author: HALL, Justice.

text:
    HUNT PRODUCTION CO. et al. v. DICKERSON et al.
    No. 5393.
    Court of Civil Appeals of Texas. Texarkana.
    Dec. 27, 1939.
    Rehearing Denied Jan. 4, 1940.

      McEntire & Shank, of Dallas, and L. L. James, of Tyler, for appellants.
    H. H. Wellborn and Frank C. Bolton, both of Henderson, and Rogers & Scott, of Waco, for appellees.
   HALL, Justice.

In July, 1935, appellee C. N. Dickerson, individually and as community administrator of the estate of his wife, Cora L. Dickerson, deceased, filed this suit in the District Court of Rusk County, in form of trespass to try title against Hunt Production Company, H. L. Hunt, individually and as trustee for undisclosed principals, and numerous other persons not necessary to mention, for title and possession of “about 148” acres of land, a part of the Dan Clark Survey. Appellee also asserted title to said land under the 3, 5, 10 and 25 years’ statutes of limitation. Appellants, Hunt Production Company, H. L. Hunt, individually and as trustee, answered by general demurrer, general denial, and plea of not guilty. And in response to this pleading of appellants, appellee Dickerson filed what he termed his first “supplemental petition” in which he alleged in part: “That if the defendants, or either of them, and particularly defendant Hunt Production Company, ever had any oil or gas lease on the land and premises described in plaintiff’s original petition filed herein, which is not admitted, the same has become forfeited, abandoned, void and of no further force or effect, and judgment cancelling the same should be entered by this court for the following good and sufficient reasons:” (a) Because Hunt Production Company has failed and refused for many years to develop said property for oil and gas “as required by their implied obligations so to do;” (b) that H. L. Hunt, Trustee, individually and as President of Hunt Production Company, advised appellee Dickerson that appellants named above had abandoned said land for oil and gas purposes and disclaimed any interest therein; (c) that Roy Lee, Secretary and Treasurer of said Hunt Production Company, advised appellee, Dickerson, that his company had abandoned said land and refused to develop same for oil and gas, and also by his acts and conduct “openly and notoriously” abandoned said land by refusing on behalf of his company to render same for taxes; (d) that Hunt Production Company acting by and through its agent H. B. Harder abandoned said land “that all of said acts and conduct took place during the years 1934 and 1935, and said defendants (appellants) continued their acts of abandonment up to and including July, 1935, on which said date, after complete and final abandonment, the defendant (appellant) Hunt Production Company undertook to assert a new claim to said land, the nature of which is to this plaintiff (Dickerson) unknown, but which this plaintiff says is not a valid claim but is unlawful.” Then follows á plea of estoppel based upon all the alleged acts of abandonment together with the statements of Hunt, Lee and Harder, allegedly made to appellee Dickerson and one Perry Allen, wherein it is alleged: “That the defendants, and each of them, and particularly the defendant Hunt Production Company, are estopped as a matter of law, from claiming any rights in or to said land and premises, or any part, thereof, or any interest in or to the oil or gas of said land, or any part thereof, or any right of possession to any part of said land, or any right of ingress or egress over said land, or any part thereof.”

It was alleged further that appellee Dickerson relying upon the acts of abandonment of the Hunt Production Company, together with the statements made by its agents, Hunt, Lee and Harder, did on May 15, 1935, lease the premises here in controversy to appellee Perry Allen for the development of same for oil and gas. And for the same reasons the appellee Allen accepted the said oil and gas lease and obligated himself to carry out the terms and provisions thereof “and (Allen) believing all of said acts, instruments, statements and conduct to be genuine, entered into a drilling contract with drillers to sink oil wells on said land, and has thereby bound and obligated himself to penalties, damages and claims which will exceed $5,000, all of which will be a total loss to him in event defendants, or either of them, is permitted to assert' any claim to said land or any part thereof. * * *” In this pleading damages were alleged at $30,000 instead of $5,000 as in appellees’ amended petition. Perry Allen intervened and adopted the pleadings of appellee Dickerson, claiming the ⅞ leasehold interest in said land under a lease from him.

In answer to this supplemental petition appellants filed their supplemental answer consisting in part of a general demurrer, arid the special exception to the effect that “the matters and allegations therein contained do not properly belong in a supplemental petition, but should be properly and lawfully alleged in an amended 'petition.” To the merits it was alleged that appellants were the legal owners of an oil and gas lease covering the land in controversy as well as other lands, assigned to them by C. M. Joiner, Trustee, as one indivisible lease contract, and that on land described in said lease contract six; producing oil wells had been drilled and completed to production, before, the filing of this suit, at a total expenditure of $100,000. It was alleged further that on October 2, 1936, the lease covering the land in controversy, together with the land on which the six wells were located, was assigned to P. G. Lake, Inc., and that this company has, since said assignment, expended $25,000 in developing same by completing two additional producing oil wells thereon, and but for the pendency of this suit would continue .to develop said land for oil in accordance with business prudence; that the land in controversy “is a part of the land covered by the oil and gas lease executed by Dickerson and wife to C. M. Joiner, Trustee, on the 30th day of March, 1927,” which lease was ratified by an instrument in writing signed by Dickerson and wife, in favor of Hunt Production Company on February 25, 1933. That said lease has been developed in a “prudent and reasonable manner” — there being six oil wells (eight at time of trial) on the land covered by the lease. That before and since the filing of this suit appellees have received and collected the royalties due them from said oil wells, and are therefore es-topped to declare a forfeiture of said oil and gas lease. This supplemental answer is also directed at the' claim of intervenor Allen.

P. G. Lake, Inc., filed an intervention in which it adopts the pleadings of Hunt Production Company and claims ownership of the original Joiner oil and gas lease covering this property by assignment from Hunt Production Company. It also seeks cancellation of the lease from Dickerson to Perry Allen of date May 15, 1935, as a cloud on its title. By cross action P. G. Lake, Inc., in an action of trespass to try title asserts its title to % leasehold interest in the land in controversy under the 10 years’ statute of limitation. To the answer of Lake, Inc., appellees filed a general demurrer and general denial.

The trial court appointed Hon. Frank Bolton, an attorney, to defend the numerous defendants cited by publication. Trial was to a jury upon special issues which were answered favorably to appellees and upon which judgment was rendered for them for title and possession of the land in controversy, subject to the previous sale of royalty interest by appellees from their ⅛ royalty retained, and for intervenor Perry Allen for the ⅞ leasehold in the land in controversy. The assignment of the oil and gas lease from C. M. Joiner to H. L. Hunt, Trustee, the assignment from Hunt, Trustee, to Hunt Production Company, the assignment from Hunt Production Company to Hunt Oil Company and P. G. Lake, Inc., the assignment from Hunt Oil Company to P. G. Lake, Inc., and the deed of trust from P. G. Lake, Inc., to H. L. Hunt, Trustee, insofar as they cover the land in controversy, were cancelled and annulled as a cloud on plaintiffs and intervenor Perry Allen’s title. The trial court also found that Hunt Production Company and its assignees were estopped by the disclaimer of its agents from claiming any interest in the land in controversy.

In its inception this case was one of trespass to try title, appellee Dickerson asserting ownership to the fee, and interven- or Perry Allen claiming title to the ⅞ leasehold to the land in controversy. As tried in the court below, and as it appears here on appeal, the suit is one seeking cancellation of the original Joiner oil and gas lease insofar as it covers the 148-acre tract of land, a part of the Dan Clark Survey. Appellant excepted to this change being effected by supplemental petition, which exception was overruled. Error is assigned to this action of the court below which we think presents a'serious question. We shall, however, pretermit a discussion of this assignment owing to the disposition to be made of this appeal, and shall consider the case as one of cancellation. Only the ⅞ leasehold interest in the land is here involved, and in reality the controversy is between appellee Perry Allen and appellant P. G. Lake, Inc., each claiming the ⅞ leasehold interest in the 148 acres of land.

Appellants’ 8th proposition is: “Appellant P. G. Lake, Inc., having proved title to the land in controversy by connecting itself with the common source by complete chain of title and by connecting intervenor Perry Allen’s • claim of title with the same source, and the uncontradicted proof showing that appellants’ title from said common source was superior to that of said appel-lee, said appellant was entitled to have the jury instructed to find in its favor.”

In response to special issues submitted the jury found: (1) That Iiunt Production Company and its assigns after February 25, 1933, and prior to July 26, 1935, the date this suit was filed, abandoned the oil and gas lease in controversy; (2) that Mr. Harder was on or about May 14, 1935, the duly authorized and acting agent in charge of the affairs in the office of H. L. Hunt Production Company; (3) that Hunt Production Company on or about May 14, 1935, acting through its agent Harder told intervenor Perry Allen that it, Hunt Production Company, had no interest in. the lease in question; (4) that said Perry Allen believed and acted upon said representations; (5) that intervenor Perry Allen relied upon said representations in contracting with W. R. Dearing to drill a well on the lease in controversy; (6) that during the month of December, 1934, H. L. Hunt, President of Plunt Production Company, told C. N. Dickerson and wife that the Hunt Production Company was making no claim to the lease in question; (7) that C. N. Dickerson believed and acted upon the statement of Hunt; and (8) that C. N. Dickerson at the time of the execution of the lease contract to Perry Allen relied upon the statement made to him by Hunt.

It is undisputed in this record that on March 30, 1927, C. N. Dickerson and wife executed an oil and gas lease to C. M. Joiner, Trustee, covering the land in controversy, a part of the Dan Clark Survey, hereafter referred to as the Clark tract, said tract containing about 148 acres. Said lease contained two other tracts, one of 47.88 acres, also a part of the Dan Clark Survey, and the third tract containing 55 acres, a part of the Thomas J. Martin Survey, and hereafter referred to as the Martin tract. These tracts were described separately in the oil and gas lease and were numbered 1, 2 and 3, respectively, and were shown to contain in the aggregate 250 acres, more or less. On November 26, 1930, this lease in its entirety was assigned by Joiner to H. L. Hunt, Trustee, and by said Hunt on June 1, 1932, assigned to Hunt Production Company. The record also shows that on February 25, 1933, Dickerson and wife ratified and confirmed unto the Hunt Production Company the original oil and gas lease executed by them to C. M. Joiner, Trustee, of date March 30, 1927, except as to tract No. 2, the smaller tract on the Dan Clark Survey, which was released by Hunt Production Company to Dickerson and wife. This ratification wás the result of a settlement and compromise of a suit brought by Dickerson and wife against Hunt Production Company to cancel the original lease to Joiner then held by it. On October 2, 1936, some months after this suit was filed, Hunt Production Company assigned the oil and gas lease covering the land in controversy, known as Tract No. 1, or the Clark tract, and Tract No. 3, the Martin tract, to appellant P. G. Lake, Inc.

At the time of the ratification by Dickerson and wife, noted above, Hunt Production Company had begun operations for oil and gas on the Martin tract covered by said lease and had brought in at least one producing oil well. At the time this suit was filed Hunt Production Company had drilled six oil wells on the Martin tract, and when this suit was tried Lake, Inc., had drilled two more wells on said tract. All eight oil wells were producing the allowable of oil, and those entitled thereto were receiving their royalty. No well for oil has been drilled on the tract of land in controversy, the Clark tract. It is contended by Lake, Inc., that the land described in the original Joiner lease should be considered as a unit, and that the drilling of producing oil wells, six in number before this suit was filed, upon the Martin tract under the provisions of the original Joiner lease, as a matter of law, vested title to the ⅞ leasehold in both tracts described in said lease, and in the ratification thereof, in Hunt Production Company, assignor of Lake, Inc., as a determinable fee. The original oil and gas lease from Dickerson and wife to C. M. Joiner, Trustee, of date March 30, 1927, provided: “It is agreed that this lease shall remain in force for a term of 5 years from this date and as long thereafter as oil or gas or either of them is produced from said land by lessee. * * * If no well be commenced on said land on or before the 30th day of March, 1928, the lease shall terminate as to both parties unless the lessee on or before that date shall pay or tender the lessor * * * the sum of $31.25 which shall operate as a rental and cover the privilege of deferring the commencement of a well for six months from said date * * * Should the first well drilled on the above described land be a dry hole, etc. * * * ”

From the above pertinent language it is clear to us that the parties to the original lease treated the three tracts of land described therein as a unit and there is nothing in the entire contract evidencing a contrary intent. “If the parties intend that separate portions of the entire land covered by the lease should be developed as units the lease should expressly so state.” Summers, Oil and Gas, Permanent Edition, Vol. 3, page 205, latter part of § 515; Johnson v. Montgomery, Tex.Civ.App., 31 S.W.2d 160, writ refused. See also Douthitt v. Wheeler, 110 Old. 131, 236 P. 408 which we think is exactly in point. We conclude, then, that the drilling of six producing oil wells by Hunt Production Company on a portion of the land described in the original Joiner lease and the actual operation of said wells, both at the time this suit was filed and at the time of the trial thereof, was such a compliance with the terms of said lease as to vest title as a determinable fee, to not only the Martin tract on which said oil wells are located, but also to the Clark tract, the land in controversy, in Hunt Production Company and its assignee P. G. Lake, Inc.

But it is contended by appellee that the statement made to Dickerson and wife by H. L. Hunt, President of Hunt Production Company, to the effect that his company did not claim the lease on the land in controversy, the Clark tract, and the statement by Harder, agent of Hunt Production Company, to appellee Perry Allen to the same effect, both statements being made before the oil and gas lease to Allen was executed by Dickerson, coupled with the fact that no oil wells had been drilled on the land in controversy together with the failure of Hunt Production Company to render the lease on said Clark tract for taxes for 'the two years next preceding the execution of the lease to Allen, constitute sufficient grounds of abandonment to warrant a cancellation of said oil and gas lease insofar as it covers the Clark tract of land, or at least raised an issue of fact with respect to such abandonment to be submitted to the jury for determination. We do not agree with this contention. If the development for oil and gas by Hunt Production Company on the Martin tract, a part of the land described in the original lease to Joiner, was sufficient under the terms of said original lease to vest title to the oil and gas in place in both the Martin and the Clark tracts, and we have held as a matter of law that it does, then the above statements and acts of the agents of Hunt Production Company as reflected by this record could not in law divest it of such title. Hanrick v. Dodd, 62 Tex. 75; Jobe v. Osborn, 128 Tex. 509, 97 S.W.2d 939; Hardin v. Wanslee, Tex. Civ.App., 197 S.W. 1031, writ refused; Foster v. Persinger, Tex.Civ.App., 30 S.W.2d 378, writ refused. True, the above cited cases have reference to vested fee simple title to land, but, in our opinion, the same rule would apply to a vested determinable fee to oil and gas in place under the original oil and gas lease. Except under extraordinary circumstances, not present here, the right to forfeit or cancel said original oil and gas lease would not exist after production had been commenced by Hunt Production Company, within the primary period, on a portion of the land covered by said lease, for failure to continue development on the other portions of the leased premises. In Waggoner Estate v. Sigler Oil Co., 118 Tex. 509, 19 S.W.2d 27, 28, it is said: “Such a writing as that here called a lease operated to invest the party called lessee and his assigns with title to oil and gas in place.” Citing cases. And, there can be no fraudulent evasion with respect to the use which keeps the estate alive. But it is not a partial use, nor a negligent use, nor an imperfect use, but a cessation of use which terminates the lessee’s estate. In Johnson v. Montgomery, supra, it is said [31 S.W.2d 165]: “If the estate conveyed to the defendants by the lease was a determinable fee and they having drilled the two wells producing gas in commercial quantities, within the primary 'period, the right to forfeit the lease for the breach of an implied obligation to continue the development after the producing of the two gas wells did not exist.” Citing Grubb v. McAfee, 109 Tex. 527, 212 S.W. 464.

While it is true that a fee of this character “does not survive abandonment, but the fact of abandonment is a necessary corollary to the cessation of the lessee’s rights. The lessees have an implied obligation to use reasonable diligence in operating the lease to accomplish the ends sought by the parties, and this implied obligation is a covenant, the usual remedy for a breach of which is an action for damages, though, under extraordinary circumstances * * * a court of equity would entertain an action to cancel the lease in whole or in part.” Leonard v. Prater, Tex.Com.App., 36 S.W.2d 216, 221, 86 A.L.R. 499; Waggoner Estate v. Sigler Oil Co., supra.

It is also contended that the fact situation found by the jury to exist, and about which there is no dispute in the record, estops Hunt Production Company and its assignee, Lake, Inc., from denying the fact of abandonment of the lease on the Clark tract. It is the contention of appel-lee Perry Allen that on account of the statements made to him by Harder and the statements made to Dickerson and wife by Hunt, known to him, he was induced to and did purchase an oil and gas lease on the Clark tract and entered into a drilling contract with Dearing & Sons in which he obligated himself to pay to said drilling contractors the sum of $5,000 as damages in the event his title to the ⅝ leasehold interest in said land failed. When Hunt and Harder made the statements to Dickerson and wife and Perry Allen, respectively, the title to the leasehold in both the Martin and the Clark tracts of land described in the original Joiner lease and the ratification thereof had vested in Hunt Production Company by virtue of its having begun and completed the primary term of said lease certain producing oil wells on a part of the land covered by the lease, to-wit, the Martin tract. It is shown without dispute that the original lease, together with its ratification were of record in the deed records of Rusk County, Texas, at the time Hunt and Harder made the statements attributed to them. The fact of the existence of the original Joiner lease, its assignment to Hunt, its ratification by Dickerson and wife, and the production of oil from land covered thereby were actually known by Dickerson, Perry Allen’s lessor. At the time Hunt made the statement to Dickerson and wife and also at the time Harder made the statement of disclaimer to Perry Allen and upon which he claims to have acted, Allen was charged with notice of the record title of Hunt Production Company to the ⅝ leasehold interest in both the Clark and the Martin tracts of land described in the recorded instruments above referred to, and he was also charged with knowledge of the laws of this State which forbade the transfer or relinquishment of title to real estate or any interest therein by verbal declaration or disclaimer. The record title held by Hunt Production Company to the ⅞ leasehold in these two tracts of land, coupled with its-actual possession and occupancy of a part of the premises described in the oil and gas lease to Joiner for the purpose of, producing oil therefrom under the terms of said lease, were matters to which appellee Perry Allen could not shut his eyes. His opportunity for knowledge respecting ownership and occupancy of the leasehold interest in these two tracts of land was equal to that of Dickerson, his lessor. Allen testified that he thought Hunt Production Company owned an oil and gas. lease on this land. Had he gone on the land in controversy, which the record shows lies adjacent to the Martin tract upon which there were eight producing oil wells, he would have seen actual production on a portion of the land covered by the original oil and gas lease given to Joiner and held at that time by Hunt Production Company. Allen cannot claim to have been deceived by the-statements, acts and conduct-of Hunt Production Company. He had constructive knowledge 'of the “true state of the title’-’' to the leasehold and if he had used the diligence required of an ordinary person,, he would not- have acted to his injury. In, Burleson v. Burleson, 28 Tex. 383, exact page 415, it is said: “The ground upon which the estoppel proceeds is fraud, actual or constructive, on the part of the1 person sought to be estopped. What will amount to the suggestion of a falsehood, or the suppression of the truth, may be difficult to determine in all cases; but some turpitude, some inexcusable wrong, that constituted the direct motive, or induced the outlay or purchase, is necessary to give silence or acquiescence the force of an es-toppel in pais. Hence, the ignorance of the true state of the title on the part of the purchaser must concur with willful misrepresentation or concealment on the part of the person estopped.”

In the case of Page v. Arnim, 29 Tex. 53, 54, our Supreme Court quoted with approval from the case of Boggs v. Merced Min. Co., 14 Cal. 279, 367, the following: “ ‘It is undoubtedly true, that a party will, in many instances, be concluded by his declarations or conduct, which have influenced the conduct of another to 'his injury. The party is 'said, in such cases, to be es-topped from denying the truth of his admissions. But to the application of this principle, with respect to the title of real property, it must appear, first, that the party making the admission, by his declaration or conduct, was apprised of the true state of his own title; second, that he made the admission with the express intention to deceive, or with such careless and culpable negligence as to amount to constructive fraud; -third, that the other party was not only destitute of all knowledge of the true state of the title, but of the means of acquiring such knowledge; and, further, that he relied directly on such admission, and will be injured by allowing its truth to be disproved.’ ”

In the case of Hume v. Carpenter, Tex. Civ.App., 188 S.W. 707, 710, writ of error refused, under a fact situation somewhat similar to that in the case at bar with respect to the doctrine of estoppel in pais as applied to a corporation, based upon the declarations of disclaimer of title to certain real estate by one of its officers, this statement is made: “Nor do we think that any such authority can be implied from its course of dealing. It may be doubtful under the facts in evidence if anything less than a resolution of the board of directors would have authorized the disposition of this property on the part of Atkinson. Certainly, a street corner conversation ought not to be held to have such effect.” Pomeroy’s Eq.Jur. (4th Ed.) Vol. 2, Sec. 806. In the case of State of Oklahoma v. State of Texas, 268 U.S. 252, 45 S.Ct. 497, 69 L.Ed. 937, by the Supreme Court of the United States, it is said:

“A secondary question is whether, if the Powell survey included this strip, the present owners of that survey are estopped from claiming the strip, and therefore the royalty interest, as against the Durfee Mineral Company. * * *
“The master concluded, and we agree with him, that as a whole the? evidence shows that the Durfee Company and its predecessors purchased with full knowledge of the record title * * *. In this situation the asserted estoppel must fail. Only where conduct or statements are calculated to mislead a party and are acted upon by him in good faith to his prejudice can he invoke them as a basis of such an es-toppel. And if they relate to the title of real property ‘where the condition of the title is known to both parties, or both have the same means of ascertaining the truth, there can be no estoppel.’” (Italics in all quotations ours.)

We conclude, then, that the doctrine of equitable estoppel in pais does not apply in this case. The conclusions reached by us as expressed above render a discussion of the other assignments brought forward unnecessary.

The judgment-of-the trial court is reversed and judgment is here rendered for appellant P. G. Lake, Inc., for title and possession of the % leasehold interest in controversy.


source: Caselaw Access Project

author: JACKSON, Chief Justice.

license: Public Domain

text:
    HUGHES v. STOVALL et al.
    No. 5089.
    Court of Civil Appeals of Texas. Amarillo.
    Dec. 11, 1939.
    Rehearing Denied Jan. 8, 1940.

      M. F. Billingsley, of Munday, and J. E. Brown, of Brady, for appellant.
    Kenneth Bain and R. F. Stovall, both of Floydada, for appellees.
   JACKSON, Chief Justice.

The record shows that on February 1, 1928 J. D. Farmer and wife, Ida M. Farmer, for and in consideration of $5,000 cash to them in hand paid and the execution and delivery of a series of eight promissory vendor’s lien notes of even date with the deed, each for the sum of $625, payable the first, on January 1, 1929 and one on January 1st each succeeding year to and including January 1, 1936 conveyed to R. M. Stovall the West one-half of Survey 55, of Block No. 1 in Floyd County, Texas.

This series of eight notes was for a valuable consideration sold and assigned to the Southwestern Life Insurance Company and it was subrogated to all the rights, liens and equities of the owner and assignor of said notes.

The indebtedness evidenced by these notes with some accumulated interest and taxes was by agreement of the parties extended on December 13, 1928. In order to consummate the extension agreement R. M. Stovall and his wife, Mamie Stoval', executed a principal note for the sum of $5,500, due and payable January 1, 1939, bearing interest from date until maturity at the rate of 6% per annum, payable annually on the 1st day of January each year until the maturity of the principal note, which note and the interest installments or coupons due thereon were to bear interest after maturity until paid at the rate of 10% per annum, and the failure to pay the note or any installment of principal or interest when due at the. election of the holder matured the principal note and the unpaid coupon interest notes. In addition to the provision for the payment of annual interest in the principal note, attached thereto were ten interest coupon notes each for the sum of $330, payable on the 1st day of January of each year which was the amount of interest due at the rate of 6% per annum provided in the note. The principal note and each of the coupon interest notes were signed by R. M. Stovall and his wife and contemporaneously therewith the principal note and the interest notes attached thereto were secured by a valid deed of trust executed and delivered to T. W. Vardell creating a lien on the land herein above described for the protection and benefit of the Southwestern Life Insurance Company.

R. M. Stovall and wife, Mamie, defaulted in the payment of interest due January 1, 1931, as stipulated in the principal note and also evidenced by one of the attached coupon interest notes which at the instance and request of R. M. Stovall and wife was detached from the principal note and paid by the Floyd County National Bank and such coupon interest note, as well as the lien securing the payment thereof was, on July 9, 1931, properly transferred and assigned to said bank and made subordinate to the lien held by the Southwestern Life Insurance Company. The Floyd County National Bank closed its doors for business July 15, 1931 and was thereafter adjudged insolvent and its assets were duly and legally sold and transferred to S. W. Hughes who on September 23, 1937 instituted this suit in the District Court of Floyd County to foreclose two judgment liens and to recover on the interest coupon note acquired from the insolvent bank and foreclose the lien securing the payment thereof on the premises above described. He instituted suit against several defendants each of whom filed a disclaimer to all right, title and interest in the land involved except R. M. Stovall and wife, Mamie, who urged demurrers, a general denial and alleged that the South 200 acres of the 320 acre tract involved is and has been their homestead at all times since February 1, 1928, was their homestead when the judgments sued upon were obtained and therefore not subject to the alleged judgment liens. They also pleaded that the interest coupon note sued upon and the lien securing the payment thereof were barred by the four year statute of limitation.

The case was tried before the court without the intervention of a jury and judgment rendered that the plaintiff, S. W. Hughes, take nothing against the defendants who filed a disclaimer and that they go hence with their cost; that the interest coupon note and the lien securing the payment thereof were barred by the four year statute of limitation and plaintiff take nothing by reason thereof; that the North 200 acres of the 320 acre tract is the homestead of R. M. and Mamie Stovall and not subject to the judgment liens of record nor the lien securing the payment of the coupon note, and all cloud on the title thereto by. virtue of such alleged liens was removed and title vested in R. M. and Mamie Stovall; that the plaintiff, S. W. Hughes, have and recover of and from R. M. Stovall and Mamie Stovall a decree foreclosing his judgment liens upon the North 120 acres of said tract of land.

There is no question over the pleading and the only complaint made in this court by S. W. Hughes, the ■ appellant, which he presents by several assignments of error, is that the court erroneously held that- the interest coupon note sued on due January 1, 1931 and the lien by which it is secured are barred by the four year statute of limitation.

There is no controversy about the facts. The principal note for $5,500 was executed December 13, 1928, provided for annual interest and was due and payable January 1, 1939. To this note was attached ten -coupon interest notes evidencing the annual interest, the first payable January 1, 1930> and one on January 1st up to and including January 1, 1939. The interest coupon note owned by appellant and involved in this suit reads as follows:

“Dallas, Texas, Dec. 13, 1928
“On first day of January, 1931, for value received the undersigned promise to pay to Southwestern'Life Insurance Company at its office in Dallas, Texas, the sum of Three Hundred Thirty • Dollars with interest after maturity at the rate of ten per centum per annum, being interest due that day on note numbered below of even date herewith for $5,500.00 payable to said Company. ,
“Note No. 1. R. M. Stovall
“Mamie E. Stovall.”

It must be conceded that unless regulated by a statute to the contrary if a contract stipulates for payments in installments at a fixed time limitation begins to run on each installment from the time of its due date. Pollack v. Pollack, Tex.Com.App., 39 S.W.2d 853; Rockwall County v. Roberts County et al., 103 Tex. 406, 128 S.W. 369; City of Galveston v. Loonie, 54 Tex. 517; 28 Tex.Jur. 174, para. 83.

It is also the law that unless otherwise contracted interest is due and payable at the maturity of the debt on which it accrues and limitation begins to run from such date. Connor v. City of Paris, 87 Tex. 32, 27 S.W. 88; Parsons v. Parsons, Tex.Com.App., 284 S.W. 933.

In 1931 the Legislature amended article 5520, R.C.S. (Vernon’s Ann.Civ.St. art. 5520), and the part thereof material to this suit is as'follows:

“Actions by vendors, etc. There shall be commenced and prosecuted within four (4) years after the cause of action shall have accrued and not afterward, except as herein provided, all actions of the following description:
“1. Actions to recover real estate by virtue of a superior title retained by the vendor in a deed of conveyance or purchase money note.
“2. Actions for the foreclosure of vendor’s liens on real estate.
“3. Actions to foreclose deed of trust or mortgage liens on real estate.
“Provided, however, that where a series of notes may be given or any note may be made payable in installments, or if any other instrument is executed which creates an obligation on the Vendee or Grantee of real estate to pay for the same in installments or partial payments, limitation shall not begin to run until the maturity date of said last note or installment. Upon the expiration of four (4) years from and after the date of maturity of the last said note or installment, payment shall be conclusively presumed to have been made1 of each said note and installment, and the lien for the security of. same shall cease to exist, unless the same is extended by an agreement in writing by the party or parties primarily liable-for the payment of the indebtedness, as provided by law.”

Does this statute prescribe the limitation which regulates the transaction evidenced by the notes and deed of trust? Since this statute became effective the courts hold that where a series of -notes is given limitation begins to run from the due date of the last note of the series. Hammann v. H. J. McMullen & Co., 122 Tex. 476, 62 S.W.2d 59; Shepherd v. Woodson Lumber Co., Tex.Civ.App., 63 S.W.2d 581; Kuykendall et al. v. Taylor et al., Tex.Civ.App., 89 S.W.2d 297. They also hold that installment payments on a note or contract are not barred until four years after the due date of the last installment. Mercantile Nat. Bank at Dallas v. Chanowsky et al., Tex.Civ.App., 89 S.W.2d 1068; Hutton v. Harwell, Tex.Civ.App., 95 S.W.2d 467.

The appellant, although he purchased from the owner but one of the notes, was subrogated by the contract to all the rights, liens- and equities of the owner though the lien transferred to him was made subordinate to the superior lien retained by the owner. Sullivan et ux. v. Doyle, 108 Tex. 368, 194 S.W. 136. We think that the note owned by appellant was one of a series of notes all secured by the same lien on .the same real estate, however, if it was not one of. a series of notes then the principal note and the interest notes, if considered one note or one instrument, was an installment note or an instrument payable in installments or partial payments and all were secured by the same lien on the same land.

This article of the statute applies to .rights pertaining. to real estate or contracts relative thereto. A series of notes as used in this article means, we think, notes issued following one another in uninterrupted succession. A note payable in installments is one given for a total amount of money to be paid within a certain time in sums less than the whole on fixed dates. Any other instrument which creates an obligation to pay for land in installments or partial payments would apparently include any obligation against real estate. We think that the principal note and the interest notes are a series of notes or an installment note or another instrument when construed with the deed of trust lien on the land all constitute-a transaction subject to the law of four year limitation prescribed in this article.

There are many transactions relative to the purchase and sale of land in which an installment contract or note is given with the provision that when an installment is paid the money shall be applied first to the accumulated interest and the balance to the principal of the obligation. Should an installment and interest remain unpaid for four years after its due date, would limitation, if urged, defeat the collection of the interest accrued but not defeat the collection of the principal due at the same time? We think not.

In Broussard v. Beaumont Rice Mills et al., Tex.Civ.App., 115 S.W.2d 1235, 1237, the appellees sued the appellant on the 8th day of June, 1936 on a vendor’s lien note for the sum of $2,297.60, payable in yearly installments of $500 each, with interest thereon at the rate of 8% per annum, payable annually as it accrued. These payments were to be applied first to discharge the accrued interest and the balance of the installment to principal'. The first installment was due September 28, 1927 and the other installments Annually thereafter. Nothing was ever paid on the note and it was never renewed or extended. On November 12, 1936 appellees were given judgment “for the full amount of the note, principal, interest and attorney’s fees, in the sum of $6,732.77.” The appellant urged the four year statute of limitation. In disposing of this plea the court said:

“Appellant complains, also, that the court erred in overruling his plea of the statute of four years’ limitation. The note was executed on the 28th day of September, 1925. The first installment matured on the 28th day of September, 1926. Appellees’ demand for that installment was barred by limitation on the 28th day of September, 1930. Article 5520, Rev.St.1925, before its amendment in 1931, effective August 21, 1931, see Acts 42d Legislature, chapter 136, page 230, Vernon’s Ann.Civ.St. art. 5520; Citizens’ National Bank of Hillsboro v. Graham, 117 Tex. 357, 4 S.W. 2d 541.
“The second installment would not have been barred by limitation until September 28, 1931, which was subsequent to the effective date of the amendment of article 5520, Vernon’s Ann.Civ.St. art. 5520. Under this amendment the installments of a vendor’s lien note are not barred until four years after the maturity of the last installment which was on the 28th day of September, 1934. Therefore, the installments, subsequent to the first one, were not barred by limitation when this suit was filed on the 8th day of June, 1936. Johnson v. Steele, Tex.Civ.App., 87 S.W.2d 785; Shepherd v. Woodson Lumber Co., Tex.Civ.App., 63 S.W.2d 581; Hutton v. Harwell, Tex.Civ.App., 95 S.W.2d 467; Spencer & Co. v. Coal & Oil Co., Tex.Civ.App., 91 S.W.2d 411; Crow v. Willard, Tex.Civ.App., 110 S.W.2d 161, 164.
“It follows that the judgment of the lower court should be reformed by eliminating from the amount of appellees’, recovery the first installment of $500 with annual interest thereon from the 28th day of September, 1926, and as reformed, affirmed.”

It will be observed that the court in effect held that neither principal evidenced by the installment nor the accrued interest due with the installment was barred by limitation.

The appellees alleged that the south 200 acres of the 320 acre tract involved constituted their homestead. The record shows that the parties agreed that the south 200 acres of the tract involved •was the homestead of R. M. Stovall and wife and if the interest coupon was not barred by limitation five-eights of the amount of the judgment rendered thereon should be adjudged against said south 200 acres. The judgment rendered in the trial court decreed “the north two hundred (200) acres of land out of the west half of the section involved was the homestead of defendants.”

The judgment decreeing that appellees should have and recover the North 200 acres of the 320 acre tract as their homestead is fundamental error since such judgment is not warranted by the pleading nor the proof. This part of the judgment is reversed and, since the pleading and the evidence disclosed without controversy that appellees should have and recover as their homestead the south 200 acres of land out of the west half of Survey No. 55, Block 1, in Floyd County, • Texas, the judgment is here rendered decreeing to appellees the said 200 acres as above described as their homstead, subject to any valid lien against it.

The judgment of the court denying appellant a recovery on his coupon interest note and a foreclosure of the lien executed to secure the payment thereof because barred by limitation is. reversed and here rendered decreeing that appellant ■have and recover the principal sum of $330, with interest thereon, and a foreclosure of the deed of trust lien on the land securing the payment thereof.

The judgment is reversed and here rendered.


author: DUNKLIN, Chief Justice.

text:
    TUCKER et al. v. COLEMAN et al.
    No. 13916.
    Court of Civil Appeals of Texas. Port Worth.
    Dec. 15, 1939.
    Rehearing Denied Jan. 19, 1940.

      Smithdeal, Shook & Lefkowitz, of Dallas, for appellants.
    Read, Lowrance & Bates, of Dallas, for appellees.
   DUNKLIN, Chief Justice.

In the year 1922, H. H. Tucker, Jr., by an instrument in writing, created a common law trust, to be known and designated as “Texas American Syndicate, H. H. Tucker, Jr., sole Trustee”, for the purpose of acquiring oil leases and mineral interests in lands in Texas, title to all of which was to be conveyed to “Texas American Syndicate, H. H. Tucker, Jr., sole Trustee”, with full general power in said grantee to buy, manage, control, mortgage and dispose of same on such terms and for such prices as it might deem proper. The instrument provided for the issuance and sale of shares in the enterprise, giving shareholders the right to participate in the profits, but with the further provisions that “the right of the said trustee to manage, control and administer said trust estate shall be absolute and unconditional, free from the control and management of the shareholders.”

On March 12th, 1931 the Syndicate, by deed of conveyance, purchased from Gladys C. Coleman, joined by her husband, J. S. Coleman, an undivided one-half interest in all the oil, gas and other minerals in the east 1,000 acres out of a tract of land known as the Hood County School Land, situated in Coleman and Taylor Counties, Texas. The consideration for said conveyance was the sum of $7,510, of which $10 was cash and the balance in 15 promissory notes of the grantee, in the sum of $500 each, payable to the order of Gladys C. Coleman and J. S. Coleman, falling due, respectively, the first, on March 15th, 1931, 'and one at the expiration of every four months thereafter, all secured by a vendor’s lien .retained in the deed.

On the same date, to-wit, March 12th, 1931, said Syndicate acquired from said Gladys C. Coleman and J. S. Coleman an oil and gas mineral lease on an undivided one-half interest in a tract of 3,000 acres out of the Hood County School Land, situated in Coleman and Taylor Counties. The consideration for that lease was $7,500, payable in equal instalments of $500 each, • payable respectively on July 15th, 1931, and at the expiration of each four months thereafter. A vendor’s lien was .retained in the Instrument on the property, to secure payment of said notes; with a further agreement by the lessee to pay certain oil royalties on the oil to be produced from the tract covered by the lease.

On July 21st, 1931, the Syndicate executed and delivered to the Centennial Oil & Gas Company all its right, title and interest in 67 tracts of land, situated in different portions of the State, one of which included 2,000 acres of the lands theretofore acquired by the Syndicate from Gladys C. Coleman and J. S. Coleman, shown above. The consideration for that conveyance was 35,990,000 non par value shares of stock of the grantee corporation, and the assumption of $300,000 of indebtedness owing by the grantor, and secured by its deed of trust on some of the property conveyed, besides the two tracts it acquired from Gladys C. Coleman and J. S. Coleman, shown above.

The Centennial Oil & Gas Company was placed in the hands of a receiver in a suit filed against it in the district court of the 95th judicial district, Dallas, wherein Joseph Vogner et al. were plaintiffs and the Centennial Oil & Gas Company was defendant. Thereafter, J. S. Coleman and wife, Gladys C. Coleman, filed in that receivership proceeding their plea of intervention, claiming superior vendor’s liens retained by them on the two tracts they had conveyed to the Syndicate to secure payment of the purchase money notes alleged to be due and unpaid, and also seeking a recovery against the Centennial Oil & Gas Company for the unpaid notes, on allegations of its assumption thereof as a part of their contract of purchase from said Syndicate.

On May 14th, 1935, Gladys C. Coleman and J. S. Coleman entered into a written agreement with George B. Ray, receiver of the Centennial Oil & Gas Company, by the terms of which that company consented to relinquish to the Colemans all rights acquired by the Centennial Oil & Gas Company from the said Syndicate, under the latter’s deed of date July 21st, 1931, noted above, and the Colemans would waive any claim of personal liability of the Centennial Oil & Gas Company, growing out of its deed of conveyance by the Syndicate of said two properties.

That agreement of the parties was duly approved by the receivership court and a deed by the receiver to the Colemans in fulfillment of said contract was duly confirmed by the court.

On June 11th, 1934, in a suit instituted by Charles C. Looney et al. against H. H. Tucker, as sole trustee of the Texas American Syndicate, a common law trust, and the Texas American Syndicate, the district court of Parker County for the 43rd judicial district, appointed J. H. Doss receiver of said Syndicate, with authority to take over all its property and assets, subject to the orders of that court; with a further order requiring all persons claiming any interest in the properties or debts against same to file pleas of intervention in the case, setting up such claims.

On March 28th, 1935, J. S. Coleman and wife, Gladys C. Coleman, filed their plea of intervention in that receivership pro-' ceeding, in which they sought a recovery against the receiver and the Texas American Syndicate for the unpaid balance on the notes given by the Syndicate for the two properties purchased from the interveners, and for foreclosure of the vendor’s liens given to secure them. After the plea of intervention was filed, J. S. Coleman died. His children and only surviving heirs then deeded to their mother, Mrs. Gladys C. Coleman, all their interests in the notes and liens in controversy. The intervention was then prosecuted by the mother, as sole owner, and judgment was rendered in her favor for the relief prayed for, from which the receiver and the Syndicate have appealed.

.The case was tried before the court without a jury, and findings of fact and conclusions of law by the trial judge appear in the record here. The facts recited above were established by uncontroverted evidence and they were included in the court’s findings as the basis of the judgment rendered.

The statement of facts shows that defendants introduced in evidence a conveyance executed by Edward C. Coleman, J. S. Coleman, Jr., and Gladys Coleman to Mrs. Gladys C. Coleman, their mother, of all their interests in the notes and liens sued on, reciting that the grantors were the children and only children of Mrs. Gladys C. Coleman and John S. Coleman, deceased, and that there had been no administration or necessity of administration on the estate of John S. Coleman. With that showing in the record, there is no merit in appellants’ complaint of lack of evidence to prove that those persons were children and only children of Mrs. Gladys C. Coleman and John S. Coleman. Furthermore, there is no challenge of the further finding by the court that the notes and liens were the separate property of Mrs. Gladys C. Cole.man.

Appellants cite a provision in the declaration of trust noted above, to the effect that the trustee, H. H. Tucker, Jr., could not bind the Texas American Syndicate to the payment of any note or mortgage, trust deed, unless delivery of same be made by the trustee in person or by his agent, acting under written authority of the trustee.

Appellants then cite testimony of Wm. F. Tyree, tending to show that the notes were not delivered to John S. Coleman and Mrs. Gladys C. Coleman by the trustee in person or by any one with his written authority. But', according to the undisputed evidence, Mr. and Mrs. Coleman executed and delivered to the trustee of the Syndicate the mineral deed and lease, and received therefor the notes in suit, through some apparent agent in possession thereof. Thereafter, the Syndicate and trustee made payments on the notes and asserted title to the property so conveyed by the Colemans. And Mrs..Coleman had possession of the notes at the time of the trial.

Under such circumstances we fail to perceive any merit in the assignment now under discussion.

As shown in the transcript, in their original plea of intervention filed in the 95th judicial district of Dallas, in the receivership proceedings in the case of Joseph Vogner v. Centennial Oil & Gas Co., Mrs. Gladys C. Coleman and her husband, J. S. Coleman, claimed their vendor’s lien reserved in their deed and lease they had executed to the Syndicate, as against that company, and also sought a personal judgment against the Centennial Oil & Gas Company on the purchase money notes secured thereby, on allegations of assumption thereof by the Centennial Oil & Gas Company. In reply to that plea the receiver of the Centennial Oil & Gas Company denied such assumption. Thereafter, the interveners amended their first plea of intervention, in which they abandoned former allegation of such assumption. The inter-veners and said receiver then had a compromise settlement which was approved by the court, by which the receiver of the Centennial Oil & Gas Company relinquished to the interveners any claim of interest in the notes and in the properties which the Colemans had sold to the Syndicate. In-terveners agreed not to assert any claim of personal liability of the Centennial Oil & Gas Company on the notes. The former allegation of such assumption by the Centennial made in the original plea of intervention, was made through mistake. And in the order of court approving said compromise settlement, it was expressly decreed that the same was made without prejudice to the right of the interveners to enforce payment of the notes by the Syndicate, who executed them, just as was stipulated in the settlement agreement on which the order was made. We believe it clear that those facts conclusively show that there is no merit in the assignments presenting these contentions: (a) that the liens in suit here were released by said settlement; (b) that the mineral deed and lease executed by the Colemans to the Syndicate were thereby rescinded; (c) that said settlement operated as an estoppel of Mrs. Coleman to claim that the Texas American Syndicate, H. H. Tucker, Jr., Sole Trustee, is now liable to her on said notes and for a foreclosure of the liens given to secure their payment; (d) that said settlement operated as an extension of the notes in suit, without consent of the makers, by reason of which the maker was released from liability thereon. We shall not undertake a discussion,of authorities cited by appellants to support those contentions, because they involve facts which are distinguishable from the facts in this case, and therefore are not in point. Nor do we believe they are at variance in principle from any of our foregoing conclusions which, in our opinion, are in accord with well established principles announced in many authorities.

But in answer to the argument stressed by appellant that the evidence showed a merger of the debts and liens for which plaintiff seeks a recovery in this suit, with the claim presented by the Cole-mans in their intervention in the receivership of the Centennial Oil & Gas Company, we will add that there could be no such merger in the absence of an intention to accomplish that result, and the evidence noted above conclusively refutes such an intention. Tankersley v. Jackson, Tex.Civ.App., 187 S.W. 985; Elliott v. C. C. Slaughter Co., Tex.Civ.App., 236 S.W. 1114; 41 C.J., § 744, page 709.

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


author: WALKER, Chief Justice.

text:
    TRAVELERS INS. CO. v. REED CO.
    No. 3562.
    Court of Civil Appeals of Texas. Beaumont.
    Dec. 21, 1939.
    Rehearing Denied Jan. 10, 1940.

      Pipkin & Pipkin, of Beaumont, for appellant.
    Lamar Cecil, of Beaumont, for appellee.
   WALKER, Chief Justice.

J. J. Brown v. The Reed Company, No. S1603 on the docket of the district court of Jefferson county, was an action by Brown, plaintiff, to recover damages against The Reed Company, defendant, on the following allegations:

“That prior to January 11, 1936, plaintiff contracted to purchase and did purchase of the defendant herein an electric refrigerator, known as a Frigidaire, paying a portion of the purchase price therefor in cash and obligating himself to pay the balance of the purchase price in installments; that by reason of misfortune and business reverses which were beyond his control, plaintiff failed and was unable to pay defendant certain ,of the installments for said Frigidaire as they matured; that after insistent demand by defendant for the payment of such past due installments plaintiff called at defendant’s office and there related to the defendant the reasons for his inability to make prompt payment and said defendant agreed with plaintiff to grant to him and it did so grant to him additional time within which such installment payments could be made.
“Third: That after defendant agreed with plaintiff to grant him additional time within which to make such past due installment payments as aforesaid and prior to the expiration of the time agreed upon between them and on or about, to-wit, the 11th day of January, 1936, one J. K. Bunch, the duly authorized agent, servant, and employee of defendant, acting within the scope of his employment came to the home of plaintiff while plaintiff was absent from his home and asked plaintiff’s wife if he could see this-plaintiff; that plaintiff’s wife stated to said Bunch that plaintiff was not at home but that he had been gone only about 10 minutes and that he, Bunch, could overtake him if he desired to see him. Plaintiff further alleges that the said J. K. Bunch, declined to endeavor to overtake plaintiff and stated to plaintiff’s wife in a loud and vociferous manner that he had come to collect money on the note for the Frigidaire and money he was going to have; that said Bunch, continuing the use of loud and vociferous language, stated to plaintiff’s wife that he was not going to wait another day for payment on the note and when plaintiff’s wife stated to him that plaintiff had told her that he had made arrangements with defendant for an extension of time of payment on the note, he, the said Bunch, stated that plaintiff was lying and had made no such arrangement and that he, the said Bunch, was going to take the Frigidaire, put it on a block, sell it for $50.00 and sue the plaintiff for the rest and would take plaintiff’s house and furniture in payment of whatever balance was due after he had sold the Frigidaire ; that said Bünch thereafter in the same loud and vociferous manner threatened' plaintiff’s wife with law suits and the loss of her said home and furniture, and demanded payment on said note in a threatening manner and although repeatedly requested by plaintiff’s said wife to leave her home, he refused to do so for a considerable period of time during all of which he continued to threaten her as aforesaid by the use of loud and vociferous language and thereafter upon leaving he yelled to plaintiff’s said wife that her husband, the plaintiff herein, had better; come to his, Bunch’s office not later than the coming Monday or they would lose not only their Frigidaire but their home and furniture as well.
“Fourth: That the aforesaid transactions between plaintiff’s said wife and Bunch, the agent, -servant, and employee of defendant who was acting within the scope of his employment took place in plaintiff’s private residence within the hearing of his children and a stranger and by reason thereof his said wife was terror striken, humiliated and disgraced and put in' fear of bodily harm, thus causing her' to suffer great fear and anguish of body and mind and because thereof,she suffered a severe nervous shock and great pain of body and mind, and at the time of the occurrence aforesaid plaintiff’s said wife was knowfi by said Bunch to be pregnant and with child, or by the use of ordinary care such fact could and should have been known by him; that throughout the course of the transactions hereinabove related, plaintiff’s said wife was in an extremely nervous condition by reason of the status of her health and the conduct of said Bunch, and by reason of such conduct and of said threats and because of the violent and cruel treatment on the part of said Bunch and his use of loud and vociferous language as aforesaid she became • very frightened by reason of his acts and behavior and became very suddenly ill, suffering from nervous agitation and had a complete nervous breakdown to the extent that it was necessary for her children to put her to bed, where she remained until the 17th day of January, 1936, at which time she had a miscarriage, giving premature birth to her child. Plaintiff alleges that said Bunch knew, or by the use of ordinary care could and should have known that his acts and conduct would greatly frighten plaintiff’s said wife and cause a severe shock of her nervous system and that such acts and conduct on the part of the said Bunch wounded the feelings of plaintiff’s wife and caused her great physical pain and mental anguish and suffering. * * * And plaintiff further alleges that the defendant’s agent, servant and employee, Bunch, then and there acting in the course of his employment with the defendant and in the furtherance of the said defendant’s business was guilty of the following acts of negligence, each and all of which either jointly or separately were a proximate cause of the above and foregoing enumerated damages, harms, and injuries sustained by plaintiff’s wife:
“(a) In going upon the plaintiff’s prop--erty and entering his private residence and while there using loud and vociferous language.
“(b) In addressing plaintiff’s wife in a loud tone of voice.
“(c) In addressing plaintiff’s wife in a loud and vociferous language.
“(d) In failing to observe the pregnant condition of plaintiff’s wife at the time and place in question.
“(e) In failing to leave plaintiff’s premises when plaintiff’s wife’s agitated condition became apparent to him.
“(f) In continuing his use of loud and vociferous language after it became apparent to him that same was adversely affecting the state of mind of plaintiff’s wife.
“(g) In failing to address plaintiff’s wife and make his demands of her in a calm, gentlemanly tone of voice.
“(h) In threatening plaintiff’s wife with lawsuits.
“(i) In threatening to seize by process of law or otherwise plaintiff’s home and furniture.
“Plaintiff further says that while no specific intent on the part of defendant’s agent, servant and employee, Bunch, to harm or injure plaintiff’s wife is alleged, yet said agent, servant and employee knew that plaintiff’s wife was a married woman and knew or should have known in the exercise of ordinary care' that she might possibly have been pregnant and knew or should have known that any unseemly conduct on his part with reference to the use of loud and vociferous language or' threats might reasonably be calculated to cause harm to plaintiff’s wife, either mentally or physically or both; and defendant further alleges that the acts and conduct of the said Bunch as aforesaid, the duly authorized agent, servant, and employee of the defendant, while acting within the scope of his employment, were reckless and without provocation and constituted a tort and a breach of the peace and were in violation of the statutes and laws of this State and proximately caused the damages and injuries herein complained of. * * * that by reason of the injuries and the physical pain and anguish proximately caused by the reckless and negligent acts and conduct of defendant’s said agent, servant, and employee while acting within the scope of his employment, plaintiff’s said wife since her said injuries has been and will in the future be unable to assist plaintiff in'his work or to do her housework and care for and mother her said children and that such inability on her part will probably last during the remainder of her natural life.”

On the 11th day of January, 1936, and prior and subsequent thereto — the period of time in which Brown alleged that his wife suffered her injuries — The Reed Company, hereinafter referred to as appellee, had in force and effect a policy of insurance with The Travelers Insurance Company, hereinafter referred to as appellant. The insuring clauses of the policy were as follows:

“I. To indemnify the Assured against loss by reason of the liability imposed upon him by law for damages because of bodily injuries, including death at any time resulting therefrom, accidentally sustained by any person or pqrsons except those employed by the Assured or those to whom the Assured may be held liable under any Workmen’s Compensation law.
* * *
“II. Bankruptcy or. insolvency of the Assured shall not relieve the Company of any of its obligations hereunder. If any person or his legal representative shall obtain final judgment against the Assured because of any such' injuries, and execution thereon is returned unsatisfied by reason of bankruptcy, insolvency 6r any other cause, or if such judgment is not satisfied within thirty days after it is rendered, then such person or his legal representatives may proceed against the Company to recover the amount of such judgment, either at law or in equity, but not exceeding the limit of this Policy applicable thereto.”
“2. To defend for the Assured any suit seeking damages for such injuries, even if such suit is groundless, false, or fraudulent.”
“3. To pay all costs taxed against the Assured in any such defended suit and all expenses incurred by the Company, also all interest accruing after entry of judgment until the Company has paid, tendered or deposited in Court such part of such judgment as does not exceed the limit by the Assured for such immediate surgical relief as shall be imperative at the time of injury.”
“D. In'the event of accident written notice shall be given by or on behalf of the Assured to the Company or any of its authorized agents as soon as is reasonably possible thereafter.”
“E. No recovery against the Company shall be had hereunder until the amount of loss or expense shall have been finally determined either by judgment against the Assured, the claimant, and the Company, nor in either event unless suit is instituted within two years thereafter.”
“F.'Any specific statutory provision in force in the state in which it is claimed that the Assured is liable for any such accident as is covered hereby shall supersede any provision in this Policy inconsistent therewith.”

On the back of the policy was endorsed in large letters: “Public Liability Policy.” From January 11, 1936, until the service of citation upon Randolph C. Reed, President and Executive Officer of The Reed Company, on December 14, 1937, in the suit of J. J. Brown against The Reed Company, neither The Reed Company nor any of its officers had notice of the alleged occurrence made the basis of Brown’s suit against The Reed Company. On the 8th day of January, 1938, appellant filed its answer to the ■Brown suit. On February 28, 1938, appellant was duly notified of the suit of J. J. Brown against him, and was furnished all particulars concerning such alleged action. Thereafter, the matter was referred by the appellant to its investigator, Mr. James Bergin, Jr., who conducted a full and complete investigation of the case with the full cooperation of appellee and its attorney. After receiving notice of the Brown suit against appellee, and after completing its investigation of the facts, on the 24th day of March, 1938, appellant wrote appellee that the Brown suit, on the facts alleged, was not covered by its policy, and refused to make the defense for the reason — the sole reason- — that in the petition there was “no allegation of bodily injury accidentally sustained.” On receipt of that letter appel-lee, by its attorney, wrote appellant -that the Brown suit was set for trial on the 11th day of April, 1938, and furnished it a copy of the amended pleading which we have summarized above; in that letter appellee made the following demand upon appellant: “We now make demand on you to defend this case and insist that same is covered by the contract of insurance issued by you to our client, and in the event you do not see fit to protect your assured, The Reed Company, in this instance, this will advise that we will undertake the defense of this case under protest and will [with] full reservation of any rights we may have against you under this contract of insurance.” On the 5th day of April, 1938, appeliant wrote ap-pellee’s attorney: “You are correct in your assumption that we do not intend to defend this suit inasmuch as the case is not covered under our insurance contract;”

Appellant refused to defend the Brown suit and appellee was forced to employ attorneys to prepare and present its defense. 'The Brown suit carne on for trial on the 11th day of April, 1938, and on trial to the «court without a jury the following judgment was entered :

“On this the 11th day of April, A. D. 1938, came on to be heard the above styled and .numbered cause, and came the. parties, both in person and by their attorneys, and announced ready for trial, and a jury having been waived, the matters of fact as well as of law were submitted to the Court for its consideration, and it appearing to the ‘Court that the parties to this suit had arrived at a settlement and compromise of all •of the issues joined herein, under the terms of which said settlement and compromise the defendant, The Reed Company, is to pay to the plaintiff, J. J. Brown, the sum of Two Thousand ($2,000) Dollars, in •full settlement and satisfaction of all of the issues in this cause, and of all claims and ■demands of any nature whatsoever which the said plaintiff may have or have had •against said defendant, and the terms of ■said compromise and settlement having been fully explained to the Court, and after having 'heard the pleadings, evidence, and •argument of counsel, and being fully advised.in the premises, the Court is of the opinion that said agreed compromise and settlement is in all things just, fair - and equitable to all parties and in all things approves same.

It is therefore ordered, adjudged, and decreed by the Court that the plaintiff, J. J. Brown, do have and recover of and from the defendant, The Reed Company, the .■sum of Two Thousand ($2,000) Dollars.”

Appellee paid the $2,000 adjudged against •it and on the 17th day of September, 1938, filed the suit at bar against appellant, alleging generally the facts given above, and prayed for judgment for the $2,000. Ap-pellee also prayed for judgment for an attorney’s fee in the sum of $400, as a reasonable fee incurred by it in the defense of •the Brown suit, and for an attorney’s fee of '$300 for prosecuting the suit at bar; it also •prayed for judgment for the expenses incurred in making the necessary investigation of the facts of the Brown suit and in .preparing its defense.

On the 16th day of January, 1939, on trial «of the suit at bar to the court without ■a jury, judgment was rendered in appellee’s favor against appellant for all the relief prayed for. From that judgment appellant has duly prosecuted its appeal to this court.

Opinion.

There is no provision in the insurance contract supporting an action by appellee against appellant for the attorney’s fee incurred by it in the prosecution of the suit at bar — the $300. Appellee’s contract of insurance with appellant insured it “against loss,” and not against liability. Under this construction of the insurance contract, appellee had an action against appellant only for the loss actually sustained, and not for liability incurred. Universal Automobile Ins. Co. v. Culberson, 126 Tex. 282, 86 S.W.2d 727, Comm. of App. On authority of that case, since appellee has not paid the attorney’s fee of $400, incurred by it in the defense of .the Brown suit, and one item of $25 charged by it against appellant in the preparation of that suit for trial, the judgment of the court in favor of appellee against appellant for these two items is without support. ■ It follows that the judgment of the lower court in favor of appellee against appellant for the attorney’s fee of $300 must be reversed and judgment here rendered in appellant’s favor; on the other two items — the attorney’s fee of $400 and the expense of $25 — the judgment of the lower court must be reversed and the cause remanded for a new trial.

The next point to be reviewed: Were the injuries sustained by Mrs. Brown, on the allegations of Brown’s petition, “accidentally sustained”? It appears on the face of the policy — Sec. (I) of the policy quoted above — that its purpose was protec-tipn- against liability for the consequences of the negligence of the - insured or its agent. Miller v. United States Fidelity & Casualty Co., 291 Mass. 445, 197 N.E. 75. So, if the injuries sustained by Mrs. Brown resulted from the “negligence” of appellee’s agent Bunch, then her injuries were “accidentally sustained.” But protection against liability on the ground of negligence was the extent of the coverage; appellee was not protected from the consequences of its own willful and intentional wrongs nor against the willful and intentional wrongs of its agent, committed with the intent to inflict injury. County Gas Co. v. General Accident Fire & Life, etc., Corp., Tex.Civ.App., 56 S.W.2d 1088.

Clearly “bodily injuries” sustained from the negligence — ordinary negligence — of the insured or his agents, acting within the scope of their employment, would be “accidentally sustained." And with equal certainty it can be said that “bodily injuries” resulting from the willful acts of the insured or his agents, acting within the scope of their authority, committed with- the intent to inflict injury, are not within the coverage of the policy. One cannot insure himself against the consequences of his willful acts, committed with the intent to inflict injury. Richardson v. The Fair, Inc., Tex.Civ.App., 124 S.W.2d 885.

A more serious question arises on the question of gross negligence: Should it be said that bodily injuries resulting from gross negligence — acts committed negligently, but not with the intent to inflict injury — were “accidentally sustained”? Under the jurisprudence of this state, we think the question should be answered in the affirmative. We have the same action both for ordinary negligence — the failure to exercise ordinary care — and gross negligence; and to the extent of compensation, both actions are governed by the same rules of law. A count on gross negligence includes all lesser degrees of negligence. Hays v. Gainsville St. R. Co., 70 Tex. 602, 8 S.W. 491, 8 Am.St.Rep. 624. Gross negligence implies nothing more than some degree of negligence. Cleveland, C. C. & St. L. Railway Co. v. Tartt, 7 Cir., 64 F. 830, 833. “Gross negligence” is nothing more than negligence “with the addition of a vituperative epithet.” Mariner v. Smith, 52 Tenn. 203, 5 Heisk. 203, 208. Gross negligence is the absence of the care required under the circumstances. Galveston, H. & S. A. Railway Co. v. Cook, Tex.Sup., 16 S.W. 1038; it is but an omission of duty, not designed in willful mischief. Jacksonville, S. E. Railway Co. v. Southworth, 135 Ill. 250, 25 N.E. 1093. The only difference between the two actions is that in the action for gross negligence the injured party may recover punitive damages. Since on the issue of compensation the same rules of law govern both actions, and both actions are for “negligence”, we think a policy of insurance, indemnifying the insured against loss resulting from negligence, should be construed to cover both ordinary and gross negligence. Whether or not such a policy should cover loss incurred by the insured on the issue of punitive damages is not at issue in this case.

Did the facts alleged by Brown in his petition against appellee constitute negligence, either ordinary .or gross, or did such facts constitute an intentional and willful act committed by Bunch against Mrs. Brown, with the intent to injure her?

In his petition Brown charged that the acts committed by Bunch cons'-; - tuted negligence; an action within the coverage of the policy of insurance; an election of remedies which he had the right to make as between himself and appellee. But appellant was not bound by Brown’s election. Its duty to defend the suit was measured by the alleged facts; Michels v. Boruta, Tex.Civ.App., 122 S.W.2d 216, it was not bound to assume the burden of the defense unless on the alleged facts Mrs. Brown’s injuries were “accidentally sustained”; it was not bound to assume the defense, if, on the alleged facts, Bunch acted willfully with the intent to injure Mrs. -Brown.

On the issue of appellant’s duty to defend the Brown suit, the alleged acts of Bunch must be construed from his standpoint and not from the standpoint of Mrs. Brown. If from his standpoint he acted negligently, and not with the willful intent to inflict injury, appellant was obligated to assume the burden of the defense. What was the nature of Bunch’s, acts?

Construing the alleged acts of Bunch, it must be said that he acted wantonly and in reckless disregard of the rights and safety of Mrs. Brown, and without regard to the consequences of his acts. On this statement the alleged acts of Bunch exceeded ordinary negligence.

On the issue of gross negligence or willful intent to inflict injury, the alleged facts should be given the following construction; Bunch went to the Brown home to make a collection from Mr. Brown; all he did and said was for the purpose of forcing the collection from Mrs. Brown — -his coarse language, his cruelty of act and word, his lies, his misrepresentation of the law; he did nothing with the willful intent to injure her. Defining gross negligence, we quote the following definition from Words and Phrases,. Third Series, Vol. 3, page 994: “ ‘Gross-negligence’ is that entire want of care-which would raise a presumption of conscious indifference to consequences, an entire want of care, or such a slight degree-of care as to raise the presumption of entire disregard for, and indifference to, the safety and welfare of others; the want of even slight care or diligence. Foster v. State, 102 Tex.Cr.R. 602, 279 S.W. 270.” Words and Phrases, Second Series, Vol. .2, page 793: “ ‘Gross negligence’ is defined as that entire want of care which would raise a presumption of conscious in- ' difference to consequences and as an entire want of care on the part of the employes, or such a slight degree of care as to raise the presumption of entire disregard and indifference to the safety and welfare of others. Gulf W. T. & P. R. Co. v. Letsch [Tex.Civ.App.] 55 S.W. 584, 587.” The absence of the intent to inflict injury distinguishes negligence from other torts. Blunk v. Snider, 342 Mo. 26, 111 S.W.2d 163. On these authorities, the wrongs committed by Bunch against Mrs. Brown constituted gross negligence. So, appellant breached its contract with ap-pellee when it refused to assume the burden of the defense of the Brown suit.

Whether or not Brown had a valid claim for damages against appellee on the facts alleged was not an issuable fact on the trial of the case at bar. Appellant was advised of the pendency of the suit and given an opportunity to defend it, and since on the alleged facts the policy afforded protection to appellee, it was appellant’s duty to assume the defense. Having declined to discharge that duty, it cannot now retry the issue. Miller v. United States Fidelity & Casualty Co., 291 Mass. 445, 197 N.E. 75.

But appellant insists that the Brown case was not tried to judgment, but- that judgment was entered on an agreed settlement, which was nothing more than a voluntary contract between Brown and Reed. The proper construction of the judgment entered in the Brown case denies that contention. While it affirmatively appears on the face of the judgment that the award of the $2,000 was the result of an agreement between Brown and appellee, yet it further appears that the issue of appel-lee’s liability to Brown and the reasonableness of the agreed settlement were litigated; the court heard the pleadings, the evidence, and the argument of counsel, and concluded that the agreed settlement was “in all things just, fair and equitable to ■all parties.” It was further decreed that the agreed settlement was “in all things” approved.

Appellant makes the further point that it did not have due notice of the suit filed by Brown against Reed. By denying liability on the ground that Brown’s petition against appellee contained “no allegation of bodily injury accidentally sustained,” appellant waived the provision stipulating for written notice. Couch Cyclopedia of Insurance Law, Vol. 7, Sec. 1593, announces the following proposition: “An insurer, by specifying a certain or particular defect or defects in proofs of loss, waives all other defects therein.” The opinion in Haynes v. American Mutual Benefit Ass’n, Tex.Civ.App., 283 S.W. 199, by the late Mr. Chief Justice Hightower, speaking for this court, directly supports the proposition of law announced by Couch Cyclopedia of Insurance Law.

From what we have said, it follows that the judgment of the lower court awarding appellee judgment for the $2,000 paid in settlement of Brown’s suit should be affirmed.

Accordingly it is ordered that the judgment of the lower court be in part reversed and rendered, in part reversed and remanded, and in part affirmed, all as indicated by what we have said above.