text:
    COOKSEY v. McGUIRE et al.
    No. 2069.
    Court of Civil Appeals of Texas. Eastland.
    Dec. 6, 1940.
    Rehearing Denied Jan. 10, 1941.

      McWhorter, Howard & Cobb, of Lrtb-bock, for appellant.
    Carl Rountree and J. E. Garland, both of Lamesaj for appellees.
   LESLIE, Chief Justice.

Tom Cooksey instituted this suit against Gordon McGuire, Jimmie Stanfield, M. C. Lindsey, Bob Brown, W. W.-Strong, el-don Lindsey, J. C. Camp, John Strong, H. H. Barron, Jim Broughton, Pruitt Dubose, Mrs. Laura Horton, a feme sole,- Mrs. Guy Simpson, a married woman, and her husband, Guy Simpson, to recover damages due to an alleged libel and slander perpetrated against the plaintiff by the defendants, jointly and severally.

The defendants answered separately by general demurrer, general denial, and that the matters communicated were qualifiedly or conditionally privileged and spoken if at all without malice toward the plaintiff.

Preliminary to the commencement of the trial and on motion of the plaintiff, the cause of action was dismissed with prejudice as to Weldon Lindsey, J. C.‘ Camp, John Strong, Jim Broughton and Pruitt Dubose. The trial then proceeded before the court and jury, and at the conclusion of the plaintiff’s testimony the trial court instructed a verdict in favor of each of -the remaining defendants. The plaintiff appeals.

The alleged libel and slander charged by appellant, Cooksey, against the appellees consisted in the publication by the latter of a check accompanied by statements to the effect that the appellant had not paid the same and did not pay his honest debt, etc. The check is to the tenor following:

“Lamesa, Texas, 2/10/1924
“The First State Bank
Of Lamesa
“Pay to the or,der of Mr. M. M. Horton .$600 Six Hundred and.Dollars “For work for one year 1923.
“Tom Cooksey
“Tax Coll”

It is first alleged that the appellees “acting together with each other” displayed said check to named persons, stating with reference thereto that the appellant had executed and delivered it and had not paid it. That in so doing he refused to pay his honest debt and by so acting had rendered himself unfit to be nominated for and elected to the office of Sheriff of Dawson County, or to hold any such official position. It is also alleged that the appellees acting separately and individually defamed the appellant in the manner indicated on various and sundry occasions in Dawson County. That whether acting together, or separately, said statements were maliciously published and circulated.

It was alleged that at the time said check was displayed and commented upon, the appellant was a candidate for the Democratic nomination for Sheriff of Dawson County and that the appellees in accordance with an agreement between them and others unknown to the appellant maliciously and for the two-fold purpose of damaging the name of the appellant and blasting his good reputation in the community, circulated said check without his knowledge.

It was further alleged by appellant that said check was originally given by him to said M. M.-Horton, who, at the time, was a deputy under him in the Tax Collector’s office of Dawson County. That same was in payment of the deputy’s salary for 1923, and that the check had subsequently been paid by the appellant. That by reason of the malicious publication of the check and the statements concerning the same, the appellant had suffered from such defamation great mental anguish and pain. That his credit was impaired by such statements made by the appellees who acted without regard to the truth and without making any effort to find out the truth concerning the check.

The action of the trial court in instructing a verdict for the defendants and the judgment in response thereto is attacked from different angles but the appellant himself proceeds upon the theory that the alleged libelous and slanderous matters must be regarded as qualifiedly or conditionally privileged. He frankly states in his brief that “it must be admitted there is a qualified privilege * *

Granting for the present that the check and the language in reference thereto constitute libelous or slanderous matters, the above admission brings us to the controlling question presented by the appeal. That is, were such qualifiedly privileged communications uttered with the actual or express malice prerequisite to fixing liability on the part of the appellees, or either of them. Cranfill v. Hayden, 97 Tex. 544, 80 S.W. 609; 27 Tex.Jur. p. 675, sec. 49, et seq.

It becomes.unnecessary to discuss at length the state of facts which ordinarily render certain communications qualifiedly privileged. Such communications comprehend all bona fide statements upon any subject matter in which the 'author has an interest,' or .with regard to which he has a duty to perform when made to another having a corresponding duty. The principle is that “The defendant who is acting under a conditional privilege is performing duties which the law regards as beneficial to the parties concerned and to society.” 5 Texas Law Review, p. 357. In other words, the effect of such privileged occasion is to justify the communication when made without actual malice. 27 Tex.Jur. p. 649, sec. 35 et seq.

In substance, the undisputed facts of the instant case are as follows: The appellant was a candidate for the nomination for Sheriff of Dawson County. The ap-pellees were voters therein. As such, it was both their right and duty to consider, investigate and discuss in a proper way the fitness of appellant, as well as his opponents, for the office sought by them. Obviously, the communications had reference to matters in which the appellees and the public generally had an interest. Such rights and interests extended to the official acts of the appellant even in former years. The check here involved was signed by him as Tax Collector of that county. The record contains no testimony that either of the appellees spoke concerning the check and its author in any harsh and vehement manner, or that either of them was actuated by sinister or corrupt motives toward the appellant. On the contrary, he described his relationship with each of the appellees as having been cordial and friendly. As to' M. C. Lindsey it was “the very best” and as to McGuire it was “exceptionally so.” As Tax Collector of Dawson County the appellant alleged and testified he issued and delivered the check to the payee, M. M. Horton, in consideration of a year’s service rendered him (Cooksey) by said Horton when serving as his deputy tax collector. The check had no cancellation marks, nor was it stamped by the bank in a manner indicating payment, rejection or presentation. No agent of the bank (in Lamesa) testified that the check had never been presented for payment. - It was, except as to its age, a bona fide negotiable instrument put in circulation by the appellant. On its face the instrument made no suggestion of a libel. If it could be said (which we think it cannot be) that the instrument reflected matters libelous per se, then it is obvious that the appellant himself was its author, and that he failed or neglected to repossess or recover the sáme.

Concerning the alleged payment of the check, the appellant’s testimony is to the effect that said M. M. Horton in 1922 (prior to his going to work for appellant as deputy tax collector) borrowed $600 from appellant who advanced the'loan by a check for that amount. That at the time (Feb. 10, 1924) the appellant’gave the check here involved said Horton had' not repaid the 1922 loan. That after issuing the 1924 check and delivering it to Horton he and Horton subsequently agreed that this 1924 check he satisfied by the cancellation of the pre-existing alleged debt of equal amount which Cooksey testified Horton had been owing him as the 1922 loan. That at such settlement Horton agreed to destroy or return the check to him. The check was not returned to appellant by Horton in his lifetime, and he died about five years after Cooksey went out of office and several years before the date of the alleged defamation in this suit.

The appellee Jimmie Stanfield is a brother of the appellee Mrs. Horton, and by reason of his relation to her and his interest in her estate, as well as from statements made to him (1925) by the deceased during his lifetime, said Stanfield had come into the possession of information that the check represented an unsatisfied obligation on the part of Cooksey. There is no evidence that Stanfield, or his sister, knew anything to the contrary.

In some way the existence of the instrument had cropped out in the political campaigns in 1934, 1936, and possibly an earlier campaign in which Cooksey was a candidate. The transactions and matters here involved developed during his campaign in 1937 or 1938. There is no testimony that any of the appellees had any knowledge that the 1924 check had been paid or canceled as claimed by the appellant. Concerning such information on their part he frankly stated, “I don’t know whether they knew anything about it or not.”

In the light of the testimony generally it cannot be said that either of the appellees liad any information or belief that the check was other than what it purported to be on its face, namely: an unsatisfied obligation. With that, the privileged nature of the occasion of said comments is not disputed by the appellant.

The occasion or comment being privileged, there arises no presumption of malice, but on the contrary, the law raises the presumption of good faith and want of malice. Stated differently, the privileged occasion rebuts an inference of malice prima facie. Here the burden rested on appellant (plaintiff) to show actual or express malice. Cranfill v. Hayden, supra; I. & G. N. R. Co. v. Edmundson, Tex.Com.App., 222 S.W. 181; Simmons v. Dickson, 110 Tex. 230, 213 S.W. 612, 218 S.W. 365; 27 Tex.Jur. 675, pars. 49, 50.

After a careful consideration of the testimony we readily conclude that there is no evidence of actual malice upon the part of either of the appellees in the utterances of the matters charged to them, respectively. Certainly there is no testimony of concerted action upon the part of the appellees to publish any defamation against appellant. There is a total lack of evidence of any conspiracy upon their part.

Further, if there be found in this testimony any statement suggestive of malice, concerted action by, or conspiracy upon the part of the appellees, then the nature of such suggestion is such as to bring it within the scintilla rule, and, therefore, amounts to no evidence whatever. Joske v. Irvine, 91 Tex. 574, 44 S.W. 1059. It would amount to no more than a surmise or suspicion.

The law applicable to the facts reflected by this record is well stated in the following excerpt from 27 Tex.Jur. p. 667, sec. 45. It is there said:

“Generally speaking, comment on and' criticisms of the acts and conduct of public men, including officials and candidates for office, are privileged if fair and reasonable and made in good faith. * * *
“A person who becomes a candidate for office puts his character in issue insofar as his qualification is concerned. Hie character and fitness for the position sought are a matter of public concern, and are proper subjects for discussion and fair and reasonable comment. Thus fair comment and criticism of the acts or conduct of an officer who is also a candidate are privileged if made in good faith and for the purpose of questioning his fitness for office, and this privilege may extend to statements in a letter written by one voter to another. But to be privileged the statements or comments must be pertinent to the issues; that is to say, that they must relate to the suitableness of the candidate for the office, and must be justified by the occasion; they must concern matters which would be appropriate for the electors to consider in making a selection for the office.”

A fuller statement of the law with a concrete application of the same to substantially similar facts may be found in Snider v. Leatherwood, Tex.Civ.App., 49 S.W.2d 1107, by this court. See, also, numerous authorities cited and discussed in said opinion as well as those cited by the above text in support of the rules stated.

Being of the opinion that the trial court properly and correctly appraised the testimony bearing on either libel or slander, his action in instructing a verdict in favor of each of the defendants is approved, and the judgment of the trial court is affirmed.


source: Caselaw Access Project

author: FUNDERBURK, Justice.

license: Public Domain

text:
    LANGLITZ v. AMERICAN NAT. INS. CO.
    No. 2070.
    Court of Civil Appeals of Texas. Eastland.
    Dec. 20, 1940.
    Rehearing Denied Jan. 10, 1041.
    R. L. Rust, of Eastland, and Sayles & Sayles, of Abilene, for appellant.
    Conner & Conner, of Eastland, for ap-pellee.
   FUNDERBURK, Justice.

Mrs. Tee Clyde Langlitz, surviving wife of Leonard O. Langlitz, brought this suit against American National Insurance Company to recover, as beneficiary, upon a policy of insurance issued to her said husband. The Insured was alleged to have died from gunshot wounds by reason whereof his death was by accidental means, and the Beneficiary entitled to recover double indemnity, according to a provision of the policy.

The defense was urged that the Insured’s death was suicide, occurring within two years from the issuance of the policy, by reason whereof, as provided in the policy, the liability of the Insurer was limited to payment to the Beneficiary of the amount of the premiums which had been paid by the Insured to the Insurer, which premiums had been duly tendered.

In a jury trial it was found by the verdict that Insured “did shoot himself intentionally” ; that “he did commit suicide”; that “the wound on the body of the deceased, Leonard O. Langlitz, was” not “received by accidental means.”

From the judgment for the Insurer, the Beneficiary has appealed. For brevity, we shall continue to designate the plaintiff (appellant) as “Beneficiary”; the defendant (appellee) as the “Insurer”, and the deceased Leonard O. Langlitz as the “Insured.”

The Beneficiary has briefed four assignments of error. The first, while alleging that the “court erred in rendering judgment in favor of the appellee”, which alone because of its generality presents nothing sufficiently specific for review, further alleges that “the verdict of the jury was contrary to the law and evidence”, subject to the same objection, but upon the whole the assignment is perhaps rendered sufficient by reason of further particular allegation as follows: “There was no evidence of probative force showing any motive on the part of the Insured to commit suicide”, and “there was no evidence to overcome the presumption of law aiding the theory of accidental death.”

We have no difficulty in arriving at the conclusion that evidence of motive for committing suicide is not indispensable to the sufficiency of evidence to show suicide. In the absence of any such evidence of motive there may, nevertheless, be other evidence sufficient to support a finding that death was suicide.

The allegation that “there was no evidence to overcome the presumption of law aiding the theory of accidental death” presents a question of a little more difficulty. The difficulty, however, is in properly understanding the nature and effect of the presumption thus referred to.

The Beneficiary, in addition to setting out the policy as an exhibit to her pleadings, alleged one of the obligations of the Insurer to be to pay the Beneficiary, under the provisions of the policy, the sum of $500. Another was to pay $500 additional as a “Double Accidental Death Benefit.” As to the $500 double accidental death benefit, a number of exceptions from the liability to pay the same as provided by the policy were alleged, including the exception of death “as a result of self-destruction, or an attempt thereat, whether sane or insane.” Regarding these exceptions the Beneficiary alleged that “she has stated the above exceptions as to liability in said policy only because the rules of pleading so requires and she now negatives all said exceptions and says that Leonard O. Langlitz died on or about April 4, 1939 from a gun shot wound inflicted on said date, which was an accidental discharge of said gun and that his death resulted directly and independently of all other causes from bodily injury effected solely through external and accidental means, of which there was a visible contusion and wound on the exterior of the body, to-wit, on his head and * * * he did not commit suicide and his death was not due to intentional self-destruction, but was due solely from accidental means.”

There is either a material omission, or if not, at least a want of clearness in the Beneficiary’s petition in this: While there is alleged and negatived certain exceptions from the coverage of the policy as regards the “Double Accidental Death Benefit”, there are no such allegations as to exceptions from the other obligation of the policy to pay $500 regular life insurance. Referable to this general provision, the policy provides under the heading, “Limitations”, as follows: “If the Insured, whether sane or insane, shall commit suicide within two years from the date hereof the liability of the company shall be limited to the amount of cash premiums actually paid on the policy.” The date of the policy was February 16, 1938. The alleged date of the death of the Insured, being April 4, 1939, was, therefore, within the suicide time limitation of two years. It, therefore, appears that only by appropriating the negation of exceptions to the double indemnity provision as being also the negation of exceptions -to the general obligation can the pleadings be considered sufficient to state a cause of action under the authority of International Travelers Ass’n v. Marshall, 131 Tex. 258, 114 S.W.2d 851, 852, and authorities therein cited.

The rule re-affirmed and applied in the Marshall case was stated as follows: “It has long been held that in a case of this kind the burden rests upon the plaintiff to allege and prove that the death of the insured was by accident, and did not come within the exceptions named in the policy. In order to sustain a judgment based on such policy, plaintiff must negative, by allegation and proof, the exceptions which under the terms of the policy specifically exempt the company from liability.” As. to the record in that case, the court further said: * * * that plaintiff, having failed to make such allegations, by showing that the death of William Wright Marshall came within the general liability assumed by the insurer, and that it did not come within the excepted causes stated in the policy, did not meet the burden placed upon her." (Italics ours.)

Does the rule thus declared apply to a case where one of the exceptions from the coverage of the policy is suicidal death? We think so. The attempt to recognize in such a case a distinction would, it seems to us, have no reason to support it. In International Travelers’ Ass’n v. Bettis, 120 Tex. 67, 35 S.W.2d 1040, which we may refer to as the Bettis case and one of the cases followed in International Travelers Ass’n v. Marshall, supra, the court said [120 Tex. 67, 35 S.W. 1044] : “It is further contended, and was so held by the Court of Civil Appeals in its opinion [3 S.W.2d 478], that, in the absence of any proof to the contrary, the law aids the deceased with the presumption that he did not intentionally or voluntarily inflict such injury upon himself, and that the rule should apply in this case.” The rule thus referred to was stated in the opinion of the Court of Civil Appeals as a quotation from 1 C.J. 495, as follows: “ ‘Where, however, it is apparent that the injury to or death of the insured was the result of external and violent means, and the issue is as to whether it was due to an accident, within the meaning of the policy, or to some cause excepted by .the policy, the presumption is in favor of accident and against the. existence of facts bringing the case within any of the exceptions of the policy, such as insanity of the insured, intentional injury inflicted by a third person, lack of due care and diligence, self-inflicted injuries, and suicide.’ ” (Italics ottrs.) International Travelers’ Ass’n v. Bettis, Tex.Civ.App., 3 S.W.2d 478, 481.

This rule or principle of presumption is readily identifiable as the same in support of which the Beneficiary herein cites the following cases: United States Fidelity Life Ins. Co. v. Adair, Tex.Civ.App., 29 S.W.2d 940, affirmed, Tex.Com.App., 29 S.W.2d 944; Mutual Life Ins. Co. v. Ford, 61 Tex.Civ.App. 412, 130 S.W. 769; Bankers’ Health & Acc. Ass’n v. Wilkes, Tex.Civ.App., 209 S.W. 230; Fort Worth Mut. Benev. Ass’n v. Jennings, Tex.Civ.App., 283 S.W. 910; Home Benefit Ass’n v. Buro, Tex.Civ.App., 10 S.W.2d 188; American Central Life Ins. Co. v. Alexander, Tex.Civ.App., 39 S.W.2d 86, affirmed Tex.Com.App., 56 S.W.2d 864; Supreme Camp of American Woodmen v. McNulty, Tex.Civ.App., 103 S.W.2d 867; First States Life Co. v. Ransom, Tex.Civ.App., 110 S.W.2d 143; Southland Life Ins. Co. v. Brown, Tex.Civ.App., 121 S.W.2d 653.

As to the operation, or claimed effect, of this rule of presumption as dealt with in the Bettis case, supra, the court said: "Upon this question we express no opinion. If the rule of presumption above stated did apply in this case, the judgment of the trial court could not be sustained, for the reason that the plaintiff did not comply with the rule, which places the burden upon him to allege and prove that the injury inflicted upon Zack M. Bettis was not received under one of the exceptions stated in the policy. To sustain this judgment, one presumption would have to rest upon another presumption. The well-settled principles of law prohibit this.”

We are not entirely certain that we fully understand just how the court reached the conclusion that the said rule of presumption required no expression of opinion for the reason assigned, namely, if it did apply, the judgment would be without necessary support in the pleadings in that “the plaintiff did not comply with the rule which places the burden upon him to allege and prove the injury inflicted * * * was not received under one of the exceptions stated in the policy.” It is sufficiently clear, however, we think that the court did hold that such rule of presumption does not affect the other rule that the plaintiff must allege and prove that exceptions to liability under the terms of a policy did not exist.

We shall not undertake here to determine whether there is any necessary conflict between these two rules. We shall rather assume, without deciding, that both rules may operate. If so, it seems pretty clear to us that that can only be possible upon the theory that the evidence of facts to show (making the application to the instant case) that the death of the Insured resulted “from bodily injury effected solely through external violent and accidental means”, etc., is at the same time the basis upon which said presumption operates, in lieu 'of evidence, to show that Insured did not “commit suicide.” There is involved no shift whatever of the burden of proof as called for by the required pleadings. The presumption simply stands in lieu of evidence unless and until there is some evidence tending to show suicide. In National Aid Life Ass’n v. Driskill, Tex.Civ.App., 138 S.W.2d 238, we had occasion to consider and briefly discuss, but found it there unnecessary to decide, the very interesting question of whether a presumption of fact, such as that under discussion, constitutes any evidence after the introduction of evidence contrary to the presumption, upon the issue to which the presumption relates. Since that decision the Supreme Court, through the Commission of Appeals, seems to have decided this very question. In Empire Gas & Fuel Co. v. Muegge, Tex.Com.App., 143 S.W.2d 763, 767, in the opinion of Judge Smedley, it is said: “It is settled in this state, and by the weight of authority elsewhere, that such presumption is not evidence but father a rule of procedure or an 'administrative assumption’ which ‘vanishes’ or is ‘put to flight’ when positive evidence to the contrary is introduced. * * *

“The presumption is a true presumption, which has been defined as ‘a rule of law laid down by the courts which attaches to facts certain procedural consequences’. McCormack & Ray’s Texas Law of Evidence, Sec. 32, p. 48. It places on the party against whom it operates the burden of producing evidence. It is not evidence and when met by rebutting proof is- not to be weighed by the jury or treated by the jury as evidence in arriving at a verdict.” (Italics ours.)

Under this authority, as applicable to the record here, the case stands thus: Beneficiary had the burden to plead and prove that Insured’s death was by accidental means within the other limitations stated in the policy, and further, that it was not within the suicide exception to liability. Beneficiary testified that on the day of Insured’s death she made a proof of loss as to another policy on the life of Insured in which she stated that suicide was the cause of Insured’s death. Upon the trial she attempted to parry the effect of this voluntary statement by saying she was grieved and did not know what she was signing. She made no attempt, however, to go further and show that it was an untrue statement made as a mistake of fact. This testimony alone, we think, eliminated any operation or effect of the presumption relied upon. It, as least, raised the issues that Insured committed suicide, that his death was not the result of accidental means. The verdict upon that issue being against the Beneficiary is conclusive, unless such result is to be avoided because of the action of the court sought to be reviewed under the other assignments of error.

A coroner’s inquest was held over the body of Insured and the coroner made a report to the effect that death of Insured was suicide. Over objection of Beneficiary the report containing this statement was admitted in evidence. We think the statement was hearsay, not admissible under any of the exceptions to the rule excluding that character of evidence, and was, therefore, incompetent. Boehme v. Sovereign Camp, W. O. W., 98 Tex. 376, 84 S.W. 422, 4 Ann.Cas. 1019; Dent v. National Life & Acc. Co., Tex.Civ.App., 6 S.W.2d 195; Texas Emp. Ins. Ass’n v. Ritchie, Tex.Civ.App., 75 S.W.2d 942; Washington Nat. Ins. Co. v. Chavez, Tex.Civ.App., 106 S.W.2d 751; First States Life Co. v. Ransom, Tex.Civ.App., 110 S.W.2d 143.

We are also inclined to the view that there was error in admitting certified copy of the records of the State Registrar of Vital Statistics which consisted in part of the same statement of the coroner to the effect that the death was suicide. If it be assumed that such a statement was properly a part of the records, as to which it is provided in R.S.1925, Art. 4477, and according to rule 54a thereof, Vernonls Ann.Civ.St. art. 4477, rule 54a, that certified copies shall be admissible as prima facie evidence'—in our opinion a very doubtful question—still it is clear that the statute does not provide for reporting such as a fact, but only as a probability. There is, it would seem, a material distinction between a fact as evidence and a mere probability of such fact.

We shall not dwell upon this question, nor attempt to set forth the reasons which incline us to the view stated. Assuming that the court erred in admitting both the report of the coroner and the certified copy from the State Registrar’s records, we are of the opinion that according to the record, or so far as shown to the contrary, the judgment of the court was the only proper judgment warranted.

Considering all the evidence in the light most favorable to the Beneficiary, it no more reasonably warrants the inference that death of Insured was not suicide, than it warrants the opposite inference that it was suicide. Evidence of the Beneficiary concurred with evidence of the Insurer to show suicide. On the other hand, the full effect of all the facts and circumstanc-¿s, if any, tending to show an accidental death, rather than suicide could only form the basis of a mere guess or speculation. The evidence which we have held, or assumed, was illegal, did not conflict with any evidence showing that death was accidental, or was not suicide; but, on the contrary, was in accord therewith. There was simply ah absence of any evidence of probative force that the death was by accidental means and not suicide. The court would have been warranted, we think, in instructing a verdict for the Insurer, wholly unaffected by the evidence improperly admitted.

For these reasons we reach the conclusion that the errors in the admission of testimony were harmless, that the judgment of the court below should be affirmed, and it is accordingly so ordered.


author: LOONEY, Justice.

text:
    TRADERS & GENERAL INS. CO. v. BOYD.
    No. 12938.
    Court of Civil Appeals of Texas. Dallas.
    Nov. 30, 1940.
    Rehearing Denied Jan. 11, 1941.

      L. L. Bowman, Jr., of Greenville, and Lightfoot, Robertson, Gano & Johnston, of Fort Worth, for appellant.
    J. Benton Morgan, of Greenville, for appellee.
   LOONEY, Justice.

Joe Boyd, employed at Greenville, Texas, by Hal C. Horton, sued the Traders & General Insurance Company — insurance carrier — to set aside an award of the Industrial Accident Board and to recover compensation for injuries, alleged to have been received in the course of his employment. The Insurance Company appealed from an adverse judgment.

This is the second appeal; on the first, the case was transferred to the El Paso Court of Civil Appeals, and, for reasons hereafter stated, was reversed and remanded. See Traders & General Ins. Co. v. Boyd, 121 S.W.2d 463. In an opinion by Chief Justice Nealon, the El Paso Court gave a full statement of the nature of the case and, in ord§r that it may readily be understood without referring to the report of the case, the stateme'nt made by Judge Nealon is reproduced, which is as follows: “This is a workman’s compensation case. We shall refer to the parties as they were designated in the District Court. Plaintiff, Joe Boyd, sued defendant, Traders & General Insurance Company, which was the compensation carrier for Boyd’s employer, Hal C. Horton, who operated a grain and feed mixing mill and wholesale grocery and feed store in the City of Greenville, Texas. He alleged and proved that his employer had no toilet upon the premises where he conducted his business and where plaintiff was employed; that on the morning of December 15, 1936, during the hours of plaintiff’s employment and while he was at work it became necessary for him to use a toilet; that the employees of Horton, with the latter’s consent, acquiescence and approval, resorted, when necessary, to three toilets located in the neighborhood, one being at the rear of the Gulf Filling Station of which J. D. Luna is manager; that it was to this one that plaintiff resorted, after reporting at the office of his employer that he was going to do so; that his employer had instructed employees to inform the owners of toilets being used whenever the same were out of order, and that the one at the Gulf Filling Station upon the occasion in question was out of order, and that while he was in Luna’s office reporting the condition to him, a deputy sheriff, whose custom it was to oil his gun at said station, at which were sold lubricating oils of a quality used in lubricating fire-arms, was in the act of unloading a shotgun when a shell exploded and buck shot therefrom struck and injured the plaintiff permanently; that he was totally and permanently disabled as a result thereof; that he had worked more than three hundred days during the preceding year in the same employment in which he was working when injured at a daily wage of $3.50 per day, and that appellant carried the compensation insurance of Horton.”

Although the defendant presents thirty-seven assignments and twenty-one propositions, we think the material questions are relatively few. Considered together, the cumulative effect of propositions 1, 2, 3, 4, 13 and 14 challenges the sufficiency of plaintiff’s petition'to state a cause of action, and the sufficiency of the evidence to make out a case for compensation, in that plaintiff failed to show, either by pleading or proof, that at the time of being injured, he was engaged at something having to do with, and originating in, the work, business, trade or profession of his employer; consequently, the court erred in overruling the defendant’s general demurrer to plaintiff’s petition (proposition 4) ; erred in overruling defendant’s motion for an instructed verdict (proposition 1); erred in entering judgment on the findings of the jury (proposition 2); and erred in overruling its motion for a new trial (propositions 3, 13 and 14).

Numerous cases of more or less per-tinency are cited in the briefs, but the case that, in our opinion, is directly in point and controlling, is the decision of the El Paso Court on the former appeal. The case made on the last trial, substantially, is the same as made on the first; the questions presented to the El Paso Court, in substance, were the same as those presented in the group of propositions just mentioned, with reference to which the El Paso Court said:

“Plaintiff in error under four propositions briefs its assignment complaining of the action of the court in refusing and failing to sustain defendant's general demurrer, in refusing to grant its motion for an instructed verdict, and in refusing to grant its motion for judgment non obstante veredicto. These assignments are predicated upon the theory that at the time plaintiff was injured he was not engaged in some work having to do with and originating in the work, business, trade or profession of his employer; or, in any event, that a question, inquiring as to whether he was so engaged at the time should have been submitted directly to the jury. We think these assignments are lacking in merit. Under the undisputed evidence Boyd was the employee of Horton and when he resorted of .necessity to the toilet operated by the Gulf Filling Station, he was working in the course of his employment. He suspended the particular work of necessity during his short absence from the premises. He reported at the office of his employer that he was going to the Gulf Filling Station, having previously sought to use a toilet located upon the Humble property and finding the enclosure $urrounding it closed and locked. He did not engage in any undertaking personal to himself other than as noted and to take a drink of water before leaving the Gulf Station. This undisputed testimony together with the evidence upon which the jury’s findings were based, all of which was in conformity with plaintiff’s pleadings, constitute a sufficient answer to the contentions of plaintiff in error under the propositions mentioned.”

It is our opinion that the decision of the El Paso Court settled the material questions involved, that is, as to the sufficiency of plaintiff’s petition to state a cause of action under the Workmen’s Compensation Law, Vernon’s Ann.Civ.St. art. 8306 et seq., and the sufficiency of the evidence adduced thereunder, to make out a case. However, the case was reversed and remanded because the trial court failed to submit unconditionally the issues of partial incapacity, temporary total incapacity, and permanent partial incapacity. Not satisfied with the judgment of the Court of Civil Appeals, the defendant made an application to the Supreme Court for a writ of error, obviously because of the holdings of the Court of Civil Appeals, to the effect that, plaintiff’s petition stated a good cause of action and that the evidence showed, at the time of the injury, he was engaged in some work having to do with and originating in the work, business, trade or profession of his employer; defendant’s contention being that, on the pleadings and facts, the Court of Civil Appeals should have reversed and rendered judgment in favor of the defendant (see p. 29, defendant’s brief).

The Supreme Court denied the application, thus affirming the correctness oT the judgment of the Court of Civil Appeals, which, in our opinion, consistently could not have been done if the Supreme Court had been of the opinion that either the pleadings or the evidence failed to show that plaintiff received the injury complained of, in the course of his employment. It follows therefore, that under an approved applicable doctrine, the pronouncement of the El Paso Court be comes the law of the case; hence the propositions under consideration and their related assignments are overruled. See 3 Tex. Jur. pp. 1338, 1339, § 939.

We also think propositions 5, 6, 7, 8, 9, 10, 11 and 12 should be grouped and considered together. They challenge the correctness of issues 1 to 9, defendant’s contention being that the issues, by requiring evidentiary findings, unduly emphasize the facts inquired about, and, in effect, were upon the weight of the evidence.

These issues required the jury to find from a preponderance of the evidence, (1) whether the employes of Hal Horton, for several years prior to plaintiff’s injury, had been using the toilet room of the Gulf Filling Station in Greenville, Texas, for their convenience in attending to calls of nature; (2) if answered in the affirmative, whether such use of the toilet was within the knowledge, acquiescence and consent of Hal Horton (the employer); (3) whether plaintiff, while working for Hal Horton, had been using the toilet in question for a long period of time prior to his injury; (4) whether Hal Horton had instructed his employes, including plaintiff, in the event the toilet got out of repair, to report such fact to the proprietor of the toilet room; (5) whether on the occasion in question, and just before plaintiff received his injury, he had used the toilet in question; (6) if answered in the affirmative, to find whether, after using the toilet, plaintiff went into the filling station to report to the proprietor of the station that the toilet was out of repair and needed attention; (7) if answered in the affirmative, to find whether, while plaintiff was in the station for the purpose mentioned, he was injured by the discharge of a gun in the hands of a person in the station; (8) to find whether the injury suffered by plaintiff arose out of the work or business of his employer (as that term was correctly defined) ; and (9) whether plaintiffs injury arose in the course of and in the furtherance of his employer’s business -(as the clause “in the course of employment” was correctly defined). The jury answered each and all of these questions -in the affirmative.

Defendant’s position, with reference to the propositions under discussion, is stated in its brief, as follows: “The contention under the above propositions is to the effect that the court has unduly emphasized the contention of the plaintiff and has led the jury to believe that the plaintiff would be within the course of his employment provided that it believed plaintiff and other employees had been using the Gulf Station toilet with the knowledge, acquiescence and consent of Hal Horton over a period of years. The issues further lead the jury to speculate as to what might be a risk or hazard ordinarily or reasonably inherent or incidental to the conduct of Hal Horton’s business and leaves the jury to further speculate as to whether or not the plaintiff in fulfilling his duties was doing something incidental to his employment without regard to the terms and provisions of the Workmen’s Compensation Act.”

We recognize the correctness of the rule that only ultimate fact issues should be submitted, and that it is improper to split up into several parts and submit separately the different elements of the main issue; but, for a violation of the rule to constitute reversible error, it must appear that harm • resulted. On the first trial, only a group of evidentiary fact issues, constituting-the ultimate issue, were submitted; whereas, on the last trial, in addition to these evidentiary issues, the ultimate fact issue was also submitted in issues 8 and 9. We do not think harm resulted from the submission, because, as stated by the El Paso Court, “Under the undisputed evidence Boyd was the employee of Horton and when he resorted of necessity to the toilet operated by the Gulf Filling Station, he was working in the course of his employment.” The overemphasis of undisputed facts (if overemphasized) was not prejudicial. It is only where the evidence is conflicting that it is improper to comment upon its weight, or over-emphasize any particular facts. We, therefore, overrule the group of propositions under consideration and their related assignments of error. •

The point presented by the defendant in' propositions IS, 16 and 17 is that, the court erred in not sustaining defendant’s motion for an instructed verdict, and in not granting a new trial, because .the finding of the jury, to the effect that plaintiff had suffered permanent total disability, was so against the overwhelming preponderance of the evidence as to indicate passion, prejudice, or some other improper motive on the part of the jury.

We do not think so. While the evidence is somewhat conflicting, we think it preponderates decidedly in favor of the finding of the jury, which we adopt as our conclusion on the issue involved, therefore overrule the propositions and related assignments.

In its 18th proposition and related assignment, the defendant complains of the refusal of the court to grant a new trial on the ground that the finding of the jury in favor of a lump sum settlement was so contrary to the weight of the evidence as to indicate passion or prejudice on the part of the jury.

This contention is overruled, because, in our opinion, the' evidence preponderates in favor of the finding of the jury, which we also adopt as our conclusion of fact on the issue involved.

The court submitted issue IS, reading : “Do you find from a preponderance of the evidence that plaintiff has been or will be partially incapacitated, as that terrri is■ hereinafter defined for you? An- ' swer: ‘Plaintiff is partially incapacitated,’ or ‘Plaintiff is not partially incapacitated.’ As you- may find. Answer: Plaintiff is. not partially incapacitated. By ‘partial incapacity to labor’ is meant that one is able to perform only a part of regular ordinary work and that his earning capacity has been reduced partially but substantially.”

In propositions 19 and 20, the contention is made that the issue as submitted was prejudicial, in that it placed the burden of proof upon the defendant.

We do not agree with the contention of the defendant that the charge is prejudicial, therefore overrule the propositions and their related assignments. See Wright v. Traders, etc., Co., 132 Tex. 172, 123 S.W.2d 314; United Employers’, etc., Co. v. Burk, Tex.Civ.App., 140 S.W.2d 571; National Indemnity Underwriters v. Blevins, Tex.Civ.App., 129 S.W.2d 734; and Southern Underwriters v. Stubblefield, Tex.Civ.App., 130 S.W.2d 385.

Disentangling the question from its wrapper of verbiage, seemingly the defendant makes the point, in proposition 21, that the court committed reversible error, after calling to the attention of the jury their failure to answer a material issue (No. 15), in orally directing them to return to their room and answer the unanswered issue; the contention of the defendant is that the instruction should have been given 'in writing.

Judge Speer, in his work on Special Issues, § 401, p. 533, after quoting Article 2207, R.C.S., reading: “If the verdict is informal or defective, the court may direct it to be reformed at the bar. If not responsive to the issue submitted, the court shall call their attention thereto and send them back for further deliberation.”, said: “Under the statute just quoted, if it should appear that there were conflicting findings in the answers, it would be the duty of the court to send the jury back for further deliberations to the end that such conflict be eliminated. This, however, is itself a species of defect within the statute. The action of the court in directing the reformation of an informal or defective verdict, or the return of the jury for further deliberation, where the same is not responsive to the issue submitted, is not apparently required to be in writing, for neither of these is the giving of an additional instruction within the statute requiring the charge to be in writing. Clearly the implication of the statute is that it fiiay be oral. Precisely as the return of the jury for continued deliberations, where they have been unable to agree, may be oral.”

The failure of the jury to answer one of several material issues submitted rendered the verdict defective, and, in its incomplete form, was not entirely responsive to the issues submitted; hence, we are of opinion that the court’s oral instruction to the jury, to return to their room and answer the unanswered interrogatory, was an unobjectionable procedure.

After duly considering all propositions and assignments urged for reversal, and failing to find reversible error, the judgment of the trial court is affirmed.

Affirmed.


author: FOLLEY, Justice. STOKES, Justice

text:
    HANCE v. STUBBS et ux.
    No. 5220.
    Court of Civil Appeals of Texas. Amarillo.
    Nov. 25, 1940.
    Rehearing Denied Jan. 13, 1941.

      Cox & Brown, of Temple, for appellant. Vickers & Campbell, of Lubbock,- for ap-pellees.
   FOLLEY, Justice.

Associate Justice STOKES of this court has written an opinion in this case with which the Chief Justice and the writer of this opinion do not agree. The following opinion, therefore, becomes the majority opinion and controls the disposition of the cause in this court.

This is the second time this cause has been before this court. The opinion in the first appeal will be found in Temple Trust Co. v. Stubbs, 94 S.W.2d 247. . A writ of error was granted by the Supreme Court and the prior judgment of this court was affirmed by the Commission of Appeals in 133 Tex. 58, 126 S.W.2d 645. We refer to these former opinions for a statement of such facts as we deem unnecessary to restate here.

It appears that on' February 10, 1925 the Temple Trust Company made a loan to the appellee Roger Q. Stubbs, purporting to be in the sum of $2,200. As evidence of such indebtedness the appellee, joined by his wife, executed eight notes aggregating the sum of $2,200 in favor of the Temple Trust Company, and, in order to secure the payment of such notes, also executed a de<?d of trust upon 3.41 acres of land, in Lubbock County, Texas. Four ofithe notes were for $150 each and three for $200 each, due respectively March 1, 1926 to March 1, 1932. There was also one note in the sum of $1,000 due March 1, 1935. All of the notes provided for interest at the rate of 7% per annum from date, payable semiannually. The record is conclusive that the appellees actually received only $1,980 in the transaction, which was $220 less than the aggregate sum indicated in the eight notes. For want of a better name, for the purpose of this opinion, we shall designate this $220 as “bonus”, as have the parties to this appeal. The loan transaction was in the former appeal declared usurious and no contention to the contrary is made in the present appeal.

The $150 notes and the $200 notes were sold by the Temple Trust Company to parties not interested in this suit, and such notes were paid to such owners in full, both principal and interest- as provided therein. The $1,000 note was sold to the appellant, Cora L. Hance, February 20, 1925. The appellant thereafter collected from the appellees the sum of $527.92 as interest on such note.

Some time prior to 1936 (the record not disclosing the date of the filing of the original petition) appellee Roger Q. Stubbs, joined by his wife, filed this suit against the Temple Trust Company and Cora L: Hance, alleging that the loan transaction was usurious and asking to recover and have credited upon the note held by Cora L. Hance all interest which had been paid upon the entire series of notes. Upon the former trial the trial court rendered judgment crediting the note held by Mrs. Hance with all of the interest paid by the appellee on the entire series of notes thereby extinguishing the appellant’s note. The case was appealed to this court where it was held the action of the court below in crediting Mrs. Hance’s note with the amount of interest paid to the holders of other notes was error. The holding was affirmed by the Commission of Appeals as above indicated.

Upon a retrial of the case before the court without a jury judgment was rendered December 21, 1939 in favor of Mrs. Hance and against the appellees, Roger Q. Stubbs and wife, for the sum of $357.67 with foreclosure of the deed of trust upon the 3.41 acres of land in Lubbock County, Texas. In arriving at the sum due, the trial court deducted from the $1,000 note the $220 bonus retained by the Temple Trust Company when the original loan was made and also the $527.92 interest paid by the appellees to the appellant, which left a balance of $252.08, to which latter amount was added legal interest and 10% attorneys’ fees, making the total of $357.67.

The principal contention of the appellant in this court is that the trial court erred in deducting from her note the full amount of the bonus in the sum of $220, or any part thereof, which amount was retained by-the Temple Trust Company when the loan was made. The action of the court in allowing a credit upon the appellant’s note for the $527.92 interest which she had collected is not seriously contested by the appellant, and, indeed, could not be. It is the well-established law in this State that the owner of the principal note in a usurious loan transaction is properly chargeable with collecting usurious interest when the same is paid to him upon the principal note while in his hands. Hamilton et al. v. Bill et al., Tex.Civ.App., 90 S.W.2d 929, writ of error refused.

The minority opinion of this court, with which we cannot agree, is to the effect that all of the $22Q bonus in the original transaction should be charged against the $1,000 note held by the appellant. In such opinion Justice Stokes relies chiefly upon the case of Temple Trust Company v. Stobaugh, Tex.Civ.App., 59 S.W.2d 916, which was a suit for penalties under article 5073, R.C.S. of 1925, wherein the original lender was at all times the owner of all of the notes in the transaction and had collected all the principal and interest paid thereon. The defense of limitations was urged against the recovery of double the amount of the bonus upon the theory that such bonus was paid at the time the loan was made in 1924 by deducting the same from the amount of the money advanced to the borrower. The Court of Civil Appeals for the Third District overruled this contention, holding that the bonus being interest and not principal, was carried over into the last note unpaid and that limitation could not begin to run against it until the payment of such note. It should be noted in that case the court was not dealing with a situation like that of the instant case where various holders of the notes in the series have collected the principal and interest of their respective notes.

In the instant case the sum of $1,980, the amount of money actually advanced to the borrower, is but 90% of the $2,200 aggregate sum of the eight original notes. - In the absence of any note designated as bonus or any express agreement as to its payment, we think under the circumstances of this case it follows that the original parties impliedly agreed that each of the eight notes should bear its respective portion of the bonus. The face value of each of the notes therefore represented only 90% principal and the balance was, in effect, interest, which under the provisions of article 5071, R.C.S. of 1925, was a void obligation. Palmetto Lumber Co. et al. v. Gibbs et al., 124 Tex. 615, 80 S.W.2d 742, 82 S.W.2d 376, 102 A.L.R. 474. If each of the respective notes should bear its proportionate share of the bonus each of the $150 notes represented only $135 principal, each of the $200 notes only $180 principal and the $1,000 note only $900 principal. If each of the notes is so charged with its share of the bonus the respective holders of the first seven notes collected their proportionate share of the bonus as such notes were paid. In other words, when one of the $150 notes was paid its owner received $15 of the bonus and when one of the $200 notes was paid its owner received $20 of the bonus. Likewise, under this- theory, the appellant would receive $100 of the bonus if and when her note was paid according to its tenor.

We have no quarrel with the theory advanced in the Stobaugh case that such bonus is not fully paid to the holder of the whole series until all of the principal of the notes is paid to him. Such theory is apparently based upon the doctrine that the borrower is entitled to have the bonus payments applied to the principal of the obligation and so long as the opportunity is open to have it so applied the law will appropriate it to that purpose. However, the theory that the law automatically makes such appropriation is criticized by Judge Smedley of the Commission of Appeals in Adleson et ux. v. B. F. Dittmar Co., 124 Tex. 564, 80 S.W.2d 939, as therein indicated. But, be that as it may, it is our opinion where several holders of portions of the indebtedness have collected the same, including their proportionate share of the bonus as in the instant case, neither the law nor the borrower may arbitrarily charge that portion of the bonus theretofore received by others to the holder of the last unpaid note. Such a rule has never been announced in this State nor do we think it should be. The holders of the respective portions of the indebtedness represented by the first seven notes of the series were charged with constructive knowledge that the whole transaction was usurious ab initio. Although their knowledge may have been only constructive they are particeps criminis in the collection and retention of usurious interest. But under this record such holders are not the only ones possessed of such knowledge, constructive or otherwise. The borrower knew the Temple Trust Company had advanced to him only 90% of the aggregate face amount of the notes he executed. This was not constructive but actual knowledge of a fact which would certainly charge him with constructive knowledge that the loan was usurious. Possessed with such actual and constructive knowledge he paid the holders of the notes other than the appellant their portion of the bonus and now desires to charge the appellant with the portions they received under his own application of such payments. Such a procedure, in our opinion, would be very inequitable and unjust under the circumstances of this case. To adopt such a rule would not only be inequitable and unjust but we think would be in violation of the strict mandate of the Supreme Court of this State. In the former appeal the Commission of Appeals held that the interest paid on the first seven notes of the series was not deductible from the principal of the appellant’s note, and such decision is now stare decisis. Since the bonus included in the face amount of the notes was in reality only interest, the amount so paid to the holders of the, first seven notes could not, in our opinión, be charged against the appellant except in strict violation of the judgment of the Supreme Court in the former appeal and of the established law of this State. Temple Trust Co. et al. v. Murfee et ux., 133 Tex. 53, 126 S.W.2d 643, and authorities therein cited.

As we construe the Murfee case, supra, it supports in principle our holding in this cause. In that case the loan contract was identical, in effect, with that of the instant case. In the Murfee case $4,950 was advanced to the borrower upon ten notes aggregating $5,500. Thus the money advanced was but 90% of the aggregate face value of the ten notes. The Farmers State Bank of Temple became the owner of the tenth note of the series in the sum of $1,700. The nine prior notes totaling $3,800 were held by other parties .who received in full the principal and interest payments thereon as they became due. The borrower, J. E. Murfee, sought to charge the bank with payments of interest received by the owners of the first nine notes. Upon a certified question from this court, as indicated in the opinion of the Commission of Appeals, it was held that the usurious interest received by the transferees of the first nine notes should not be applied to the principal of the tenth note purchased by the bank, which bank had received none of such payments. If our theory in the instant case is correct, the holders of the first nine notes in the Murfee case received $380 of the $550 bonus or excess interest paid upon their notes-. Although such fact was not in so many words recited by this court in its certificate in such cause a careful analysis of the opinion of the Commission of Appeals will reveal that such fact actually existed. Therefore, the issue as to the receipt of the $380 fictitious principal by the holders of the first nine notes was at least inferentially before the Supreme Court in that decision. With such fact evident in such cause our court of last resort made no distinction between the money received as interest as such on the first nine notes and that received as inflated principal which, in effect, amounted only to interest. If such a distinction exists, as urged by our associate, the Commission of Appeals might well have so announced in the Murfee case and thus charged the bank’s note with the $380 received by the holders of the other notes in the series. Its failure to do so under the circumstances of that case, we think, affords authority for our holding in the instant case.

Under the record here presented we think that $60 of the so-called aggregate principal in the first four $150 notes, together with $60 of the so-called aggregate principal of the three $200 .notes, constituted the proportionate share of such notes in the bonus originally deducted by the lender, which bonus or interest has heretofore been received by parties other than the appellant.' We are further of the opinion that the remaining unpaid portion of the bonus in the sum of $100 constitutes a void obligation and may be justly deducted from the claim of the appellant.

The judgment of the trial court is reformed so as to deduct from the appellant’s note only $100 of the $220 bonus and the further sum of $527.92 representing interest paid to the appellant, which leaves a balance due appellant on March 1, 1935 in the sum of $372.08; that to the latter sum shall be added interest thereon at 6% per annum from March 1, 1935 until December 21, 1939, the date of the trial court’s judgment, making a total of $479.34; that to such latter amount shall be added $47.93 as attorneys’ fees, making a total due on December 21, 1939 in. the sum of $527.27; that the latter amount shall bear interest at 6% per annum from December 21, 1939 until paid; and that as so reformed the judgment of the trial court is affirmed.

Reformed and affirmed.

JACKSON, C. J., concurring.

STOKES, Justice

(dissenting).

As revealed by the opinion in this case, handed down today by the majority of the court, I am not in accord with the disposition of the appeal which they make nor with the conclusions reached and expressed by them concerning the law which I deem applicable to the issues presented by the briefs. It is my opinion that the judgment of the trial court was correct and should be affirmed. The principles of law which, in my judgment, control the issues involved, in my opinion, are wholly at variance with the conclusions reached by the majority and I shall, as briefly as possible, express my views concerning those which I deem most pertinent.

It seems that the contentions made by the parties in this appeal were not involved in the former appeal. The opinions of this court and the Supreme Court on the former appeal seem to deal only with the interest that was paid as such by the appellees, that is, the seven per cent, provided in the notes as interest, and not with the $220 that was retained by the Temple Trust Company as a bonus when the loan was made. The record now before us contains only the amended pleadings upon which the case was last tried. It is likely, therefore, that the present issue concerning the so-called bonus was first injected into the case upon the last trial.

Upon the question of whether or not the trial court erred in crediting upon the $1,000 note held by appellant the entire $220 retained by Temple Trust Company as a bonus, jt may be observed that in testing the contract for usury, the real principal of the loan is not necessarily the amount specified in the face of the notes, but the amount actually received by the borrower from the lender. Adleson v. Dittmar Co., 124 Tex. 564, 80 S.W.2d 939. In this case the principal of the loan was $1,980. If the entire transaction had consisted of only one note in the sum of $2,200, there would be little difficulty in ascertaining the position in the indebtedness that is occupied by the’ portion constituting the bonus. The bonus cannot be considered as interest paid because when stripped of its formalities, the note for $2,200-was given for a loan of but $1,980. Adleson v. Dittmar Co., supra. Usury can be recovered or deducted from the real principal of the note only in the event interest has been paid by the borrower. Art. 5073, R.C.S.1925. The $220 retained as a bonus was not paid by the borrower nor was any portion of it ever paid to any of the holders of the series of notes. If the entire transaction had been included in one note and appellee had paid the seven per cent interest thereon as provided in the note, it could not be said that he had paid any portion of the bonus until some amount in addition to the actual principal of $1,980 had been paid. Federal Mortgage Co. v. State Nat’l. Bank, Tex.Civ.App., 254 S.W. 10022. I can conceive óf no reason why this feature of the transaction would be changed by dividing the loan into a series of notes. It is well settled in this State that, in order to have credited upon the principal, usurious interest paid or to recover double the amount thereof where a suit is filed therefor within the limitation period, the plaintiff must allege and prove that he paid the interest constituting the usury. If appellee had, at any time during the pendency of the loan, brought suit against the holders of the notes for double the amount of interest paid by him during the two years preceding the filing of a suit therefor under Art. 5073, he would not have been entitled to recover any portion of the bonus of $220. He had never received it from the Temple Trust Company nor had he paid any portion of it to any one. A portion of the loan, or money, actually advanced to him would still be unpaid, and unless he should be able to allege and prove that he had paid more than the $1,980, it would have been impossible for him to show that he had paid any portion of the bonus. At the very threshold of his case he would have been met by his own contract in which he appropriated the payments made by him to certain portions of the principal and the seven per cent, provided therein as the current interest. He would not, therefore, have been entitled to recover any portion of the bonus. It seems to me, therefore, that it must follow that no portion of the bonus was included in any of the series of notes except the last one which was for considerably more than the amount of the bonus.

In considering a similar question the Supreme Court of California in Haines v. Commercial Mortgage Co., 200 Cal. 609, 254 P. 956, 255 P. 805, 53 A.L.R. 725, held that the bonus was not actually paid and was, therefore, not a proper item of a judgment trebling the amount thereof. It held, furthermore, that the item of $1,020 which was retained by the lender in that case as a bonus, simply became surplusage and not only could not be collected by the lender but it could not be the basis of apportionment for either principle or interest; and that the payments on account of principal would serve to reduce the net principal and not be construed as a payment of the bonus either in whole or in part.

Sec. 5198 of the Revised Statutes of the United States, 12 U.S.C.A. §§ 86, 94, is very similar to our usury statute, Art. 5073, and in Gunter v. Merchant, 213 S.W. 604, 607, Judge Sadler, speaking for Section B of the Commission of Appeals, said: “Under this statute the Supreme Court of the United States has uniformly held, and our Supreme Court has followed it, that the reservation by a banking corporation of the interest at the time of making a loan is not such a payment as will sustain a suit to recover the penalty, unless the note given has been paid. In determining the question of limitation as applying to recovery for penalty, the Supreme Court of the United States, and of our state, held that where usurious interest has been held out in the original transaction, and is incorporated into the note, the period of limitation for the recovery of the penalty does not begin to run until the actual payment of the note.”

It is obvious that this holding could not have been made except upon the theory that the usurious interest held out in the original transaction was relegated to the last portion of the indebtedness. These authorities clearly locate the bonus in such a transaction as merely an addition to the real principal of the indebtedness which cannot be collected if resisted by the payor, but which, other than tainting the transaction with usury, gives the payor no right of recovery of the bonus until the actual or real principal and that portion of the note represented by the bonus or a portion of it have been paid.

In the case of Temple Trust Co. v. Stobaugh, Tex.Civ.App., 59 S.W.2d 916, 919, a question arose which was very similar to the one involved here. In that case the Temple Trust Company made a loan to Stobaugh.in the actual sum of $1,205.35 and as evidence of the indebtedness Stobaugh executed to the lender five notes of $100 each and one for $250, maturing September 1, 1925 to 1930, respectively, and one in the sum of $600, maturing September 1, 1934, all bearing interest at the rate of seven per cent per annum, payable semiannually. These notes aggregated $1,350, which included a bonus of $144.65. The appellant in that case contended that, even if the $144.65 bonus be treated as interest paid, it should be considered as having been paid at the time the loan was made; credited on the principal at that time, and not as paid in March, 1932, when the last note of the series was discharged. Iii delivering the opinion of the Court of Civil Appeals of the Third District, Justice Baugh said: “We do not sustain this contention. The transaction must be construed >as if the contract were a written promise to pay only the $1,205.35 actually borrowed, and all other sums provided for therein are to be considered as interest. Appellee was entitled to a credit for, or recovery of, only the usurious interest actually paid by him, and where the penalty is not invoked within two years after payment, the law applies such payments on the principal. In the instant case appellee contracted in said notes to pay $100 each year for five years, and $250 the sixth year on the principal. Consequently, there was not included in these items the excess $144.-65 which he agreed to pay. Meantime appellant was collecting 7 per cent, interest on that item up until his last payment, and limitation cannot we think begin to run against that item, which must be construed as usurious interest, until it was actually paid by appellee in his discharge of the $600 note. The rule as stated in 27 R.C. L. 279, is: ‘Since the inclusion of usurious interest as principal in notes does not constitute a payment of the interest, it does not start the running of the statute against a right of action to recover twice the amount of interest paid; but the usurious transaction from the date of which the statute begins to run is the time when the usurious interest is actually paid.’ And the excess, or bonus, was we think clearly carried over in this case into the last note, and was so treated by appellant itself in charging interest on it up to the maturity of that note.”

The question again came before the same court in the case of Temple Trust Co. v. Haney, 103 S.W.2d 1035, and-the same conclusions were expressed.

The principle that the bonus is carried over to the last portion of the indebtedness has its foundation in. the doctrine of locus penitentiae expressed by the learned Justice Stayton in delivering the opinion for the Supreme Court in Stout et al. v. Ennis Nat. Bank, 69 Tex. 384, 8 S.W. 808, 810. It is that, the contract not being rendered void by the statute, the lender may repent and relinquish the interest, including the bonus, and recover the balance of the debt. In the cited case, the Supreme Court said,; “ ‘And, in the absence of proof as to any appropriation of a partial payment, the law will apply a payment to a valid demand, rather than to the illegal one; and the balance which remains unpaid, if it exceed the usury agreed to be paid, includes the usury;. so that, on the ‘ one side, the debtor shall not recover back any part of that which he honestly owed, by the allegations on his part that the payment made by him was the payment of the usury; nor, on the other hand, will the law permit the creditor to secure to himself the benefit of his illegal contract, when he sues for the balance due on the contract, to aver that the usurious interest was contained in the previous payment, and that the residue is justly due.’ When, however, the parties, as they did in this case, appropriate, and intend to appropriate, the payment to usurious interest, the locus penitentise can no longer exist; for the offense has been consummated, ‘the greater rate of interest has been paid,’ and the right to the penalty is fixed.”

See also Stevens v. Lincoln, 7 Metc., Mass., 525, 528; Citizens’ Nat’l. Bank v. Froman’s Assignee, 111 Ky. 206, 63 S.W. 454, 757, 56 L.R.A. 673, and the many cases there cited.

Thus it will be seen that our Supreme Court has held that where money is paid on usurious contracts containing amounts retained as bonus without an appropriation by the parties of the payment to the usurious interest or bonus, the law will appropriate the payment to that part of the demand which is legal; for neither the party n making nor receiving the payment would be presumed to have intended that it should be appropriated to the payment of usurious interest. There is nothing in the record in the instant case to indicate that an appropriation was made by either appellant or appellee or any other party to the transaction of any payment made by appellee to the bonus or any part thereof. All payments made on the note in suit were for the seven per cent interest specifically provided as such in the note and all other payments made were of the principal and seven per cent interest specifically provided in the other notes of the series. While it is true that the transaction consisted of eight separate notes, and they were assigned to different parties and the former notes paid to those who held them by assignment from the Temple Trust Company, yet I can discern no difference in so far as the rule of law is concerned from what the effect would have been if the entire transaction had been included in one note and remained in the hands of the original payee until an amount had been paid thereon equal to that which has been paid on the series of notes by appellee in this case. Although the notes were assigned to separate parties, the entire series 'and the deed of trust executed to secure them constituted but a single transaction and appellant cannot assume the role of an innocent purchaser. Her position in the transaction is not different in any respect from that of the Temple Trust Company. She stands in its shoes and her rights and liabilities are governed by the same rules of law as its rights and liabilities would have been if it had remained the owner of the entire indebtedness. Gilder v. Hearne, 79 Tex. 120, 14 S.W. 1031; Van Meter v. American Central Life Ins. Co., Tex.Civ.App., 78 S.W.2d 251; Temple Trust Co. v. Stobaugh, Tex.Civ.App., 59 S.W.2d 916; Dallas Trust & Savings Bank v. Brashear, Tex.Com.App., 65 S.W.2d 288.

The parties to the loan transaction specified in the contract that .$150 should be paid on the principal each year during the first four years. The effect of the holding of the majority is to change that portion of the contract and appropriate only $135 of these payments to the principal. This results in an arbitrary appropriation of a portion paid upon the legitimate principal of the loan to the usurious interest or bonus which constitutes the illegal and void portion. This is exactly what the Supreme Court said in the Stout case, supra, the law will not do.

In consonance with what I deem to be sound principles of law and, in keeping with my interpretation of the holdings of our own courts, as well as eminent tribunals of other jurisdictions, I cannot but adhere to the conclusions here expressed and respectfully enter my dissent to the disposition made of the appeal, and the conclusions of law upon the issues presented in the briefs, as expressed in the opinion handed down by the majority in this case.


author: JACKSON, Chief Justice. STOKES, Justice.

text:
    FARMERS STATE BANK OF TEMPLE v. MURFEE.
    No. 5227.
    Court of Civil Appeals of Texas. Amarillo.
    Dec. 2, 1940.
    Rehearing Denied Jan. 13, 1941.

      Cox & Brown, of Temple, for appellant.
    Vickers & Campbell, of Lubbock, for appellee.
   JACKSON, Chief Justice.

The record shows that on January 4, 1924 J. E. Murfee and his wife, Sarah E., made a written application to the Temple Trust Company for a loan of $5,500 for a period of ten years and on January 8th thereafter obtained the loan which was evidenced by their ten promissory notes aggregating the principal sum of $5,500. The first and second notes were for the sum of $250, the third for the sum of $300, the fourth, fifth, sixth, seventh, eighth and ninth each for the sum of $500 and the tenth for $1,700. The principal notes were due the first on March 1, 1925 and one on March 1st each year thereafter until the notes were discharged. Each note provided for interest at the rate of 7% per annum from February 15, 1924 evidenced by interest coupon notes attached, payable semiannually on March 1st and September 1st each subsequent year until the indebtedness was paid.

The payment of the ten notes aggregating the sum of $5,500 and the interest coupon notes attached were secured by a deed of trust on Lot 4 in Block No. 137 of the original town of Lubbock.

The Temple Trust Company sold and transferred the first, second and third notes to Mrs. J. L. Zurovec and sold and transferred the remainder of the series to C. H. Blum, now deceased. Under the will of C. H. Blum, Henry Blum and W. F. Blum, Jr., acquired notes Nos. 4 to 10, inclusive, and transferred the notes so acquired to Mrs. Gus Koch who thereafter transferred and assigned note No. 10 for $1,700, the note involved in this litigation, to the Farmers State Bank of Temple.

J. E. Murfee paid to the Temple Trust Company, the payee, the principal of the first nine notes which aggregated the sum of $3,800 and in addition thereto paid $2,567.40 interest on the series of ten notes to March 1, 1933. The Temple Trust Company remitted the amounts so received to the parties to whom it had sold the notes and $897.46 was paid to the then owner of note No. 10 as interest but this was prior to its purchase by the Farmers State Bank, which neither collected nor received any of said $897.46 nor did it receive any payment made on any of said notes except $238 interest accruing on note No. 10 after the bank became the owner thereof.

On. February 15, 1934, J. E. Murfee and wife, plaintiffs, instituted this suit in the District Court of Lubbock County against the Temple Trust Company, its receiver, H. C. Glenn, and the Farmers State Bank of Temple to have the entire loan transaction declared usurious and all the interest theretofore paid, amounting to $2,627.40, or the necessary part thereof, applied to the payment of note No. 10, the. indebtedness cancelled and the lien on the real estate securing the payment thereof declared null and void.

The Temple Trust Company by its receiver answered that the loan was not usurious and alleged that all the notes had been transferred to and paid to other parties and that the Farmers State Bank had acquired and was the owner of note No. 10, the last in the series.

The Farmers State Bank adopted the answer filed by the Temple Trust Company, and in addition claimed to be an innocent purchaser of note No. 10 for $1,700, asked for judgment and foreclosure of its lien on the property described and pleaded that in no event could any sum of money paid on the series of notes prior to its purchase of note No. 10 be applied as a payment on its note inasmuch as the bank did not receive any part of the money so paid. The bank also impleaded the parties from whom it had purchased the note and by whom the note was endorsed and sought in the event it was denied a recovery and foreclosure against the Murfees that it have personal judgment against the parties im-pleaded.

This is the second appeal of this case.

On the former appeal this court certified to the Supreme Court for its determination the following question: “Should the interest paid by Murfee to the Temple Trust Company and received by the transferees owning the first nine of said series of notes be applied to the payment of the principal of Note No. 10 of the series owned by the Farmers State Bank?” This question was answered in the negative in an opinion by the Supreme Court reported in 133 Tex. 53, 126 S.W.2d 643, to which we refer for a more complete history of the transaction. The case was returned to this court, we held the loan transaction usurious and remanded the case for the reason that the record did not contain sufficient data to determine the amount for which judgment should be rendered. Temple Trust Co. et al. v. Murfee et ux., 129 S.W.2d 773.

While the suit was pending J. E. Mur-fee died testate but had by will bequeathed and devised all of his property to his surviving wife, Mrs. Sarah E. Murfee, who was substituted as plaintiff in the suit and adopted the pleading theretofore filed by plaintiffs.

Before the second trial, by supplemental petition, Mrs. Sarah E. Murfee individually and as executrix of the estate of J. E. Murfee, deceased, alleged that $550 was added to the $4,950 as bonus or interest and included in note No. 10 as a part of the principal of the $1,700 note owned by the Farmers State Bank, asserted the bonus was interest rendering the loan contract void because of usury and prayed that the entire amount thereof in addition to all the interest paid to prior owners of said note and all the interest paid to the Farmers State Bank be deducted from the $1,700 of the bank.

The case was again tried before the court without the intervention of a jury and all relief sought against the Temple Trust Company, its receiver and the parties impleaded was denied. The court adjudged the loan contract to be usurious because there was included in the total sum of $5,500 a bonus of $550 and the Murfees had received only $4,950 which constituted the entire principal of the loan. He found that the Murfees had theretofore paid on the principal of the first nine notes $3,800 which he applied as a payment on the $4,950. He deducted the $897.46 interest paid to the owner or owners of note No. 10 prior to its purchase by appellant, the $238 interest paid to and received by appellant and the entire $550 bonus from the note for $1,700 owned by -the bank, leaving due $14.54 with interest thereon at the rate of 6% per annum from March 1, 1934, with 10% attorneys’ fees, or a total of $24.80; directed that the plaintiff, individually and as executrix of the estate of J. E. Murfee, Sr., deceased, pay the amount of the judgment into the registry of the court for the appellant; that the debt evidenced by said note and secured by the lien be cancelled; provided that if appellee failed to pay the judgment the lien was foreclosed and an order of sale directed to issue and the land be sold to satisfy the judgment and costs. From this judgment the Farmers State Bank alone prosecutes this appeal.

No complaint is made of the action of the court in adjudging the loan contract usurious.

The loan contract — composed of the series of ten notes and the deed of trust —is not on its face usurious but the extrinsic testimony shows that the contract was tainted with usury because there was added to the valid debt of $4,950 a bonus of $550.

The appellant bank by proper assignments contends that the judgment of the trial court is erroneous because its note for $1,700 should only be charged with the amount of interest received by the bank and cannot be charged with interest it did not receive nor with the entire bonus of $550.

The appellee by counter propositions says that interest paid by the maker of a usurious note to the holder must be credited upon the principal of such note in the hands of any subsequent holder and that interest so paid to the subsequent holder of one of a series of usurious notes likewise must be credited on the principal of such serial note in the hands of any subsequent purchaser at the election of such maker. She therefore claims that since appellees had paid or caused to be paid to the owner or owners of note No. 10, $897.-46 as interest previous to the purchase thereof by appellant and had in addition paid to appellant interest in the sum of $238 and as the bonus of $550'was included in the $1,700 note the aggregate of which items is $1,685.46, the court correctly deducted this amount from the $1,700 and adjudged the balance due to be $24.80.

We deem it unnecessary to'discuss at length appellee’s claim that the $897.46 paid by the Murfees to the holder or holders of note No. 10 before its purchase by appellant should be credited on said note since in our opinion this question is settled adversely to the contention of appellee. Hamilton et ál. v. Bill et al., Tex.Civ.App., 90 S.W.2d 929, holds- that it would be manifestly unfair to permit a borrower to voluntarily pay usurious interest and thereby honor the void contract in the hands of its owner and then have the amount thus paid applied to the principal owned by another and different person, citing in support of such holding Commerce Trust Co. v. Best, 124 Tex. 583, 80 S.W.2d 942; Ward et al. v. Pace et ux., Tex.Civ.App., 73 S.W.2d 959; Dallas Trust & Savings Bank v. Brown, Tex.Civ.App., 48 S.W.2d 1044; Deming Inv. Co. v. Giddens et ux., Tex.Civ.App., 41 S.W.2d 260. See also Temple Trust Co. v. Murfee, supra, and authorities therein cited.

The appellee to sustain her position that the entire bonus of $550 was included in the tenth and last note of the series relies mainly on the case of Temple Trust Co. v. Stobaugh, Tex.Civ.App., 59 S.W.2d 916, and Temple Trust Co. et al. v. Haney, Tex.Civ.App., 103 S.W.2d 1036, however, other authorities are cited.

In Temple Trust Co. v. Stobaugh, supra, the Austin Court of Civil Appeals, speaking through Judge Baugh, holds that the contract there involved, though evidenced by series of notes, constituted but a single transaction and in harmony with the Texas decisions announced in effect that all sums contracted to be paid in excess of the amount of the actual loan, whatever subterfuge was used to conceal the usury, is interest whether called excess or premium or bonus. He also says that all sums paid on a usurious contract are by law applied to the principal and finds as a fact that the bonus in that case was carried over to and included in the last note and on such finding bases his holding.

In that case the Temple Trust Company retained ownership of all the notes, collected and applied the usury paid, and the question of requiring a subsequent owner to credit on the principal of his note the illegal interest voluntarily paid by the maker to, and appropriated by the preceding owner was not involved and therefore not passed on. The decision seemingly is based primarily on two grounds, first, a holding that the law automatically applied all illegal interest paid, no matter what subterfuge was used to conceal the usury, to the reduction or cancellation of principal and, second, ’the finding by the court that the record disclosed that the so-called bonus was not distributed in the notes proportionally but was all incorporated in the last note. The holding that the law automatically credited the usury paid to the principal, if it was ever applicable to a subsequent holder of a usurious note, has been essentially modified; Adleson et ux. v. B. F. Dittmar Co., 124 Tex. 564, 80 S.W.2d 939; Temple Trust Co. v. Haney, supra, in which it is held that the borrower is entitled to have the interest paid on a usurious contract applied to the principal or if he prefers to sue for penalties and it is not accurate to say that such interest payments are by the law applied to the principal. None of the other authorities cited by the appellee sustain her contention.

Do the facts in the instant case show that the entire bonus was incorporated in appellant’s note, the tenth and’ last of the series? There is no testimony on the question unless contained in the written instruments composing the usurious contract. The written application was made for a loan for ten years for the sum of $5,500. The deed of trust was given to secure “the payment of ten promissory notes * * * payable to the order of the Temple Trust Company” for the “total loan” of “Fifty-five Hundred Dollars”. The notes and deed of trust were executed in compliance with the written application. The $5,500 was divided into ten payments. The record is conclusive that the actual loan amounted to $4,950 and that the $550 called bonus was added to that sum, making a total of $5,500, the aggregate amount written in the face of the series of ten notes. That the amount of $4,950, the actual loan, was distributed among the ten notes pro rata according to the relation the face amount of each of such notes bore to the total valid loan is not debatable and every fact and circumstance which impels this conclusion, shows with the same inescapable certainty that the $550 bonus was also distributed among the entire series of notes according to the relation in amount that each of said notes had to the amount of the bonus.. It matters not whether the $550 be designated as excess, premium or bonus, it is. interest and must be so considered in determining whether the contract is tainted with usury.

The first and third "notes .of the series aggregated the exact amount of the bonus and it might be with greater propriety .concluded that these two notes, rather than the note of appellant, included the bonus. In our opinion the bonus was distributed, as was the actual loan, pro rata among the ten notes and the borrowers in the payment and satisfaction of the first nine notes of the series paid to the owners of such nine notes the pro rata part of the-bonus or usury included in the loan.

The actual loan is 90% of the $5,500. The first nine notes of the series on their face aggregated the sum of $3,800. 90% of such amount is $3,420, and constitutes the part of the actual loan distributed among said nine notes, and $380, 10% of the $3,800, represents the part of the bonus written into the face of the first nine notes of the series, and appellant’s note for $1,700 included $170 or 10% of the so-called bonus. In addition to the authorities heretofore cited in support of our conclusion we cite Palmetto Lumber Co. et al. v. Gibbs, 124 Tex. 615, 80 S.W.2d 742, 82 S.W.2d 376, 102 A.L.R. 474, 482; Deming Investment Co. v. Clark, Tex.Civ.App., 89 S.W.2d 853; Commerce Farm Credit Co. et al. v. Ramp et al., Tex.Civ.App., 116 S.W.2d 1144; Wallace v. D. H. Scott & Son et al., 133 Tex. 293, 127 S.W.2d 447; Travelers Ins. Co. et al. v. Rowley et al., 133 Tex. 372, 128 S.W.2d 20; Robertson et al. v. Connecticut General Life Ins. Co., 134 Tex. 588, 137 S.W.2d 760.

We conclude from the decisions that the law does not automatically apply usurious interest paid to the reduction or cancellation of the principal in a usurious transaction. If the owner of a usurious contract collects illegal interest thereon he must on demand by the debtor apply all such illegal interest appropriated by him to the reduction of the principal contained in the obligation which he owns and though a stranger to the original transaction a subsequent holder of such obligation is required to apply such illegal interest to the reduction or cancellation of the principal in his obligation but cannot be required to account to the debtor for usurious interest, although designated bonus, voluntarily paid to a previous owner of such obligation. This conclusion, we think, is sanctioned .by both law and equity.

The judgment of the trial court is reformed and $170, the pro rata part of the $550 bonus included in the note of appellant and the $238 interest received and appropriated by it are deducted from the $1,-700, leaving a balance of $1,292 with interest thereon from March 1, 1934 at the rate of 6% per annum, together with 10% attorneys’ fees on principal and interest, and as so reformed the judgment is affirmed.

FOLLEY, J., concurring.

STOKES, Justice.

I concur in the holding of the majority with reference to the item of $897.46. That was interest paid by the appellee to the former holders of the note and appellant did not receive any portion of it. Under the well-established rule as announced in the cited case of Hamilton v. Bill, Tex.Civ.App., 90 S.W.2d 929, and the many cases following it, appellee was not entitled to have that item credited upon appellant’s note because it had not been paid to appellant.

I cannot agree with the holding of the majority, however, with reference to the item of $550 designated as bonus. This is the identical question involved in the case of Cora L. Hance v. R. Q. Stubbs, 146 S.W. 492, decided by this court, the opinion in which was handed down November 25, 1940. As expressed in the dissenting opinion filed by me in that case, I was unable to agree with the majority of the court .in the conclusions reached by them concerning the position in a series of notes that is occupied by an item that is deducted from the ostensible amount of a loan and ordinarily designated as a bonus. In my opinion, such an item is not, under the law, arbitrarily distributed over the entire series of notes pro rata; but, in the absence of an appropriation by the parties themselves, it is relegated to the last portion of the indebtedness. The law will not arbitrarily appropriate payments made on such indebtedness to that portion which is illegal and void as long as there is a legitimate portion of it still remaining unpaid. Such is the effect of the holding of the majority, nevertheless, and, for all of the reasons expressed in my dissenting opinion in the Stubbs case, I respectfully dissent from their holding in this case in respect to the item of $550 designated as bonus.


author: MURRAY, Justice.

text:
    SIMPSON v. CLAYTON et al.
    No. 10773.
    Court of Civil Appeals of Texas. San Antonio.
    Nov. 27, 1940.
    Rehearing Denied Jan. 15, 1941.
    M. C. Chiles and Atlas Jones, both of Uvalde, for plaintiff in error.
    Ditzler IT. Jones, of Uvalde, and George C. Herman, of Crystal City, for defendants in error.
   MURRAY, Justice.

This is an interpleader suit instituted by Kansas City Life Insurance Company to determine the ownership of the proceeds of a $1,000 life insurance policy issued by this company on the life of Gordon D. Simpson. The policy was taken out by Gordon D. Simpson on his own life and was issued March 3, 1930. Gordon D. Simpson died January 10, 1939.

Mayme W. Simpson, former wife of. Gordon D. Simpson (the named beneficiary in the policy), and Evelyn Clayton, executrix of the will of Gordon D. Simpson and guardian of the estate of Bettie Joyce Simpson, were made defendants and each filed answers claiming the proceeds of said insurance policy.

Gordon D. Simpson and Mayme W. Simpson were married during the year 1929. On October 7, 1938, Gordon D. Simpson was granted a divorce. Mayme W. Simpson was granted care, custody and control of their five year old daughter, Bettie Joyce Simpson. Gordon D. Simpson was required by the terms of the divorce decree to pay to Mayme W. Simpson the sum of $10 per month for support of the daughter until she reached the age of sixteen years.'

The policy of insurance involved herein was issued on the life of Gordon W. Simpson in 1930. Mayme W. Simpson was named as the beneficiary and all premiums had been paid out of community funds. Gordon D. Simpson, when he.took out the policy, did not reserve the right to change the beneficiary and Mayme W. Simpson never gave her consent to a change of beneficiary. Gordon D. Simpson died in Kerr County, Texas, on January 10, 1939, at which date the insurance policy was in force and effect.

The trial was before the court without the intervention of a jury and resulted in judgment awarding to Mayme W. Simpson,the sum of $59.87, as being one-half of the cash surrender value of the policy at the date of the divorce. The remainder of the proceeds of the policy was awarded to Evelyn Clayton, as independent executrix of the estate of Gordon D. Simpson, deceased, after deducting attorney’s fees and court costs. From which judgment Mayme W. Simpson has prosecuted this appeal.

Recovery was denied Mayme W. Simpson as the beneficiary named in the policy because, as found by the court, she had ceased to have an insurable interest in the life of the insured after their divorce on October 7, 1938.

We are of the opinion that Mayme W. Simpson did have an insurable interest in the life of Gordon D. ■ Simpson after they were divorced, on October 7, 1938. An insurable interest is defined in 24 Tex.Jur. p. 767, § 70, as follows: “In the case of life insurance, an insurable interest-exists only if there be a reasonable ground, founded upon the relations of the parties, either pecuniary or of blood or affinity, to expect some benefit or advantage from the continuance of the life of the assured.”

Certainly Mayme W. Simpson had reasonable grounds to expect some benefit or advantage from the continuance of the life of Gordon D. Simpson in that they were jointly and severally charged with the duty of supporting their daughter, Bettie Joyce Simpson. The divorce decree provided that Gordon D. Simpson should pay to Mayme W. Simpson the sum of $10 per month for the support of their daughter. To this extent Mayme W. Simpson was relieved of this direct obligation. The judgment required this sum, of $10 per month, to be paid until Bettie Joyce reached the age of sixteen years. She was six years of age at the time of the trial of this cause; therefore, these payments would have amounted to about $1,200 before Bettie Joyce became sixteen years of age. The court would have had the power, upon a further hearing, to have increased these monthly payments and required that they be made uhtil the child became twenty-one years of age.

It so happens in this case that Gordon D. Simpson had executed a will naming his daughter as his sole heir, thereby so arranging his affairs that his daughter will receive the benefit of the proceeds of this policy, even though it is paid to his estate. However, in passing upon whether or not Mayme W. Simpson had an insurable interest in the life of her former husband, we cannot consider the fact that Bettie Joyce was made the sole heir of her father. The rights of Mayme W. Simpson would be the same regardless of whom Gordon D. Simpson might have named in his will as his heir.

There seems to be no authorities in this State deciding the question herein involved. Apparently it presents a question of first impression in this State. We are unwilling to hold that the ex-wife and mother of a man’s children has no interest in the con-' tinuation of his life whpn under the law he is charged with the duty of supporting such child or children even though the care, custody and control may have been awarded to the wife. 31 Tex.Jur. p. 1302, § 28.

The judgment of the trial court will be reversed and judgment here rendered allowing the attorneys for the insurance company the sum of $100 for their services, providing that 'the costs of this Court and the court below, as well as said attorneys’ fees, be paid out of the proceeds of the insurance policy, and the remainder thereof be paid to Mayme W. Simpson.