., Ry. v. Horton, 239 U. S. 595, 36 S.Ct. 180, 60 L.Ed. 458, the court held, where complaint of the defect had been made by the servant, the master had promised to remedy the defect, and the servant, relying upon the promise, continued in the service, there was an exception to the rule that the servant assumed the risks known and appreciated by him, unless the danger of remaining in the employment pending performance of . the promise was so imminent and obvious as to import an assumption of the risk, notwithstanding the employer’s promise to remedy the defect.

In Chicago, R. I. & G. R. Co. v. Frederick, Tex.Civ.App., 74 S.W.2d 275, writ refused, the Amarillo Court of Civil Appeals held, where a brakeman was injured while standing on the foot board of a locomotive tender in a collision with rocks on the .railroad track, and where the brakeman should and did know that possibly there were obstructions on the track, the servant was not shown, as a matter of law, to have assumed the risk incident to such action.

In Lawson v. Hutcherson, Tex.Civ.App., 138 S.W.2d 131, Lawson was employed by Hutcherson to operate a tractor, The day Lawson began driving the tractor he learned it was defective. He informed his employer there was something wrong with the steering gear and he was having trouble with it. At least twice thereafter - he again informed his employer that there was something wrong with the tractor and pointed out some of the defects. The employer advised Lawson that in a short time he would have another tractor ready for appellant to use, to continue the use of the one he was driving; that the tractor he was driving would be fixed when it rained, or at some convenient time when the employer was not too busy. On such assurances, appellant continued to operate the tractor. Lawson had driven a tractor in the summertime for five or six years. The first complaint was made June 19th. The tractor was not repaired and the employee was injured as a result on June 30th. The court instructed the jury to return a verdict for the defendant. The instructed verdict was apparently based upon the conclusion that the evidence showed, as a matter of law, that Lawson had assumed the risk incident to his continued operation of the defective tractor. The appellate court held to the contrary and reversed the judgment. It quoted in its opinion from Coca-Cola Bottling Co. v. Dickson, Tex.Civ.App., 115 S.W.2d 1223, 1224, as follows: ‘Tt has been frequently held to be reversible error for the court to direct a verdict, ‘ “If, discarding all adverse evidence, and giving credit to all evidence favorable to the plaintiff, and indulging every legitimate conclusion favorable to the plaintiff which might have been drawn from the facts proved, a jury might have found in favor of the plaintiff.” ’ ”

From the foregoing authorities we think it is clear that an exception to the general rule (that a servant, with knowledge and appreciation of the danger in using defective machinery furnished by the master, who continues in the employment assumes the risk) is generally recognized when the servant complains of the defect, the master promises to correct it, and the servant continues to work with the defective machinery, or instrument, relying upon the promise of reparation, provided (1) the danger is not so imminent and obvious that a reasonably prudent person would not continue to work, regardless of the promise, and (2) 'the servant does not continue to work after he can no longer reasonably expect, or does not expect, the master to keep his promise.

After a careful consideration of the testimony, and, giving credit to all the testimony favorable to plaintiff, and indulging every legitimate inference which might be drawn from the facts in evidence, we conclude a jury might have found for the plaintiff on the issue of assumed risk. In other words, the evidence does not show, as a matter of law, that plaintiff assumed the risk incident to continuing his work as assistant hostler without the aid of a hostler’s stool. Wichita Falls & S. R. Co. v. Lindley, Tex.Civ.App., 143 S.W.2d 428, 432; Jackson v. Langford, Tex.Civ.App., 60 S.W.2d 265, 267. If the instructed verdict depends alone upon the conclusion that assumption of risk by the plaintiff was shown conclusively, it cannot be sustained. We are of the opinion it is not conclusively shown that the danger was so imminent and obvious as to deprive plaintiff of the right to continue in defendant’s employment relying upon its promise. Seaboard, etc., Ry. v. Horton, supra.

Whether the instructed verdict was based upon the conclusion that assumption of the risk by plaintiff was conclusively shown or not, it is our duty to affirm the judgment, based on the instructed verdict, if any issue essential to plaintiff’s recovery, or any absolute defense, is conclusively established against the plaintiff. After a careful study of the evidence, we conclude that no such issue is established as a matter of law, but, we think that “discarding all adverse evidence, and giving credit to all evidence favorable to the plaintiff, and indulging every legitimate conclusion favorable to the plaintiff which might have been drawn from the facts proved, a jury might have found in favor of the plaintiff.” Gross v. Shell Pipe Line Corp., Tex.Civ.App., 48 S.W.2d 377, 378.

We, therefore, conclude the court erred in directing a verdict for the defendant. The judgment is reversed and the cause remanded.


source: Caselaw Access Project

author: O’QUINN, Justice.

license: Public Domain

text:
    NATIONAL MUT. CASUALTY CO. v. LAMBERT.
    No. 3825.
    Court of Civil Appeals of Texas. Beaumont.
    April 3, 1941.
    Rehearing Denied April 9, 1941.
    Albert Maverick and Lamar Cecil, both of Beaumont, for appellant.
    Collins, Williams & Garrison, of Lufkin, for appellee.
   O’QUINN, Justice.

This is a compensation insurance case. Sheehan Pipe Line Construction Company was the employer; Claude Lambert, appel-lee, the employee; and The National Mutual Casualty Company, the compensation insurance carrier. On September 29, 1939, while engaged in the course of his employment as an employee of Sheehan Pipe Line Construction Company, Claude Lambert received an injury for which he claimed compensation. He filed his claim before the Industrial Accident Board. On June IS, 1940, the Board made its final ruling and award, and appellee gave notice that he would not abide said award, and duly filed this suit in the district court of Jasper County, Texas, to set aside said award, and to recover compensation as for total and permanent disability.

This suit was filed June 24, 1940, and citation served on Hon. Walter C. Woodward, who was then Chairman of the Board of Insurance Commissioners for the State of Texas, on June 27, 1940, who was agent and attorney in fact of appellant, the defendant, having been duly- designated by appellant as such to receive service of citation. On that date, June 27, 1940, Woodward by registered mail forwarded copy of the plaintiff’s original petition and copy of citation, to appellant at its home office at Tulsa, Oklahoma, and in his letter of transmittal called appellant’s attention to the fact that the citation was issued on June 24, 1940, and was returnable on July 22, 1940. This was received and acknowledged by appellant on June 29, 1940. This was 25 days before appearance day. The term of the district court of Jasper County, at which the judgment against appellant was had, convened on July 22, 1940, and ended on August 17, 1940 — a four weeks term. The appellant filed no answer and on July 26, 1940, judgment by default (after hearing evidence) was rendered against appellant in favor of appellee in the sum of $6,208.38. This represented in lump sum the amount adjudged to appellee after allowing discount as required by law. The judgment was filed and entered upon the minutes of the court on July 26, 1940, the day of its rendition.

On August 10, 1940, appellant filed its motion to set aside the default judgment entered July 26, 1940, and to grant it a new trial, and alleged in its motion various matters for the purpose of showing that its failure to file answer as cited to do was not intentional, nor the result of conscious indifference on its part, but was due to mistake or accident, and further alleged that it had a meritorious defense to appellee’s suit; and further that the judgment was grossly excessive; and that it would proceed to a prompt trial of the case on its merits, and would defray any expenses which appellee may have incurred in obtaining the default judgment. Appel-lee answered the motion by general demurrer, general denial, several special denials, and pleaded matters - attempting to show that appellant had been consciously indifferent to the cause, or inexcusably negligent in failing to answer, and alleged that the judgment rendered was just and fair, and that it would work a grievous wrong to appellee to set aside the judgment and allow a trial of the cause to be delayed as a trial could not be had at that term of the court, and attached to his answer numerous exhibits of letters and documents connected with and had in connection with appellee’s claim and suit for compensation, offered for the purpose of showing that appellant was fully informed of the filing and pendency of the suit, and the appearance day of the- term of the court. On August 12, 1940, the court, “after hearing such motion and the evidence adduced in support of such motion,” overruled the motion. This appeal is from that order.

On said date, August 12, 1940, appellant filed its answer consisting of a general demurrer, general denial, and specially denied (a) that plaintiff, Claude Lambert, sustained any injury while in the employment of the Sheehan Pipe Line Construction Company, and alleged that if appellee was suffering from any character of disability, that same was the sole result of disease or infirmity existing prior to the date of his alleged injury; and (b) that if plaintiff, Lambert, had suffered any character of disability, which was denied, that same was -slight and only temporary; and (c) that if plaintiff was then suffering from hernia, •that same was not sustained in the course of his employment, but existed prior to the date of his alleged injury. In this answer, there was no plea of meritorious defense.

Appellant’s first proposition reads: “It was error for the trial court to overrule and refuse to sustain appellant’s motion to set aside the default judgment rendered in this cause, for the reason that the failure of the appellant to answer before judgment was not intentional nor the result of conscious indifference on its part, but was due to a mistake or accident; and further, because appellant’s motion to set aside said default judgment and the evidence adduced in support thereof set up a meritorious defense, and such motion was filed at a time when the granting thereof would not have occasioned delay or worked an injury to the appellee.”

The term of the court at which the judgment was rendered convened on July 22, 1940, and. ended August 17, 1940. It was a four weeks term. The suit was filed June 24, 1940. Citation was served on Hon. Walter C. Woodward, Chairman of the Board of Insurance Commissioners, who had -been duly designated by appellant its agent and attorney in fact to receive service of citation, on June 27, 1940. On that date, June 27, 1940, said Woodward by registered mail forwarded copy of the plaintiff’s original petition and copy of the citation to appellant at its home office at Tulsa, Oklahoma, and in his letter of transmittal called to appellant’s attention the fact that the citation was issued on June 24, 1940, and was returnable on July 22, 1940. Woodward’s letter was received by appellant at its home office on June 29, 1940. This was 25 days before appearance day. The letter from appellant’s home office to Walter C. Woodward acknowledging the receipt of his letter transmitting to appellant the copy of plaintiff’s petition and copy of citation was signed by “George C. MaS-sey, Claim Department.” A copy of this letter was mailed-from appellant’s office by Massey to C. Villiva, Beaumont, Texas. ' Villiva was an agent of appellant. Appellant also had a lawyer, Hon. Lamar Cecil, residing at Beaumont, but he was in no manner notified of the pendency of the suit. The motion to set aside the default judgment was not filed until August 10, 1940, two weeks after the judgment was rendered.

Hon. Lamar Cecil, attorney for appellant, and who attended to matters for appellant in this territory, testified that on August 7, 1940, he received a long distance telephone call from Mr. J. A. Tillotson of Tulsa, Oklahoma, Assistant Supervisor of Claims in the Home Office of The- National Mutual Casualty Company at Tulsa, and who had charge of compensation insurance claims carried by said company, and who told him that he, Tillotson, had overlooked appellee’s case then pending at Jasper, Texas, and that he, Cecil, at once went to Jasper to see the status of the case, and found that judgment by default had been rendered against the company on July 26, 1940; that he immediately returned to his office at Beaumont and prepared the motion to set aside the judgment, and forwarded copy of the motion to counsel for appellee, which motion was filed on the 10th. This was on Saturday of the next to last week of the term of the court. Hearing on the motion was on the 12th. The only witness connected with appellant’s home office offered by appellant was Tillotson. His testimony fills 27 pages of the statement of facts. We shall not undertake to set same out by question and answer but will give what we deem the essential parts in substance. He testified that he was Assistant Supervisor of Claims and had charge of workmen’s compensation claims; that all such claims were supposed to pass under his jurisdiction, and that generally they did; that “once in a while I am out of the city, or something like that; but they are supposed to be under my supervision”; that some “four or five or six days ago” he discovered the file of the case containing copy of the petition and citation in the case; that he did not know how it got there; that he at once put in a long distance call to Mr. Cecil, attorney for the company, at Beaumont, asking that he check up on the case, and advise what to do; that he did not intentionally overlook the matter, that it was an oversight on his part; that the citation and copy of petition was received at his office on June 27, 1940; that during that week (the week embracing June 27th) he was for some four days beginning on the 26th attending the “Industrial Commission Docket for the Oklahoma Industrial Commission”; that he was out of his office four days; that when he got back to his office he did not see the citation; that “a short time after that I became ill with an infected throat” and was in bed “just about a week,” under a doctor’s care and unable to attend to business; that it was “around the 20th or 21st when he returned to his office,” at which time he had to go to Oklahoma City to attend Industrial hearings and was there for “two or three” days; that the letter of date June 29, 1940, from appellant’s office to Walter C. Woodward, acknowledging receipt of the registered letter from Woodward enclosing copy of petition and citation calling attention to the fact that the citation was served on him (Woodward) on June 24, and service was returnable on July 22, 1940, was signed “The National Mutual Casualty Company, By Geo. C. Massey, Claim Department”; that while Massey was connected with the Claims Department, that all compensation claims were supposed to be under his (Til-lotson’s) supervision; that he did not know whether or not the company’s agent, Vil-liva, at Beaumont, 'was a lawyer, that he had not delegated to Villiva any authority to represent the company in any matter; that the ’ first he saw of the letter from Woodward transmitting the copy of the petition and citation to appellant was “when I discovered the citation and petition in the file last week”; that if the court would set aside the default judgment, the appellant would try the case at any time the court would set same for trial. On cross-examination: That he had some assistance in his office; that Mr. Finnegan was the Supervisor over him, and that Mr. Moore was manager of the claim department, mostly of automobile claims; that he tried to and usually did answer mail referable to his desk, “If I am in”; that “last week” was the first time he saw the letter from Woodward enclosing petition and citation to the company in the suit, that he could not tell exactly, “four or five days ago”; that the letter when it was received was answered by George C. Massey; that Woodward’s letter called attention to the fact that the service was returnable July 22, 1940; that he assumed thát Massey read the letter — that Massey was not present; that he did not know how Massey came to give attention to the letter, that ordinarily he did not do that kind of work; that when the letter (Woodward’s) reached the office, he was in Miami, Oklahoma, attending court, and that he got back on the 29th, but Massey did not call his attention to the letter; that one of the girls in his office gave him. his mail and that he probably read it, but did not see the file in the case; that he “started feeling badly the week end of July 13th, and consulted a doctor”; that he would not say that he remained in his office and performed his work from June 29th to July 13th, but that he was in his office “quite a bit”; that along in June “we had a young man by the name of Elliot Finton who I turned a lot of these matters over to; probably I would have turned this over to him had I known of it, but I was gone. After he left, Mr. Massey, who was in the claims department, left the claims department and took over the duties as building manager, and since that time only Mr. Finnegan and myself have been in the office”; that “I found the citation in the file when I looked through it”. In answer to the question, “How did you learn that a judgment had been rendered in this case,” he said: “Well, when I went through the file and found the citation in there last week, and saw a copy of the petition, and the citation asking answer to be made on July 22; I immediately called Mr. Cecil at Beaumont”; that was “around the 7th”; that he received a copy of letter written by the Industrial Accident Board acknowledging its receipt of appellee’s notice of appeal from the Board’s award; that ordinarily letters of that kind went to his desk; that he paid no attention to the letter; that the first time he saw the letter was when he went completely through the file in the case; that he had “quite a bit” to do with handling the file in the case up to the time the suit was filed; that he could not explain what happened to the file that it did not get to his desk before the judgment was taken; that after he got sick about the 13th he did not return to his office until about the 20th; that on the 22nd he went to Oklahoma City on Monday, and returned on Wednesday evening the 24th; ■ that Mr. Finnegan knew the file in the case was in the office; that so far as he knew there was no letter written concerning the case nor any attention given to the case from the date of service, June 27th, down to August 7th, 1940, when the default judgment was discovered; that he did not know of the letter from Walter C. Woodward transmitting the copy of the petition and the copy of citation to appellant, nor of Massey’s letter from the Claim Department of appellant acknowledging the receipt of the letter containing the copy of the petition and citation until August 7th. It appeared that appellant did not have an office in Texas.. The letters referred to, the notice of appeal from the Board’s award, and the letter from the Board to the parties giving notice of the notice of appeal were all in evidence. We have omitted much of the substance of the testimony of Mr. Tillotson, but think we have incorporated a sufficiency of same.

The company’s home office was at Tulsa, Oklahoma; its chief counsel resided there. All citations in suits were sent there for attention. The company had excellent counsel at Beaumont who attended to cases in the territory where the instant suit was pending, but he received no notice of the suit until August 7th, two weeks after the judgment was rendered. Citation returnable July 22, 1940, reached the office at Tulsa June 29, 1940, and its receipt acknowledged; admittedly no attention was given this citation, other than place same in the files, the excuse for not giving attention being that “it was not called to my attention,” by Assistant Superintendent of Claims, Tillotson, whose duty it was to handle such matters, though he admitted that he was in his office for at least fifty-fifty per cent of the time during the 25 days until appearance day where the suit was pending, he testifying that “I think it is correct to say that not a person there gave any attention to this matter from the date the citation was served (June 29th) until the 7th day of August, 1940, (two weeks after the default judgment was rendered)”. Without further discussion of the evidence, we will say that the record, to our mind, shows inexcusable negligence in overlooking the matter.

Furthermore, the motion to set aside the judgment was filed on August 10, 1940, on Saturday before the Monday of the last week of the term of court. The hearing on the motion was held on Monday the 12th. The record discloses that the case was reached on call on appearance day, Tuesday, July 23rd. No answer had been filed. The court passed the case without action until Friday, the 26th, when the case was again called, and no answer having been filed, evidence for plaintiff was received and judgment rendered for appel-lee. Judge F. P. Adams, the regular judge of the court and who presided and rendered the judgment sought to be set aside, testified in substance: This is the last week of this term of court. The criminal docket is set for this week. I believe the District Attorney told me that he had three cases ready for trial this week. The civil docket is also set for trial this week. I believe there are fourteen civil cases on the docket. There is a jury out now on a civil case tried last week which continued over into this week and is not yet concluded. “I can’t see any reasonable probability at all to try the case if the matters before me are tried”; I presume there will' be at least three cases tried, and so far as extending the term of court is concerned, before the term could be extended all parties must announce ready for trial, be in the midst of trial. I have another session of court convening immediately after this one in my district, Monday morning in Newton, and I have no other intention except to go there and open court. So it appeared almost if not certainly impossible for a trial of the case to be had at that term of the court. We judicially know that there are four other counties, besides Jasper county, ' in Judge Adams’ judicial district, their terms of court convening after each other, each of four weeks, except Sabine County which has five weeks. So, if the motion to set aside the judgment should be granted, it certainly follows that the case could not be tried until after Judge Adams completes the circuit of his district and returned to Jasper for the next term of court there — a very considerable delay. A careful consideration of the evidence adduced by plaintiff on the trial at which the judgment was rendered and upon the hearing of the motion, convinces us that to reverse the judgment for the purpose of giving appellant a trial on the merits, and so delay the trial until the next term of the court would work injury and injustice to appellee. The rule seems to be settled that even though the failure to answer before judgment is not intentional or the result of conscious indifference on the defendant’s part, but was due to a mistake or accident, and the motion to set aside the default judgment sets up a meritorious defense, it will not avail unless the motion is filed at a time when the granting of the motion will not occasion delay or otherwise work an injury to the plaintiff. Craddock v. Sunshine Bus Lines, 134 Tex. 388, 133 S.W.2d 124, 126. This is a just rule and has been the law in Texas since announced in Dowell v. Winters, 20 Tex. 793, 794, until reannounced in the Craddock' case, supra. We see no escape from the conclusion, in view of the record, that to have granted the motion would have resulted in delay that would have worked an injustice to appellee. The proposition is without merit and is overruled.

The second and third propositions complain that the default judgment was erroneous for in that it granted to appel-lee compensation at the rate of $20 per week in the absence of pleading to support the judgment. Appellee pleaded a wage rate of $5 per day, and his petition contained alternative pleas based upon the alleged rate of $5 per day under subsections 1, 2 and 3 of Section 1 of Article 8309, Revised Statutes, 1925. Appellee’s petition also contained the following specific allegation : “But it is further shown in this connection that plaintiff’s average weekly wage and the weekly compensation rate to which he was entitled under the Workmen’s Compensation Laws of the State of Texas, and the said policy hereinafter set out, has been adjusted, agreed upon and fixed and settled between the parties to this suit, the plaintiff and the defendant; that his average weekly compensation rate has been agreed upon, settled and fixed at seventeen & 13/100 ($17.13) dollars per week; that the defendant has .made payments to the plaintiff of compensation under said’ law and under said policy at said compensation rate of seventeen & 13/100 ($17.13) dollars per week, and therefore it is estopped from claiming this plaintiff was not an employee of the Sheehan Pipe Line Construction Company when injured, and not in tile scope of his employment, .and not covered by said policy, nor that he was not and is not entitled to compensation insurance at the rate of seventeen & 13/100 ($17.13) dollars per week.” ■

Appellee, on the hearing July 26, 1940, when the default judgment was rendered, testified that appellant had paid him compensation from the date of the injury, September 29, 1939, to May 8, 1940, in the sum of $543.23, which was at the rate of $17.13 per week. This was in accordance with appellee’s special plea of an agreed rate of weekly compensation. It was error to grant appellee compensation at the rate of $20 per week. Accordingly, we reform the judgment to accord with the pleading, that is, that he receive compensation at the rate of $17.13 per week. As reformed the judgment is affirmed. The costs of this appeal are taxed against appellee.


author: NORVELL, Justice.

text:
    MONARCH MUT. LIFE INS. CO. et al. v. ALDRETE.
    No. 10910.
    Court of Civil Appeals of Texas. San Antonio.
    March 5, 1941.
    Rehearing Denied April 16, 1941.

      Gammage, Gammage & Bauer, of Houston, for appellants.
    Weatherly & Weatherly, of Falfurrias, for appellee.
   NORVELL, Justice.

This is an appeal by Monarch Mutual Life Insurance Company and Imperial Life Insurance Company from judgment rendered in favor of Baltazar Aldrete for the principal sum of $1,000 plus interest, twelve per cent damages, and $500 attorney’s fees, making a total recovery of $1,702.71.

Trial was to the court without a jury. Upon proper request, the trial judge filed findings of fact and conclusions of law, which have been examined, approved and adopted by us.

We have come to the conclusion that the judgment of the trial court should be affirmed, and in stating our reasons for this conclusion, we make the following statement as pertinent to and explanatory of our holding, which, while not embracing all the trial court’s findings, is taken for the most part therefrom and is as follows:

(1)On April 28, 1935, National Protective Union, a Colorado corporation having no permit to do business in Texas, acting through an agent at Falfurrias, Brooks County, Texas, issued to Abel Aldrete, also a resident of Falfurrias, a certain life insurance policy or certificate, agreeing to pay appellee, Baltazar Aldrete, the nephew of the insured, a sum not exceeding $1,000 upon the death of the insured, Abel Al-drete. It was stipulated that said rate should remain unchanged as long as the certificate or policy was continued in force. The incontestability clause of the policy read as follows:

“Unrestricted and Non-Contestable After the Second Year Except For: suicide, fraud, misstatement or misrepresentation of facts. ■ Nothing else can cause the payment of any benefits due under this Certificate to be withheld from the Member or his or her beneficiary after the full second year of this Certificate, except for non-payment of premium due, and all claims will be paid in the order claims are approved, and recorded on the Union’s books.”

(2) On July 6, 1936, appellant Imperial Life Insurance Company assumed the payment of the above policy in accordance with the terms of the following letter:

“R. C. Howerton, M. J. Carroll,
President Secretary
Imperial Life Insurance Company
3017-1/2 Knox Street
Dallas, Texas
July 6, 1936 •
Dear Friend:
This is to inform you that your certificate No. G241c4c issued by the National Protective Union, Denver, Colorado, has been assumed as of this date subject to the terms and provisions of your certificate together with the laws of the State of Texas under which this Company has been licensed.
All future payments and correspondence will be transacted direct with the Imperial Life Insurance Company, of Dallas, Texas.
The Imperial Life Insurance Company is licensed by the Department of Insurance of Austin," Texas, and operates under the supervision of its Board of Insurance Commissioners.
We feel certain that you will be pleased to receive this information, and we wish to assure you that it will be our pleasure to offer you every service possible.
Yours very truly,
MJC ANT M. J. Carroll, Secretary
P. S. Please attach this letter of assumption to your certificate.”

(3) On or about September 28, 1936, the Imperial Life Insurance Company without the insured’s having made application therefor, mailed to said insured a certain insurance policy which was, however, never accepted by said insured, in lieu of, or in cancellation of, the policy theretofore issued by the National Protective Union.

(4) About September 1, 1938, appellant Monarch Life Insurance Company, without notice to Abel Aldrete, the insured, took over all funds of the Imperial Life Insurance Company except $550. By an agreement dated September 10, 1938, Monarch Mutual Life Insurance Company assumed all liabilities arising from policies issued by the Imperial Life Insurance Company.

(5) The insured, Abel Aldrete, died on September 27, 1938, apparently of heart disease, according to evidence introduced by appellant.

(6) At the time of his death, the deceased had paid all premiums and charges upon his policy of insurance as they became due and payable, and said premiums were accepted by the companies.

(7) Appellee furnished proofs of death and otherwise complied with all requirements of the policy within.the time and in accordance with the terms thereof and duly and timely demanded the payment of $1,-000 with interest under said policy.

(8) At the date of the insured’s death the Imperial Life Insurance Company and the Monarch Mutual Life Insurance Company each had on hand in their respective reserve funds enough money to pay said $1,000 with interest; and the Monarch Mutual Life Insurance Company at and before the time of the trial of this case had on hand in its reserve funds enough money, including money received from the said Imperial Life Insurance Company, to pay the amount of the judgment rendered herein.

(9) Appellant failed to pay appellee’s claim within thirty days after demand therefor, and appellee has necessarily employed attorneys to collect same, $500 being a reasonable fee for such services rendered or to be rendered in the trial and appellate courts.

The trial court’s conclusions of law were as follows:

“1. I conclude that as the National Protective Union was a foreign corporation and never had a permit to do insurance business in Texas that it was in respect to this said policy subject to the general insurance laws of the State of Texas.
“2. That the general insurance laws of the State of Texas form a part of the insurance contract and of the obligation of the insurance contract issued by the National Protective Union to the insured in the form of its said policy as evidenced by Exhibit No. 1 as aforesaid the same as if said laws were fully and expressly written into said contract.
“3. Under the general insurance laws of Texas existing at the time the National Protective Union policy was issued to the insured and under the facts introduced herein the National Protective Union became bound to pay plaintiff the said reasonable attorney’s fees and the statutory amount of 12 per cent damages and the amount of said loss, provided it had sufficient money on hand at the date of insured’s death; that the defendants in this case have in legal effect assumed the contract of the National Protective Union, without substantial limitation, and they are bound for the payment of such loss.
“4. I conclude that the plaintiff is entitled to the judgment rendered in this cause.”

Appellants’ contention that this case must be reversed because appellee failed to negative the exceptions contained in the National Protective Union policy is based upon an erroneous construction of the policy. The exceptions apparently relied upon relate only to the provisions of the policy concerning additional accidental death benefits, or provisions relating to disability benefits. An attempt to construe these “exceptions” as applicable to the principle insuring covenant, i. e., the agreement to pay upon death of the assured, leads to hopeless contradiction and absurdity. The case of International Travelers Association v. Marshall, 131 Tex. 258, 114 S.W.2d 851, is not in point here. In the case at bar the “incontestability clause” was operative. The premiums had been paid. The only ground of defense reserved by the insurance company was suicide and fraud. Appellants asserted neither, and the evidence indicates that the death of deceased was not caused by suicide and that the policy was not procured by fraud.

Appellants further contend that their liability should be governed by the following by-law provision which was also contained in the Imperial life insurance policy of September 28, 1936, to-wit:

“Should death occur during the first four months from date of issue or any reinstatement the company shall be liable only, except for purely accidental death, for the return of premiums actually collected plus ten per cent interest and shall be liable for a like amount should death result from pregnancy, any form of heart or kidney trouble, stomach trouble, tuberculosis, paralysis, pellagra, arterio-sclerosis, anemia, senility, cancer, insanity, any form of chronic or venereal disease within twenty-four months from date of issue or any reinstatement ; * *

Appellants say that the .deceased died of “heart trouble” (whatever that general term may mean) one year, eleven months and twenty-nine days from the date of the Imperial policy, and therefore appellee’s recovery should be restricted to the sum of $61.25.

The trial court held, as above pointed out, that this Imperial policy was neither applied for nor accepted by the insured. We have no hesitancy in saying that after the Imperial Company had assumed payment of the National Protective Union policy, it could not change the terms of the contract evidenced by the original policy and the letter of assumption, without the consent of the insured, by the simple expedient of mailing another contract to the insured. A contrary holding would violate fundamental principles of the law relating to contracts. The fact that the insured paid a higher premium to the Imperial Company upon its demand therefor than he had paid to the National Protective Union is not conclusive evidence of acceptance of the Imperial policy. It at most raised a fact issue which the trial court found against appellants.

It also seems to be appellants’ contention that under the Imperial letter of assumption the policy of insurance involved became subject to various by-laws, resolutions, classifications, etc., made by the Imperial Company. It is sufficient answer to this contention to point out that the letter of assumption does not provide that the policy shall be subject to such resolutions, by-laws, etc. The reference to the laws of the State of Texas under which the company is licensed will not support the construction urged by appellants. When an attempt is made to apply this reference as a provision governing the contract rights of the parties, it will be found that it is so vague, indefinite and ambiguous as to be practically meaningless, and the trial court would have been justified in disregarding it altogether. Francis v. International Travelers’ Ass’n, Tex.Civ.App., 260 S.W. 938, affirmed 119 Tex. 1, 23 S.W.2d 282; National Surety Co. v. Chalkley, Tex.Civ. App., 260 S.W. 216.

We next consider appellants’ contention as to the liability of Monarch Mutual Life Insurance Company. It seems that it was contemplated by the Imperial and the Monarch companies (both of which were dominated and controlled by M. J. Carrol), that the Monarch Company would issue a new set of policies to the holders of the Imperial policies. Had this procedure been carried out, the insured’s coverage would have been reduced from $1,000 to $172. Appellants rely upon General American Life Insurance Company v. Martin, Tex.Civ.App., 137 S.W.2d 139, which is obviously not in point. In the Martin case, the General American Life Insurance Company acquired certain assets of the Missouri State Life Insurance Company which was •in receivership. Full notice of the terms of a proposed assumption agreement by the General American of Missouri State Life policies was given to Missouri State Life policyholders, including Martin. In this case, no notice was given the insured Abel Aldrete. The Monarch simply took over the funds of the Imperial Company applicable to the payment of the policy here involved, without the knowledge and consent of the insured. The contract rights of the insured cannot be destroyed or diminished by such inter-company transactions. The trial court correctly held that the Monarch Company became liable upon appellee’s claim (including penalties and attorney’s fees) by reason of this transaction. Certainly it cannot be said that one company can, without notice, take over the funds of another and thus avoid payment of claims legally chargeable against the funds so acquired.

We next discuss the matter of attorney’s fees and penalties. Appellants contend that as the insurance companies here involved were chartered under Article 4859f, Vernon’s Ann.Civ.Stats., they cannot be held, liable for such charges under Article 4736, Vernon’s Ann.Civ.Stats. (copied in the margin), as section 19 of Article 4859f provides that “no insurance law of this State shall apply to any corporation operating under this Act, and no law hereafter enacted shall apply to them unless they be expressly designated therein.”

The policy which is the basis of appellants’ liability was not written by a company chartered under Article 4859f, or any prior act of the Texas Legislature relating to mutual assessment life insurance corporations. It was written by a foreign corporation having no permit to do business in Texas. The contract was therefore subject to the attorney’s fee and penalty provisions of Article 4736. This article in a sense became part of the contract. Independent Order of Puritans v. Brown, Tex.Civ.App., 229 S.W. 939. The Imperial Life Insurance Company assumed the obligations of the National Protective Union “without substantial change” and its liabilities are measured by the provisions of the National Protective Union policy. If liability for penalties and attorney’s fee would have attached against the National Protective Union, the same liability attaches against the Imperial Life Insurance Company. Amarillo Mutual Benevolent Ass’n v. Franklin, Tex.Com.App., 50 S.W.2d 264. We do not believe that a policy of insurance issued subj ect to the provisions of Article 4736 can subsequently be removed from the operation of the article, except by the agreement of both contracting parties, by insolvency or bankruptcy proceedings, or some action on the part of the Legislature. The unilateral action of one of the contracting parties would be insufficient to accomplish this purpose. An insurance company operating under the general insurance laws of the State, including Article 4736, could not avoid liability for penalties and attorney’s fees, upon its policies previously issued, by incorporating under Article 4859f, and it would therefore seem that the Imperial Insurance Company, although incorporated as a mutual assessment life insurance company, cannot avoid liability upon its assumption of a policy which was subject to the provisions of Article 4736. There is no contention made here that the assumption agreement was ultra vires and in view of the acceptance of premiums by the Imperial Company such defense could not be successfully urged. Amarillo Mutual Benevolent Ass’n v. Franklin, supra.

As the trial court found that appellants were possessed of sufficient funds to discharge the judgment rendered, and the burden of proof to show any inadequacy of available funds or resources for such purpose is upon the insurer (Sweetwater Progressive Mut. Life & Accident Ass’n v. Allison, Tex.Civ.App., 22 S.W.2d 1107, and authorities therein cited), we hold that the judgment for penalties and attorney’s fees was proper.

• Being of the opinion that no reversible ■error has been shown, the judgment of the trial court will be affirmed and judgment here entered in favor of appellee and against Lawyers Lloyds of Texas (the surety upon appellants’ supersedeas bond filed herein) for the principal sum of $1,702.71, together with interest thereon from April IS, 1940, until paid.

Judgment affirmed.

       “Art. 4736. * * * Losses shall he paid promptly

      “In all cases where a loss occurs and the life insurance company, or accident insurance company, or life and accident, health and accident, or life, health and accident insurance company ‘liable therefor shall fail to pay the same within thirty days after demand therefor, such company shall be liable to pay the holder of such policy, in addition to the amount of the loss, twelve per cent damages on the amount of such loss together with reasonable attorney fees for the prosecution and collection of such loss. Such attorney fee shall be taxed as a part of the costs in the case. The Comt in fixing such fees shall take into consideration all benefits to the insured, incident to the prosecution of the suit, accrued and to accrue on account of such policy. Acts 1909, p. 192, sec. 35; Acts 1931, 42nd Leg., p. 135, ch. 91, § 1.”


text:
    BURTON et al. v. KIRBYVILLE STATE BANK OF KIRBYVILLE.
    No. 3781.
    Court of Civil Appeals of Texas. Beaumont.
    April 3, 1941.
    Rehearing Denied April 9, 1941.

      Synnott & Smith, of Jasper, and John B. Warren and Fowler & Conn, all of Houston, for appellants.
    Collins, Williams & Garrison, of Lufkin, and Richardson & Lanier, of Jasper, for appellee.
   O’QUINN, Justice.

On the 13th day of February, 1935, there were two state banks in the city of Kirby-ville, the Kirbyville State Bank, with a capital stock of $40,000, and the Peoples State Bank, with a capital stock of $20,000. Under the orders of the State Banking Department, these two banks merged and formed a new bank, the Kirbyville State Bank of Kirbyville, with a capital stock of $30,000. In liquidation of the assets of the two old banks, they entered into the following contract with the new bank:

“State of Texas
“County of Jasper
“Know All Men by These Presents:
“That this agreement and contract made and entered into in five original counterparts this 13th day of February, A. D. 1935, by and between Kirbyville State Bank, Kirbyville, Texas, a banking corporation organized and existing under the laws of the State of Texas, domiciled at Kirbyville, Texas, hereinafter called ‘party of the first part’, and The Kirbyville State Bank of Kirbyville, Texas, a banking corporation organized and existing under the laws of the State of Texas, domiciled at Kirbyville, Texas, hereinafter referred to as ‘party of .the second part’, each of said corporations acting by and through their duly authorized officers and in pursuance of resolutions heretofore duly adopted by the respective Board of Directors of each banking corporation, witnesseth:
“1. In consideration of the assumption by party of the second part of all the liabilities of party of the first part as of the date of transfer, except its liabilities to its stockholders, as such, party of the first part agrees to sell and party of the second part agrees to purchase all of the assets of party of the first, except such assets as were classified as doubtful and loss in the examination report of State Bank Examiner W. N. Greer, as of January 15, 1935, but including the amount classed as doubtful in the Bonds & Stocks Account. Such assets as are purchased by party of the second part are to be embodied in a schedule and designated and identified as ‘Class A Assets’ as of date of delivery thereof, such schedule to constitute a part of this contract, and such ledger assets as are not purchased by party of the second part are to be embodied in a schedule to be designated and identified as ‘Class B Assets’.
“2. All ‘Class B Assets’ and all non-ledger and charged off assets shall be transferred to party of the second part under the following conditions: That party of the second part will maintain such records as will keep these assets segregated from the assets of the party of the second part; that the party of the second part shall have the right to substitute at any time for a .period of two years any ‘Class A Assets’ for a like face amount of ‘Class B Assets’ or non-ledger assets; that party of the second part shall have the right to proceed with the liquidation of ‘Class B Assets’ with the right to compromise or sell any of such assets as is now permitted by law, and proceeds from such sale shall be treated and considered as ‘Class B Assets’; that party of the second part shall have the right during the two year period of substitution to permit renewals in whole or in part of both ‘Class A’ and ‘Class B Assets’, said renewal paper, however, not to have a maturity period beyond the expiration of the substitution period herein-before stated, such right of renewals to include renewal of renewals, and in making renewals, party of the second part shall have the right to divide or separate the liability of any obligor or obligors on either secured or unsecured notes or on other like or similar instruments, attaching the security thereto to one or more of said instruments, and leaving one or more of said instruments without security,- — in case of such division or separation of liability, the holder of the unsecured instrument shall have a second lien upon said security and both the secured and unsecured instruments shall be stamped, or otherwise marked, with appropriate legend indicating the respective rights of the holders of each of said instruments; that, at the end of the two year period of substitution, party of the second part shall return to party of the first part, or its authorized representative, all ‘Class B Assets.’
“3. Party of the first part agrees to execute such satisfactory instruments of transfer as may, in the opinion of party of the second part be necessary or advisable to transfer ownership in any and all assets acquired hereunder by party of the second part.
“4. Party of the second part is not to purchase from party of the first part, and party of the first part is not to sell the following notes: N. B. Thompson, $3,750.00; J. A. Conn, $3,750.00; R. C. Conn, Jr., $3,-750.0Ó; and R. J. Conn, $3,750.00; and they are not to be treated as ‘Class B’ or non-ledger assets, it being expressly agreed .that party of the second part will cause to he issued $15,000.00 of its stock prorata to the stockholders of the party of the first part, and that upon receipt of such stock party of the first part will cancel and deliver to the makers the aforementioned notes.
“5. Party of the second part expressly agrees to assume the payment of income debentures due the Reconstruction Finance Corporation by party of the first part in accordance with the tenor and effect of such debentures, provided such assumption is approved by the Reconstruction Finance Corporation.
“6. This contract is executed in five originals and shall be binding upon and inure to the benefit of the parties hereto and to each of their successors and assigns, and to any person succeeding to the legal rights of each of the parties hereto. In witness whereof, parties hereto have set their hand and affixed their seals this 13 day of February, A. D. 1935.”

The new bank immediately took charge of the assets of the two old banks, classified as stated in the contract. On the 23 day of October, 1937, J. A. Conn, as president and E. J. Conn, N. B. Thompson, William Crockett, R. J. Conn, Jr., and Mrs. Lena Nance, deceased, as the Board of Directors of the Kirbyville State Bank, a dissolved bank, instituted this suit in district court of Jasper County against appellee, the Kirbyville State Bank of Kirbyville, Texas, the new bank, on behalf of all stockholders of the old bank, Kirbyville State Bank, praying for an accounting on the Class B Assets, as set up in the contract of merger. The nature of the petition and of appellee’s answer will be more fully stated in the discussion of the propositions of error. The Peoples State Bank, one of the old banks, is not a party to this litigation. Disclaimers were filed by many of the stockholders of the Kirbyville State Bank, some of them being named in plaintiffs' petition and some not named. The plaintiffs who prosecuted -the suit to judgment were limited practically to members of the Conn family. The case was submitted to the jury on the following special issues, both answered in the affirmative:

“Special Issue No. 1. Do you find from a preponderance of the evidence that the defendant (The Kirbyville State Bank of Kirbyville) on February 9, 1937, sold, transferred and delivered to the Trout Creek Lumber Company notes involved in this controversy to Citizens State Bank of Corrigan, Texas?”
“Special Issue No. 2. Do you find from a preponderance of the evidence that the defendant (its officers or agents) acted in good faith and with no intent to defraud the plaintiffs in making the above sale?”

All other issues made by the plaintiffs’ pleadings were ruled against them, as a matter of law. On the verdict of the jury and the “undisputed evidence,” judgment was entered that the plaintiffs take nothing, from which they have prosecuted their appeal to this court.

We take the following statement from appellee’s brief: “Appellants do not here complain of any failure on the part of the Trial Court to submit to the jury any issue of fact whatever. Their contentions being, aside from certain contentions as to the admission and exclusion of evidence and rulings upon pleadings, that they were as a matter of law entitled to judgment for various sums of money and for interest in certain tracts of land. Such contentions being based upon the assertion that the evidence showed without dispute or beyond controversy such facts as entitled them to judgment as matter of law.”

As we understand the facts, all transactions had by the’ new bank with the Class B Assets were had between the time of its organization and the time the Conn family, who were in control of the new bank, sold their stock in the new bank to C. E. Pool, except the transactions between the new bank and the Corrigan Bank, which the jury found to be a bona fide sale.

We overrule appellants’ assignments against the verdict of the jury, finding that the sale of the Trout Creek Lumber Company notes was in good faith. Much testimony was offered on this transaction. Under the testimony of Mr. Pool and Mr. Wickline, the transaction was in' good faith, and on the evidence as a whole the jury was justified in taking their statement of the facts. This conclusion overrules appellants’ propositions 9 to 15.

By o(her propositions, appellants assert that as a matter of law they were entitled to judgment for certain specific items of damages brought forward in their propositions. There is no complaint that the court erred in refusing to send to the jury any issue in relation to these items. As a general statement under these propositions, we quote from appellee’s brief, as follows: “We also feel justified by the evidence in saying that the management of the new bank up to the time J. A. Conn and his relatives and a few others sold their stock in the new bank to Pool, the management of the new bank, the Board of Directors as hereinabove described, were in trouble with the banking department about the condition of the new bank. Thus in September, 1935, the banking' department classed the Five Thousand Nine Hundred' ($5,900.00) Dollar debt held by the new bank against the Trout Creek Lumber Company as a loss. On October 4th, 1935, the banking Commissioner made an order reciting that a report of the examination of the bank September 7th, 1935, ‘reflects a capital impairment and I have been informed that at this time said impairment has not been relieved.’ And ordering ‘said bank to make good the deficiency set out in your report of examination at close of business September 7th, 1935,’ concerning which order witness Conn was asked. On September 26th, 1935, the Department had written the Directors of the defendant bank saying the examination of September 7th, 1935, reflects ‘a capital impairment in the amount of Three Thousand Fourteen & 42/100 ($3,014.42) Dollars’. And further that it was the judgment of the Department the bank could not obtain deposit insurance until that impairment was met and requesting a reply over a majority of your signatures within ten days. And April 3rd, 1936, the Department addressed a letter to L. C. Edwards, Cashier of the defendant bank enclosing part of report and requiring the bank to charge against Profit and Loss Account One Thousand Seven Hundred Eighty & 80/100 ($1,780.-80) Dollars. First item is Nebb and Weir notes.”

In answer to appellants’ propositions that, as a matter of law, they were entitled to judgment for the specific items brought forward in their propositions, we quote from appellee’s brief, as follows:

“That the President of and the members of the Board of Directors of the old bank became almost in solido the President and Directors of the new bank — the exception being that E. J. Conn and Mrs. Lena Nance, directors of the old bank did not become directors of the new bank. All that is shown by Appellants’ Statement in their Brief, pages 1 and 6. There was one additional director, Miss Beulah Wright for the new bank. These officers brought with them the cashier of the old bank, B. C. Ivey to be cashier of the defendant bank, and L. C. Conn assistant cashier. That the proof relied upon by plaintiffs and contended by them to show as matter of law the wrongful acts of the defendant consisted of the testimony of J. A. Conn, who was an interested party not only because he was a plaintiff but because he was a stockholder in the old bank and would profit out of any recoveries in this suit, and statements as to what the records of the defendant bank showed, which records were practically all made while the persons who constituted the Board of Directors of the old bank and who bring this suit as such were in charge of the new bank as its directors and which records were not shown to have been correctly kept, but on the contrary were shown not to have been correctly kept.
“Further of the seven members of the Board of Directors of the old bank only four, J. A. Conn, E. J. Conn, R. C. Conn Jr. and N. B. Thompson, are prosecuting this suit; two of the directors of such old bank, R. J. Conn and Wm. Crockett filed disclaimers and did not prosecute the suit in the Trial Court and are not prosecuting this Appeal. That of the persons who owned stock in the old bank those who prosecuted the suit and are prosecuting this Appeal owned only 173 shares, while those who refuse to prosecute the suit and disclaim owned 184 shares and the owners of the other 43 shares are not accounted for. That of such four directors who are prosecuting this suit J. A. Conn and after him N. B. Thompson were President of the new bank during all the time but about two and one-half months of the two year period mentioned in the contract, and that during that same time another of the three prosecuting this suit as directors of the old bank, R. C. Conn Jr., was also a director of the new bank. Practically all the record entries by which plaintiffs sought to fix liability on this defendant were made during the regime of those three directors, J. A. Conn, N. B. Thompson and R. C. Conn Jr. Neither of the cashiers, Ivey or Edwards nor the assistant cashier, L. C. Conn, nor any of the bookkeepers who had charge of the records of the defendant during the time mentioned was called as a witness; and when the defendant attempted to make enquiries as to the correctness of the record the plaintiffs strenuously objected on the ground that the defendant was bound by the records no matter who made them nor whether true or correct; and on the ground that neither the old bank, nor the parties who brought this suit as director of the old bank nor individual stockholders of the old bank would be bound by any acts of such directors as directors of the new bank. Where record entries were advantageous to plaintiffs they insisted, they were indisputable proof, not even subject to explanation or correction though erroneous, and when favorable entries were not found Conn proceeded to testify from memory and hearsay.”

By propositions 2 to 8, appellants assert that they were entitled to judgment, as a matter of law, for their claimed interest in the J. W. Richardson note, certain real estate conveyed to the bank in satisfaction of the Conn-Few note, their claimed interest in the rents from certain, real estate, and in the funds derived from the settlement of the U. B. Ogden notes. The following statement from appellee’s brief answers this contention: “Every transaction upon which plaintiffs, the Appellants here, seek to charge the defendant bank presented in said propositions, (except some matters presented in the 8th proposition) occurred while the plaintiffs who sue here as directors of .the old Kirbyville Bank were in charge of this defendant bank; and the bookkeeping was done and book entries were made while the said plaintiffs had complete charge and management of this defendant bank. And that other than so far as any such transactions are proven by books and book entries, the plaintiffs’ right to recover depended wholly, solely and alone upon the testimony of J. A. Conn one of the plaintiffs, who was not only a party to the suit but also personally interested in any recovery the plaintiffs might get in this suit. Plaintiffs do nothin their Brief here complain of any failure of the Trial Court to submit any issue whatever; but contend that upon every matter which they claim in those propositions they were entitled to judgment from the Court as a matter of law. The records kept while the plaintiffs were so in charge of th'is defendant bank were not proven to have been correctly kept and in fact the plaintiffs objected to fevery inquiry as to the correctness or such records. That a party is not entitled to recover as a matter of law upon any question shown by his own testimony alone is well settled.”

The only contentions briefed under propositions 16 to 26 are that the court erred in overruling their exceptions to ap-pellee’s answer, wherein it pleaded that some of the appellants—-naming members of the Conn family—were appellee’s officers and directors at the time appellee dealt with the Class B Assets, and further, that “it is wholly immaterial, irrelevant and prejudicial to the plaintiffs on any issue in this case as to who were the officers and directors of the defendant bank during the period under investigation and at the present time, and the same constitutes no defense in the suit by the plaintiffs to require the defendant bank to account to them for their interest in the class ‘B’ assets of the old Kirbyville State Bank and the collections made thereon by the defendant, and the whole of said paragraph 14 shouid be stricken therefrom.” The court did not err in overruling these exceptions. It was pertinent to allege that appellants, as officers and directors of the new bank, made the very transactions of which as plaintiffs they now complain. . It was also pertinent to allege that as officers of the new bank they made these transactions, and having transferred the assets in issue to the new bank sold their stock therein, thereby receiving directly the profits of their dealings with the Class B Assets. Answering these assignments, appellee makes the following statement, which is certainly good law: “In answer to those propositions Appellee merely reminds this Court that by the pleadings and the evidence and the disclaimers filed it clearly appears that the plaintiffs who were actively prosecuting this suit were prosecuting it for their own benefit alone. And we assert that under such circumstances such plaintiffs could be and should be held to be estopped by their acts and conduct, and the representations alleged in the 14th paragraph of Defendant’s Answer to have been made by such plaintiffs to the purchasers of such stock.”

In their petition, appellants named certain stockholders as claiming interests in the Class B Assets; this petition was read to the jury. The court did not err in permitting appeljee to read to the jury the disclaimers filed by certain stockholders who were named as plaintiffs, and by other stockholders for whose benefit the suit was brought. These disclaimers were filed, and appellants could have eliminated this issue by not reading to the jury as plaintiffs the names of those who had filed disclaimers.

The court did not err in striking appellants’ supplemental petition, filed not as a supplemental petition but as an amendment, in part, to their trial petition.

The 30th proposition discusses error against the following statement by one of appellee’s counsel: “Well, they are charging us with some rascality in connection with the Allen Few transaction, and let me get the pleading from them, which charge is about on a par with their other charges in this case.” Immediately, the court instructed the jury not to consider the statement; that instruction rendered the statement harmless error, even if it could be classed as error, which it could not.

By propositions 31 to 33, appellants assign error against testimony on the issue of the value of certain lands taken by the new bank in payment of Class B Assets. The point made is that this testimony was “immaterial and irrelevant.” The exception is without merit, but in no event could the testimony have prejudiced appellants on their assignment that, as a matter of law, they were entitled to judgment for their interest in the property put in issue by this testimony. For the same reason, the court did not err in receiving the evidence complained of by propositions 34, 35 and 36.

It follows that the judgment of the lower court should be affirmed, and it is accordingly so ordered.

Affirmed.