text:
    SNELLING v. HARPER et al.
    No. 5411.
    Court of Civil Appeals of Texas. Texarkana.
    Feb. 22, 1940.
    Rehearing Denied Eeb. 29, 1940.

      Perkins & Perkins and Thomas Shearon, all of Rusk, for appellant.
    Norman & Norman, of Rusk, and Vinson, Elkins, Weems & Francis, of Houston, for appellees.
   JOHNSON, Chief Justice.

On or about July 11, 1930, E. B. Snel-ling entered into a written contract with the State of Texas to completely remodel (except installation of heating, plumbing and wiring) one of the State’s buildings at Rusk in Cherokee County. A separate contract was awarded by the State to one J. L. Martin to install the plumbing, heating and wiring. Martin, with consent of the Board of Control, assigned his contract to J. O. Andrewartha. So, Snelling and Andrewartha were independent contractors obligated to perform the respective tasks specified in their separate contracts with the State. The building in question was a two-story brick, about forty years old, formerly a part of the State Penitentiary, now an asylum for the insane, known as the East Texas Hospital. The remodeling was for the purpose of converting this building into a ward for patients and is referred to as the ward building. The north and south walls of the building were 120 feet long, the east and west walls were 52 feet long. The walls were 26 feet high. The north and south walls were 17 inches thick from ground floor up 14 feet to the second-story wall, where there was a set-back of 4 inches, making the second-story wall 13 inches thick and 12 feet high above the first-floor walls. The second-story floor was wood, supported by 2x12 joists, resting on a 2x6 plate, which plate was laid lengthwise of the first-story wall and extended under the second-story wall 2 inches. Thus the top wall rested, as its base, upon 11 inches of brick and 2 inches of said 2x6 plate. The roof rested upon similar joists and plates at top of second-story wall.

On November 7, 1933, Snelling, the contractor in charge of remodeling the building, had removed the roof, joists and plates; and had removed the second-story floor, joists and plates; and had scraped the inside plastering off the walls, and cut 12xl7-inch holes, 12 feet apart, at the top of the first-story walls and under base of second-story walls. These holes extended into the walls 9 inches at base of second-story wall. The holes were for the purpose of placing therein reinforced concrete joists. The walls were left unr braced, except such as was rendered by their own strength. One of the side walls had a crack on the inside about 10 feet long. The crack did not show through the plaster on the outside wall. Snelling had also laid the first floor of concrete, and had constructed the forms in which to pour the concrete for the second floor. The forms were made of 1x8 shiplap, supported by concrete pillars and by 2x4-inch jacks. The employees of Snelling were pouring concrete in the forms for the second floor; and J. T. Tannehill, an employee of Andrewartha, was setting thimbles in the concrete being poured. Such thimbles were for passageways for plumbing and heating pipes through the concrete. At this time the walls of the building collapsed and Tannehill was killed. J. L. Cook, Snelling’s foreman in charge of the building, testified that the walls could have been securely braced, and prevented from falling, with little expense and time, but that no inspection was made to determine their strength or whether or not it was necessary to brace them. His testimony was not disputed.

Tannehill was survived by his wife, Mrs. Mary B. Tannehill, two minor daughters, Do'rothy -Lee and Ruth La Nelle, and by his mother, Mrs. Annie B. Tannehill. Mrs. Mary B. Tannehill was appointed guardian of said two minors. The employees of Andrewartha, including Tannehill, were insured under the Workmen’s Compensation Act of Texas, Vernon’s Ann.Civ.St. art. 8306 et seq., by Lloyds Casualty Company of New York, which company acknowledged liability and assumed payment of the compensation. It had paid part thereof when it was placed in the hands of a receiver. This suit was filed by Mrs. Mary Tannehill, individually, and as guardian of said two minors, and for Mrs. Annie B. Tannehill, and Lloyds Casualty Company, against E. B. Snelling to recover damages on account of the death of J. T. Tannehill, alleged to have been caused by the negligence of E. B. Snelling, his agents, servants and employees. During pendency of the suit E. B. Snelling died testate July 24, 1932, and Mrs. E. B. Snelling was appointed and qualified as Independent Executrix of his estate. Mrs. Mary B. Tannehill married L. L. Harper, and on July 26, 1937, filed her third amended original petition, joined by her husband, L. L. Harper, making Mrs. E. B. Snelling as Independent Executrix of the Estate of E. B. Snelling, deceased, defendant. The petition, in charging Snelling, the general contractor in charge of remodeling the building, with liability for the death of Tannehill, in substance alleges that Snelling in the performance of his work in repairing the building under his contract with the State negligently removed the roof and second floor when he knew, or by exercise of ordinary care could have known, that the building was old and out of repair, and that the walls were likely to be weakened by age, and by the repairing, unless proper precautions were taken for bracing the walls during repair; that Snelling knew that Andre-wartha and his employees, including Tan-nehill, were rightfully on the building engaged in the performance of their duties of installing the plumbing and heating, and that Snelling owed them the duty of taking such reasonable and necessary precautions in repairing the building as to protect and insure their safety; that Snelling in repairing the building removed the roof and weakened the side walls in such way that unless they were braced or supported would likely collapse and' fall; which was known, or in exercise of ordinary care should have been known to Snelling; and that he was negligent in failing to inspect the soundness of the walls after the roof had been removed; and that Snelling knew, or by use of ordinary care could have known, that the walls were old, weak and insecure, not properly braced and likely to collapse. The foregoing general allegations were followed by specific allegations of negligence on the part of Snelling, his agents, servants and employees: “(a) In not inspecting the walls and structure of said building to determine whether or not they were old, weak, loose and likely to collapse; (b) In not warning the deceased of the old, worn, loose and weakened condition of the walls; (c) In not bracing or otherwise maintaining other adequate supporting devices; (d) In attempting to^ rebuild the second floor and thereby placing an additional weight upon the 'walls without bracing or otherwise providing supporting devices; (e) In not making a sufficient test to determine that the said walls were old, loose, insecure and weak; (f) In not furnishing and maintaining a reasonably safe place for deceased, Tan-nehill, to work; (g) In so conducting the work in the building as to make it dangerous for deceased, Tannehill.”

Trial of the case to a jury upon' special, issues resulted in the following findings: That Snelling, his agents, and employees failed to make a reasonable inspection of the walls and structure of the building to determine whether or not they were old, weak, loose and likely to collapse; and failed to provide and maintain adequate braces or supporting devices to prevent the collapse or falling of said walls; and during the remodeling of said building failed to so keep and maintain it so as to be a reasonably safe place for said Tannehill to perform his work; and that each of said acts was negligence, and a proximate cause of Tannehill’s death; that the death of Tannehill was not the result of an unavoidable accident; that Tannehill did not cut into and through one of the walls; that Tannehill was not warned in time, after the south wall of the building fell, to leave the building before the collapse of the north wall; that failure of Tannehill to leave the building before the collapse of the north wall was not negligence; that failure of Tanne-hill to leave the building before collapse of the north wall was not a proximate cause of his death; that Mrs. L. L. Harper had sustained damages in the sum of $500; and Dorothy Lee Tannehill in the sum of $2500; and Ruth La Nelle Tanne-hill in the sum of $3000.

Judgment was rendered for plaintiff against Mrs. E. B. Snelling as Independent Executrix of the Estate of E. B. Snelling, deceased, in accordance with the verdict of the jury. Defendant has appealed.

By her propositions 1, 2, 3, 5, and 6, appellant presents the contention that the trial court erred in overruling her general demurrer and special exceptions to plaintiff’s petition, which demurrer and exceptions are based upon the legal theory that the right of Andrewartha and his employees to be upon the premises was that of a licensee; that since the contracts of Snelling and Andrewartha with the State were separate and independent contracts, and the relation of master and servant not existing between Snelling and Andrewartha, Snelling and his employees engaged in remodeling the building owed to Andrewartha and his employees engaged in installing the plumbing and heating therein, only the duty legally accorded licensees, namely, that of not wantonly or wilfully injuring them. Therefore, it is contended, Snelling and his employees owed no duty of executing their work in such manner as to exercise “reasonable or ordinary care” for the safety of Andrewartha and his employees, including Tannehill; and that since plaintiff only charges Snelling and his employees with failure to exercise reasonable and ordinary care, and not with wantonly or wilfully injuring Tannehill, therefore, it is contended, the petition alleges no cause of action against Snelling. Based upon the same legal theory appellant made like objections and exceptions to the court’s charge in submitting the issues, and such objections and exceptions are brought forward in appellant’s propositions 8 and 9. The exceptions to the petition and to the charge being based up-on the same ground will be considered together. We do not think that appellant’s contention is sound.' Though Snelling may be regarded as the general contractor in charge of the building, the rights of Andrewartha and of Snelling, and their employees, to be upon the premises, in the performance of their respective tasks under their separate contracts with and for the benefit of the owner, were of equal legal dignity. So their classification as to whether they were licensees or invitees is not of controlling importance. However, we think that such contractors would both be properly classified as invitees.

“A license is distinguished from an invitation in that the licensee is on the premises by sufferance only and not by virtue of any business or contractual relationship with or any enticement or inducement to enter held out to him by the owner or occupant, but merely in his own interest and for his own purposes, benefits, convenience and pleasure.” 45 C.J. 788.

Independent contractors, and their employees, upon the premises to do work under contract with the owner are there in a legal sense by invitation of the owner. Montgomery v. Houston Textile Mills, Tex. Com.App., 45 S.W.2d 140; Middleton v. P. Sanford Ross, Inc., 5 Cir., 213 F. 6; Sesler v. Rolfe Coal & Coke Co., 51 W.Va. 318, 41 S.E. 216. The two independent contractors, Snelling and Andrewartha, and their employees, being rightfully upon the premises to perform the particular tasks for the owner as specified in their respective contracts, then what duty, if any, did each contractor and his employees owe to the other contractor and his employees? Did Snelling and his employees owe to Andrewartha and his employees the duty of executing or performing their part of the work with “reasonable and ordinary care” for the safety of Andrewartha and his employees working on the same premises? The question is answered in the affirmative. The rule that each contractor owes to the employees of the other contractor the duty of executing his work with reasonable care for their safety is stated in 38 A.L.R. 471, § 19, supported by the authorities- cited in that text. For a particular case in point with the facts here involved, see Lisle v. Anderson, 61 Okl. 68, 159 P. 278, L.R.A.1917A, 128, decided by the Supreme Court of Oklahoma. The same principle of law is decided, on not materially different facts, in St. Louis Expanded Metal Fireproofing Co. v. Dawson, 30 Tex.Civ.App. 261, 70 S. W. 450, by Court of Civil Appeals of Texas, writ refused.

, By her fourth proposition appellant asserts that the trial court erred in overruling her special exceptions to appel-lee’s petition which were based upon the contention that Tannehill assumed the. risk involved that resulted in his death. Ap-pellee’s petition affirmatively discloses that 'Tannehill was not an employee of Snelling, the general contractor in charge of the building, and that the relation of master and servant did not exist between them. Our courts hold that the defense of assumed risk applies only in cases of master and servant or employer and employee. Ford Motor Co. v. Maddin, 124 Tex. 131, 76 S.W.2d 474; City of Weatherford v. Veit, Tex.Civ.App., 196 S.W. 986, 990; San Angelo Light & Power Co. v. Baugh, Tex. Civ.App., 270 S.W. 1101, 1106; El Paso Printing Co. v. Glide, Tex.Civ.App., 246 S.W. 1076; Texas Pacific Coal & Oil Co. v. Grabner, Tex.Civ.App., 10 S.W.2d 441; Nesmith v. Magnolia Petroleum Co., Tex. Civ.App., 82 SW.2d 721.

Appellant’s seventh proposition presents the contention that the trial court erred in overruling her objections to certain testimony of plaintiff’s witnesses Wm. Neal and Joe Pittsford. Neal testified that he had been working for Snelling in the general building contract business from about 1914 to 1930, and that he had worked in remodeling old as well as new buildings, and was working for Snelling in the building in question. After having qualified as an expert, he testified that the cutting of the trenches or grooves in the wall would weaken them; and that it appeared to him that the walls could have been braced. Pittsford testified that he had been engaged in the plumbing business for about fifteen years and had worked for Andre-wartha on the building in question; that in his calling he had performed considerable services in remodeling and repairing old buildings; that he had worked on two buildings almost like the one in question. After having qualified as an expert, he gave it as his opinion that the walls could have been braced so as to prevent their falling, and that the removal of the roof weakened the walls. We do not agree with the contention that the testimony of said witnesses did not concern matters of science and skill about which expert testimony may be given. See Decatur Cottonseed Oil Co. v. Belew, Tex.Civ.App., 178 S.W. 607; Corrigan, Lee & Halpin v. Heubler, Tex. Civ. App., 167 S.W. 159. It further appears that if admission of the testimony complained of was error, such error was rendered harmless because appellant without objection permitted appellee to introduce substantially the same testimony by the witness J. L. Cook, and because appellant herself introduced testimony of the same character by her witness John H. Thomas. Hough v. Grapotte, 127 Tex. 144, 90 S.W.2d 1090; 3 T.J. 1032, Sec. 732; Id., p. 1058, Sec. 880.

By special issues No. 11, No. 12 and No. 13, the trial court in his main charge inquired of the jury (a) whether or not the deceased Tannehill cut a hole or trench into or through one of the walls of the building; and (b) if such was negligence ; and (c) was such negligence, if any, a proximate cause of his death. The jury answered each of the three questions in the negative. Appellant objected to special issue No. 11, because it did not include “other employees of Andrewartha”; and appellant requested the court to submit to the jury, in lieu of special issue No. 11, appellant’s requested special issues inquiring of the jury (a) as to whether Tannehill “or other employees of Andrewartha” cut into and through the walls, and (b) whether such was negligence, and (c) whether such negligence, if any, was a proximate cause of Tannehill’s death. The court overruled appellant’s objections to the court’s 'charge and refused her said requested special issues. Appellant contends that the rulings mentioned of the trial court were error, and bases the contention upon Fox v. Dallas Hotel Co., 111 Tex. 461, 240 S.W. 517, and other authorities, holding that a defendant is entitled to have affirmatively and separately submitted to the jury each group of facts pleaded and raised in the evidence which, standing alone, would constitute a complete defense to plaintiff’s recovery. We agree with the rule of law declared in the authorities cited, but do not agree that the rule has here been violated. The special issues Nos. 11, 12 and 13, contained in the trial court’s main charge, completely submitted the alleged defense of Tannehill’s contributory negligence pleaded by appellant. The negligence, if any, of Tannehill’s fellow servants concurring with that of appellant as constituting a proximate cause of the injury, sought to be inquired of by appellant’s said requested special issues refused by the court, did not form a defense to Tannehill’s suit against appellant, a third party or stranger, not Tannehill’s employer. Ft. Worth & D. C. R. Co. v. Mackney, 83 Tex. 410, 18 S.W. 949; St. Louis Southwestern R. Co. v. Swinney, 34 Tex.Civ.App. 219, 78 S.W. 547, writ refused; 30 Tex.Jur. 786, Sec. 113.

Appellant’s eighty-fifth assignment of error is stated as her nineteenth proposition, reading: “The court erred in awarding execution in the judgment against the defendant as Independent Executrix of the Estate of E. B. Snelling, Deceased, because there is no pleading or proof as to the solvency or insolvency of the Estate of E. B. Snelling, Deceased.”

■It was agreed upon the trial of the case that E. B. Snelling died testate July 24, 1932, and that in accordance with his will, duly probated, his widow, Mrs. E. B. Snell-ing, was thereupon appointed, qualified and is acting as independent executrix of his estate. Appellant’s answer was filed July 26, 1937, — more than one year after the probate of the will. There is no allegation or proof that the estate was insolvent or that it owed other debts. The judgment rendered in the particular complained of is sustained by R.C.S., Article 3437, which authorizes any -person holding a debt against the estate, after expiration of one year from probate of the will, to enforce it by suit against the executor, and that execution may run against property of the estate in his hands subject to the debt. The rule declared in Etter v. Tuck, Tex. Civ.App., 91 S.W.2d 875, authorizing in-junctive relief against a sale of the property upon application and showing that such sale would operate to give such creditor a preference over another creditor of the same or higher class, does not, as contended, warrant a holding that the judgment here rendered is invalid for authorizing issuance of execution.

We have examined the remaining propositions cited in appellant’s brief, but do not find any error presented by any of them and they are each respectfully overruled.

The judgment of the trial court is affirmed.


source: Caselaw Access Project

author: WALTHALL, Justice.

license: Public Domain

text:
    GRISSOM v. GRISSOM.
    No. 3891.
    Court of Civil Appeals of Texas. El Paso.
    Feb. 1, 1940.
    Rehearing Denied Peb. 23, 1940.
    Fred C. Knollenberg, J. M. Deaver, and D. J. Smith, all of El Paso, for appellant.
    Lea & Edwards, of El Paso, for appel-lee.
   WALTHALL, Justice.

Appellant, defendant in the trial court, .prosecutes this appeal from an adverse judgment in the trial court in a divorce proceeding brought by appellee.

The case was tried by the court without a jury on appellee’s first amended original petition . and appellant’s second amended answer and cross action.

' Upon the hearing the trial court rendered judgment granting appellee a divorce and decreed that all the real and personal property described in the pleadings of appellee and appellant was the separate property of appellee and that appellant had no ciaim.of any kind thereon, to which judgment and ruling appellant excepted and prosecutes this appeal.

The trial court made' and filed findings of fact and conclusions of law.

In view of some of appellant’s propositions we state briefly-appellee’s grounds for divorce.

Appellee states all the facts essential to the jurisdiction of the court to which no question is raised, and we omit stating them here.

Appellee alleged that she and appellant were married on January 9, 1930, and finally separated February 23, 1938, and that there were no children born of the marriage union.

Plaintiff says that during all the time plaintiff and defendant lived together as husband and wife, she was kind and affectionate toward defendant, and performed all her marital duties, but that defendant almost immediately after their marriage aforesaid began and has been guilty of a general course of harsh and cruel treatment toward plaintiff which cpntinued without abatement until the time of their separation as herein set out.

Plaintiff, says that defendant has since their marriage continuously . and. continually drunk to excess and has abused plaintiff, cursed in plaintiff’s presence, nagged at her continuously; that the continuous and continual ill treatment of defendant toward plaintiff in his continuous and excessive use of intoxicating liquor and his nagging and quarrelling at plaintiff has seriously broken the health of plaintiff and has made her a nervous wreck; that thet treatment of defendant toward plaintiff has caused her physical and mental suffering to such an extent that in February, 1938, she was seriously and desperately ill and during which period defendant left plaintiff in a destitute conditipn without the care and attention of anyone and that plaintiff was compelled to call upon her friends for assistance during her desperate condition; that when defendant came back plaintiff refused to permit him to come to the house again and that she does not expect to live with .him again; that all the .acts of cruel treatment on the part of defendant toward plaintiff is and was cruel treatment of such a nature as to render their further living together insupportable.

Plaintiff alleges that defendant has dissipated and spent the greater portion of the separate estate of plaintiff which plaintiff owned and possessed in her own right at the time of her marriage.

We will first consider the petition for divorce. Appellant submits but one proposition and that to the effect that the divorce should not have been granted under . the pleadings and evidence.

The record does not show that appellant presented to the court any demurrer, general or special, complaining of the insufficiency of appellee’s petition as not specifically or fully stating the facts pleaded.

The court found that appellee conducted herself in a proper and becoming manner and performed all her marital duties; that shortly after their marriage appellant began to drink intoxicating liquors to excess and many times came home drunk and not in a condition to go into social gatherings with appellee; that he was of a quarrel-pome, contentious and disagreeable disposition which was magnified and accentuated by the excessive use of alcohol; that without provocation he cursed and used profane language in the presence of appel-lee and on one or more occasions called appellee a damn fool; that appellant is by nature unreasonably jealous and often accused appellee of being in love with other men and accused her of phoning to other men from their home; that on one or more occasions appellant accused appellee of going into immoral places of different towns and cities, and made other uncomplimentary remarks of and concerning appellee intended to wound her feelings; that by reason of the above appellant and appellee separated and that there is no reasonable probability they will live together again.

The court concluded as a matter of law that appellant’s conduct towards appellee since their marriage constituted cruel treatment of such a nature as to render their living together insupportable and to entitle appellee to a divorce and the restoration of her former name, and so render judgment.

Without quoting the evidence, we have read and considered it. It is much too extensive to quote here. Appellee testified to the facts as found by the trial court.

Mrs. Nannie B. White testified that she had visited in appellee’s home many times; appellant came home intoxicated a number of times; its effect on appellee was that “she was dreadfully humiliated, would resort to tears like most women.”

Lawrence Phillip testified that on one occasion he carried appellant home drunk from appellant’s place of business.

Appellant testified that all during the years he was drinking to excess, knew ap-pellee’s highly sensitive nature and knew its effects on her.

We have concluded the evidence is sufficient to sustain the court’s findings and to justify the court’s decree of divorce.

The trial court found that all of the real estate and personal property described in appellee’s-petition and in appellant’s answer is the sole and separate property and estate of appellee and that there is no community estate of appellee and appellant in existence; that appellant had no property, real or personal, at the time of his marriage to appellee; that appellant used all the income derived from appellee’s separate property for his own personal business and use, and had dissipated not only the rents and revenues of appellee’s property, but a large part of her separate estate which had been placed in his care.

The court concluded as a matter of law that appellant has no claim to or interest in any of the real estate or personal property described in the pleadings of either appellee or appellant, and that appellant is not entitled to any of the relief prayed for in his answer on which he went to trial, and in the judgment the court found that all of the property both real and personal described and involved in the suit was and is the separate property of appellee, and in the judgment specifically described the properties, real and personal, as in the petition and answer. The court denied the ap-pellee judgment for $8948.12 as prayed for in her petition, adjudged that appellee is responsible for payment of any and all liens, tax or otherwise, on the property, and taxed all the costs against appellant.

Appellant says judgment should have been given him for one-half of the rental on the farm for 1938, whether the property is separate or community.

Without discussing the evidence further' than to say that the record does not show there was a crop grown or in existence on the farm in 1938, we cite the following authorities: Curlee v. Rogan, Tex.Civ.App., 136 S.W. 1126; Trinity & B. V. Ry. v. Doke, Tex.Civ.App., 152 S.W. 1174; Williams v. King, Tex.Civ.App., 206 S.W. 106; Millingar et ux. v. Foster, Tex.Com.App., 17 S.W.2d 768.

Appellant insists that the personal property described in the judgment and on the ranch purchased with funds from a joint bank account is community property, and that appellant should have been given judgment for one-half of its value.

We have stated the trial court’s finding that there is no community estate of appellant and appellee in existence, and that appellant had no property, real or personal, at the time of their marriage, and that appellant used all the income derived from appellee’s separate property for his own separate business and use; that he had dissipated the rents and revenues of appellee’s separate estate placed in his care. In fact appellant admits such to be the fact.

Question: “I believe you state that she (appellee) came and laid it in your lap and you felt it your duty to take it. I have reference to her estate given to you of some $61,000.” Answer: “Yes, sir, that is correct. Wait a minute — I don’t want to get things mixed up. There was $61,-000 worth of paper.”

Question: “$61,000 worth of paper that was her separate property — estate?” Answer: “Yes, sir.”

Again appellant said: “I never made an investment but what I talked it over and thought I was going to make some money out of it, and I was over ambitious to make something out of her estate after she put it in my hands, and it ended badly.”

Appellee testified: “He just had everything.”

Question: “And his street car salary went into this joint account, didn’t it?” Answer: “I think he worked about three months the year we were married.”

Question: “As a matter of fact he collected your rents, didn’t he?” Answer: “Oh, yes.”

Question: “What did he do with it ?” Answer: “I can’t tell you. He dissipated them.”

As suggested by appellee, it seems to us that whatever farm implements there were they were bought with appellee’s money, or conceding it to be community property, appellant placed its value at “approximately $2445,” and appellee's claim of $8942.12, for which the court refused her judgment, would more than offset appellant’s claim for the value of the farm implements.

We think appellee’s claim for the $8942.-12 was well established, and we. think the trial court intended to allow it as an offset, though the judgment does not so state.

Appellee alleged that the -three pieces of real estate described in the deed of September 22, 1937,'was her separate property. The deed clearly expressed the intention on the part of appellant, the grantor, to make the property described the separate estate of appellee, the grantee. There is no allegation in appellant’s answer or evidence in the record that the deed was so worded by accident, mistake or fraud.

The trial court refused to hear evidence to show that at the making or delivery of the deed there was an agreement between the grantor and the grantee that the grantee (appellee) was to hold the property as trustee for the community estate.

Appellant contends the court was in error in refusing to hear the evidence as to such agreement. Appellant in his answer denied that the property described and conveyed in the deed was the separate property of appellee, and offered to show such agreement, and contends here with much force that he should be permitted to show such agreement.

We have concluded that the court was not in error.

We need refer to only one case, that of McKivett v. McKivett, 123 Tex. 298, 70 S.W.2d 694, and the cases there cited. The case is by the Commission of Appeals and is adopted by the Supreme Court. The case is directly in point, and holds contrary to appellant’s contention.

We have found no reversible error and the case is affirmed.


author: TAYLOR, Commissioner.

text:
    SHELL PETROLEUM CORPORATION v. ROYAL PETROLEUM CORPORATION et al.
    No. 1806-7380.
    Commission of Appeals of Texas, Section B.
    March 13, 1940.
    R. H. Whilden, Jesse M. Davis, and Barksdale Stevens, all of Houston, for plaintiff in error.
    O. F. Wencker, J. W. Hassell, J. W. Hassell, Jr., Herbert W. Whisenant, and S. W. Marshall, all of Dallas, for defendants in error.
   TAYLOR, Commissioner.

This suit was filed by Royal Petroleum Corporation against B. B. and G. E. Caster, husband and wife, the Republic National Bank & Trust Company of Dallas, Allen K. Puckett, and the Shell Petroleum Corporation. For convenience the parties named will be designated as the Royal, the Casters, the Bank, Puckett, and the Shell.

The controversy arose out of the following facts:

The Casters on July 19, 1932, owned a lease containing about 41 acres of land in Rusk County, Texas. The Royal on the date mentioned purchased it, paying therfe-for .$1,500 in cash, and agreeing to pay a further consideration of “$25,000.00 payable out of ¼⅛ of %ths of all the oil and gas produced, saved and marketed from * * * the tract * * * from wells ■* *■ *• now drilled or to be hereafter drilled thereon.”

The Royal, after purchasing the lease, operated it, and delivered the oil produced therefrom to the several purchasers of, the oil runs. During all of the time involved the Royal was the operator, and was in charge of the lease and the oil produced therefrom, and its delivery to the various purchasers.

After the Casters conveyed the lease to the Royal they sold partial interests in the $25,000 oil-payment to several purchasers, respectively, including Puckett. The sales were evidenced by transfer orders, signed and acknowledged, the first, of which to Puckett, reads in part:

“Magnolia Petroleum Company Transfer Order
“To Magnolia Petroleum Company,
Dallas, Texas
“February 16, 1933
“The undersigned, having transferred, as indicated below, oil production of wells numbered one and up on (here follows description of land covered by lease), you are hereby authorized, beginning * * * on the 1st day of February^ 1933, and until further notice, to give credit for oil received on account of said interest so transferred as follows:
Credit to Transferred Interest P. O. Address Allen K. Puckett $50.00 per month * * *
"Due on the 12th of each month out of Mrs. G. E. ■ Cáster and B. B. Caster’s interest, * * *. '
“The above payments shall continue for twenty (20) consecutive months or until the total sum of $1,000.00 has been paid Allen K. Puckett, payments ‘to begin March 12, ' 1933 (here follow signatures of the Cásters, attested by witnesses). :
“The undersigned certify that they are the legal owners of the interest above transferred and warrant the title thereto, and the Magnolia Petroleum Company is hereby authorized until further notice to receive oil for purchase from said parties subject to the following conditions: * * *
“6. Sellers severally agree to notify Magnolia Petroleum Company of any change of ownership, it being understood that any vendee or assignee of said wells or the production-thereof shall take same subject to the-terms hereof.”

The foregoing order is signed also b}r Puckett.

The Casters and Puckett executed five such transfer orders of partial interests respectively out of the $25,000 oil payment, aggregating $8,550, as follows: No. 1, dated February 16, 1933, for $1,000 payable $50 per month; No.. 2,- dated March 17, 1933, for $1,000 payable $50 per month; No. 3, dated April 25⅛ 1933, for $2,550 payable $75 per month; No. 4, dated October 3, 1933, for $1,000 payable $50 per month; No. 5, dated February 21, 1934, for $3,000 payable $125 per month.

They were all acknowledged and filed for record in the deed records of Rusk County.

Subsequent to the sale of the-lease by the Casters to the Royal (July 19, 1932), and prior to February 1, 1935, purchasers of the oil produced from the lease paid the Casters and their assigns the total sum of $24,899.88, lacking only $100.12 of being payment in' full of the $25,000 oil-payment.

The Magnolia was the first purchaser of the oil runs. The Lion Oil Refining Company was its successor as purchaser. The Shell succeeded the Lion as purchaser and' was taking the oil runs when this controversy arose in 1935. There was no connection between the companies takipg the oil runs. One merely succeeded the other as an independent purchaser.

On March 29, 1934, a short time before the Shell began taking the oil runs (May 21, 1934), Puckett assigned'to the bank as Collateral to secure his indebtedness to it then or thereafter existing, the five transfer, orders, or oil payments, above described (then partly liquidated), payable in the aggregate, at the rate of $350 per month. The assignment, among other things, directs and empowers '“the purchaser of oil * * * ' to pay direct to Republic Bank & Trust Company * * * every and all sums of money - * ' * * when and as they become due and payable to Allen K. Puckett *' * * by virtue of said oil payments,” the oil payments referred to being those evidenced by the five transfer orders above described. It further authorized the bank to receive and collect and apply same to the payment of Puckett’s indebtedness to the bank, present and future. The assignment was duly acknowledged and was recorded in Rusk County on March 30, 1934.

The Shell made no distribution until after it received a division order signed by the respective owners of the parties’ interests in the $25,000 Caster oil payment. After it became the purchaser, it sent to the Royal, the operator of the lease, a blank division order form and requested substantially that the names of those owning partial interests in the working interest of the lease and the respective proportions in which owned, be inserted, and that proper signatures be secured. The request was complied with and the division order, executed by the parties at interest, was returned by the Royal to the Shell.

Omitting the unfilled blanks, the names of witnesses, the description of the land covered by the lease, certain immaterial (for present purposes) paragraphs, the postoffice addresses and penciled notations, the division order is as follows:

“Division Order
To Shell Petroleum Corporation,
St. Louis, Missouri. June 9th, 1934
The undersigned certify and guarantee that they are the legal owners of the oil produced from Wells Nos. 1 and up on the lease (involved herein), including royalty interest, and until further notice you will give credit for all oil received from said wells as per directions below:

* * . * * *

Shéll Petroleum Corporation is hereby authorized until further written notice to receive the oil from said wells for purchase from said parties severally in the propor? tions named, subject to the following conditions :

First: The oil run in pursuance to this division order shall become the property of the Shell Petroleum Corporation upon delivery thereof to any pipe line designated by it.

Second: The oil received in pursuance to this division order shall be paid for to the patty or parties entitled thereto according to the division of interest shown above, at the price,for each day’s receipts posted on that day by Shell 'Petroleum Corporation for the same kind and quality of oil in the field in which it is received. Settlement therefor shall be made on or before the 12th day of each calendar month for oil run during the preceding month. These payments are to be made in checks of the Shell Petroleum Corporation, to be delivered or mailed to the parties thereto entitled at the addresses above given.

* * * * *

Fourth: Each undersigned hereby warrants and guarantees the title to the oil credited to such undersigned owner according to the division of interest' hereinabove indicated, as well as all interest hereafter acquired.”

The division order is signed' by all of the parties to whom the working interests are credited, including the bank. The bank signed it as “assignee of the interest of Allen K. Puckett.”

At the time the Shell became the purchaser of the oil runs (about May 21, 1934) there remained unpaid of the $25,000 item the sum of $10,507.81, and there was still unpaid on the aggregate amount of the Puckett interest the sum of $5,125. Thereafter, the Shell after receiving the signed division order (dated June 9, 1934) made payments on the Puckett interest beginning July 1, 1934, and continuing monthly thereafter until the payments aggregated the sum of $2,700. They appear to have been made to the bank as follows:

August 14, 1934. 350.00
September 13, 1934. 350.00
October 15, 1934. 350.00
November 14, 1934. 300.00
December 13, 1934. 250.00
January 14, 1935.■ 250.00
February 13, 1935.250.00
March 30, 1935. 250.00
$2700.00

The instrument whereby the Casters conveyed the lease in question to the Royal, provides, in addition to the consideration of the promise to pay $25,000 out of ½ of of the oil produced from the lease, that the payments shall be made "if, as and when the oil is produced, saved and mafr-keted.” (Italics ours.)

The Shell, after completing payment of the full amount of the $25,000 item, except the $100.12, so notified the Royal. It is un-controverted that in completing the payment it did so by making monthly payments aggregating $2700 as itemized above. Nor is it controverted that upon the completion of the payments the five Puckett interests evidenced by the transfer orders, the aggregate of the amounts paid thereon, was less than the sum of $8550 by $2425. No contention is made that the Royal is not entitled to all of the oil production after the $25,000 item has been paid.

It is uncontroverted also that both the Royal and Puckett, after the Shell notified the Royal that payment of the amount of the $25,000 remaining unpaid when it began taking the oil had been completed, asserted their claims respectively, Puckett asserting his right to receive the $2,425, and the Royal asserting its right to receive the entire amount held by the Shell over and above the $25,000 which had been paid.

Controversies arising out of the facts stated above, and the Shell’s unwillingness, in view thereof, to make further payments either to the bank on the Puckett interest, or to begin making payments to the Royal, brought about the filing of the suit.

The following excerpt from the opinion of the Court of Civil Appeals sets out a condensed summary of the voluminous pleadings of the parties [111 S.W.2d 1178, 1180]:

“The Royal alleged that, sufficient oil having been produced and sold to pay in full the item of $25,000 purchase money recited in the deed to it by the Casters, it was entitled to releases, and had demanded of interested parties receiving payments the execution of suitable releases, freeing the leasehold from the implied lien; alleging the refusal of the parties to execute same; also alleged in detail facts, not necessary to be repeated, praying that, on final hearing, the court adjudicate that the parties (the Casters, The Bank, Puckett, and The Shell) owned no further interest in the leasehold, or in the oil produced therefrom; and that the clouds cast upon the title, by reason of their previously existing claims, be removed, and that plaintiff have judgment against The Shell for the value of the oil produced in excess of the amount necessary to satisfy the said $25,000 indebtedness.
“Puckett answered the main suit and filed a lengthy cross-action against the Royal, the Casters, The Bank, and The Shell, alleging in detail the material facts involved, showing that, although The Shell had purchased a sufficient quantity of oil from the lease to pay his claim, it had failed to do so, lacking $2,425 of paying the full amount due, but instead paid the same to the Casters, for which amount, Puckett prayed judgment against all the parties named in his cross-action. * * *
“The Shell pleaded at great length, contending in effect that it had paid the proceeds of all oil purchased in strict accordance with the terms and provisions of the division and transfer orders, and that payments as made fully discharged it from all liability to Puckett. Also filed a cross-action against the Casters and The Royal, praying in the alternative that if judgment should be rendered against it in favor of Puckett, that judgment be rendered in its favor over against said cross-defendants for the amount of the judgment so rendered, etc. * * * ”

The bank and Puckett did not plead antagonistically against each other. Puckett sought no affirmative relief against the bank. The bank sought no affirmative relief against Puckett. It alleged merely the assignment of TAarch 29, 1934, made by Puckett to it for collateral purposes, and payments under the assignment, alleging in this connection its receipt from the Shell of the $2,700 in monthly payments as above itemized.

The Casters filed no answer and entered no appearance of any kind.

The Shell in its first amended original answer admitted that the companies taking •oil from the premises had paid to the Casters and their assigns, including Puckett ■and the bank as his assignee, the full sum ■of $25,000 less the sum of $100.12 then in its possession, alleging that it was holding ■same for such of the defendants as might "be entitled thereto, and tendering such sum into court “to be paid out in accordance with any judgment * * * the court might render.” It admits also that it had ■on hand, accrued as of August 1, 1935, from ¾ of % of the oil produced and purchased hy it, the sum of $3,000 to which claim was being asserted by both the Royal and Puck■ett, and alleges that on account of the conflicting claims it is tendering, and does ten•der into court, this sum also to be paid out .in accordance with the court’s judgment.

The Shell pleaded, and attempted to prove, that it was the custom in the oil industry in Texas and generally in the United 'States for operators of oil properties which are operated in accordance with the obligations entailed by the instruments above set •out to keep purchasers of oil produced from such properties, advised as to the application of the purchase money toward the liquidation of the outstanding oil payments, •and that this custom was recognized and •adopted by the parties in this cause. The testimony upon this issue is conflicting and the trial court’s finding that “no such custom” existed, is final, and need not be further mentioned.

It should be added that other than the •conflict referred to the material facts are in no wise in conflict.

Upon trial of the case without a jury the •court rendered judgment in favor of Puckett and the bank (assignee) against the Shell for $2,425, and against the Casters, jointly and severally, for the same amount. It also rendered judgment in favor of the Shell over against the Casters, jointly and •severally, for a like amount ($2,425), but provided that execution should not issue on the judgment in favor of the Shell against the Casters until the Shell had paid the judgment against it in favor of Puckett and the bank. The court further adjudged that the ’ Royal recover of ■ and from the Shell and all other parties to the suit the sum of $3,000 tendered into court, that title of the Royal be discharged of the claim for unpaid purchase money recited in the conveyance by the Casters to the Royal and by reason of the previously existing claims of parties, be removed.

The judgment so decreeing was affirmed by the Court of Civil Appeals, 111 S.W.2d 1178. Writ of error was granted upon application of the Shell.

The principal holding of the trial' court upon which its judgment was rendered, and upon which it was affirmed upon appeal, is that the Shell “without any authority” from Puckett or the Royal paid the Casters-$2,-425, which, according to the view of the courts below, Puckett and the bank were entitled to receive from the Shell. •

We are in accord with the view expressed by the Court of Civil Appeals that the judgment upon the holding stated is “pivotal,” and settles the main controversy; and that as a consequence all subordinate issues presented in cross actions by the parties against each other are settled. We are not in accord, however, with the view either that the Shell’s payments to the Casters and their assignees were made without authority, or that Puckett and the Bank are entitled to receive from the Shell the sum of $2,425, or to receive from it any sum other than the $100.12 tendered into court by the Shell. The provisions of the instruments above set out and referred to, particularly of the conveyance by the Casters to the Royal of the transfer orders executed by the Casters and Puckett, and of the division order.

Puckett does not contend that the Royal is not entitled to receive the proceeds of the: oil produced, over and above $25,000, or that this amount has not been paid to the Casters and their assignees, including himself and the bank, except, of course, the $100.12 tendered into court. His principal contention is that inasmuch as he and the bank, as his assignee, lack $2,425 of having received the sum of $8,550, the Shell should continue making monthly payments upon the interests transferred to him out of the $25,000 interest until the sum of $2,425 has been paid.

His contention is predicated upon the view that the stipulation of the transfer orders that the “payments shall continue for” the stated number of “consecutive months, or until the total sum of” the stated amount “has been paid” to him, means that the payments shall continue for the stated number of consecutive months, and until the total sum remaining unpaid ($2,-425) has been paid. He contends, stating it another way, that the word “or” as used in the stipulation is explanatory, and that in the clause in which it is used it means “that is to say”; and that by substituting this phrase for “or”, requires that the above payments shall continue monthly for the stated number of “consecutive months,” until the total sum of $2,425 has been paid to him. We cannot agree with the contention stated.

In its ordinary use the term “or” is disjunctive, and alternative in its effect; See the analogous cases- of Oxsheer v. Watt, 91 Tex. 402, 44 S.W. 67.' Unless there is some impelling reason apparent in the context, it should be given its ordinary, rather than a conjunctive meaning. Id.; Lunt v. Ætna Life Ins. Co., 261 Mass. 469, 159 N.E. 461; In re Gaynor, 217 Mass. 86, 104 N.E. 339, L.R.A.1916A, 363. We find nothing in the text indicating, as urged by Puckett and the bank, that “or” as here used in the alternative stipulated, is explanatory and means “that is to say.” Nor is there any impelling reason in the context for giving the word “or” any other than its usual meaning.

The Casters, it will be observed, part with no right to receive the full sum of $25,000, except as evidenced by the terms of the transfer orders. It follows from this as a corollary that Puckett acquired no right to monthly payments after the $25,000 oil payment had been discharged. It is therefore manifest that the legal effect of the provisions of the transfer orders is to transfer to Puckett monthly payments subject.to cessation of payment upon discharge of the $25,000 out of which the Puckett interest is payable. In other words the transfer orders transfer monthly payments payable consecutively so long as any balance of the $25,000 remains unpaid.

The alternative stipulation discussed above prevents cessation of payment so long as the proportionate part of production applicable to the liquidation of it and the $25,000 interest does not amount to as much per month as Puckett’s stipulated monthly sum. There is no stipulation, however, in the transfer orders requiring application of more than the stipulated monthly sum to the Puckett interest in the event the proportionate part of applicable production amounts td more than that. In the absence of such stipulation the excess is payable toward the discharge of the amount remaining unpaid on the $25,000 interest.

It is clearly provided in the conveyance from the Casters 'to the Royal that payments toward the liquidation of the $25,000 are to be made "if, as and when the oil is produced, saved and marketed” (italics ours), from which it follows that such excess, whether much or little, is applicable to discharge such unpaid amount. In such contingency it is manifest that the ultimate limit of the Puckett interests ($8,550) pays out less rapidly than the remaining $25,000 interest.

The contingency last referred to actually materialized. Production increased. It is uncontroverted that - there was only one producing well on the property when the Royal purchased the lease. There were five when the Shell began making distribution of the proceeds of the oil about July 1, 1934, and by the time the $2700 was paid there were nine. Puckett himself testified that the Magnolia was taking the oil when he purchased his first partial interest in the $25,000 oil payment; that every month subsequent to that time he was furnished oil run statements showing the amount of production, first by the Magnolia, iater by the Lion, and finally by-the Shell; that each and every time he obtained a transfer order from the Casters he procured from the Royal figures as to the approximate balance due on the $25,000 oil payment; that he could tell, from the monthly run statements furnished him that production was increasing in amount ; that the statements from the Shell.toward the end showed “quite an increase” in production; that they were sent to his bank and were by the bank furnished to him; that he was indebted to the bank far in excess of $2,425, and that the bank was getting the statements monthly and was getting the money dué him.

The instruments of conveyance above referred to were duly filed for record in Rusk County, and charged the parties with notice of their respective , stipula-i tions and provisions.

It will be noted that by, the terms of the conveyance of the lease by . the . Casters to the Royal a. limit of $25,000 is placed upon the amount of the oil payment to be paid out of oil .production on the Caster $25,000 oil payment. The conveyance itself stipulates in this connection that until said sum of $25,000 has been received by grantors the purchaser is authorized to pay to the grantors the purchase price “of ⅛ of ⅞ of the oil * * * , said payments to be made as, if and zvhen the oil is produced, saved and marketed."

The division order directs the Shell that “until further notice you will give credit for all oil’’ received from the lease, to the owners of the working interests named therein in the proportions stated; that is to say, it directs the Shell, so far as the Caster-Puckett interests are concerned, to give credit to the Casters until notified by the Royal, ¼ of ⅞ of the proceeds of the oil produced, "less $350.00 per month to Republic National Bank & Trust Company,” until “notified by the Royal Petroleum Corporation.”

Puckett makes some contention that he did not sign the division order, but it is, not disputed that it was signed on his behalf by the bank as his assignee and that he, month after month, received notice that his obligation to the bank was being credited with payments made from the oil runs. As stated in the opinion of the Court of Civil Appeals, the interests of the bank and Puckett are not antagonistic. Puckett makes no contention that the bank was not authorized to sign the division order. as,,above stated, and Puckett testified that “beginning June, 1934, and terminating January, 1935”, the monthly oil run statements were forwarded to him “from time to time as the * * * bank received them.” He is not in position, under the record before us, to now assert as against the Shell that he is not bound by the directions contained in the division order.

After receiving notice from the Royal that the $25,000 item lacked only $100.12 of being liquidated, the Shell made no further payments to any of the owners named in the division order, and tendered into court, but after suit was filed, that amount, together with the sum of $3,000.

It follows from what has been stated that under the record before us the Court of Civil Appeals erred in affirming the trial court’s ' judgment" awarding judgment .against the Shell in favor of Puckett and the bank. It follows also that since the judgment against the Shell is erroneous the cross action decrees predicated thereon are also erroneous.

We hold that the Court of Civil Appeals did not err in affirming the trial court’s judgment for $2,425 in favor of Puckett against the Casters. This holding is predicated not upon the view that the Casters were overpaid by the amount recovered against them, but because they filed no answer in the case, entered no appearance therein, and prosecuted no appeal from the judgment, thereby permitting it to become final in the trial court.

We hold that the judgment of the trial court as between Puckett and the Shell should have been in Puckett’s favor for $100.12, together with his costs; and that the court in this connection should have directed that the sum of $100.12 be paid the bank as assignee of Puckett.

We also hold there was no error in that portion of the trial court’s judgment awarding -the Royal judgment against the Shell and all other defendants for “the sum of the $3,000.00 tendered into court,” and in declaring its title “free and discharged of all claims and liens,” to the extent that they are asserted to arise from the payment of that part of the $25,000 remaining unpaid when the Shell began distributing the proceeds of the oil runs applicable to the payment of such remainder, but we hold in this connection that it was erroneous to decree that the Royal’s title be declared free of liens other than such as arose out of payments of the amount of the $25,000 remaining unpaid at the time stated.

These holdings determine all of the material questions presented.

We accordingly affirm that part of the judgment of the Court of Civil- Appeals which affirms the judgment of the trial court in favor of Puckett against the Casters for $2,425. In all other respects the judgments of the courts below are reversed and set aside, and the cause is remanded to the trial court for entry of a judgment in accordance with this opinion.

The judgment is affirmed in'part and is reversed and remanded in part with instruc- . tions.

Opinion adopted by the Supreme Court,


author: GERMAN, Commissioner.

text:
    ROBERTSON et al. v. CONNECTICUT GENERAL LIFE INS. CO. et al.
    No. 2294—7450.
    Commission of Appeals of Texas, Section A.
    Feb. 21, 1940.
    Hamilton, Lipscomb & Wood, of Dallas, Cureton & Cureton and H. J.. Cureton, all of Meridian, and W. V. Dunnam, of Waco, for appellants.
    Read, Lowrance & Bates, of Dallas, and Bryan & Maxwell, of Waco, for appellees.
   GERMAN, Commissioner.

The tentative opinion of the Court of Civil Appeals contains a concise and admirable statement of the pertinent facts. This statement is in part as follows:

“This is a usury suit. George P. Robertson and wife brought this suit against Connecticut General Life Insurance Company and Dallas Bank & Trust Company to cancel a debt and deed of trust lien on the ground that the contract provided for a usurious rate of interest and that the payments which had been made as interest were sufficient to discharge the principal debt. The Connecticut General Life Insurance Company reconvened and sought judgment for its debt 'with foreclosure of its lien. The undisputed facts and the material findings of the jury are as follows:

“On October IS, 1909, Robertson and wife executed to A. H. Kahler a note for $3,500.00, due in five years and secured by a first deed of trust lien on the land in question. The record does not disclose the rate of interest borne by this note but it is asserted in the brief that it bore eight per cent per annum. In addition, said deed of trust contained a provision requiring the debtors to pay the taxes assessed against the note or bond under certain conditions. This tax clause will be set out in full later. At the same time they executed a second lien to secure the payment of a note in the sum of $383.30, payable in five annual installments to cover additional interest on the principal note. The principal note above referred to was assigned to National Life Insurance Company on November 29, ¡1909, and was later assigned to United States Bond & Mortgage Company on October 16, 1914. On November 1, 1914, Robertson and wife executed and delivered to United States Bond & Mortgage Company a deed of trust to secure the payment of a note in the sum of $3,500.00 due on the first day of November, 1919, and bearing interest at the rate of 6⅝ per cent, per annum. This note was secured by a first deed of trust lien on the land in question, which deed of trust contained the tax clause above referred to, requiring the debtors to pay taxes assessed against the note and bond under certain conditions. On the same day the debtors executed a second deed of trust to the same concern to pay a note in the sum of $350.00, payable in two installments of $175.00 each, but the record does not disclose when these installments were due. The evidence does show that one of these installments was paid in 1915 and the other in 1916 and it may be inferred therefrom that they were payable during said years. This second note purported to represent a part of the interest charged on the' first note. The principal note was assigned to National Life Insurance Company on November 30, 1914, and was later assigned by that company to Dallas.Trust & Savings Bank (now Dallas Bank & Trust Company) on June 16, 1920. On October 22, 1919, Robertson and wife executed to Dallas Trust & Savings Bank a note for $3,500.00, due on first day of November, 1924, bearing interest at 6 •per cent, per annum. This note was secured by a first deed of trust on the land in question, which contained the tax clause above referred to. Said deed of trust recited that the note therein secured was given in lieu of and in extension of the note previously executed to United States Bond & Mortgage Company, which note had been taken up and extended by Dallas Trust & Savings Bank at the request of the debtors. At the same time the debtors executed a second deed of trust to secure the payment of five notes in the sum of $35.00 each, payable annually, which, notes purported to represent a part of the interest charged on the principal note. The principal note last above described was assigned to National Life Insurance Company on May 8, 1920, and was reassigned to Dallas Trust & Savings Bank on November 5, 1924. On November 1, 1924, Robertson and wife executed to Dallas Trust & Savings Bank a note for $7,500.00, due November 1, 1934, and bearing interest at the rate of 6 per cent, per annum. This deed of trust securing the same contained the tax clause above referred to. It recited that said note was given partly in lieu and extension of the balance due on the note executed in 1919, and that the Dallas Trust & Savings Bank, at the debtors’ request, had advanced the money necessary to take up and extend said indebtedness. The balance of said loan, $4,000.00, represented new money advanced to the debtors at the time of the execution of the last lien. On the same day, Robertson and wife executed a second deed of trust to the same creditor to secure the payment of five notes for $75.00 each, one payable each year as interest on the- principal note. The principál note last above referred to was assigned to Connecticut General Life Insurance Company on February 4, 1925. All of the notes above referred to provided for interest at 10 per cent, per annum after maturity, and the deed of trust securing same provided for acceleration of maturity in certain contingencies. The combined tax rate for the county of Dallas and state of Texas for the years 1917 to 1935, inclusive, varied from $1.02 to $1.69 on the one hundred dollar valuation, and the tax rate for the city of Dallas for the same period varied from $1.89 to $2.47 on the one hundred dollar valuation. There was ho showing as to the basis of valuation of property for tax purposes in the city and county of Dallas prior to the year 1931. During the years 1931 to 1934, inclusive, the basis for assessment for city purposes in the city of Dallas was 45% of the value of • the property, and during the years 1935 and 1936, the basis for the same purposes was 52% of the value of the property. There was no showing as to the basis of assessment for county and state taxes for any of the years in question. The Connecticut General Life Insurance Company is a foreign corporation and during all the years that it owned the note here sued on, its home office was in Hartford, Connecticut. Said note- was serviced by the Dallas Trust & Savings Bank, a Texas corporation, from 1925 to 1931, but during all the years in question, 1925 to 1934, said note was kept at the home office of the holder in Hartford. The debtors paid the interest installments as they accrued to the various holders of the several first lien notes up to and including the year 1930 and a part of the year 1931. They also paid the second lien notes to the holders "thereof as they accrued.

“The jury, in answer to special issues, found that in the preparation of the loan contract of date October 22, 1919, and in the preparation of the loan contract of date September 22, 1924, the Dallas Trust & Savings Bank did not intend to exact or receive from the debtors a greater rate of interest then ten per cent per annum; that Dallas Trust & Savings Bank was the owner of the principal note in the sum of $3,500.00 of date November 21, 1914, at the time the same was renewed and extended in 1919-; that the note for $3,500.00 of date October 22, 1919, was owned by Dallas Trust & Savings Bank at the time the same was renewed and extended by the contract of date September 22, 1924; that the principal note executed in 1924 was accepted by the Dallas Trust & Savings Bank for the purpose of resale to investors and that in the preparation of said contract said creditor intended to require the debtors to pay all such taxes as might thereafter be levied against said note by the city and county of Dallas and state of Texas; that the Connecticut General Life Insurance Company purchased said $7,500.00 note, of date 1924, with the intent to require the debtors to pay such taxes as might be assessed against said note; that from the year 1931 to 1936 inclusive, the Connecticut General Life Insurance Company, which was a foreign corporation, maintained a general office in Texas in the city of Dallas, but that the rate of the tax assessed by the city of Dallas, county of Dallas, and state of Texas, plus the interest as provided in the note of date September 22, 1924, during any one year, would not be an amount in excess of ten per cent as interest on the amount of said $7,500.00 note;' and that the debtors, in the execution of the loan contract of 1924, did not intend to thereby waive the privilege of thereafter interposing the defense of usury to any of the loan contracts above referred to. Upon motion, the trial court rendered judgment non obstante veredicto in favor of Connecticut General Life Insurance Company for its debt with foreclosure of its lien and denied plaintiffs the relief prayed for.”

The court then discusses the proposition that even though the first and second loans may have been usurious, nevertheless the Connecticut General Life Insurance Company would not be chargeable on its principal note for $7,500 with interest payments made to third parties on the first and second loans. The court next passed to the question of whether or not the loan of 1924 was usurious. It held that the contract, independent of what is designated the “Tax Clause,” was not usurious. The questions certified to this court arise because of the tax provisions, and for convenience in the discussion of same we subdivide that clause into designated paragraphs. It is as follows:

“Whereas, for the better securing of said bond, with all interest to become due thereon to said Mortgagee, or its successors and assigns, the. Mortgagor hereby covenants with the Mortgagee as follows :

“(a).That Mortgagor will pay said bond with the interest thereon as the samé becomes due and payable;
“(b) That Mortgagor has a good and perfect title in fee simple to said property, and has a right to convey the same to the said Mortgagee, and to its successors and. assigns, in this mortgage as aforesaid;
“(c) That Mortgagor will pay all taxes and assessments and premiums of insurance now due, or which may become due on said premises, or chargeable against said premises, or said' bond, or upon the interest in said premises of the Mortgagee, or its successors and assigns, before the same shall become delinquent;
“(d) Or, if at any time, any law either Federal or State, shall be enacted, imposing or authorizing the imposition of, any tax upon this mortgage, or upon said 'bond/ or upon the principal or interest money secured by this instrument, by virtue of which the owner, for the time being, of the land above described, shall be authorized to pay any such tax upon said ‘bond/ or Mortgage, or the principal or interest of the debt secured, or upon either of them, and deduct the amount of such tax so paid from the debt hereby secured, or upon the rendering by any court of competent jurisdiction of a decision that the undertaking by the Mortgagor as herein provided to pay any such tax or taxes is illegal and inoperative, then or in any such event, the said principal sum hereby secured, and all interest thereon to the date of payment thereof, shall, at the option of the holder of said ‘bond/ be and become immediately due and payable, anything in this Mortgage or said ‘bond’ contained to the contrary notwithstanding;
“(e) Provided, this condition of this agreement shall not be construed to include any personal'tax when imposed against the owner of said ‘bond’ or Mortgage at the residence or domicile of such owner.”

As having some bearing upon the questions propounded'we quote the acceleration clause in the main deed of trust of 1924, same being as follows: “It is hereby further specially agreed that if any of said ‘bond’ or any installment of interest, or any taxes or assessments, or premiums of insurance or charge of any kind against said property which shall have been paid by the said Mortgagee, or its successors and assigns, remain unpaid for five days after the same are due, or in case any tax or assessment is assessed within the State of Texas against the debt or bond secured hereby, or the interest in said premises of the said Mortgagee, or its successors and assigns, or upon the rendering by any court of competent jurisdiction of a decision that the undertaking by the Mortgagor as herein provided to pay any tax or taxes, is legally inoperative, then at the option of the said Mortgagee, or its successors and assigns, the whole indebtedness and all sums secured by this mortgage, to-wit: The principal and interest then accrued on said bond, and all advances made to or on account of the undersigned, for taxes, assessments, 'premiums of insurance, and charges of every kind, shall at once become due and payable, and the moneys due on said bond and for advances as aforesaid, may be collected by a sale under this mortgage, or by a suit in the courts of Dallas County, or otherwise, as the said Mortgagee or its successors and assigns, may elect; and in case said debt as evidenced by said bond, or any interest thereop, or any charge or charges accruing under the terms of this mortgage, shall be placed in the hands of an attorney for collection after maturity, or after the same have been declared to be due under the provisions hereof, or if placed in the hands of an attorney for collection before maturity under circumstances requiring collection by legal process, or for collection through the Courts of Bankruptcy, or through the Probate Court, then the said Mortgagor will pay ten per centum of the entire amount due as attorney’s fees.”

Question No. 1 is as follows: “In view of the provision in the deed of trust that the agreement with reference to the debtors’ obligation to pay taxes should not be construed to include ‘any personal tax when imposed against the owner of said “bond” or mortgage at the residence or domicile of such owner/ was it possible for the hold-’ er of the debt secured by said deed of trust to create a situation whereby the debtors' could be required to pay such ad valorem taxes as might be assessed against said debt or the ‘bond’ evidencing same ?”

Apparently, the quoted provision concerning any “personal tax when imposed against the owner of said bond” has caused some- confusion on the part of the Court of Civil Appeals. The effect of that provision was strongly urged in oral argument. The meaning of the provision mentioned is to our minds - reasonably clear. Subdivision (c) of the quoted clause is an outright, covenant to the effect that the mortgagor will pay taxes on the bond. Subdivision (d) is a little unusual. It creates a condition on which" an acceleration may be declared, Subdivision (e) follow's immediately, and declares that, “provided this condition of this agreement shall not be construed to include any personal tax when imposed against the owner of said bond or mortgage at the residence or domicile of such owner.” We are of the opinion that this provision relates directly to the preceding1 condition expressed in subdivision (d), and has no relation whatever to the covenant expressed in paragraph (c); and is no limitation thereon.

We therefore answer Question No. 1 Yes.

Question No. 2 is as follows: “Was the burden on the debtors to prove and secure a finding from the jury that the parties at the time of entering into the contract contemplated that the ad valorem taxes which might be assessed against the ‘bond/ when added to the interest stipulated therein, would be sufficiently high to make the total charge for the use of the money usurious ?”

To this question we answer No. We think what was in the contemplation of the parties is clearly expressed in their language. They intended to require the debtor to pay “all taxes and assessments due * * * on the bond, or upon the interest in said premises of the mortgagee, or its successors or assigns.” It is immaterial whether they contemplated that same would result in the interest rate exceeding ten per centum or not, if such result actually, followed. They contemplated the natural result of their contractual stipulations.

The Court of Civil Appeals appears to be laboring under the impression that notwithstanding the imperative covenants of a contract as to payment of the taxes which may be assessed against a bond or mortgage, it must nevertheless be made to appear that at the very time of contracting the parties contemplated that the interest might thereby be increased beyond the legal rate. In the tentative opinion the court has said: “This court, in the case of Duvall v. Kansas City Life Insurance Co., 96 S.W. 2d 793, in an opinion by Chief Justice Gallagher, held that where the interest absolutely payable under the terms of a contract is less than the statutory maximum, whether a provision obligating the debtor to pay such taxes as might be assessed against the note rendered the transaction usurious depended on whether the parties thereto, in the light of the probable tax rate and the basis of assessment, contemplated at the time of entering into the contract that during some one or more years' thereof the interest expressly reserved and the taxes which might become payable on the contingency stated would amount to more than ten per cent per annum on the unpaid principal, and that in order to render such contract usurious, it must affirmatively appear that the parties so contemplated. As we understand, this holding was sustained on appeal by the Supreme Court. Kansas City Life Ins. Co. v. Duvall, [129 Tex. 287], 104 S.W.2d 11.”

We think the court is in error in so construing the opinion of the Supreme Court above mentioned. While there may be isolated statements in the original opinion calculated to sustain such a conclusion, yet the court on motion for rehearing said: “The instructions contained in its opinion for guidance upon another trial are necessarily modified by our holding that the construction of the loan contract as to whether it is usurious is a matter of law-. The opinion of that court does not point out, as is here done, that it is unnecessary upon another trial for the court to submit to the jury the issue submitted upon the first trial relating to usurious intentions and knowledge on the part of the payees and assignee of the note.”

It is appropriate we think to here refer to an apparent misunderstanding of the opinion of the Supreme Court in the case of Norris v. Land Mortgage Co., 98 Tex. 176, 82 S.W. 500, 501. In that case the mortgage contract contained a clause requiring payment of taxes on the bond or notes. By special plea the mortgage company alleged that such provision was put into the mortgage by mutual mistake. It was further alleged that the parties intended “solely to provide for the payment by the mortgagor of any tax or assessment on the mortgage that might be imposed by Texas legislation during the life of the mortgage, whereby the mortgagor would be taxed on the landed security only to the value of his equity therein, and the remainder of the landed tax, or the difference between the full value of the security and the equity of redemption, would be imposed on the mortgage holder.” The Supreme Court in effect held that if the tax clause in the mortgage had referred primarily to ordinary taxes, usury had been shown, as a matter of fact, if not as a matter of law. In this connection the court said:

“The contract, as written, binds the borrower to pay that which the law imposes on the lender — the taxes on the lender’s own property. This exaction is made as a, condition of the loan, and is therefore made for the ‘use/ etc., of the money. When such a reservation in a contract necessarily makes the charge for the use of the money exceed 10 per cent., the contract, in our opinion, is necessarily usurious. But can it be said that this contract itself reserves more than 10 per cent.? The levy for state purposes, made by permanent law, was only 34 cents on the hundred dollars. The levies for county and city purposes could hardly have been made for the year 1900 on the 1st of January of that year, when the loan was contracted for, and it could not, upon mere construction of the contract, be said that the amount of such levies, when made, would be sufficient to make the interest exacted greater than 10 per cent. Under such conditions it cannot, we think, be laid down as a broad proposition that such a stipulation, on its face, is unlawful. It might be otherwise if the contract reserved interest at the full lawful rate, and, in addition, exacted the payment of taxes, whether the amount thereof were known or not. Mortimer’s Ex’rs v. Pritchard [1] Bailey Eq. (S.C.) 505; Meem v. Dulaney, 88 Va. 674, 14 S.E. 363; Banks v. McClellan [24 Md. 62], 87 Am.Dec. 594. Such provisions as that under consideration were involved and discussed, but not very satisfactorily, in the cases cited.

“The question whether or not the contract as written was, as a matter of law, usurious on its face, is not of great importance, because the trial court upon the evidence has found usury, which involves the idea that the parties, when they contracted, contemplated and intended the payment of more that 10 per cent., and this conclusion is probably justified by the common knowledge that the combined rate of the tax levies for state, county, and city governments uniformly is and has been more than 1 per cent., which knowledge may well be imputed to these parties.”

The court, however, held that parol proof was admissible to sustain the special plea of the mortgage company, because the tax clause would not make the loan usurious if, as .alleged, it was intended to have reference only to taxes as to which there was no provision in law at the time of making the contract, and not reasonably within the contemplation of the parties.

However, in this connection a further statement is necessary. Under the holding in the case of Kansas City Life Ins. Co. v. Duvall, 129 Tex. 287, 104 S.W.2d 11, as applied to the facts of this case, we are forced to the conclusion that the bond in question might find a situs for taxation in Dallas County, and that the contract contained elements which made it potentially usurious. However, the indebtedness bore only 7 per cent interest per annum. It certainly cannot be said that on its face it was unlawful. Norris v. Land Mortgage Co., supra. In order to show that it contained potentialities which would make it usurious, certainly it was incumbent on debtors to prove facts showing that under its terms the interest rate, by reason of tax levies, would at some time during the contractual life of the bond exceed 10 per cent. Without laying down any definite rule in this respect, we will say that, in our opinion, the burden would be upon the debtors to prove that under prevailing standards of valuation fixed from year to year, and under prevailing rate or rates fixed from year to year, the taxes which might be levied against the bond, when added to the interest contracted for, would cause the amount exacted to exceed the legal rate of 10 per cent per annum upon the amount of the bond unpaid. If and when this fact be established then the contract is to be regarded as usurious from beginning; but until such fact be established it cannot be said as a matter of law that the contract was usurious. In this particular it is peculiarly within the province of the Court of Civil Appeals to first determine the status and effect of the facts as proven in the case.

Question No. 3 is as follows: “If either of the loan contracts made prior to 1924 were usurious, did the debtors by the execution of the new note to Dallas Trust & Savings Bank of November 1, 1924, for the full amount of the principal of the old debt, under the circumstances set out in the opinion, thereby, as a matter of law, elect to treat all interest payments previously made as payments on interest and waive their right to have such payments credited as payments on the principal ?”

The certificate in this case was filed in the Supreme Court before opinions in the cases of Temple Trust Co. v. Murfee, Tex.Com.App., 126 S.W.2d 643, Wallace v. B. H. Scott & Son, Tex.Com.App., 127 S.W.2d 447, and Travelers Ins. Co. v. Rowley, Tex.Com.App., 128 S.W.2d 20, were rendered. Under those decisions, debtors are not entitled to credits upon the principal note held by Connecticut General Life Ins. Company, and consequently we answer said question Yes.

Question No. 4 is as follows: “Does the provision that the debt shall bear interest at the rate of ten per cent per annum after maturity, when construed in connection with the tax clause and the provision for acceleration of maturity in certain contingencies, render the contract usurious ?”

As we understand, the purpose of this question is to meet the proposition of appellants as follows: “Since the principal note for $7,500.00 bears interest after maturity at the rate of ten per cent, whether such maturity results from-lapse of time or by acceleration of maturity under the provisions of the contract, and since the note after maturity is a credit subject to taxation as provided by the provisions of Article 7174.of the Revised Civil Statutes of the State of Texas, and the tax clause in the contract obligates the mortgagors to pay such tax, at the rate fixed by the governing authorities, as may be' assessed against the notes in State of Texds on the basis of the full value of the sum payable, the contract is usurious.”

To this question we answer No. If the indebtedness be accelerated under provisions of the contract, then it is expressly provided that the amount collectible is, “the whole indebtedness and all sums secured by this mortgage, towit, the principal and interest then accrued on said bonds.” Under numerous decisions this constitutes a saving clause against usury. The other provision that the bond shall bear 10 per cent interest after “maturity” obviously mehns that it is to bear such rate after the due date of the bond. It is our opinion that this provision in the principal note or bond, when it comes into operation by virtue of the maturity of the obligation, is to be given the effect of supplanting or superseding all other interest provisions of the entire contract. As the requirement for payment of taxes upon the bond is considered as an interest provision (otherwise there would not be usury by reason thereof), it is but a fair and reasonable construction to conclude that such provision would also be superseded when the provision for 10 per cent upon the indebtedness, after maturity, became operative. Such construction being a reasonable one in light of all the provisions of -the contract, it is the duty of the court- to give it effect in order to save the agreement from the imputation of usury.

Opinion adopted by the Supreme Court.


author: BEAUCHAMP, Judge. KRUEGER, Judge.

text:
    ELLERD v. STATE.
    No. 20784.
    Court of Criminal Appeals of Texas.
    Jan. 24, 1940.
    Rehearing Denied March 20, 1940.
    Mahan & Broughton, of Childress, for appellant.
    Lloyd W. Davidson, State’s Atty.., of Austin, for the State.
   BEAUCHAMP, Judge.

Appellant was charged by indictment in the District Court of Childress County with the offense- of having in his possession a forged instrument with the intent to use and pass the same as true. It is also alleged that appellant had been previously convicted in Baylor County on the 8th day of September, A. D. 1937, for an offense of like character, to-wit, the offense of forgery.- Evidence was submitted properly authorizing the jury to return the verdict complained of finding him guilty as charged in the indictment. The court then pronounced sentence fixing the penalty at five years’ confinement in the state penitentiary.

Appellant states in his brief that there is only one question to be determined by this appeal and that is whether or not the record would support a conviction with the enhanced punishment as provided for under Article 62 of the Penal Code of Texas. The contention is that the article would not support' the judgment under the allegations in the indictment and under the facts of this case for the reason that the offense of forgery is not “one of the same nature” as that for which the appellant was being tried. Article 62 of the Penal Code reads as follows: . “If it be shown on the trial of a felony less than capital that the defendant has been before convicted of the same offense, or one of the same nature, the punishment on such second or other subsequent conviction shall be the highest which is affixed to the commission of such offenses in ordinary cases.”

The indictment, so far as it is pertinent to the question at issue, reads as follows: “And the grand jurors aforesaid do further present that the said R. D. Ellerd, under the name of R. D. Ellerd, heretofore and prior to the commission by the said R. D. Ellerd of the offense hereinbefore charged against him, he, the said R. D. Ellerd, under the name of R. D. Ellerd, was duly and legally tried on the 8th day of September, 1937, upon an indictment charging an offense of like character, then and there legally pending' against him, in the District Court of Baylor County, Texas, and which said court then and there had jurisdiction of said cause, the said cause being No. 2253 on the docket of said court and entitled the State of Texas vs. R. D. Ellerd and who was tried and convicted in said cause under the name of R. D. Ellerd and he, the said R. D. Ellerd was in said court then and there tried and convicted of an offense of like character as that hereinbefore alleged against him in and by this indictment, he having been convicted on the 8th day of September, A. D., 1937 in said cause No. 2253 of the offense of forgery and after the said felony conviction and judgment thereon had become final against him, he, the said R. D. Ellerd, being one and the same person as the R. D. Ellerd charged in the indictment herein, committed the offense first alleged in this indictment against the peace and dignity of .the State.”

The question presented for this court to decide is whether or not the indictment alleges a previous conviction for an offense which will authorize the enhanced penalty under the statute quoted. We think the evidence. sufficient and the only question is one of law.

The case of Muckenfuss v. State, 55 Tex.Cr.R. 216, 117 S.W. 853, gives the early views of this court on the subject. It holds that any conviction for violation of á Sunday law may be proven for the purpose of enhancing the penalty in a subsequent prosecution for a violation of any other Sunday law. The effect of this holding, as we understand it, would include, by the general expression, any misdemeanor which violated the Sunday law. We agree' with an expression in a subsequent opinion, Warner v. State, 118 Tex.Cr.R. 351, 42 S.W.2d 616, that the rule there laid down that offenses possessing a single element of sameness may not always be of the same nature, and that Strickland v. State, 115 Tex.Cr.R. 410, 28 S.W.2d 818, went too far in approving the Muckenfuss case. But there is nothing in the Warner opinion which may be considered .to so modify the Muckenfuss case or the Strickland case as to aid the appellant in his contention that forgery is not an offense of the same nature as possessing a forged instrument for the purpose of passing same. We think the indictment in the instant case properly alleged an offense of the same nature as contemplated by Article 62 of the Penal Code.

It is contended that the use of the word “offenses”, in the plural, will preclude the use of any other and prior conviction for an offense which may have a different penalty to that for which a party is being subsequently tried. The use of the word in the plural form will not support the construction that it means to refer to both the former and present offense. “Such offenses” unquestionably means all felonies less than capital for which a party may be on trial and has no relation to and is not meant to include the prior conviction. It is our conclusion, therefore,,that the statute means to denominate the highest penalty fixed by statute for the offense with which the party is tharged. Any other construction would nullify the statute. If it were subject to more than one construction!, it would be the duty of this court to give it that construction which makes the statute effective.

With good reasoning this court has held that possessing liquor for sale and selling liquor are "offenses of the same nature” within the meaning of the statute. Warner v. State, 118 Tex.Cr.R. 351, 42 S.W.2d 616. Theft of property over the value of $50 is an offense of like character to that charged in an indictment for the theft of an automobile of the value of $350. Calloway v. State, 125 Tex.Cr.R. 317, 67 S.W.2d 872. Theft of an automobile and burglary with intent to commit theft have been held to be offenses of a like nature authorizing the enhancement of punishment on the conviction for theft. Sasser v. State, 131 Tex. Cr.R. 347, 98 S.W.2d 211.

' Upon such cases and the reasoning found therein, it is here held that the indictment alleges an offense of a like nature as contemplated in the Penal Code, and the jury having found the appellant guilty, the court fixed the proper penalty.

The judgment is affirmed.

On Appellant’s Motion for a Rehearing.

KRUEGER, Judge.

Appellant, in his motion for a rehearing, reasserts the same matters which he urged as grounds for a reversal of this case on original submission. We have again considered the subject of his contention, but see no reason for receding from the conclusion expressed in our original opinion.

The motion for a rehearing is overruled.

PER CURIAM.

The foregoing opinion of the Commission of Appeals has been examined by the Judges of the Court of Criminal Appeals and approved by the Court.