text:
    RIO BRAVO OIL CO. v. STALEY OIL CO. et al.
    No. 14035.
    Court of Civil Appeals of Texas. Fort Worth.
    March 1, 1940.
    Rehearing Denied April 5, 1940.

      Bullington, Humphrey & Humphrey and Frank Ikard, all of Wichita Falls, for appellant.
    McDonald & Anderson, T. R. Boone, and Charles C. McDugald, all of Wichita Falls, for appellees.
   DUNKLIN, Chief Justice.

This suit was instituted by the Staley Oil Company on June 20th, 1938, against the defendant, Rio Bravo Oil Company, to recover ygths of the mineral estate in 120 acres, out of the S. W. ¼⅛ of Survey No. 33, Block No. 7, H. & T. C. Ry. Co. Survey, in Wichita County. There were two cqunts in plaintiff’s petition: the first in the statutory form of trespass to try title; the second was a claim of title by statutes of limitation of 3, 5, 10 and 25 years, Vernon’s Ann.Civ.St. arts. 5507, 5509, 5510, 5519. With a further plea of laches and stale demand and estoppel, by reason of plaintiff’s adverse possession of 55 years and abandonment by defendant of any claim of title. Plaintiff further pleaded that it was a bona fide purchaser for a valuable consideration, without notice of the unrecorded muniments of title under which defendant was claiming title.

M. L. Banta filed a plea of intervention, in which he sought a recovery of defendant, for all the mineral estate in the entire 160-acre tract not sued for by plaintiff, and also for title to the surface estate. His plea was substantially the same as in plaintiff’s petition.

The defendant answered the' suits of both plaintiff and intervener, by general demurrer, general denial, plea of not guilty and a special plea of claim of title in the minerals in and under the said southwest quarter of section 33, block 7, H. & T. C. Ry. Co. Survey, -including 160 acres, with incidental right of ingress and egress over the surface of the land, and all other privileges and reservations, including the minerals, retained by the Houston & Texas Central Railway Company in its contracts with James H. Banta, of date August 1st, 1882, conveying to him said quarter section, but disclaiming title to the surface estate thereof.

All parties prayed for removal of claims of their adversaries, as clouds upon their respective titles.

The case was tried to a jury, and following is the documentary evidence on which plaintiff and intervener relied for recovery, additional to evidence hereinafter noted to support title by limitation.

Plaintiff’s Exhibit No. 7: deed of trust by the Houston & Texas Central Railway Company, dated July 1st, 1866, by the terms of which it conveyed to Shepherd Knapp an'd David S. Dodge, trustees, and their successors in trust, ten sections of 1,024 acres per mile of- railway it would construct, and which included the land to be acquired by the Railway Company, now in controversy, under an Act of the Legislature passed March 11th, 1848, and .later Acts supplemental thereto, including an Act approved January 30th, 1854, entitled “An Act to Encourage the Construction of Railroads in Texas, by donation of lands.” It was recited in that instrument that it was given to secure payment of certain bonds the Railway Company would issue to procure money with which to pay for construction of its railway and for equipment with which to operate it. It was stipulated that after the Railway Company had surveyed and located the land covered by the lien, it would furnish to the trustees schedules and descriptions thereof, and affixed thereto minimum prices for which they are to be sold, with affidavits of the president and secretary of the Railway Company that such minimum prices are fair, the aggregate amount of which to be sufficient to liquidate the aggregate of the bonds to be issued; and the trustees would also reappraise said lands and affix minimum prices thereof in the same manner as the Railway Company has done, and with the same force and effect. With these further provisions:

“And whenever said Railway Company shall certify in writing to said Trustee that it has contracted for the sale of any section or parcel of said lands at a sum not less than the minimum price affixed to the same and ten per cent at least of the consideration shall be paid to the Trustees and a bond and mortgage of the consideration shall be paid upon the premises contracted to be sold in proper form from the purchaser to the Trustee securing the residue of the consideration money with the interest thereon as hereinafter mentioned shall be delivered to the Trustees such mortgage having been first duly acknowledged and recorded, the said Trustees will thereupon make, execute and acknowledge a deed conveying to such purchaser, his heirs and assigns, all the rights, title, interest, estate and property of the said Trustee of, in and to the section or parcel of land so sold with a covenant that they have not done any act, matter or thing to defeat or prejudice their title to the lands so conveyed. Provided that in all cases the true consideration or price of the land shall be set forth in the conveyance and shall in no case except as hereinafter provided be less than the minimum price affixed to the same as aforesaid * *

It was further stipulated that in event of default in payment of bonds, the trustees would be empowered to sell the lands then on hand, to satisfy such obligations, and convey same to the purchasers by deeds with general warranty of title.

Plaintiff’s Exhibit No. 1: patent from the State of Texas, of date July 5th, 1867, to the Houston & Texas Central Railway Company, to the S. W. quarter of section 33, block 7, H. & T. C. Ry. Co. Survey, in Wichita County; filed for record in Deed Records of Wichita County, March 14th, 1910.

Plaintiff’s Exhibits Nos. 2 and 3: two oil and gas leases in the usual and customary form, dated September 25th, 1937, and filed for record in the Deed Records of Wichita County, November 3rd, 1937, from M. L. Banta and wife, Jimmie Banta, Mrs. R. C. Pinkerton, a widow, and E. L. Chilton and wife, Estelle Chilton, D. R. Preston and wife, Brown Eyes Preston, Mrs. Irene Preston, individually and as community ad-ministratrix of the estate of herself and T. E. Preston, deceased; Rado Bradley, wife of R. J. Bradley, Mary Lee Walker, wife of M. T. Walker, Zora Cunningham, wife of G. E. Cunningham, M. L. Pinkerton, E. L. Chilton, by R. J. Bradley, attorney in fact, to plaintiff, Staley Oil Company, covering the southwest one-fourth of section 33, block 7, H. & T. C. Ry. Co. Survey, Wichita County. Those leases were for a period of ten years, upon conditions stated. The recited consideration in each was ten dollars cash in hand • paid and covenants and agreements of the lessee to pay to lessors one-eighth of oil and gas produced, with privilege of lessee to avoid a termination of the leases by paying a rental of $1 per acre, at the end of any preceding year.

Uncontradicted testimony of M. L. Ban-ta, introduced as a witness by plaintiff, to the following facts, to-wit: in the year 1885, James H. Banta built a residence house upon the 160-acre tract in controversy, and enclosed the same with a fence. During the same year, he moved upon -it with his family, put 40 acres in cultivation and used the remainder for pasturage of his stock. He continued that occupancy and use, and paid taxes on the land, from 1885 to the year of 1916, when he died. Throughout that period his possession of the surface estate has been peaceable and adverse. When he died, he left surviving him six children, and witness was one of them. Witness then went into possession and ever since and up to September 25th, 1937, -the date of plaintiff’s oil and gas leases, he has been in peaceable and adverse possession of the surface estate, occupying the residence thereon, cultivating the 40 acres and using the remainder for pasturage purposes, just as his father had done, and has paid taxes thereon. During his possession of the land, James H. Banta executed oil and gas leases on portions of the 160-acre tract to different persons; one dated April 6th, 1909, to D. C. Green; one to Fred S. Rowe, of date August 10th, 1911; one to Frank Cullinan, dated January 17th, 1913; also a deed to A. N. Treece, of date January 28th, 1913, hut' the land was reconveyed to J. H. Banta by Treece, on the same date. After the death of J.- H. Banta, his heirs executed deeds one to another of their respective interests in the land, which they had inherited from him, those deeds being of divers dates between the year 1916 and 1920. On July 22nd, 1922, some of them executed an oil and gas lease to The Texas Company on a portion of the tract, and on September 7th, 1927, several executed a deed of partition of the tract between themselves. All of the instruments noted above, including those executed by J. H. Banta and by his heirs, were filed and recorded in the Deed Records of Wichita County, soon after their execution. But no possession of the minerals was acquired under any of those instruments, by drilling oil wells. Nor has any drilling been done for oil or gas by any one else.

In the year 1924, witness sold gravel from this land to the Austin Bridge Company, who mined it by use of shovels, for a period of six months, and paid witness $900 for the gravel removed.

Witness never heard of any adverse claim of the minerals in the land as against J. H. Banta during his lifetime, or in any manner since his death, until April 12th, 1938, when defendant recorded in the Deed Records of Wichita County the instruments under which they claim title in this suit.

No evidence was offered to show that plaintiff or any of the heirs of James H. Banta, or any one claiming under them, ever paid any valuable consideration for the instruments under which they claimed title. Plaintiff and intervener then rested their case.

Defendant then introduced the following instruments.

Contract of the Houston & Texas Central Railway Company, designated as party of the first part, and James .H. Banta, designated as party of the second part, under which Banta paid to the Railway Company $133.34 cash and executed his two promissory notes in favor of the. Railway Company, each for the sum of. $133.33 principal, with interest from date, one due one year and the other two years after date, as the purchase price of the southwest ½⅛ of section 33, block 7, H.. & T. C. Ry. Co. Survey, in Wichita County,. Texas, containing 160 acres. And in consideration for the cash received and the execution and delivery of those notes and payment thereof, according to their tenor and effect, the Railway Company agreed to “make or cause to be made and executed unto said party of the second part, his heirs or assigns (upon request at the general office of the party of the first part and the surrender of this contract) a deed conveying said premises with special warranty, but made subject to the following rights of the said Railway Company, each and all of which rights are hereby reserved and are not to pass by the deed to be made by said Railway Company.” Then follow reservations of the company’s right of way 200 feet wide; the right of the company to prospect and explore the land for coal, minerals, stone or other deposits, and to mine the same, under certain conditions stated, for its own benefit; with privilege to Banta or his assigns, under stated conditions, -to open and operate any mine or mines, borings or quarries on the land for coal, stone, minerals or other valuable deposits, but that the Railway Company would be entitled to five per cent of what is taken therefrom as the result of such operations, to be delivered to it by such operator. The contract concludes as follows :

“The said James H. Banta, by accepting this deed, agrees to the reservations aforesaid, and to the entire contract as here-inabove specified, and covenants to and with the said Railway Company, and its assigns, that it and they shall have and enjoy all the reservations, rights and privileges contained and contracted for in this deed; and further agrees, that this covenant shall run with the land hereby sold. And it is stipulated in this agreement that no assignment of the premises shall be valid unless the same shall be endorsed hereon.
“In witness of which, the Houston & Texas Central Railway Company has caused this instrument in duplicate to be signed by its Vice President and Secretary, under its corporate seal, and the said party of the’second part has hereunto set his signature on the day and year above written.
“(Signed) , Vice President.
“Attest: (Signed) A. S. Richardson, Secretary.
“(Signed) James H. Banta.”

That contract was in two separate parts, each in the same words and figures and each signed by the parties thereto. One of those parts was duly acknowledged by Banta, on September 9th, 1882; and the other by the Vice President of the Railway Company, on September 14th, 1882. It was never -filed for record in the Deed Records of Wichita County until April 12th, 1938, which was some five months after plaintiff’s oil and gas lease had been recorded in those records. When defendant offered the’.contract in evidence, counsel for plaintiff .objected thereto because its execution had not been proved. The court overruled the objection and plaintiff excepted. Counsel for defendant then said: “I offer it on the ground of ancient instruments. The date of it is 1882.” The court then said: “I will let it in for the time being.” Later, when counsel for plaintiff objected to the introduction by defendant of its exhibits 4 and 5, hereinafter referred to, on grounds which also included his former objection to the introduction of said contract, counsel for defendant stated he expected to prove that the two instruments embodying said contract of sale have been in the custody of the Houston &’Texas Central Railway Company and its assigns, since the year 1882. But such proof was never offered.

Defendant introduced in evidence a deed of date August 3rd,’ 1885, and filed for record in the .Deed Records of Wichita County, December 19th, 1885, reading as follows:

“This indenture made this 3rd day of August, 1885, between Nelson S. Easton and. Jamés Rintoul, as Trustees, under the Deed of Trust hereinafter described, parties of the first part, ánd Jas. H. Banta, party of the second part,
“Witnesseth: Whereas, the said parties of the first part are duly constituted Trustees, under the certain Deed of Trust dated July 1st, 1866, duly executed and delivered by the Houston & Texas Central Ry. Co. arid recorded among other places in Vol. 2 pages 72, etc. of the Records of Mtgs. of Harris County, Texas, and,
“Whereas, the lands hereinafter conveyed were conveyed to the Trustees under said Deed of Trust upon the Trusts and with the powers therein set forth and hereby referred to, and,
“Whereas, the said The Houston & Texas Central Ry. Co. has heretofore made, executed and delivered to the said party of the second part, an instrument in writing dated August the first, 1882, and numbered 38X contracting to convey or purporting to convey the lands hereinafter described at $2.50 per acre, amounting to the sum of Four Hundred Dollars, to be fully and punctually paid as in said instrument provided, and,
“Whereas, the said consideration was not paid over to the said parties of the first part, but has been collected by the said Railway Company or its receivers, and the said Ry. Co. and its receivers have now rendered account thereof to the parties of the first part, and,
“Whereas, in and by the certain order of the Circuit Court of the United States for the Eastern District of Texas, dated May 7th, 1885, entered in the following described action, viz:
“Nelson S. Easton and James Rintoul, Trustees, Vs. The Houston & Texas Central Ry. Co. in Equity No. 183: Same Vs. same in Equity No. 184, The Farmers Loan & Trust Co., Trustee, Vs. Same, in Equity, No. 188, and The Southern Development Co. Vs. The Houston & Texas Central Ry. Co. et al. in Equity No. 185, and duly entered in the office of the Clerk of said Court, at the City of Galveston, in said State of Texas, and to which order reference is especially hereby made, it is provided that if the said parties of, the first part shall elect to ratify the said sale and the investment of the proceeds thereof that the bonds, notes, moneys, etc. therein mentioned should be paid over to the said parties of the first part as therein provided, and that the Trustees should deliver to the Receivers a deed to the purchasers for the lands sold and conveyed by the said Deed of Trust, which deed if the lands have been paid for in full shall be immediately delivered by the receiver to the purchaser of such lands and which deed, if the lands have been paid for partly in cash and partly in notes, shall be held by the receivers in escrow for delivery to the said purchasers when such purchaser shall have duly paid for the said lands in full, and,
“Whereas, the said receivers and said Ry. Co., simultaneously herewith make payment and transfer as provided in said order.
‘ “Now, this indenture Witnesseth: That the said parties of the first part, electing to consummate said transaction and make such sale, and by virtue of the powers and authority in them vested by the said Deed of Trust and in execution of said orders of the said court and in consideration of the premises and the fulfillment thereof, and of One dollar to us in hand paid by the said party of the second part, the receipt of which is hereby acknowledged, do Grant, Bargain, Sell and Convey unto the said party of the second part, his heirs and assigns, all the right, title, and interest, estate and property of them, the said parties of the first part, as such trustees, of, in and to the certain tracts or bodies of land situated in the County of Wichita, in the State of Texas, known,and described as follows, Viz:
“160 acres S.W. ⅝ in Section No. 33, in Block No. 7, and Certificate No. 747, granted by the said State of Texas, to the 'said Ry. Co. together with all and singular, the tenements, the hereditaments and appurtenances thereto belonging or in anywise appertaining, excepting and reserving here-from all the exceptions and reservations contained in the said instrument so made by the Ry. Co., the said party of the second part agreeing by acceptance hereof to perform all the covenants upon him imposed thereby as fully as if all of the same were textually inserted herein.'' To Have and To Hold all and singular, the premises above mentioned unto the said party of the second part, his heirs and assigns, forever, subject to any and all encumbrances, if any there be on the said lands and to the- exceptions, reservations and agreements (if any) in said instruments contained.-
“In witness whereof, the said parties of the first part have hereunto set their hands and seals' the day and year first above written.
“Signed, sealed and delivered in the presence of: J. W. Pungay, W. R. Bus-bour.
“N. S. Easton, J. Rintoul, as Trustees, as aforesaid.”

When counsel for defendant offered that deed, he inquired of counsel for plaintiff: “You are claiming .title under that?” Mr. Boone, for plaintiff, - said: “I am claiming title under that and I am claiming title by limitation both.”.

Defendant introduced in evidence' its Exhibit No. 4, but as,the court discovered upon inspection it did not embrace the land in controversy here, it will not be further noticed.

Defendant’s Exhibit No. 5, introduced in evidence, was a conveyance by certain named trustees to the Rio Bravo Oil Company of all the mineral estate in the 160 acres in controversy .that had been reserved by the Houston & Texas Central Railway Company in its contract of sale to James H. Banta, of. date--August 1st, 1882. That conveyance was duly authorized by orders o.f the federal .court, in- a proceeding there pending. That deed was dated October 9th, 1918, but was never filed for .record in the Deed Records of Wichita County, until April 12th, 1938, which wás some five months after' plaintiff’s oil and gas lease had been filed'in those records, on November 3rd) 1937. ]

At the conclusion of the evidence, -plaintiff and intervener moved for .an instructed-verdict in their-favor, .which motions -were overruled, and movants excepted.,-

The. jury made findings' on 23 special issues. . After they were, returned unto court, plaintiff moved for a judgment in its favor on those findings; and' defendant moved for a judgment in' its favor non obstante veredicto. The rulings of the court on those motions are' reflected in the judgment rendered. Issues Nos. 1 to 8, and 20 to'23, inclusive, embodied plaintiff’s claim of title by limitation, and the findings of the jury thereon all sustáined that claim. Plaintiff specially alleged that i't took the oil and gas lease now claimed by it upon the approval of the title by its attorney, arid the attorney so employed testified that he examined the title and reached the conclusion that the words, “said instrument” and “such instrument”, used in' the trustee’s deed to James- H. Banta, of date August 3rd, 1885, referred to the-deed of trust which had been recorded, rather than to the railway company’s, contract to sell the same. According to plaintiff’s further allegation, a reasonably prudent .person, under like employment, would- have reached the same conclusion as did plaintiff’s attorney. Findings in answer to, special issues Nos. 9 and 10 sustained those allegations.

Findings on issues 11. and 12 were that the defendant and it.s..predecessors in.title failed to give notice to the world of their claim of ownership in the mineral estate in the land.

The findings on the four issues last discussed avail nothing to plaintiff and inter-vener in the absence of proof that they were innocent purchasers of their interest and paid value therefor, as hereinafter noted.

Issues 13 to 17, inclusive, were to the effect that prior to April 1st, 1928, under claim of ownership, plaintiff and its predecessors in title caused to be mined gravel, rock and stone from the land, and sold the same for the sum of $900; and, as shown by the undisputed evidence, above noted, those operations lasted only six months.

Findings on issues Nos. 18 and 19 sustained plaintiff’s allegations that defendant and its predecessors in title abandoned all claims to the mineral estate in the land prior to April 1st, 1928, and prior to April 1st, 1913. The court in its judgment rejected those findings as unsupported by sufficient evidence. But the same were predicated upon the assumption that there had been a severance of the mineral estate from the surface estate, a point hereinafter discussed, in the absence of which the question of abandonment could not arise.

The issues presenting plaintiff's claim of title by limitation were specifically applied to the claim of adverse possession to the mineral estate, after severance thereof from the surface estate, and it is apparent from the court’s judgment that his rejection of the findings on those issues, and holding that neither plaintiff nor inter-vener had ever held adverse possession of the mineral estate in the land for a length of time sufficient to support their claims of title by limitation, were all predicated upon the assumption that there had been a severance of the mineral estate from the surface estate.

We- quote the following from the judgment rendered:

' “The court further finds that the inter-vener, M.- L. Banta, inherited an undivided 1/6 interest in and to the premises hereinafter described, from his father, James H. Banta,' and- has acquired by purchase from the heirs of James H. Banta 41/72 interest additional, making in all an undivided 53/72 interest claimed by the said inter-vener M. L. Banta.
“The court finds that the said M. L. Banta is not a bona fide purchaser for value of the undivided 1/6 interest in and to the land and premises hereinafter described which he inherited from his father, but that the said M. L. Banta, intervener, is a bona fide purchaser for value of the remaining 41/72 interest claimed by him in and to the land and the premises hereinafter described, including the mineral rights thereunder.
“The court further finds that the said Staley Oil Company, plaintiff herein, is a bona fide purchaser for value of the oil and gas lease covering the premises hereinafter described, which said oil and gas lease was purchased by the said Staley Oil Company from M. L. Banta and other heirs and ven-dees of the heirs of the said James H. Banta, deceased.
“It is, therefore, ordered, adjudged and decreed by the court that the intervener, M. L. Banta, do have and recover of and from the defendant, Rio Bravo Oil Company, an undivided 41/72 interest in and to the mineral rights in and under the premises hereinafter described, and that the title and possession of the same be divested out of the defendant, Rio Bravo Oil Company, and vested in the intervener, M. L-Banta.
“It is further ordered, adjudged and decreed by the court that the defendant, Rio Bravo Oil Company, do have and recover of and from the intervener, M. L. Banta, an undivided ⅝ interest in and to the minerals in and under the premises hereinafter described, subject to the oil and gas leases of Staley Oil Company and J. L. Art, together with such rights in and to the surface of said premises as were reserved by the Houston & Texas Central Railway Company in its contract with James H. Banta, dated August 1st, 1882, recorded in the Deed Records of Wichita County, Texas, to which reference is hereby made for a more particular understanding thereof, and that said undivided interest be vested in the defendant, Rio Bravo Oil Company, and divested out of said M. L. Banta, intervener.
“It is further ordered, adjudged and decreed by the court that the plaintiff, Staley Oil Company, and the intervener, J. L. Art, do have and recover of and from the defendant, Rio Bravo Oil Company, the title and possession of the oil and gas leasehold estates acquired by them, from M. L. Banta and others on September 25, 1937, by instruments recorded in Volume 356, pages 542 et seq. and Volume 356, pages 547 et seq. of the Deed Records of Wichita County, Texas, to which reference, is hereby made for a more particular description thereof, in which instruments the said M. L. Banta et al conveyed the title to ⅞ of all the minerals thereunder, reserving unto themselves as lessors ⅛ of the minerals thereunder as royalty to be delivered by the lessee, Staley Oil Company, and its as-signee and intervener, J. L, Art; to the credit of the lessors, free of cost to the pipe line or lines to which said lessee connects its well or wells.”

Then follows a description of the land, as shown in the patent from the State, and a decree to intervener of title to the surface estate on defendant’s disclaimer of such title.

The defendant duly perfected its appeal to this court, after its motion for new trial was overruled. But neither plaintiff nor intervener appealed.

Article 6627, Vernon’s Texas Civil Statutes, reads: "All bargains, sales and other conveyances whatever, of any land, tenements and hereditaments, whether they may be made for passing any estate of freehold of inheritance or for a term of years; and deeds of settlement upon marriage, whether land, money or other personal thing; and all deeds of trust and mortgages shall be void as to all creditors and subsequent purchasers for a valuable consideration without notice, unless they shall be acknowledged or proved and filed with the clerk, to be recorded as required by law; but the same as between th.e parties and their heirs, and as to all subsequent purchasers, with notice thereof or without valuable consideration, shall be valid' and binding.”

The pleas of innocent purchaser by plaintiff and intervener are predicated on that statute. But since there was no evidence, other than recitals in the instruments, to show payment of a valuable consideration by plaintiff or intervener, M. L. Banta, for the interests acquired by them under the instruments relied on, appellant’s assignments of error .to the findings of the trial court sustaining said pleas and awarding relief based thereon are sustained. Ackers v. Frazier, Tex.Civ.App., 220 S.W. 426; Johns v. Wear, Tex.Civ.App., 230 S.W. 1008; Davidson v. Ryle, 103 Tex. 209, 124 S.W. 616; Watkins v. Edwards, 23 Tex. 443; 43 Tex.Jur., p. 646; idem, sect. 406, p. 687, and decisions there cited.

Appellant presents the further contention that it established a complete chain of title from the common source of title to itself., The 'title claimed by it was to the mineral estate only, with express disclaimer of title to the surface estate. It therefore had the burden of showing a severance of the mineral from the surface estate. To show such severance, it introduced in evidence, over plaintiff’s objection, the unrecorded contract of sale between the Houston & Texas Central Railway Company and James H. Banta, dated August 1st, 1882. As shown above, it was introduced as an ancient instrument, without proof of its execution by the parties thereto, and without proof of the predicate that it came from a proper custody; that it was admitted by the court for the time being and counsel for defendant thereafter failed to produce proof of the necessary predicate for its introduction. For that reason we sustain appellee’s cross-assignments of error to the admission of that contract of sale. Emory v. Bailey, 111 Tex. 337, 234 S.W. 660, 18 A.L.R. 901; West v. Houston Oil Co., 56 Tex.Civ.App. 341, 120 S.W. 228, writ refused; Holmes v. Coryell, 58 Tex. 680; Flores v. Hovel, Tex.Civ.App., 125 S.W. 606; Hardin v. Sparks, 70 Tex. 429, 7 S.W. 769.

Nor does the acknowledgment of an ancient deed in the manner required by law dispense with proper proof of its execution under common-law rules of evidence. Wiggins v. Fleishel, 50 Tex. 57; Gaines’ Administrator v. Ann, 26 Tex. 340; 17 Tex.Jur., sect. 312, page 729.

The record therefore must be considered as though the contract of sale had never been introduced in evidence.

The proper construction of that deed to Banta, with that elimination therefrom, is the next question to be determined.

In 14 Tex.Jur., sect. 135, p. 913, this is said: “Where a deed is to be construed by reference to its language alone, the jury have nothing to do with its proper interpretation; this is a question of law for the court.”

And in sect. 138, p. 916, this is said:

“ ‘The language of a' deed is the lam guage of the grantor, and if there is any doubt as to its construction, it should be 'resolved against him.’
“If it be conceded that there is ambiguity in a deed, and that it is susceptible of two constructions, that one will be adopted that is most favorable to the grantee. This is a well settled rule applicable to many provisions of doubtful meaning in deeds as well as in contracts. Thus if repugnant clauses cannot be reconciled, the greatest estate will be conferred on the grantee that the language of either clause will permit, and the other clause will be rejected.”

Many decisions are cited which support that text, including Curdy v. Stafford, 88 Tex. 120, 30 S.W. 551; Cartwright v. Trueblood, 90 Tex. 535, 39 S.W. 930; Rettig v. Houston West End Realty Co., Tex.Com.App., 254 S.W. 765; Hoffman v. Magnolia Petroleum Co., Tex.Com.App., 273 S.W. 828; Stevens v. Galveston H. & S. A. Ry. Co., Tex.Com.App., 212 S.W. 639; Hancock v. Butler, 21 Tex. 804; Arden v. Boone, Tex.Com.App., 221 S.W. 265. And in Settegast v. Foley Bros. Dry Goods Co., 114 Tex. 452, 270 S.W. 1014, 1016, this is said: “Covenants or restrictive clauses in instruments concerning real estate must be construed strictly, favoring the-grantee and against the grantor, and all doubts should be resolved in favor of the free and unrestricted use of the premises.”

In 14 Tex.Jur., sect. 140, p. 919, the rule is announced that all provisions of a deed are to be given effect if this can be done.

With the elimination noted, the deed to James' H.‘ Banta by the .trustees, of date August 3rd, 1885,‘was, on its face, a conveyance of the legal title to both the surface and mineral estate. And by the terms of the deed of trust the trustees were empowered to execute and deliver it to Banta.

That, deed having been duly acknowledged and recorded in the records of deeds of Wichjta County, it established a priority of right over title acquired by defendant under its unrecorded deed to the mineral estate of date October 9th, 1918, perforce of the registration statute, Article 6631; Vernon’s Texas Civil Statutes. 36 Tex.Jur., sect. 40, p. 455, and decisions there cited, including, among others, Houston Oil Co. v. Village Mills Co., Tex.Com.App., 241 S.W. 122; Spencer v. Jones, 92 Tex. 516, 50 S.W. 118, 44 L.R.A. 716; Davis v. Lund, Tex.Com.App., 41 S.W.2d 57.

W'e do not believe this conclusion is in conflict With1 the holding of the Supreme Court in Rio Bravo Oil Co. v. McEntire, 128 Tex. 124, 95 S.W.2d 381, 387, 96 S.W.2d 1110.

In that case, it appeared that the Houston & Texas Central Railway Company executed a deed of trust of date October 1st, 1872, to secure its bonds, and the land thereafter acquired by it from the state was conveyed to trustees with power of sale similar to that given in the deed of trust shown in the instant case. Further, that in 1882, the railway company, without complying with requirements of provisions of the deed of trust, executed its contract to sell to one Kelley three sections of land in part consideration for which Kelley executed his eight promissory notes reciting a vendor’s lien retained to secure their payment. Later, during the pendency of a suit to foreclose the lien given by the deed of trust shown above and in which a receiver was appointed, the court granted permission to the trustees to execute to Kelley a deed of release and quitclaim to the three sections he had 'contracted to buy and same was executed. But in- opinion of Justice Smed-ley in that case, it was held that it was apparent from the terms of the court’s order and other facts,' that the deed was nothing but a release of Kelley’s land from the deed of trust lien, and not an independent deed of conveyance of title of the Houston & Texas Central Railway Company. In subsequent portions of the opinion this was said: “The Kelley contracts were not contracts for the sale of the land at a future time, but the contracts, together with the notes contemporaneously executed by Kelley for part of the purchase price, evidenced present, sales and gave to Kelley an equitable title to the land with right of possession. * * * These contracts and notes accomplished a present sale of the land with- reservation of the minerals and retention of vendor’s lien and worked as effective a severance of the minerals from the surface as would have been made by an instrument in the form of a deed conveying the land with similar reservation of minerals and retention of vendor’s lien.”

The court then decreed to the Rio Bravo Oil Company title to the minerals so reserved and severed, as assignee of the Railway Company.

It is manifest that in the absence of proof of the contract of sale in the instant case, that conclusion would not be controlling here.

We conclude that defendant, Rio Bravo Oil Company, failed to establish a sever-anee of the surface and mineral estates and a purchase by it of the mineral estate after such severance. That plaintiff and inter-vener acquired title to both of said estates, under instruments duly recorded, independently of their claims of title by limitation.

Furthermore, even if it be said that the deed from the trustees to James H. Banta, dated August 3rd, 1885, is not sufficient to support the plea of five years’ limitation, because of its alleged reservation of the mineral estate in the land conveyed, nevertheless, plaintiff’s and intervener’s ■claims of title under their pleas of the ten-year statute of limitation were established by the uncontroverted testimony of M. L. Banta, that his father was in peaceable and .adverse possession of the 160 acres, cultivating, using and enjoying the same, from 1885 to the date of his death in 1916, together with his specific assertion of adverse claim of title to the mineral estate also, ■evidenced by the several oil and gas leases ■executed thereon by him, beginning in the year 1909, and continuing up to the date'of Tiis death; and a continuation of the same character of possession of the land- by his lieirs, and also with their specific claim of adverse possession of the mineral estate ■evidenced by their action in mining stone therefrom, and executing oil and gas leases ■thereon after the death Of their father.

Based on those conclusions, the judgment awarding plaintiff and intervener recovery against the Rio Bravo Oil Company is affirmed, independently of the theory on which the trial court based its judgment. In accordance with a well-settled rule of decisions of this State, warranting such action.

And it is also a further rule that the judgment of the trial court will not be reversed in the absence of error shown.

As a result of the foregoing conclusions, it would logically follow that intervener would have ground for reversal of the recovery by defendant of his ⅛⅛ undivided one-sixth interest in the land which he inherited from his father, as shown in the judgment. But no cross-assignment of error is presented here sufficient to raise that point; the only suggestion thereof being in the general prayer at the conclusion of ap-pellee’s brief.

Accordingly, all assignments of error are ■overruled and the judgment is affirmed- in its entirety.


source: Caselaw Access Project

author: " O’QUINN, Justice.

license: Public Domain

text:
    AMERICAN INS. CO. OF TEXAS v. JENKINS.
    No. 3687.
    Court of Civil Appeals of Texas. Beaumont.
    March 9, 1940.
    Rehearing Denied March 27, 1940.

      P. C. Fewell, of Dallas, 'for appellant.
    . Touchstone, Wight, Gormley & Touchstone, of Dallas, for appellee.
   " O’QUINN, Justice.

Dr. O. L. Jenkins, appellee, brought this suit against American Insurance Company of Texas, a mutual insurance corporation operating under the provisions of Article 4859f of Vernon’s Annotated Revised Civil Statutes of Texas, to recover monthly disability benefits at the rate of $400 per month, under a policy of insurance issued July 26, 1935, by another mutual insurance company also named American Insurance Company of Texas, which last-mentioned insurance company operated’ under the provisions of Chapter Six, Title 78 of the Revised Civil Statutes of Texas, hereinafter referred to as original insurer.

Appellee alleged that his disability began on January 1, 1938, and had continued regularly since said date; that appellant took over all of the assets and assumed all of the liabilities of the original insurer on January 8, 1938, and collected the monthly premiums thereafter due on the policy sued on and thereby promised, assumed and became bound to pay to appellee $400 per month so long as he lived and his disability continued. He further alleged that appellant recognized its liability on the policy and had paid him the monthly payments of $400 per month from May 25, 1938, to June 10, 1939, twelve and one-half months, amounting to $5,000, when it refused to make further payment; that appellant’s failure to pay him from the date of his disability, January 1, 1938, to May 25, 1938, damaged him in the sum of $1,933.33, and from June 10, 1939, to August 10, 1939, the further sum of $800, aggregating the sum of $2,733.33, for which he prayed judgment, and further prayed for judgment requiring that appellant be required to set up and maintain a reserve ¡fund to meet future payments based upon a life expectancy of eighteen years.

Appellant answered by general demurrer, general denial, and specially that Article 4859f, Vernon’s Annotated Civil Statutes, under which it was incorporated and operated, made any contract by it to assume the payment of or to pay more than $5,000 to any one member illegal and void, and made it illegal for it to promise to pay or to divert trust funds received from payments by its present members to the payment of additional benefits to Dr. Jenkins, appellee. .It also in special answer pleaded its history, corporate powers, by-laws, constitution, and that at the time of the transfer of the membership of the original insurer to the appellant organization, the liabilities of the original insurer exceeded its assets and that appellee was not an insurable risk; that the contract between original’ insurer and appellant, relied upon by. appellee, was ultra vires, illegal and void, or, in the alternative, ultra vires, illegal and void to the extent that it promised benefits in excess of $5,000.

. Appellee, by supplemental petition, answered and alleged that appellant having taken over and received by virtue of said contract, all of the assets and assumed all of the liabilities of the original insurer, it was estopped to deny appellee’s claim, and further that by accepting premium payments on the policy from appellee, appellant had ratified and confirmed the policy sued on.

The trial was to the court without a jury and resulted in. a judgment in favor of appellee against appellant for $1,300, but denied appellee’s prayer that appellant be required to set up and maintain a reserve to meet future payments as they matured. Notice of appeal was duly given and we have the case for review.

The case was tried upon stipulated facts among which were: That the policy sued on was issued by American Insurance Company of Texas on July 26, 1935, which company, at the time the policy was issued, and. until January 10, 1938, was operating and doing business as a mutual assessment health and accident insurance association under and by virtue of Chapter Six, Title 78 of the Revised Civil Statutes of Texas, together with the amendments thereto,, with no limitation upon the amount of benefits it could promise in its policies. The policy was issued to Dr. O. L. Jenkins July 26, 1935, and he made regular monthly payments of $18 per month as they fell due to the issuing association (original insurer) in the total sum of $540 of which sixty per cent, or $324, was applied to the mortuary fund for the payment of matured claims, and forty per cent, or $216, was applied to the expense fund to pay cost of operating the association. The disease, as the result of which Dr. Jenkins is now disabled and the cause of his disability, originated within the effective period of the policy. On January 8, 1938, at a regular annual meeting of the members and directors of said original insurer, two resolutions were adopted: (1) authorizing the board of directors of said original insurer to secure a charter which would permit it to vgrite life insurance in amounts sufficiently large to comply with requests of policyholders and permit the acceptance of reinsurance of the business then- outstanding on the books of the company, and authorizing and empowering said company to effect a reinsurance of the policies of said company, and to transfer its entire assets and liabilities to the new company, if, as, and when such charter could be secured. (2) Authorizing and empowering the officers and directors of the company (original insurer) to surrender its existing (Chapter Six) charter to the Attorney General of Texas for immediate cancellation following the completion of the contract of reinsurance, and requesting the officers and directors to petition the Board of Insurance Commissioners for the use of the name “American Insurance Company of Texas’’ (the same as the name of the original insurer) for any company into which the then policyholders may be transferred. At that time, January 8, 1938, Monarch Life Insurance Company was an association duly incorporated under the laws of the State of Texas, operating as a mutual assessment life insurance corporation under the provisions of the Acts 1933, Forty-third Legislature, page 856, chapter 245, as amended by Acts 1935, Forty-fourth Legislature, page 651, chapter 264, and Acts 1937, Forty-fifth Legislature, page 522, chapter 257, designated in Vernon’s Annotated Revised Civil Statutes of the State of Texas as Article 4859f. On the same day, January 8, 1938, at a meeting of the members and directors of said Monarch Life Insurance Company, a resolution was adopted authorizing said company to assume all of the.outstanding policies and liabilities of the said (original insurer) American Insurance Company of Texas, as of December 31, 1937, in consideration of the transfer of all of the assets of said (original insurer) company to the said Monarch Life Insurance Company, and that the office of said Monarch Life Insurance Company be moved from Austin, Texas, to Dallas, Texas, and the name Monarch Life Insurance Company be changed to American Life Insurance Company (the same as original insurer). The transfer was immediately made thereafter; the officers and directors resigned and the officers and directors who had formerly served the American Life Insurance Company (original insurer) were elected and qualified as officers and directors of the Monarch Life Insurance Company and its home office moved to Dallas, Texas. The permit, license and all evidence of authority to do business was thereupon surrendered by the original insurer then operating under Chapter Six, Title 78, and the Monarch Life Insurance Company was changed to American Life Insurance Company (the name of original insurer). The membership of the original insurer was transferred to and became members of the present American Insurance Company, the appellant, representing ap-proxímately 32.9% of its total membership. Notice of such transfer was sent to members before January 20, 1938. The American Insurance Company (original insurer) then operating under Chapter Six, Title 78, Revised Civil Statutes of Texas, was duly dissolved and its charter voluntarily surrendered February 18, 1938. The appellant, American Life Insurance Company of Texas, was originally incorporated as “Lincoln’s Independent Knights of the World.” On September 2, 1933, its name was changed to “Wonderful Workers of the World Mutual Insurance Company”— it has continuously operated under Article 4859f, Vernon’s Ann.Civ.St. The name “Wonderful Workers of the World Mutual Insurance Company” was changed to “Monarch Life Insurance Company” on November 3, 1934, and to its present name, “American Life Insurance Company of Texas,” January 10, 1938. Appellant’s constitution and by-laws provide that it shall not issue a policy of insurance on any one life for more than $5,000, and provides that said limitation in amount of insurance shall apply to members “that have been or may be transferred, merged -or rewritten” by the company, “in whole or in part from any other association, regardless of the amount of insurance the member may have carried with such other association.” Appellee paid monthly assessments ($18 per month) regularly to appellant, as due, from January 20, 1938, (since the date of the transfer of his certificate by original insurer to appellant) to June 20, 1939, inclusive, and since said •date tendered other payments to appellant, which were refused by appellant on the theory that if it were liable it owed him more than the premiums, and if it were not liable it should not have the premiums. 'The amount paid by appellee to appellant was $324 after it assumed the liability of the policy. Appellee filed his claim for •disability in a manner satisfactory to appellant, for $400 per month beginning February 1, 1938. He has never filed ■claim for total and permanent disability. .Appellee has been continuously disabled to engage in any gainful employment since May 25, 1938. He was 43 years of age •at the time of the trial, and in his present condition had a life expectancy of 18 years. .His malady is diagnosed as “Spondylitis Deformans” or “Sclerosis” of the motor nerves of the spine. Appellant has not repudiated its contract, but takes the posi-.tion that .it has. paid the full amount for which it became liable by the transaction hereinbefore stated. However, if appellee should prevail in this litigation, no multiplicity of suits will result because under such circumstances appellant would renew and continue payments so long as appellee is disabled and appellant is solvent. Appellant admitted the total disability of ap-pellee from May 25, 1938, from which date it has paid him $400 per month benefit as per the policy up to and including June 10, 1939, totaling $5,000.

We have stated rather fully the agreed facts contained in the record. There were only two contested matters of fact to be ascertained, namely: (a) appellant contended that it sent to all members of the original insurer, at the time it took over the assets and assumed the liability of the original insurer, a rider of date January 8, 1938, said rider to be attached to the respective policies, and that it sent to appellee said rider, which reads:

“American Insurance Company of Texas,
“Dallas, Texas, May 21, 1938.
“Assumption Rider
“To Be Attached To Policy No. 22470.
“Be it known that on January 8, 1938, by resolution of the Membership and Directors in joint session, it was voted to merge the membership of the American Insurance Company of Texas with the membership of the Monarch Life Insurance Company of Austin, Texas, and to change the name of the Monarch Life Insurance Company to American Insurance Company of Texas and its Home Office from Austin, Texas, to Dallas, Texas, and to assume no liability on any particular policy greater than Five Thousand ($5000.00) Dollars. Therefore, in accordance with the resolution heretofore mentioned, this Rider is to be attached to and made a part of the above numbered policy.
“American Insurance Company of Texas.
“By L. T. Lewis
“President.”

Dr. O. L. Jenkins, appellee, and his wife contend and it is agreed would testify that no such rider has ever been delivered to or received by either of them.

(b) Dr. Jenkins, appellee, denied and if personally testifying would testify that prior to receiving the said benefit payments, totaling $5,000, he was not personally informed and had no actjial knowledge of the transfer of his membership from the original insurer (American Insurance Company of Texas) to appellant, American Insurance Company of Texas. Appellant contends that Dr. Jenkins was so informed and did have personal knowledge of said fact.

At the request of appellant the court filed his findings of fact and conclusions of law. The findings of fact are' in accord with the agreed facts mentioned above. On the two contested matters of fact, the court found (a) that appellee did not receive the alleged rider to be attached to his policy, nor did he have notice' of same; and (b) that appellee' had no notice or knowledge of the assumption agreement by appellant with the (original insurer)' American Insurance Company of Texas. On the facts the court concluded as a matter of law that the policy sued on was a valid, subsisting, enforceable obligation against appellant, and rendered judgment accordingly.

Appellant’s brief contains 43 assignments of error most of them pertaining to the same question, and upon which three propositions are presented. The first insists that since the provisions of Article 4859f, Vernon’s Annotated Civil Statutes, under which appellant operates, must be read into any' purported contract of insurance relied upon by appellee to support his claim against appellant, all such acts and purported contracts are illegal, void and unenforceable. This contention is based upon Section 12 of said article, which reads: , “No corporation operating under this Act shall write any policy or certificate of insurance calling for a maximum benefit in excess of Five Thousand. Dollars ($5,000.00) * * (Italics ours.)

It is also true that under appellant’s present charter, appellant is limited to writing policies not in excess of $5,000. This does not mean, however, that appellant could not assume the liability of a policy issued by another company that had the power or right under its charter to write a policy for more than $5,000. American Insurance Company of Texas (original insurer) issued the policy sued on to Dr. Jenkins, appellee, on July 26, 1935, at which time it was authorized by law, and its constitution and by-laws, to issue the policy. ■ Dr. Jenkins promptly paid all monthly premiums to keep the policy in force. Appellant here admittedly took over all of- the assets and assumed all of' the liabilities of the original -insurer about January 1, 1938, such assumption being in consideration of the transfer to appellant of all the assets and membership of the original insurer. After this transfer and assumption, appellee regularly continued to pay the monthly premiums as they came due under his policy to appellant, and it accepted the premiums and appropriated same to its use and benefit. Under the decisions of this state, appellant’s defense of ultra vires is without support in the law.

Amarillo Mutual Benevolent Association v. Franklin, 50 S.W.2d 264, 266, by the Supreme' Court of Texas, was a. case where the Fort 'Worth Mutual Benevolent Association issued a policy of insurance .to Mrs. Mary C. Franklin, which was taken over by the Amarillo Mutual Benevolent Association. Suit was filed to enforce the obligations of this policy, and the Amarillo Mutual’s-defense.was (as here) that under its charter and by-laws it could not write the type of policy which it had- taken over from the Fort Worth Mutual, and inasmuch as it could not write such a policy, it could not assume the liability of same, and therefore the attempted assumption was void, and so it was not liable on the policy. In refusing this contention, the court said: “The Amarillo Association having taken over the obligations of the Fort Worth Association, such obligations are measured by the provisions of the policy legally, issued by the latter association and its constitution and by-laws governing the same. If liability would have attached against the Fart Worth Association, the same liability attaches against the Amarillo Association.” (Italics ours.)

And further: “It is argued that no liability exists against the Amarillo Association because, under policies issued by it, its obligations extend only for payment should the insured sustain accidental injuries resulting within four months, in total and permanent disability, and not to cases of total and permanent disability due to bodily injuries or disease as covered by the policy issued by the Fort Worth Association. A sufficient answer to this is that the Amarillo Association issued no policy in this case, but took over and assumed the obligations of the Forth Worth Association evidenced by the policy 'herein ■sued on, and thereafter accepted all dues and assessments paid by defendant in error, on the faith of and under the terms of the Fort Worth Association’s policy and without notice to or by her of ■any •change in the terms or conditions. The Amarillo Association simply stepped into the place of the Fort Worth Association.” (Italics ours.)

There is no dispute in this case, and the trial court found, that Dr. Jenkins had never had any knowledge that his original insurance company was taken over by the appellant, and had no knowledge whatever of any limitation in the by-laws of appellant company. The court, in the Amarillo case just quoted, speaking on this proposition, said: “A change in the by-laws, subsequently made without the insured’s knowledge or consent, does not authorize an amendment substantially altering and materially impairing the obligation of.a previously made contract of insurance.”

Provision F of the policy sued on in this lawsuit, reads: “No provision of the charter or by-laws of the company not included herein shall avoid the policy or be used in any legal proceeding hereunder.”

The Supreme Court, in the opinion just quoted,' affirmed the Fort Worth Court of Civil Appeals, 33 S.W.2d 859, which, in its opinion, quoted with approval the case of Cathcart v. Equitable Mutual Life Association of Waterloo, 111 Iowa 471, 82 N.W. 964, 966, by the Supreme Court of Iowa. That case on the facts is very similar to the instant case. There the Iowa Masons’ Benevolent Society, a mutual benefit association incorporated under the laws of Iowa, issued a certificate of membership to Aaron D. Wetherell. This was in 1887. In 1896, the Equitable Mutual Life Association took over, by a contract of consolidation, the membership of the Iowa Masons’ Benevolent Society. Weth-erell died, and suit was brought against the Equitable Mutual Life Association on the policy. The defense was that the attempted consolidation or assumption by the Equitable Mutual Life Association was void for the reason that the deceased was over sixty five years of age at the time of the assumption, and based its defense upon a statute of Iowa, McClain’s Code Iowa, 1888,.§ 1767, which read: “No corporation or association organized or' operating, under this act, shall issue any certificate of membership, or policy.to any person under the age of fifteen years, nor over the age of sixty-five years * * * and any certificate issued or assignment made in violation of this section shall be void.”

There the defendant (as here) insisted that the transaction was, in effect, the same as if the defendant had, at the time of the consolidation, issued its certificate to Aaron D. Wetherell, but the court said this was not so. Quoting from the opinion: “The defendant never issued nor agreed to issue a certificate to Mr. Wetherell. It did not contract to insure him,- but agreed to carry out am existing lawful contract of insurance. We do not think that the contract as to Mr. Wetherell was in violation of said section 1767.”' (Italics ours.)

And: “Where a mutual insurance association transferred its membership to another association under an agreement that the latter should carry out the insurance contracts of the former, such arrangement was not an agreement to insure, within Code, § 1767, prohibiting such an association from insuring a person over 65 years of age, and hence the fact that a member of the association whose membership was so transferred was over 65 years of age at the date of the agreement did not release the latter association from liability on his certificate. * * * ‘We can hardly think that the defendant desires to insist upon its position. If it is true, as claimed, that the certificates which it has issued, and which the holders have in good faith relied upon as a provision for their family in case of death, have no validity, and if the defendant has, since this defense has been set up, proceeded to make and collect assessments, thus falsely pretending to the certificate holders that the certificates are valid, while claiming in the courts of the state that they are not, proceedings in quo warranto should be instituted against the defendant at once. These certificates are not to be treated as valid for the purpose of collecting assessments and invalid for the purpose of escaping liability; and we are not prepared to say that grave consequences should not follow the act of all persons who have participated in the- commission of the great wrong.’ So far as the Masons’ Benevolent Society, the assured, and these beneficiaries are concerned, the contract of consolidation and the contract of insurance of Mr. Wetherell has been fully executed, and under the well-recognized rules of. law in such cases the defendant should be held to perform its part.”. (Italics ours.)

It will be noticed that the Iowa statute prohibiting the writing of the policy referred to is stronger than the Texas statute, Article 4859f, Vernon’s Ann.Civ.St., upon which appellant relies for its defense in the instant case. There the Iowa statute declares that a policy written in violation is void. That ¡under which appellee here operates nowhere declares a policy written in violation of the statute to he void, hut provides for a fine against the insurance company violating said statute. In other words, the penalty defined in this statute (Article 4859f) is directed at the insurance company alone. The case of American National Insurance Company v. Tabor, 111 Tex. 155, 230 S.W. 397, 399, supports this conclusion. In that case the Supreme Court construed Article 4954, which forbids any insurance company doing business in Texas to make or permit any discrimination in favor of one person against others with respect to premiums charged for life insurance. Any company or agent violating the article is guilty óf a misdemeanor and is subject to punishment by fine under Article 416c, of White’s Penal Code. As an additional penalty, the company’s certificate of authority to do business in the state and the agent’s license for one year may be forfeited. There it was the contention of the insurance company that the effect of Article 4954 was to render void a life insurance policy issued in this state, to one aged 64 years at the premium rate for one aged 4& years. To this the Supreme Court said:

“Such a policy contract does contravene the prohibition against discriminations between policy holders; but it does not necessarily follow that the courts will adjudge it void or refuse to enforce it. The effect of the statute on the forbidden contract depends on the legislative intent.
“The statute does not denounce as void .any policy which violates its terms. The expressly declared consequences of infractions of the statute appear to be ample to secure its obedient observance. The Supreme Court of the United States was -of the opinion that, where this was true, it was the reasonable implication that the Legislature meant for only the statutory remedies to be applied, and it did not mean for courts to refuse to enforce contracts which were not declared void or unenforceable, though in contravention of the statute. Harris v. Runnels, 12 How. 79, 13 L.Ed. 901.”

Quoting further from this case:

“The language of the statute shows that the Legislature did not regard the insured and the insurer as in pari delicto in making the contracts sought to be prevented. The insurer and the insurer's agents are alone to be punished, and are alone expressly subjected to forfeiture. The command to refrain from the discriminatory acts is addressed to the insurance companies alone.
“We sanction the declaration of Judge Selden, quoted with approval in a later opinion of the New York Court of Appeals, that—
" ‘It is safe to assume that whenever the statute imposes a penalty upon one party and none upon the other, they are not to be regarded as par delictum.’ Tracy v. Talmage, 14 N.Y. 162, 67 Am.Dec. 145. [Italics ours.] * * *
“It would not he in accord with either the public policy declared by the act wherein the statute is found or the ends of justice to permit insurance companies to issue discriminatory policies of life insurance and collect and retain the premiums thereon and to then refuse payment after the death of the insured. [Italics ours.]
“The rule is established that a court of equity will not withhold relief where it is necessary in the interest of justice and of sound public policy to enforce a contract which is inhibited by statute, but is not declared void and is not otherwise open to attack, provided the parties are not in pari delicto, and he who is least culpable seeks relief.”

It cannot be, said that Dr. Jenkins, appellee, was in pari delicto with appellant, American Insurance Company. The court found that he had no notice of the assumption or any attempted change by appellant of his policy. There was no new policy issued to him. He did not take advantage of the waiver of premiums when he became disabled, but continued to send his premiums to the company. Appellee refused to receive further payments. The statute relied on by appellant, Article 4859f, Vernon’s Ann.Civ.St., simply declares certain penalties against the insurance company for a violation of said statute, and it does not anywhere say that a policy issued in contravention of said law will be void, but like the statute construed in American National Insurance Co. v. Tabor, supra, by the Supreme Court, the penalty is directed to the insurance company alone. The assignment is overruled.

Appellant’s second proposition is in effect a restatement of the first. On the authorities above cited, Amarillo Mutual Benevolent Association v. Franklin, Tex.Com.App., 50 S.W.2d 264; Cathcart v. Equitable Mutual Life Association, 111 Iowa 471, 82 N.W. 964, and American National Ins. Co. v. Tabor, 111 Tex. 155, 230 S.W. 397, we overrule the assignment.

The third proposition asserts that since appellee failed to allege and prove an injury to Dr. Jenkins or a benefit to appellant, American Insurance Company of Texas, resulting from the transaction relied on by appellee to support his plea of estoppel, the trial court’s judgment, based upon ..an estoppel, was error. No exceptions were levelled against the sufficiency of appellee’s pleading to raise the issue of estoppel. Thé trial court found the pleadings supported by the facts, and held against appellant on that point. On similar facts, the doctrine of estoppel was applied in Amarillo Mutual Benevolent Association v. Franklin, Tex.Civ.App., 33 S.W.2d 859, affirmed Tex.Com.App., 50 S.W.2d 264, where' the defendant pleaded that the taking over of the Fort Worth Association by the Amarillo Association was an ultra,vires act, and the court held in substance that where "the assured , continued to pay dues and assessments for several years after mutual aid association assumed obligations on policies issued by another association, the association, was estopped from asserting its assumption of obligations on policies taken over from the other association was ultra vires.

The same doctrine was applied in Continental Fire Ass’n v. Masonic Temple, 26 Tex.Civ.App. 139, 62 S.W. 930, 931, writ denied, where the insurance company made the following contentions:

“(1) ‘The policy, having been issued in violation of appellant’s charter and' of the laws of Texas, and of the laws of the Dominion of Canada, is ultra vires and void.’
“(2) Appellant is not estopped from setting up the ultra vires character of said contract as a defense to plaintiff’s action.”

In. answer to these contentions, the court said:

“According to the charter of this corporation, its members — and, of course, all policy holders, who are, as such, members —must be resident citizens of the state of Texas; and we regard the charter as permitting it to insure property situated in Texas only. Nevertheless it appears to have had agents outside of the state, and to have issued this policy to a nonresident corporation insuring property in Ontario. The company received and accepted the premium,, and it was cm executed contract of insuram.ee. The authorities on the subject of a corporation’s liability in cases where it acts outside its chartered powers in transacting its business are conflicting, but in this state it has been decided, upon careful consideration of the question, that where the contract is .executed, amd the corporation has received the benefits of it, it cannot invoke its wa/nt <of power as a defense.” (Italics ours.)

In Wirtz v. Sovereign Camp W. O. W., 114 Tex. 471, 268 S.W. 438, 441, the court said:. “It is undeniably true that benevolent and fraternal organizations and life insurance companies are as subject to the operation of the law of estoppel and waiver as are individuals, and the law has, in both particulars, been repeatedly enforced against them in this state.”

. We think there is no merit in appellant’s contention that appellee was not damaged by the acts, of appellant. App.ellee had a, pontract. of insurance calling for monthly payments for the rest of his life if he is totally and permanently disabled, or as long as he is totally disabled. Appellant attempts to limit that policy in the amount he is entitled to receive under his policy. It accepted the benefits of the policy'without murmur until it came to paying as prescribed by- the policy. There is no merit in appellant’s contention that the policy, as to it, was valid up to $5,000 and invalid for any further amount. The policy showed on its face that the liability might go beyond that amount. Appellant knew this in January, 1938, when it assumed the policy — not after it had paid $5,000 to ap-pellee, but at the very time it assumed the policy. Knowing this appellant accepted appellee’s payment of premiums and continued to accept same until August, 1939. It acknowledged liability on the policy in. May, 1938, and paid the monthly benefits ■until June, 1939, without any qualifications, without any notice to Dr. Jenkins, appellee, that it would arbitrarily stop payments at any time. Appellee continued to pay his. premiums, even after disability,, until appellant declined to accept them further, in. August, 1939. Estoppel to deny its full liability as provided in the contract of insurance evidenced by the policy, clearly appears in the facts. The parties are not in pari delicto. Appellee fully complied with his contract, and appellant failed to do so, and further denies that it is obligated to do so.

The judgment should be affirmed, and it is so ordered.

Affirmed.


author: COMBS, Justice.

text:
    WILLIS v. ADAMS.
    No. 3612.
    Court of Civil Appeals of Texas. Beaumont.
    March 13, 1940.
    Rehearing Denied March 27, 1940.
    ' Morris & Bennett, of Beaumont, for appellant.
    C. T. Duff' arid Lámar Cecil, both of Beaumont, and Louis V. Nelson, of Dallas, for appellee. ' ' ' - ' -
   COMBS, Justice.

This suit was for debt in the amount of $700 and interest, evidenced by two notes given in part payment for a secondhand tractor and grader purchased from appel-lee by appellant. ■ The only defense plead by appellant to this debt was a cross action for damages for fraud and misrepresentation by the appellee. In substance, the cross action alleged fraud, misrepresentation and concealment at the time the defendant viewed the machinery prior to the purchase. Subsequently, the written contract was entered into. The damages resulting to the appellant from the alleged fraud were fully plead in his.cross action. The trial was to the court and appelleefs general demurrer to appellant’s cross action was carried with the case. However, all proof tendered by appellant in support of the matters plead in his crbss action was excluded on objection of the appellee to the effect that such proof would vary and contradict the written purchase contract executed by the parties. At the conclusion of the evidence, the trial court entered a judgment for the appellee for its debt and foreclosure of mortgage lien on the machinery involved. The judgment by its terms sustained the plaintiff’s general demurrer to the defendant’s cross action, which judgment had the effect, of denying the defendant the defense relied upon.

The sale contract duly executed by the parties contained the following stipulations:

“12. Purchaser hereby waives all statutory warranties and all warranties implied by law in connection with the sale of the property described on the reverse side hereof, and agrees that the only warranties made.by seller in connection with said sale are those set forth on this page.
“13. It is agreed that this contract shall not be countermanded, and contains the entire agreement.between the parties hereto and that no .agreements or representations, either verbal or written,.. made by agents or employees, shall be binding on J. D. Adams Company, other than are contained herein.”

The cross action contained no allegations attacking the written contract itself.

Opinion.

We think the trial court entered the correct judgment on the -record ■ as made. The alleged fraud occurred during negotiations leading to- the purchase of the machinery by the appellant and occurred before the making of the written contract. There is no pleading in the cross action attacking the contract or tending to show that through fraud, accident or mistake it failed to represent the true agreement as finally made. The stipulations above quoted by their very terms constitute an effective bar to the matters alleged so long as the written contract is permitted to stand as written. Certainly, to permit proof which squarely contradicts and nullifies the provisions of the contract, would violate the parol evidence rule which shields written instruments from such attack.

The judgment of the trial court is affirmed.


author: WALKER, Chief Justice.

text:
    MATTHEWS v. DUNCAN et al.
    No. 3630.
    Court of Civil Appeals of Texas. Beaumont.
    Feb. 29, 1940.
    H. R. Rolston, of Lufkin, for appellant.
    C. W. Falvey, of Lufkin, for appellees.
   WALKER, Chief Justice.

This case originated in justice court,, precinct No. 1, Angelina county, an action by appellant against appellees for $118. On trial to the court without a jury, judgment was in favor of appellees on the following finding by the court: “That same action is a suit wherein J. D. Matthews plaintiff is claiming an indebtedness of $118.00 due and owing by defendants to-him, and that defendants, as a matter of defense have interposed their counter claim to said indebtedness and request that said' counter claim be allowed over and against the said debt of $118.00 and the court is of the opinion that same should be done.”'

From the judgment against him, appellant appealed to the county court of Angelina county, where, on trial to a jury,, judgment was rendered against him in favor of appellees for the sum of $250 on the-verdict of the jury answering the following issues as indicated:

“Issue No. 1.
“What amount, if any, do you find fromi a preponderance of the evidence, the defendants are indebted to the plaintiff, J. Di. Matthews.
“Answer’by stating the amount, if any.
“Answer: $-
“Special Issue No. 2.
“What amount, if any, do you find from a preponderance of the evidence, the plaintiff is indebted to the defendant, Millie Duncan et al.
“Answer by stating the amount, if any.
“Answer: $250.00.”

In justice court, appellant’s demand was for the balance due on an account between him and appellees. Appellees filed a counterclaim against appellant of $722.25, with credits in appellant’s favor of $389.50. Since the pleadings in justice court are oral, in support of the judgment rendered in justice court, we indulge the presumption that appellees abandoned their counterclaim and simply plead payment of the $118 claimed by appellant against them.

On appeal to county court, the pleadings are also oral, and in view of the verdict of the jury we must indulge the presumption that appellees plead a counterclaim of at least $250 in excess of the amount claimed against them by appellant. The judgment is fundamentally erroneous, the amount in controversy being beyond the jurisdiction of the court. On appeal from justice court to county court, the jurisdiction of the county court is limited to the jurisdictional amount of the justice court, which is $200. McNeill et al. v. Vickery, Tex.Civ.App., 26 S.W.2d 741; Bankers’ Mortgage Co. v. Rogers, Tex.Civ.App., 61 S.W.2d 593; Trail v. Harper, Tex.Civ.App., 58 S.W.2d 883; 26 Tex.Jur. 956.

Judgment reversed, and cause remanded.


author: O’QUINN, Justice.

text:
    BOOTH TERMITE & CHEMICAL CO. v. MANUEL.
    No. 3566.
    Court of Civil Appeals of Texas. Beaumont.
    Jan. 26, 1940.
    Rehearing Denied March 13, 1940.

      H. C. Cunningham and E. B. Votaw, both of Beaumont, for appellant.
    Elton Cruse, of Beaumont, for appellee.
   O’QUINN, Justice.

This suit was filed by A. J. Manuel for himself and as next friend for his minor daughter, Marlene Manuel, against T. E. Booth, doing business under the trade name of Booth Termite & Chemical Company, to recover damages to his said minor daughter, occasioned by the alleged negligence of appellant in leaving sulphuric acid in a milk bottle on the premises of ap-pellee which bottle was picked up by the minor daughter, Marlene Manuel, some seven years old, and the acid in said bottle accidentally spilled on the clothes and person of the said minor.

The case was tried to a jury upon special issues, on the answers to which judgment for appellee was entered in the sum of $1,100, from which judgment appellant brings this appeal.

Appellant’s request for an instructed verdict is overruled. Issues of fact were raised by the pleadings and evidence, and so an instructed verdict could not be granted.

The assignment that the court’s definition of “new and independent cause” amounted to a general charge, and constituted reversible error, is without merit. The term was used in the definition of “proximate cause” used in the submission of special issue No. A-3. Tt was authorized and required by Article 2189, R.S.1925, and so could not be termed a general charge.

There was no error in permitting the introduction of a dress alleged to have been worn at the time she received her injuries. The contention, in the main, is that the dress was not properly identified. We think the identification was sufficient, and also that the dress was in the same condition when offered as immediately after the accident.

Assignments of error Nos. 7, 8, 9, and 10 relate to the issues submitted on the question of exemplary damages. The jury answered all these issues in favor of appellant. No harm resulted from their submission.

We overrule appellant’s contention that the court committed reversible error in his definition of “new and independent cause.” The definition was sufficient. Moreover, we do not believe the question of a “new and independent cause” was raised by the evidence.

In defining “new and independent cause” the court used the expression “intervening efficient force.” This expression was not defined, and appellant objected to said' definition because the term “intervening efficient force” was not defined. In Rio Bravo Oil Co. v. Matthews, Tex.Civ.App., 20 S.W.2d 342, and Blanche v. Villiva, Tex.Civ.App., 22 S.W.2d 490, failure to define this term was held reversible error. Believing that the question of “new and independent cause” or “intervening efficient force” was not raised by the evidence, the error was harmless.

Several assignments are levelled against the submission of special issues A-l, A-2, and A-3 to the jury, the complaint being that the use of the words “substantial quantity” of “strong sulphuric acid”, was improper because there was no evidence to show the quantity of acid left in the bottle, nor to show the strength of the acid, if the liquid was sulphuric acid.

Special issue No. A-l reads; “From the preponderance of the evidence, do you find that the Booth Termite Company on or about June 3, 1938, left a substantial quantity of strong sulphuric acid in plaintiff’s milk bottle on the back steps of plaintiff’s apartment?” The jury answered “Yes.” There was evidence that there was a liquid called sulphuric acid in the bottle. The issue submitted inquired as to whether there was a “substantial quantity” left in the bottle. No definition of “substantial quantir ty” was requested. It is not believed that this' was error. As to the expression “strong sulphuric acid” there was evidence that the liquid in the bottle was sulphuric acid, and that it burned or destroyed the cotton fabric, of the child’s dress where it came in contact with it and also burned the parts of the child’s body where it touched same. We do not believe there was reversible error if error at all. The assignment that the charge was on the weight of the evidence is without support in the objections taken to the charge.

Assignment of error No. 5 reads: “The court committed reversible error in permitting the witness A. J. Manuel to conduct an experiment before the jury as to the effect a certain fluid produced in court by himself would have on. cloth or ordinary fabric, claiming said fluid to be sulphuric acid such- as was used at the fire station and at the same time admitting that he was not a chemist and was not experienced in handling .such, acid, over the objection of appellant, to the effect that said experiment should not have been permitted unless it was first proven that such fluid was in fact sulphuric acid and of substantially the same strength and quality of the acid which is alleged to have injured Marlene Manuel.”

The record discloses that Mr. Manuel was an employe of the City of Beaumont in the Fire Department, and worked at a fire station near the apartment in which he with his family lived. His apartment was on the ground floor. There was an apartment upstairs right over his' apartment. The Booth Termite & Chemical Company (Mr. T. E. Booth) was employed to exterminate certain insects in this upper apartment. Booth sent one of his employees to the premises at about 8:30 or 9 o’clock in the morning for the purpose of performing the services. This employee explained to Mrs. Manuel what he was going to do, and that the fluid used was dangerous, if inhaled, and requested her to take her daughter, the injured girl about seven years old, and go away from the premises and remain away all of the day. Mrs. Manuel and her little girl went away. She told the man that her milk bottles were in the house, and he asked her to set them on the outside, which she did. When she returned she came to the rear of the apartment and picked up two of the milk bottles and the little girl picked up two, one in each hand, on the back steps and they started to get in their car. One of the bottles that the little girl picked up had a watery looking fluid in ⅛ and when she started to pour out the fluid in the bottle some of it spilled on her and burned her clothing and her person. Marlene, the little girl, began tp scream and her mother saw that the clothes “began to have holes in them” and told .her to run to her father at the fire station which was right near by. Her father met her and she was given first aid treatment. The fluid was spilled all down the front of her dress and on her legs. She was taken immediately to a doctor who treated her.

On the trial counsel for appel-lee desired to perform an experiment before the jury to illustrate the effect of sulphuric acid on cotton cloth, and was preparing to do so when objection was made by appellant. Among other things, the following took place:

“Mr. Cruse: Your Honor, I made some inquiry a while ago for one of these little glass things like water pitchers used to sit in, but I haven’t been able to locate any. I would like to ask Mr. Bergman if he knows of one of those being around here. I would like to make some experiments.
"Mr. Votaw: I think we have got one and we can accommodate you. Now we are going to see the big smoke.
“Mr. Cunningham: (Holding up bottle) Wouldn’t you like to use this?
“Mr. Cruse: No; I am conducting this experiment.
“Mr. Votaw: Do we understand counsel is going to submerge this dress or a part of in this liquid over here?
“Mr. Cruse: That’s my intention.
“Mr. Votaw: Your Honor, we object to that on this particular piece of evidence here; this is introduced in evidence, this item, • and we want this certified to the Court of Civil Appeals if this case is appealed, and we don’t want it defaced; and furthermore we don’t want it submerged in this acid unless it is proved that this acid is the sanje, contains the same strength of acid as that was in the milk bottle that he claims to have been in Mr. Booth’s possession.
“Mr. Cruse: I don’t like to use this handkerchief.
“Mr. Votaw: Now, if he is going to use this acid here, we are going to object to any demonstration before the jury of this acid over here, unless it is proved that this is sulphuric acid and it is the same strength that they claimed Mr. Booth used on this house. This may be much stronger acid; it may burn that stuff completely up, or anything of that kind that the acid that he used might not have. This man says he can’t tell whether it is the same; he is no chemist, and that it would have to be tested.
“Mr. Cruse: He did' state though that it acts similarly to what this acid did.
“The Court: Well, it is in evidence before the jury, what the effect of the other was. I will sustain the objection to the exhibit, but as to the other, I will permit it.
“Mr. Votaw: In this particular stuff here?
“The Court: Yes, sir.
“Mr. Votaw: We want to get our objection clear. We object to this experiment for the reason it is not shown that this acid, if it is acid, is of the same strength of the acid which plaintiff claims to have been left at his premises.
“Mr. Cunningham: And high prejudicial. And shows no connection between the liquid that fell on the girl and the matters now before the jury. Further, that the witness is not qualified to testify as to the contents, that the two bottles are in any way identical, or have the same chemical contents.
“The Court: Overruled. The Court will permit the experiment for the purpose of demonstrating before the jury what action on cotton cloth the stated percent of sul-phuric acid will have.
“Mr. Cunningham: Note our exception, and further object to it because that -is immaterial. ■ If it is not shown that the acid that is alleged to have fallen on the girl is of like character as that with which the demonstration is made; otherwise it would be immaterial and prejudicial.”

The experiment was made with sulphuric acid obtained from the fire station. There was no testimony showing the respective strengths of the acid used by Booth Termite & Chemical Company in their exterminating work, and that obtained from the fire station with which the experiment was made. The assignment is without merit. The undisputed evidence shows that sul-phuric acid was used by appellant in the work done at the apartment on the day of the accident, and that some was left in a milk bottle on the rear steps of appellee Manuel’s apartment, and that Marlene Manuel, the seven year old daughter of ap-pellee picked up the bottle with the acid in it and accidentally spilled some of the acid on her dress in front and upon her person, and that the acid burned up or destroyed the dress, which was of cotton fabric, where it touched it, and also burned her body and legs, causing blisters where it came in contact for which she was treated by a doctor. The experiment was performed in the presence of the jury for the purpose of showing the effect of sulphuric acid on cotton cloth and to account for the injury to her person. The sulphuric acid with which the experiment was made was obtained at the fire station where Manuel worked, and with which he was familiar. While it was not shown that the sulphuric acid used in the experiment was of the same degree of strength as that spilled on the child, the effect was the same — burned or destroyed the cloth in the same manner as did that spilled on the dress of the girl. The effect of sulphuric acid on cotton cloth or flesh of a person had already been established by the evidence of witnesses who testified to the acid getting on the clothes and person of the child, and its effect. And, too, the bottle with some of the acid in it was taken immediately after the accident to the fire station and some of the fluid in the bottle was poured on cotton cloth and it burned or destroyed the doth. This established the fact sought to be proved by the experiment. It seems to be the law that where evidence of experiments is offered to prove a fact already established by the testimony, neither its rejection nor its admission is error of which either party can complain. 22 C.J. p. 756, Section 845.

Other assignments are presented. They have all been considered, none of them are believed to show error, and are all overruled.

No reversible error appearing, the judgment should be affirmed, and it is so ordered.

Affirmed.

On Motion for Rehearing.

This was a suit by appellee, A. J. Manuel, for himself, and as next friend for his minor daughter, Marlene Manuel, against appellant for damages. The jury found for the minor in two items of $500 each. It also found in favor of appellee, A. J. Manuel, for a sum, which after a remittitur was filed, was $100. The judgment was rendered for A. J. Manuel for the entire amount of $1,100. The judgment should have been in favor of Marlene Manuel, the minor, by her next friend, A. J. Manuel, for $1,000 for the use and benefit of said minor, Marlene Manuel, and that the money, when collected, is to remain in court until the appointment and qualification of a regular guardian of the estate of said minor, authorized to receive said money; and judgment in favor of A. J. Manuel for the $100. The matter is called to our attention by appellant in its motion for rehearing. The judgment is hereby reformed so as to award, in consonance with the jury’s finding, $1,000 to the minor, Marlene Manuel, by her next friend, A. J. Manuel, for the use and benefit of said minor, and that the money, when collected, shall remain in the registry of the court until the appointment and qualification of a regular guardian of the estate of said minor, authorized to receive said money; and, further judgment in favor of A. J. Manuel for $100, and as reformed is affirmed. Texas Cent. Ry. v. Stewart, 1 Tex.Civ.App. 642, 20 S.W. 962, writ refused; Gulf, C. & S. F. Ry. v. Styron, 66 Tex. 421, 424, 1 S.W. 161; Wilson v. Fisher, Tex.Civ.App., 105 S.W.2d 304, writ refused.

The motion for rehearing in all other respects is overruled.