author: WALKER, Chief Justice.

text:
    BROUSSARD v. UVALDE ROCK ASPHALT CO.
    No. 3834.
    Court of Civil Appeals of Texas. Beaumont.
    March 13, 1941.
    Rehearing Denied April 16, 1941.

      Lipscomb & Lipscomb, of Beaumont, for appellant.
    Geo. A. Weller, of Beaumont, for appel-lee.
   WALKER, Chief Justice.

On the 9th day of April, 1940, appellee, Uvalde Rock Asphalt Company, instituted this suit in district court of Jefferson County, Texas, against appellant J. E. Broussard, Jr., as an action in trespass'to try title to Lot 1, Block 15, of the McFaddin Second Addition to the City of Beaumont, and in the alternative as an action in rem to foreclose a paving lien against the property sued for, in trespass to try title. On trial to the court without a jury, judgment was for appellee on its alternative prayer for relief.

Appellant answered by pleas of not guilty, and the statutes of two and five years’ limitation.

The controlling facts are without dispute. L. Perl was the agreed common source of title. Appellee offered in evidence the following deeds conveying the property in controversy, also offered by appellant: (a) warranty deed from W. F. Fowler and wife to L. Perl, dated July 22, 1921, recorded September IS, 1921; (b) warranty deed from L. Perl to Harry Boyd, dated June 5, 1926, filed for record May 9, 1927, reciting a cash consideration of $2,750, and a vendor’s lien note against the property for $5,-750; (c) a special warranty deed, dated October 8, 1926, filed for record May 9, 1927, from Harry Boyd to U. S. Realty Company, a corporation, the grantee assuming the payment of the outstanding vendor’s lien note; (d) general warranty deed dated November 20, 1928, filed for record November 21, 1928, from U. S. Realty Company, a corporation, to H. I. Josey, the grantee assuming the payment of the outstanding vendor’s lien note, executed by Boyd to Perl; (e) general warranty deed dated January 17, 1930, filed for record 1930, by H. I. Josey to the Block Realty Company, a corporation, the grantee assuming the payment of the vendor’s lien note of Boyd to Perl.

Appellee offered the following additional testimony: (a) Warranty deed dated October 27, 1930, recorded November 1, 1930, by Block Realty Company, a corporation, to F. J. Block as her separate estate. (F. J. Block is Floral Block, the wife of I. Block), (b) Appellee received on August 16, 1927, a paving certificate of that date on the lot in question, for paving on Fifth Street in the City of Beaumont, under a resolution, authorizing the assessment, of date February 1, 1927. The certificate was for $543.-20, corrected to $489.27; it recited completion and acceptance of the work and regularity of all proceedings for assessment, and that the assessment was a personal liability of the owner, L. Perl, and provided for its payment as follows:

“This certificate is made payable upon completion of the paving upon the portion of said street upon which said lot, lots, parts of lots, block or tract of land abuts, and the amount of said assessment * * * superior to all other liens or claims except city, county and state taxes.”

It was further recited: “That by the terms of the contract between the city and the Uvalde Rock Asphalt Co. it was provided that the property owner, in lieu of cash payment, might enter into contract with the said contractor * * * agreeing to make payment * * * as follows : one fifth cash 30 days after date of completion and acceptance of the payment (pavement) by the city engineer and one-fifth in one, two, three and four years respectively after date of the certificate ⅝ *

The following is a copy of one of the four coupons attached to the certificate: “This coupon certified that (assuming that the said propery owner has entered into contract with said contractor as herein-above provided for, qtherwise entire assessment payable on completion of improvement) three years from and after the 16th day of August, 1927, the Uvalde Rock Asphalt Co. is entitled to receive $108.64 together with all accrued interest * * *.. The amount was corrected to $97.85.”

(c) Block and wife, claiming to be owners of the lot, executed and delivered to plaintiff a mechanic’s lien contract of date March 24, 1927, wherein they obligated, themselves to pay all the assessments in installments corresponding in maturities with, the maturity clause in the coupons above referred to. It was recorded August 24, 1927. (d) On October 20, 1930, appellee filed suit No. 35778 in the District Court of Jefferson County against I. Block and wife, F. J. Block, to foreclose an alleged lien on the lot in controversy. The petition in that suit declared upon an assessment to I. Block and wife as owners and upon their contract of March 24, 1927. No reference-was therein made to an assessment against L. Perl. But it was therein declared that, “the assessment was levied against the defendants, I. Block and Flora Block, who were then the owners of said lot of land, and as a personal liability against them”. Citation in cause No. 35778 was issued and served on I. Block and wife, sole defendants, and they on November 22, 1930, filed a motion to quash, which was not acted, on. They did not file any answer, and judgment was rendered .against them by-default on January 8, 1931, foreclosing the alleged lien. On February 17, 1931, an. order of sale in said cause No. 35778 was. issued and returned without sale under direction of appellee’s attorney. On November 4, 1933, appellee obtained an alias. order of sale on its judgment in cause No. 35778, and at sheriff’s sale December 6, 1933, became the purchaser of such claim of title as the Blocks had to the land, and received a sheriffs deed therefor of date December 6, 1933, filed for record August .20, 1934, and duly recorded, (e) Mrs. F. J. Block and her husband were in possession of the property when they executed to appellee the mechanic’s lien contract of March 27, 1927, and remained continuously in possession until they surrendered possession to appellant in August, 1931.

At this point we give appellee’s alternative prayer which was granted by the court’s judgment: “In the alternative, plaintiff prays that the judgment in cause No. 35,778 and the liens therein established as against the said I. Block and Flora Block, be established and foreclosed as a first lien on said property as against the defendant and in the further alternative, plaintiff prays that it have judgment upon the paving assessment certificate with foreclosure of its assessment certificate with interest and attorney’s fees and foreclosure of its assessment lien which were renewed and extended by mechanic’s lien contract and the judgment herein referred to as ■against the defendant, J. E. Broussard Jr., and that it have its order of sale and such other writs as may be necessary for the enforcement of said judgment.”

Appellant offered the following additional testimony: (a) By written instrument dated July 2, 1930, on the cash consideration of $6,000, L. Perl transferred to appellant the vendor’s lien note retained by Perl against Boyd in his warranty deed to Boyd dated June 5, 1926, referred to above. 'This instrument also conveyed to appellant Perl’s reserved interest in the land, (b) Of even date with the transfer of the vendor’s lien by Perl to appellant, Block Realty Company executed to appellant a new note for $6,000, not in extinguishment but in renewal of the original vendor’s lien note. Of even date with the note, Block Realty Company, a corporation, conveyed to a trustee for the benefit of appellant, by deed of trust, the property to secure the payment of the new note executed in renewal and extension of the old note. This deed of trust made no reference to the paving lien but contained a general warranty clause binding Block Realty Company to defend the title to the trustee, his successors and their assigns against all persons, (c) Block Realty Company defaulted in its payments on the $6,000 note, executed by it to appellant. After the default appellant caused his trustee to sell the land in controversy under the provisions of his- deed of trust, and he bought in the property at the sale. The trustee’s deed was in the usual form, dated October 6, 1931, filed for record October 9, 1931. (e) F. J. Block and her husband in August, 1931, surrendered to appellant the possession of the property in controversy.

There was no testimony connecting F. J. Block with the record title to the property, prior to the conveyance of the property to her by Block Realty Company by deed dated October 27, 1930.

None of the deeds in appellant’s chain of title made any reference to the paving lien, and on his testimony appellant bought its vendor’s lien note from Perl in ignorance of the paving lien. Appellant’s first point is that the court erred in overruling his plea of limitation, under the statute of two years. On the undisputed testimony this proposition must be sustained. L. Perl signed no instrument binding himself to pay the paving certificate issued to appellee; the only liability against him on this certificate was that created by the assessment proceedings of the City of Beaumont against his property. True, on the date this assessment was levied, Perl was not in fact the owner of the property, having conveyed it to Boyd. But the Boyd deed was not of record at that time, and since Perl was the record owner, the assessment was binding against him and was superior to the vendor’s lien retained by him against the property in his deed to Boyd. A cause of action based on a paving certificate levied against the property of the owner in invitum is barred by the statute of limitation of two years. Vernon’s Ann.Civ.St. art. 5526. Uvalde Paving Co. v. Townsend, Tex.Civ.App., 92 S.W.2d 1128; Real Estate Land T. & T. v. Beryle, Tex.Civ.App., 88 S.W.2d 767, 768; City of Cisco v. Varner, Tex.Civ.App., 8 S.W.2d 311; State Trust Co. v. Morrison, Tex.Com.App., 282 S.W. 214. So, on authority of the cases cited, appellee’s cause of action on its paving certificate had long been barred by limitation at the time appellant took the assignment of the vendor’s lien note from L. Perl on the cash consideration of $6,000 paid by him to Perl for the note.

Appellee advances the following propositions against our conclusion on the issue of two years limitation:

(1) It is insisted that the mechanic’s lien contract of Block and wife, executed in 1927, obligating them to pay the certificate in five annual installments extended its payment beyond the period of limitation of two years, and that the certificate was not barred when it filed its suit against Block and wife in 1930. This proposition is overruled. On the face of the certificate it was payable “upon completion of the paving”; however, it was provided “that the property owner, in lieu of cash payment, might enter into contract with the said contractor * * * agreeing to make payment * * * as follows: one fifth cash 30 days after date of completion and acceptance of the payment (pavement) by the city engineer and one fifth in one, two, three and four years respectively after date of the certificate * * L. Perl was “the property owner,” assessed as such, and neither he nor anyone claiming under him or acting for him entered into the contract authorized by the certificate. Block and wife were strangers to the title and not “the property owner” within that term as used in the certificate. And therefore this contract did not create a lien against the property. It follows that the contract of Block and wife, strangers to the title, did not toll the running of the statute as against the assessment lien against the property.

(2) But appellee says that Block and wife were in possession of the property at the time of the execution of their contract to appellee, and in support of the judgment it must be presumed that they had title. ' This proposition is overruled. Whatever presumption of title flowed from their possession was rebutted by the exhibition ap-pellee made of its title. Having made a complete exhibition of its title from L. Perl, the agreed common source, which affirmatively excluded title in Block and wife, no presumption of title in them can be indulged. McCarthy v. Houston Oil Co., Tex.Civ.App., 221 S.W. 307; Dean v. Grogan-Cochran Lbr. Co., Tex.Civ.App., 58 S.W.2d 552.

(3) It is further insisted that ap-pellee’s suit in 1930 against Block and wife tolled the running of the statute of limitation against the paving certificate. As between the parties to that contract, the proposition is conceded. But since Block . and wife were strangers to the title, the suit was ineffectual to toll the statute against the interests of appellant.

(4) The proposition that the suit1 against Block and wife as owners of the property related back to the inception of appellee’s contract with them and bound the property as of that date is denied. This conclusion necessarily follows, for at the time appellee filed its suit against Block and wife they were not the owners of the property, and appellee did not subsequently amend its petition. 34 C.J. 892, Title Judgments, § 1299;' 19 C.J. 1074; Butler v. Frontier Tel. Co., 186 N.Y. 486, 79 N.E. 716, 11 L.R.A..N.S., 920, 116 Am.St.Rep. 563, 9 Ann.Cas. 858; 25 Tex.Jur. 402; 19 C.J. 1046, § 24. Appellee’s proposition on this point must also be denied on the authorities which hold that, once the debt becomes barred the lien is lost as against an innocent holder. Holford v. Patterson, 113 Tex. 410, 414, 257 S.W. 213; Wilkinson v. First Nat. Bank, 118 Tex. 202, 205, 13 S.W.2d 346; Flewellen v. Cochran, 19 Tex.Civ.App., 499, 48 S.W. 39; Kiel v. Staber, Tex.Civ.App., 116 S.W.2d 809.

We add this additional proposition in support of our conclusion on the issue of two years’ limitation. If title should be indulged in Block and wife in 1927 as of date with their contract with appellee, then under the undisputed evidence Block and wife held the property as their homestead. As a homestead the property was not subject to assessment for the paving lien, and the voluntary lien executed by Block and wife was inferior to the Perl vendor’s lien note.

From what we have said, it follows that the judgment of the lower court must be reversed. Since we cannot say beyond a reasonable doubt (Gulf, C. & S. F. Ry. Co. v. Snow, Tex.Civ.App., 146 S.W.2d 1040) that appellee will not be able on another trial to show title in Block and wife on the date they executed their mechanic’s lien, and that the property was not their homestead, the cause should be remanded for a new trial.

But appellant also insists that judgment should be rendered for him on his .plea of limitation of five years. Vernon’s Ann.Civ. St. art. 5509. As the evidence is before us appellant sustained that issue, but we cannot say, beyond a reasonable doubt that, on another trial, it will not be able to meet and rebut appellant’s evidence.

The judgment reversed and cause remanded.


source: Caselaw Access Project

author: JOHNSON, Chief Justice.

license: Public Domain

text:
    HOME INS. CO. v. FOUCHE.
    No. 5786.
    Court of Civil Appeals of Texas. Texarkana.
    March 20, 1941.
    Wheeler, Atchley & Vance, of Texar-kana, for appellant.
    Carney & Carney and Tom J. Mays, all of Atlanta, for appellee.
   JOHNSON, Chief Justice.

This suit was filed by J. D. Fouche against Home Insurance Company to recover on a fire insurance policy issued by the defendant covering a certain Ford truck owned by plaintiff. The Universal Credit Company held a lien against the truck securing the payment of a part of the purchase price. The loss clause in the policy was made payable to Mr. Fouche and the Universal Credit Comapny as their interest may appear.

Plaintiff alleged that the truck was destroyed by fire; that at the time it was destroyed the truck was of the reasonable cash market value of $800; “that after the truck was burned, the salvage from the truck was of a cash market value of $100”; that plaintiff was damaged in the sum of $700 for which he prayed judgment. Defendant by its amended original answer filed a general demurrer, general denial, and specially pleaded, among other facts, that at the time of the fire the Universal Credit Company held a valid lien against the truck securing the payment of $540 balance due on the purchase money and that defendant had under the terms of the policy paid said lien holder $218.73 which was all the damages sustained to the truck as the result of the fire. Defendant prayed that should it be found that the truck was damaged in excess of $218.73 that it be given credit for the amount paid the lien holder. On trial of the case it was agreed that any amount recovered by plaintiff should be credited with the $218.73 paid b.y the defendant to the Universal Credit Company. The cause was submitted to a jury upon four special issues reading as follows:

“No. 1: Do you find from a preponderance of the evidence that the insured automobile was rendered a total loss, by reason of the fire in question?” Answer: “No.”
“No. 2. What do you find, from a preponderance of the evidence, was the reasonable cash market value of the truck just prior to the fire?” Answer: “$650.-00.”
“No. 3. What do you find, from a preponderance of the evidence, was the reasonable cash market value of the truck just after the fire?” Answer: “$100.00”.
“No. 4. From a preponderance of the evidence, what sum of money do. you find, if _ any, would be necessary to repair or replace said truck, or parts thereof, with other of like kind and quality?” Answer: “$550.00”.

Upon the verdict of the jury judgment was entered in favor of plaintiff and against defendant for the sum of $550, less the sum of $218.73 paid by defendant to Universal Credit Company. From an order overruling its motion for new trial, defendant has appealed.

Appellant complains of the action of the trial court in overruling its motion for new trial, because the evidence is insufficient to support the finding of the jury in answer to special issue No. 4. It appears from the record that the contention must be sustained. The contract of insurance sued upon contains the following provisions : “This Company’s liability for loss or damage to the automobile shall not exceed the actual value thereof at the time any loss or damage occurs and the loss or damage shall be ascertained or estimated accordingly, with the proper deduction for depreciation however caused, and without compensation for loss of use, and shall in no event exceed the limit of liability, if any, stated in Item 3 of the Declarations, nor what it would then cost to repair or replace the automobile, or parts thereof, with other of like kind and quality, such ascertainment or estimate shall be made by the insured and this Company, or if they differ, then by' appraisal as hereinafter provided.” The above quoted provisions constitute limitations upon the amount for which the insurer may be held liable. American Indemnity Co. v. Jamison, Tex.Civ.App., 62 S.W.2d 197; Home Ins. Co. v. Ketchey, Tex.Civ.App., 45 S.W.2d 350; Maryland Motor Car Ins. Co. v. Smith, Tex.Civ.App., 254 S.W. 526; Automobile Underwriters of America v. Radford, Tex.Civ.App., 293 S.W. 869; Northern Assurance Co., Ltd., v. Herd, Tex.Civ.App., 273 S.W. 884. Expressed in other words, the insurance contract does not undertake to indemnify the insured against all loss or damage he may have sustained, but limits the liability of the insurer not to exceed either one (the smallest) of the following amounts: (1) Not to exceed the 'amount of the actual value of the truck at the time of the fire; (2) not to exceed the amount stated in Item 3 of the policy (the amount stated in Item 3 is $837); (3) not to exceed the amount that it would cost to replace the truck with another truck of like kind and quality; (4) not to exceed the amount it would cost to replace the truck with parts of a like kind and quality. The amount last above named, No. 4, is material when the fire has not resulted in what is generally termed a total loss as an automobile; that is, where it has been damaged only to the extent that it is reasonably subject to being repaired to its former state or condition. The automobile here in question was not a total loss as an automobile. The testimony shows that the damages sustained was to the cab, battery, and wiring of the truck. Appellee introduced testimony as to cash market value of the truck immediately before and after the fire. It is not shown but that appellee’s witness in testifying as to the value of the truck after the fire was referring to its value as salvage only. Appellee Offered no testimony showing what it would cost to repair the truck. Appellant’s witness Morris Hampton testified that he purchased the truck from Mr. Fouche after the fire; that he repaired it at an expense of approximately $50 and was still running the truck. Mark M. Greason, witness for appellant, testified that he was an automobile mechanic and that he had worked in Ford shops for about fourteen years; that at the time Mr. Fouche’s truck was burned witness was service manager for Atlanta Motor Company; that it was a part of his duties to make estimates of the cost of repairing damaged automobiles; that at the request of his employer and an insurance adjuster witness thoroughly examined the damaged truck in question and made an estimate of what it would cost to completely repair it; that the total cost, labor and all, of repairing the truck would amount to $202.06, which would include the replacement of all burned and damaged parts with new parts.

Appellee makes contention to the effect that special issue No. 4 is duplicitous in that it inquires as to cost of replacing the truck with another of like kind and quality; and inquires as to the cost of repairing the truck with parts of a like kind and quality; therefore, the answer of the jury may be made referable to the inquiry as to the cost of replacing the truck. We agree that the question is duplicitous. But should it be assumed that the answer of the jury is referable to the inquiry as to the cost of replacing the truck, the verdict would be without any finding as to the cost of repair. A finding as to the cost of repairing the truck is essential to a judgment in this case, since it is shown that it is reasonably capable of being repaired. Should it be'assumed that the answer of the jury to said issue No. 4 is referable to the inquiry as to the cost of repair, then it is apparent that the evidence is insufficient to support the amount found by the jury.

The judgment of the trial court will be reversed and the cause remanded.


author: GRISSOM, Justice.

text:
    PHILLIPS PETROLEUM CO. v. DANIEL MOTOR CO.
    No. 2117.
    Court of Civil Appeals of Texas. Eastland.
    March 14, 1941.
    Rehearing Denied April 4, 1941.

      E. H. Foster and Tom D. Lumpkin, both of Amarillo, for appellant.
    Harrell & Bowers, of Breckenridge, for appellee.
   GRISSOM, Justice.

Phillips Petroleum Cpmpany sued Daniel Motor Company for $1,118.56. Plaintiff and defendant are corporations. In the first count of plaintiff’s petition it was al7 Ieged, in substance, that on all the dates mentioned in the petition plaintiff was engaged in distributing gasoline, oil, etc., through W. M. Mitchell, its bulk station agent at Wichita Falls. There followed allegations that on certain dates Mitchell sold and delivered to defendant certain products shown by Phillips Petroleum Company’s invoices attached to the petition; that on January 19, 1939, plaintiff presented its statement to defendant and defendant, acting through its bookkeeper, Mr. Luddington, at the instance and request of Mr. Padgett, defendant’s manager and secretary-treasurer, certified plaintiff’s statement of the account was correct. That the certification' constituted the account sued upon an account stated.

In an alternative count, plaintiff alleged it was engaged in distributing gasoline, etc., through its bulk station agent, W. M. Mitchell; that beginning in March, 1935, and continuing through January, 1939, monthly statements were mailed to defendant by plaintiff, which, beginning with June, 1935, and continuing through January, 1939, reflected balances due by defendant to plaintiff for gasoline, etc., delivered to defendant by Mitchell; that defendant neither objected to the correctness of the balances shown by the statements, nor made any inquiry into the manner in which the account was being handled by Mitchell, although during all of said time defendant was paying for the gasoline, etc., delivered to it by Mitchell; that by reason of the fact that the invoices shown in the monthly statements sent to defendant varied from the invoices delivered by Mitchell, or his driver, to defendant, at the times defendant bought and paid for petroleum products, the defendant had actual notice that deliveries of gasoline, etc., were being made by Mitchell to someone other than defendant, and that Mitchell was invoicing such deliveries in the name of defendant by fictitious credit invoices forwarded to plaintiff, thus enabling Mitchell to dispose of gasoline, etc., reflected in said monthly statements, either to the defendant or to some other person and to appropriate the proceeds derived therefrom to Mitchell’s use and benefit. Plaintiff again alleged in this count the certification to the correctness of the account in the sum of $1118.56 by defendant January 19, 1939. Plaintiff alleged, in the event defendant did not have actual knowledge that Mitchell was appropriating the balances reflected in the statements to his own use and benefit, defendant had constructive notice thereof by reason of the circumstances and facts alleged and was, therefore, under a duty to object to the correctness of the statements mailed to defendant, or to inquire into the manner in which the account of defendant with the plaintiff was being handled by Mitchell; that if defendant had objected to the accounts, or had inquired into the manner in which they were being handled, plaintiff would have been apprised of the fact that Mitchell was diverting the balances reflected in the statement to his own use and benefit and would not have sustained the damages alleged. That by reaJ son of said acts of the defendant plaintiff had been damaged in the sum of $1,118.56, the amount misappropriated by Mitchell.

Defendant, among other things, answered by general denial. It denied the account sued upon constituted an account stated because it was not founded upon any previous transactions creating the relation of debtor and creditor between the parties. It alleged defendant did not owe plaintiff anything; that no account existed between the parties that could be stated; that the certification by Luddington on January 19, 1939 was without consideration; that there had been no previous transaction between the parties creating the relation of debtor and creditor, and there existed no account between the parties to be compromised or stated; that it had not sold or delivered to the defendant any of the merchandise listed in the account certified; that defendant had paid cash for all gas, etc., purchased from plaintiff and never asked for, nor received, credit from it; that, therefore, the account sued upon did not constitute a stated account and the certificate as to its correctness was void, being without consideration, and could not create an original liability where no liability previously existed. That beginning in January, 1935, and continuing through January, 1939, defendant purchased certain merchandise from plaintiff's bulk station agent, Mitchell, who was acting within the scope of his employment; that the invoices, copies of which were attached to plaintiff’s petition were forgeries; that the only purchases made by defendant from plaintiff were evidenced by certain invoices of the Phillips Petroleum Company delivered to defendant by Mitchell at the time he delivered products to the defendant, and at which times the defendant paid for all the products received. That payments were made by check of the defendant, or partly by such check, partly by the ••defendant’s coupons and courtesy card invoices, or defendant’s employees’ invoices, and at each such time defendant received from plaintiff a receipt acknowledging payment for all the products delivered to the defendant, said receipt being indorsed on plaintiff’s invoices by plaintiff’s employee making delivery of said products. That defendant was not indebted to plaintiff in any amount.

Defendant then alleged, in substance, that with the knowledge and consent of plaintiff there was an agreement between defendant and Mitchell that defendant would pay Mitchell one-half cent per gallon more than the tank price for gasoline to induce Mitchell to deliver the gasoline to defendant one hundred miles from Wichita Falls. That Mitchell and the bulk station at Wichita Falls were in plaintiff’s Tulsa Division, and defendant was in plaintiff’s Amarillo Division. That plaintiff used a system of double-billing for the products sold to defendant; that plaintiff would deliver to defendant an invoice acknowledging payment for goods delivered to defendant at the time the products were delivered, and thereafter at the end of the month defendant would receive a statement from plaintiff; that beginning with June, 1935 defendant received a statement from plaintiff showing a balance due; that defendant objected to said statement and pointed out that defendant had paid for all purchases; that defendant’s agent, Mitchell, represented that said statement did not mean anything; that defendant need not pay attention to said statement; that by reason of the one half cent additional paid to Mitchell for his long haul in delivering gasoline to defendant, and by reason of the location of Mitchell and plaintiff’s bulk sales station and defendant in different Divisions of plaintiff’s system that plaintiff used this system of double-billing ; that for a period of about eighteen months, either before or about the time of the arrival of a statement from plaintiff’s Tulsa office showing an indebtedness owing by defendant to plaintiff defendant received from plaintiff’s agent, Mitchell, a receipt therefor. That defendant continued to disregard the statements from the Tulsa office; that defendant never made any payment in response to the statements from plaintiff’s Tulsa office, or otherwise to the .plaintiff, except to Mitchell, or his truck driver, who delivered the petroleum products to defendant, at the time the products were so delivered. That defendant never received any requests from plaintiff’s Tulsa office to make any payments on any of the statements rendered by it, other than the statements themselves, until after a period of nearly four years, in February, 1939, plaintiff requested payment and defendant informed plaintiff that defendant had paid for everything purchased and owed plaintiff nothing. That defendant believed the representations made to it by plaintiff’s agent,' Mitchell, to the effect that the double-billing and statements sent out by plaintiff’s Tulsa office were merely routine and the method of carrying on plaintiff’s business between its Tulsa and Amarillo Divisions, and in order to allow Mitchell to collect his extra commission for making delivery of said products to Breckenridge, and, by a course of dealing over a number of years from 1935, had been led to believe that said representations were true, and believed the verification of the statement was a mere routine bookkeeping matter between the two Divisions; that Mitchell was the only agent of plaintiff with whom defendant had carried on its gasoline and oil business; that plaintiff knew at all times defendant was not indebted to it in any amount; that defendant’s verification of plaintiff’s statement, in January 1939, was procured by fraud. Defendant denied that it ever had actual or constructive knowledge that Mitchell was misappropriating funds paid him by defendant for plaintiff’s products; that upon the delivery of gasoline, etc., to defendant by Mitchell defendant would deliver to Mitchell Phillips Petroleum Company coupons, or credit card invoices, or employees’ invoices and defendant’s check in payment for the goods delivered; that said checks were payable to Phillips Petroleum Company and indorsed by Phillips Petroleum Company and returned to drawee bank and charged to the account of the defendant; that defendant had no knowledge that either the checks or coupons were being misappropriated by Mitchell; that, other than sending out the monthly statements from the Tulsa office, “nothing further was ever said by the Tulsa office about collecting the amount shown to be due by said statements; and for a period of almost two years defendant received receipts for the payment of the amount specified in said statements upon the stationery of Phillips Petroleum Company, said receipts being signed, ‘Phillips Petroleum Company by W. M. Mitchell, Agent’, and the said W. M. ■ Mitchell, continued to assure defendant that everything done was in accordance with the rules and regulations of the plaintiff.” That defendant relied upon such assurances of Mitchell and such statements and receipts; that said practice continued. for more than four years without any question by plaintiff’s Tulsa office; that plaintiff never at any time prior to January, 1939, made any attempt to check said account with defendant in order to ascertain the true facts; never made any effort to collect the amount claimed to be due by said statements; that if misappropriations of funds were made by Mitchell, it was the result of plaintiff’s negligence in failing to follow up the statements and in accepting payment from Mitchell and in not making any effort to check the account of Mitchell with defendant; that neither the defendant nor its manager, Padgett, had any knowledge, actual or constructive, of the misappropriation of funds by Mitchell and it was under no obligation or duty to report misappropriations to plaintiff.

Attached to the answer were Phillips Petroleum Company invoices on which printed forms a receipt showing payment for the products actually sold to the defendant was signed by the employee receiving payment, as was plainly contemplated by said Phillips Petroleum Company invoice form. The part of such a Phillips Petroleum Company invoice here material is as follows:

“Delivered by Received Payment
L. R. Wilson
Employee Receiving Money Sign here
L. R. W._
Received above merchandise in good order and I, or we, agree to pay above amount at the Amarillo Division office of company, City of Amarillo, Potter County, Texas.
Steve Cozby
Customer sign here
Make all checks payable to the company.”

• It is undisputed that defendant paid for all of plaintiff’s products sold and delivered to it at the time the products were delivered. That all checks were made payable to Phillips Petroleum Company. It is undisputed that the invoices contained in the monthly statements sent out by plaintiff’s Tulsa office were fictitious and prepared by Mitchell. It is undisputed that defendant paid Mitchell, or his gasoline truck driver, for all products received, never made any payment to plaintiff’s Tulsa office, and never asked plaintiff for credit. The trial was to the court. The court rendered judgment for defendant and plaintiff has appealed.

The following excerpts from the testimony reveal the contentions of the parties and the fact situation:

R. E. Padgett, defendant’s manager, testified:

“State whether or not the invoices which accompanied the statement which you received in June, 1935, from Phillips Petroleum Company indicated that they had been signed by a person in the employ of Daniel Motor Company who actually received the products? A. It had our employee’s name on it but it was a forgery.
“Q. Did you know it was a forgery at that time? A. N< sir, we did not.
“Q. When did you first discover that it was a forgery? A. After all this disturbance came up.
“Q. When did you first discover the invoice numbers on these statements were different ? A. After all this trouble arose.
“Q. ■ As a matter of fact, did you ever examine any of those invoices and statements at all? A. Yes, I examined them to a certain extent.
“Q. To what extent did you examine the invoices and statements for June, 1935? A. Well, when we received the first statement I mentioned it to Mitchell to find out what the thing meant.
“Q. Didn’t you notice at that time that the invoice numbers were not the same? A. Well, his statement to us was not' what ...
“Q. Just a minute. Just answer my question. Didn’t you notice at that time that the invoice numbers were different? A. Yes, we noticed some difference.
“Q. Didn’t you notice the date was different? A. No, I didn’t notice that.
“Q. But you did notice in the invoices that the amount was different, didn’t you? A. Yes sir.
“Q. Did you notice that the price per gallon was different? A. Yes sir, hut I knew that was right, because ...
“Q. Well, just answer my question. You knew that? A. Yes sir.
“Q. Now, Mr. Padgett, after you noticed that the dates were different and the numbers on the invoices were different and the amounts of the purported purchases were different, didn’t you know that the signature on those invoices was a forgery? A. I never paid any attention to ’ that. I didn’t examine it close enough.
“Q. Had you ever seen those invoices before? A. These here?
“Q. Yes, those attached to the statement? A. Yes, I saw them when we received the statement.
“Q. Before receiving the statement, had you ever seen them before that? A. No sir.
“Q. Did you ask your employee who had signed the invoices that were attached to the statement whether or not he had signed them ? A. No, I didn’t.
“Q. To whom did you make any inquiry about the statement and the invoices attached to the statement? A. W. M. Mitchell.
“Q. What inquiry did you make of Mr. Mitchell? A. Well, I wanted to know his method of handling it and why they sent out that statement. .
“Q. When did you ask him about that? A. Immediately after we received the first statement.
“Q. Did you go to Wichita Falls- and _talk to Mr. Mitchell about it? A. No, I called him up.
“Q. Long distance? A. Yes, sir.
“Q. And what did Mr. Mitchell say about it? A. He told me that was the manner in which they had of handling the thing so that he could receive his half cent commission for delivering the gasoline to us the hundred miles.
“Q. And the invoices we sent out to you were half a cent less than what you were actually paying? A. I didn’t check that very close, but it was agreed at the time Mr. Mitchell began delivering gasoline to us to give him half a cent bonus for delivering the gas.
“Q. And that was reflected in any invoices out? A. No, naturally all of your invoices were a half cent lower than ours. That was the half cent he was to get. We knew that we were paying half a cent more per gallon.
“Q. Than the invoices we sent out reflected? A. Yes, but I never checked the ■ price very close. Mr. Mitchell told us we were in the Amarillo division and they were putting us in the Tulsa division and that they had to cross bill it up there or something like that.
* * *
“Q. Did you notice all of these discrepancies at the time you received the statement from Phillips Petroleum Company? A. No, I didn’t check .them that close.
“Q. Didn’t you notice there was a difference in the price per gallon? A. I knew there would be because that was our agreement.
“Q. Well, did you notice the numbers of the invoices were'different? A. No, I didn’t check it that close.
“Q. Did you check them at all at that time? A. No sir.
“Q. What did you. do when you received that statement for October? A. I got hold of Mr. Mitchell.'
“Q. You found him? A. Yes sir.
“Q. Did you call him long distance? A. He was either down here or we had received the receipt prior to receiving the státement.
“Q. Did you call him over the telephone? A. I couldn’t swear that.
“Q. Would you say you talked to him or not? A. Not after receiving it.
“Q. How many times did you speak to Mr. Mitchell about the manner he was handling your account? A. I spoke to him every time we received one of those statements unless we had already received the receipt.
“Q. As long as you received the receipt from Mr. Mitchell you were satisfied. Is that right? A. Yes sir. He assured me everything was all right. We had his receipt for it.
“Q. Mr. Padgett, you and Mr. Mitchell are pretty close friends, aren’t you? A. No sir.
“Q. But you had a lot of confidence in him, didn’t you? A. Naturally. He had never done anything to betray my confidence in him.
“Q. And when he advised you that you would get a receipt for this you said that would be all right? A. We had no reason to question Phillips Petroleum Company’s way of handling it.
“Q. You didn’t raise any question to it, except to Mr. Mitchell. Is that right? A. No, I told you it didn’t make any difference with me as far as Phillips was concerned.
* ⅜ *
“Q. Did you notice the discrepancies in the statement you received and the invoices attached to it and the invoices in your records? A. No, the only thing we were interested in was receiving this receipt from Mitchell.
“Q. Did you examine the statement? A. No sir.
“Q. When did you-quit examining the statements you received ? A. Possibly, the only statement I ever looked at was the first one that we received. The only thing we were interested in was getting the receipt from Mitchell.
“Q. And you didn’t look at any other statements? A. I didn’t look at them close.
“Q. Didn’t Mr. Luddington look at them? A. I don’t know.
“Q. He is the bookkeeper isn’t he? A. Yes sir.
“Q. Did you get a- receipt from Mr. Mitchell- covering February 1936? A. Yes sir.
“Q. And when you got that receipt you were satisfied? A. Yes sir.
* * *
“Q. I believe you said you checked the first one, didn’t you? A. I didn’t look at it very close.
“Q. But you did check the first one. Is that right? A. No, I just looked at it. It looked like a statement and I called Mitchell and asked him what it was.”

With reference to the verification of the account on January 19, 1939, he testified:

“Q. Now when did Mr. Mitchell come down here to Brecken-ridge and tell you about wanting his account verified? A. I don’t remember the exact date. It was along in January.
“Q. Did you tell him you would verify the account? A. Yes, I told him I would.
“Q. What transpired at that time; what time of the day did he come down? A. It was at night.
“Q. About what time at night? A. Oh, I would say between seven and eight o’clock; somewhere along there.
“Q. Where did you have this conversation with Mr. Mitchell? A. Down at the place.
* * *
“A. He came down to talk to us, I presume, about getting this tire account transferred to the Wichita office. He told me he was going 'to he transferred over into the Amarillo division and he wanted to handle this tire account. It had been a pretty good tire account and we had been selling a lot of tires. They had been shipping them out of Amarillo, and he went into the details how he could deliver the tire shipments by truck. He • said, that it would mean a little more to him, since he had a tire quota to make. About that time he got ready to leave and both of us got up and started out of the office and he said: ‘By the way, in this transfer there will probably be someone down here in the next day or two and they will want you to verify the account.’ He says: T wish you would go ahead and verify the thing. It is in the matter of the transfer of these accounts from the Tulsa office to the Amarillo office.’ And I asked him what it was and he says: ‘Oh, it is just a matter of office routine. There is no liability on your part. I assure that and that the account will be hereafter handled out of Amarillo office instead of the Tulsa office.’ I told him I would do that if there was no obligation on our part and he says: T assure you that there won’t be anything coming up about it. That’s a matter of office routine and they have to handle it that way.’ ‘
* * *
“Q. Mr. Padgett, as a matter of fact, you knew this account wasn’t being properly handled didn’t you? A. No sir.
“Q. You knew it all the time didn’t you? A. No sir.
“Q. And that’s your testimony in this case? A. I thought that was the way Phillips Petroleum Company handled the account. I had no reason to believe otherwise.
“Q. You have alleged that we never did make any attempt to collect this account, haven’t you? A. Collect what? ■
“Q. To collect these past due statements? A. That who didn’t?
“Q. Phillips Petroleum Company? A. Yes sir.
“Q. Did you ever receive a letter from Phillips Petroleum Company reflecting that your account was past due and that you should get it in good shape? A. No sir.”

Mr. L. J. Luddington, defendant’s bookkeeper, testified:

“Q. Has Daniel Motor Company ever carried an account in its books covering accounts payable to the Phillips Petroleum Company? A. No, because we pay cash for all gasoline that we receive.
“Q. Mr. Luddington, did you ever know or happen to have any notice that W. M. Mitchell was misappropriating funds that you paid to him for the Phillips Petroleum Company? A. Well, the only time that I ever noticed anything was the first time we received a statement from Phillips Petroleum Company.
“Q. What did you do when you received that statement? A. Mr. Padgett laid it on my desk with the rest of the mail. I checked it over and called his attention to it, that we were charged with something like two or three hundred dollars. I don’t remember the exact amount it was. I told him about it so he went to the telephone at that time and called Mr. Mitchell and talked to him about it. Later on we received a letter or a credit slip that Mitchell mailed us showing that it was paid.
“Q. What did Mr. Padgett tell you after he talked to Mitchell over the telephone at that time? A. He told me that Mitchell was sending us a credit slip.
⅜ * *
“Q. Did you ever examine those statements you received from time to time from Phillips Petroleum Company? A. 'Which ones?
“Q. Any of them? A. Yes sir.
frQ. And when was that? A. June, I believe, was the first one we got.
“Q. And when you examined that one did you notice any discrepancies in the invoices and the statement? A. No, I just noticed they had us billed with that much and we didn’t owe it. I never checked it close.
“Q. Do you open the statements, or who handles the mail down there ? A. Mr. Padgett does when he is there and when he is not there I open it.
“Q. Did you ever examine any of the statements that you received after June, 1935? A. Not that I remember.”

Mr. Watson, plaintiff’s District Salesman, who had supervision of Mitchell’s bulk sales station at Wichita Falls, testified :

“Q. What were your duties as district salesman? A. Supervision of operations, sales, collections and just the general operation of the territory. Bulk and service station dealer accounts were included.
“Q. Part of your duties were with the Wichita Falls bulk station? A. Yes sir.
“Q. How often did you visit that station? A. Well, on an average of about once a month, I would say.
“Q. Would you check over his accounts when you visited his station? A. From the analysis sheet, yes sir.
* * *
“Q. But as a part of your duties, you supervised the collection of his accounts. Is that right? A. That’s right.
“Q. And in that capacity you had occasion to know about this Daniel Motor Company account, did you not ? A. I had seen it reflected on the analysis sheet, yes sir.
“Q. Did you ever give Mr. Mitchell any instructions with reference to that account? A. Well, not until about December of 1938, or whichever month it was it first went past due, but whichever month it was that it first went past due I did ask him to collect it, yes sir.
“Q. What do you mean that it went past due? A. That means that it became other than a current account.
“Q. Did you ever say anything to Daniel Motor Company about the account prior to January, 1939? A. No sir.
“Q. You knew that it had been on the books of Phillips Petroleum Company all that time? A. Y.es sir.
“Q. And you' knew that it was running above the $500 credit limit you say they had? A. Yes sir.
“Q. And in spite of that you never did say anything to them about it ? A. Not to the Daniel Motor Company, no sir.
“Q. And you never said anything to Mr. Mitchell prior to December, 1938? A. Whichever was the first month it went past due, but the first month it went past due I did say something to him about it, yes sir.
“Q. But you knew each month it was running over $500? A. Yes sir.
“Q. And with that knowledge you didn’t say anything to Daniel Motor Company about getting their account below the credit limit did you ? A. No sir.
* * *
“Q. Now, that was in March, 1938? A. Yes sir.
“Q. What instructions did you give Mr. Mitchell about the account at that time? A. To bring it to a current basis.
“Q. What effort did you make to collect it? A. I didn’t make any effort whatsoever myself.
“Q. Did you say anything to Daniel Motor Company about their account being past due? A. No sir.
‘‘Q. Although at that time it showed a balance of $980.27? A. Yes sir.
■ “Q. And part of it was past due?- A. That’s right.
“Q. And most of it was above the credit limit and you said nothing about it? A. No sir, not to them.”

Mr. Salts, assistant sales manager with defendant’s Tulsa Division, testified:

“Q. Then Mr. Mitchell was the agent of Phillips Petroleum Company in handling the Wichita Falls bulk station. Is that right? A. That’s right.
“Q. How long did he continue to be the agent for Phillips Petroleum Company? A. I can’t give you the exact date, but it was about four years.
“Q. Until about when? A. Until the early part of January, 1939.
“Q. He was the agent of Phillips Petroleum Company when all of this gasoline was sold to Daniel Motor Company, was he not? A. He was.
* * *
“Q. Piad the account ever been called to your attention? A. It had been discussed with Mr. Ames when Mr. Mitchell and I were present.
“Q. What was the occasion for that conference? A. Mr. Ames, our Division Manager, called Mr. Mitchell to the office regarding some accounts, and in the conversation he brought up the Daniel Motor Company account and asked him if it was all right. Mr. Ames stated that it was a little larger than the credit he wanted to give and was running past due. Mr. Mitchell stated it was all right and would be in line within 30 days.”

It is evident that at the time Luddington verified the account, plaintiff knew, or at ’least was suspicious, that Mitchell had misappropriated a large sum of money. There is no evidence that plaintiff, relying upon the verification of the account, did anything to its detriment or suffered any loss or injury of any kind by reason thereof. It is further evident that plaintiff knowingly permitted Mitchell to collect for its products from defendant from June, 1935, to the discovery of Mitchell’s defalcation in 1939, and depended on Mitchell to remit to plaintiff. The evidence shows plaintiff depended on Mitchell to see that defendant’s account “was all right”, as did the defendant. Defendant never requested credit from plaintiff. Defendant’s dealings were with Mitchell alone. Plaintiff and defendant dealt with each other at arm’s length. There existed no fiduciary or similar relation of trust and confidence. The evidence justifies a conclusion that Mitchell’s duties were to sell plaintiff’s, products at wholesale, collect and remit to-plaintiff. It is evident defendant did not purchase any of the products listed in the account sued on. Plaintiff made no effort to collect said account until it learned Mitchell had misappropriated funds collected for plaintiff. Mitchell’s accounts were audited by plaintiff every 60 to 90 days. Defendant’s account, as reflected by plaintiff’s Tulsa office records, became past due in March, 1938, then again in July, 1938, and continued past due until January, 1939. If Padgett had knowledge of Mitchell’s defalcation such fact must be imputed to him because he received monthly statements from plaintiff’s Tulsa office reflecting a balance due and he must have failed to rely, or had no right to rely, upon the explanations of Mitchell and receipts issued by him as plaintiff’s agent. Here it must be remembered that Mitchell was the only representative of plaintiff with whom defendant dealt and that plaintiff’s printed forms as well as plaintiff’s actions, if Pad-gett’s testimony is to be believed, as it was by the trial court, clearly evidenced Mitchell’s right to collect and receipt for payment for plaintiff’s products sold by Mitchell. There is no evidence that Padgett or defendant’s bookkeeper, Luddington, profited by Mitchell’s defalcation. The evidence certainly is not conclusive that there was collusion between Mitchell and any of defendant’s agents of employees, nor that they had actual knowledge of Mitchell’s defalcation, or designed to hide the facts from plaintiff. We call attention to the fact that there is neither allegation nor proof that plaintiff depended or relied on defendant to disclose any fact to plaintiff.

Typical receipts showing payment of the monthly statements sent to the defendant are as follows:

“Phillips Petroleum Co. July 6, 1935.
“Received of Daniel Motor Co., Breckenridge, Texas, $294.08. Two Hundred Ninety-Four & 08/100 Dollars, for July 1st Statement from Phillips.
“Phillips Petroleum Co.
“By: W. M. Mitchell, Agent.
“Phillips Petroleum- Co. Wichita Falls
Station
“July 6, 1935
“Mr. Padgett,
“Daniel Motor Co.
“Breckenridge, Texas.
“Dear Mr. Padgett:
“Attached please find receipt for $294.08 to cover statement from Phillips Petroleum Co. You will receive the statement within a. few days. Please destroy the statement as you have already been credited with the balance shown on the statement.
“Yours very truly,
“Phillips Petroleum Co.
"By: W. M. Mitchell, Agent.”
“Phillips Petroleum Company
“Wichita Falls Station, 4/3/1936
“Received of Daniel Motor Company, Breckenridge, Texas, $545.00, Five Hundred Forty-Five Dollars, for March con-trawise invoices.
“Phillips Petroleum Co.
“By: W. M. Mitchell, Agent.”

The court, among other things, found that defendant had paid for all products purchased from Mitchell; that defendant's manager, Padgett, in good faith, believed the account was being handled in accordance with plaintiff’s requirements; that there was no collusion between Mitchell and Padgett and that defendant had no actual knowledge of Mitchell’s misappropriations; that plaintiff had knowledge of the manner in which the account was handled.-

We are of the opinion the evi- ■ dence sustains such findings. It is not meant, of course, to say that plaintiff had actual knowledge of misapplication of funds by Mitchell prior to January, 1939. The nature of plaintiff’s suit, as we understand it, is one in tort based upon fraudulent concealment by defendant. The applicable theory of liability, we think, is found in Vol. 3, Restatement Torts, sec. 551, as follows:

“(1) One who fails to disclose to another a thing which he knows may justifiably induce the other to act or refrain from acting in a business transaction is subject to the same liability to the other as though he had represented the nonexistence of the matter which he has failed to disclose, if, but only if, he is under a duty to the other to exercise reasonable care to disclose the matter in question.
“(2) One Party to a business transaction is under a duty to exercise reasonable care to disclose to the other before the transaction is consummated (a) Such matters as the other is entitled to know because of a fiduciary or other similar relation of trust and confidence between them.”

It would appear (the facts having been found by the trial court in favor of defendant) that liability of the defendant is not shown in the absence of conclusive proof that Padgett knew Mitchell was defaulting, and Padgett was under a duty to disclose the facts to plaintiff. Evidence that defendant received niopthly statements from plaintiff’s Tulsa office showing a balance due by defendant, taken in connection with Mitchell’s explanation of the reasons for the statements being mailed to defendant, the receipts for the amount of-such accounts issued by Mitchell as plaintiff’s agent, the receipts for the purchase price of materials executed when the products were delivered, plaintiff’s failure’ to otherwise request payment during a period of about four years, and all other relevant facts and circumstances, certainly cannot be said to show, as a matter of law, that defendant had knowledge of Mitchell’s embezzlement of funds paid him by defendant. This is especially evident when it is remembered that plaintiff’s printed invoice forms showed Mitchell was authorized to collect from defendant and issue a receipt therefor. However, if under such facts it should be held that defendant was charged with constructive notice of Mitchell’s defaults, it would not result that defendant’s failure to disclose such facts constituted fraud, as a matter of law. Generally there must be something more than failure to disclose known facts to constitute fraud. The facts must be such that defendant is charged with the legal duty to communicate them. The applicable rules are stated in 23 Am.Jur. p. 8S1, et seq. as follows:

“The law distinguishes between passive concealment and active concealment, or, in other words, between mere silence and the suppression or concealment of a fact, the difference consisting in the fact that concealment implies a purpose or design, while the simple failure to disclose a fact does not. Mere silence is not representation.
“As a general rule, to constitute fraud by concealment or suppression of the truth there must be something more than mere silence, or a mere failure to disclose known facts. Where there is no obligation to speak, silence cannot be termed ‘suppression’ and is not a fraud. Either party may, therefore, be innocently silent as to matters upon which each may openly exercise his judgment.
“Silence, in order to be an actionable fraud, must relate to a material matter known to the party and which it is his legal duty to communicate to the other contracting party, whether the duty arises from a relation of trust, from confidence, inequality of condition and knowledge, or other attendant circumstances. In other words, there must be a concealment, the party sought to be charged must have had knowledge of the facts asserted to have been let remain undisclosed, and the silence must, under the conditions existing, amount to fraud, because it amounts to an affirmation that a state of things exists which does not, and the uninformed party is deprived to the same extent that he would have been by positive assertion. Concealment in the sense opposed to mere non actionable silence may consist in withholding information asked for or in making use of some device to mislead, thus involving act and intention. The term generally infers also that the person is in some way called upon to make a disclosure. It may be said, therefore, that in addition to a failure to disclose known facts, there must be some trick or contrivance intended to exclude suspicion and prevent inquiry, or else that there must be a legal or equitable duty resting on the party knowing such facts to disclose them. Moreover, one will not be permitted to say that he was ignorant of the legal effect of a fact concealed, since no one will be heard to say that he is ignorant of the law.
“The principle is basic in the law of fraud as it relates to nondisclosure that a charge of fraud is maintainable where a party who knows material facts is under a duty, under the circumstances, to speak and disclose his information, but remains silent.
* * *
“In order that suppression of the truth may constitute fraud, there must be a suppression of facts which one party is under a legal or equitable obligation to communicate to the other and which the other party is entitled to have communicated to him.
* * *
“Although the pertinent inquiry in any case where fraud on the basis of nondisclosure is asserted is whether, upon any particular occasion, it was the duty of the person to speak on pain of being guilty of a fraud by reason of his silence, except in broad terms the law does not attempt to define the occasions when a duty to speak arises. On the contrary, there has been adopted as a leading principle, the proposition that whether a duty to speak exists is determinable by reference to all the circumstances of the case and by comparing the facts not disclosed with the object and end in view by the contracting parties. The difficulty is not so much in stating the general principles of law, which are pretty well understood, as in applying the law to particular groups of facts. ■
* * *
“Knowledge that the other party to a contemplated transaction is acting under a mistaken belief as to certain facts is a factor in determining that a duty of disclosure is owing.”

In 20 Tex.Jur. p. 41, the rule is stated as follows: “One is not to be charged with fraud in suppressing information which he is not legally bound to volunteer. When, therefore, the parties are dealing at arm’s length, there being no confidential relationship, mere silence is not fraud, either actual or constructive.”

In 26 C.J. p. 1142, it is said: “* * where parties deal upon equal terms and no confidential relationships exist, neither is bound to disclose superior information he may possess and a charge of fraud cannot be based upon failure to do so *

In Higginbotham-Bartlett Co. v. Powell, Tex.Civ.App., 270 S.W. 193, 197, the court said: “Was failure of appellee to tell appellant that his calf crop was under mortgage such a suppression of the truth as constituted fraud? According to the verdict and judgment, there was no willful suppression of the truth. According to the record, no fiduciary or confidential relations existed between the parties, no inquiry was made, no statement of ap-pellee’s financial condition requested, and none was given; the parties were dealing at arm’s length and mere silence or failure to volunteer information is not fraud, either actual or constructive.”

In Long v. Martin, Tex.Civ.App., 234 S.W. 91, 94, the court quoted with approval from Black on Rescission and Cancellation, as follows: “Where persons deal with each other at arm’s length — that is to say where there is no relation of trust or confidence between them, but each is supposed to be on his guard against the other' — and no direct inquiries are made and all the sources of information are equally open to both, so that each can, if he will, possess himself of all the knowledge possessed by the other, then there is no duty of disclosure resting on either party, and if one knows circumstances affecting the matter in hand, of which the other is ignorant, it is an advantage of which he may legitimately avail himself so that his mere silence or failure to volunteer information is not fraudulent, either actually or constructively. For the concealment ‘which the law denounces as fraudulent implies a purpose or design to hide facts which the other party ought in justice to know, and mere silence is not in itself concealment.’ ”

In Restatement Torts, Vol. 3, pp. 118-119, the basis of liability in such a case is stated as follows: “The conditions under which liability is imposed for nondisclosure in an action for deceit differ in one particular from those under which a similar non disclosure may confer a right to rescind the transaction or to recover back money paid or the value of other benefits conferred. In the absence of a duty of disclosure, under the rule stated in Subsection (2) of this Section, one who is negotiating a business transaction is not liable in deceit because of his failure to disclose a fact which he knows his adversary .would regard as material.”

In Salter v. Aviation Salvage Co., 129 Miss. 217, 91 So. 340, 342, 26 A.L.R. 989, it is said: “The party charged with the fraud must have owed the party alleged to have been defrauded some duty. He must have been under some obligation to speak when he failed to do so. Mere silence alone is not sufficient. * * * Appellant occupied no relation of trust or confidence toward appellees; on the contrary they appear to have been dealing at arm’s length.”

Also, see Miller v. Anderson, 183 Wis. 163, 196 N.W. 869, 34 A.L.R. 1529; Windrom Mfg. Co. v. Boston Blacking Co., 239 Mass. 123, 131 N.E. 454, 17 A.L.R. 669, 672; Cleveland v. Richardson, 132 U.S. 318, 10 S.Ct. 100, 33 L.Ed. 384; Patten v. Standard Oil Co., 165 Tenn. 438, 55 S.W.2d 759; Randolph v. Allen, 5 Cir., 73 F. 23; Bartlett v. Terrell, Tex.Civ.App., 292 S.W. 273, 280, writ refused; Jones v. Herring, Tex.Civ.App., 16 S.W.2d 325; Bondies v. Glenn, Tex.Civ.App., 119 S.W.2d 1095, 1098.

In its pleadings, evidence and brief, plaintiff stresses the fact that the account was verified by defendant. We think the verification is not conclusive on any theory of the case. The account was verified on January 19, 1939. The last item in the account here involved was sold by plaintiff to defendant on January 17, 1939. Mitchell’s defalcation was known or suspected by plaintiff at the time of the verification of the account and he was discharged almost simultaneously therewith. There is no evidence that plaintiff made any sales or in any way acted .to its hurt relying upon such verification.

We have given careful Consideration to the case of Harworth v. Truby, 138 Pa. 222, 20 A. 942, much relied on by plaintiff. We think identical principles of law are not involved in that and the instant case. There Truby, a retail grocer, allowed Chambers, Harworth’s agent, to order a ton of coffee from his principal in Truby’s name. When it was received Truby allowed Chambers to take the coffee off and sell it. Truby then sent to Harworth money paid him by Chambers and promised that he, Truby, would pay the balance in a short time. There was a clear case of a loan of his credit by Truby to the agent, Chambers. Truby had actual knowledge of Chambers’ fraudulent scheme. Collusion and ratification were shown. Such a situation is at least not conclusively shown in the instant case and the trial court found to the contrary.

The record does not show conclusively that Luddington had any other duty than to keep the books and records of the defendant, or that he had any authority to transact any business for the defendant, except as an employee under the direction of defendant’s manager, Padgett. Notice to Luddington of Mitchell’s default was not notice to defendant. However, we think it is not conclusively shown that Luddington possessed such knowledge.

We think, therefore, liability of the defendant is not shown by evidence tending to show knowledge on the part of Ludding-ton. Re-Statement of Agency, Vol. 1, sec. 272 ; 3 C.J.S., Agency, §§ 262-265, pp. 194-200; Dimmitt Elev. Co. v. Carter, Tex.Civ.App, 70 S.W.2d 615; J. M. Radford Groc. Co. v. Citizens’ Nat. Bank, Tex.Civ.App, 37 S.W.2d 1080; Miller v. Anderson, 183 Wis. 163, 196 N.W. 869, 34 A.L.R. 1529, 1537.

We think that only questions of fact are presented by the record. 12 R.C.L. p. 447; Wintz v. Morrison, 17 Tex. 372, 67 Am. Dec. 658; Briscoe v. Bronaugh, 1 Tex. 326, 46 Am.Dec. 108; 14A C.J. p. 410, 19 C.J.S, Corporations, § 1034. These facts have been determined adversely to plaintiff. The essential facts found are supported by the testimony.

The judgment is affirmed.


author: RICE, Chief Justice.

text:
    PICKETT v. RILEY et al.
    No. 2293.
    Court of Civil Appeals of Texas. Waco.
    March 6, 1941.
    Rehearing Denied April 17, 1941.
    Williford, Williford & Bond and H. H. Vibrock, all of Fairfield, for appellant.

      Geppert, Geppert & Victery, of Teague, L. W. Shepperd, of Groesbeck, and J. G. Anderson, of Fairfield, for appellees.
   RICE, Chief Justice.

On December 2, 1929, R. A. Pickett executed and delivered to John Riley his promissory note for the principal sum of $2,080.90, payable to the order of Riley on March 2, 1930; and secured the payment thereof by executing, on the same date, a deed of trust on a tract of 120 acres of land, a part of the Kelly survey in Freestone county. This note evidenced the sum of money which Riley, at Pickett’s request, paid to the holder of a note then past due and owing by Pickett as a part of the purchase price of said 120-acre tract of land. The deed of trust above mentioned was given in extension and renewal of the lien securing said purchase-money note paid by Riley.

Thereafter, on April 14, 1931, said note being past due and having paid nothing on the principal or interest, Pickett gave to Riley, as additional security for said indebtedness, a deed of trust on a tract of 40 acres and a tract of 32 acres of land out of said Kelly survey; and Riley extended the due date of the note by endorsing upon the back thereof that the same was payable in four annual installments, the first payable on the 15th day of October of the year 1931, which endorsement was signed by R. A. Pickett. On the 7th day of April, 1933, said indebtedness being past due, and no payment of principal or interest having been made thereon, R. A. Pickett executed and delivered to John Riley the instrument in writing which is the subject matter of this litigation, the same being a deed of trust on a tract of 134 acres of land out of the McGraw' survey, which deed of trust recited that it was given to secure the aforesaid indebtedness, and further recited: “This deed of trust is given as additional security to secure said note in addition to the lien given to secure said note dated December 2, 1929, as shown by deed of trust from R. A. Pickett, recorded in Vol. B, page 293, of the Deed of Trust Records of said county.” On the same date, R. A. Pickett, joined by his wife, Berta Pickett, executed, acknowledged and delivered to John Riley a homéstead designation, designating as their homestead the tracts of 120 acres, 40 acres and 32 acres on the Kelly survey and a tract of 8 acres off the west end of a 50-acre tract out of the McGraw survey. Pickett, his wife and family at that time actually resided on the 120-acre tract of land and had been residing there since 1921, the date of its purchase. In addition to the four tracts of land mentioned in the homestead designation, aggregating 242 acres, Pickett then owned another tract of 134 acres of land out of the McGraw survey; and said five tracts of land adjoined each other.

Thereafter, on January 27, 1934, being again in default in the payment of said indebtedness, principal and interest, R. A. Pickett executed, acknowledged and delivered to John Riley an agreement renewing the above-mentioned note; said extension agreement reciting that the indebtedness so- extended was secured by a lien on 120 acres of land out of the Kelly survey, and also as additional security, by a tract of 134 acres of land out of the Daniel Mc-Graw survey, described in Vol. X, page 263, of the Deed of Trust Records of said county. Each of the above-mentioned instruments were, shortly after their execution and delivery, filed with the county clerk of Freestone county and were duly recorded in the records of said county.

Thereafter, in the year 1938, R. A. Pickett having paid nothing on said indebtedness since John Riley took the same over, except the sum of $200, on September 17, 1936, John Riley brought this suit against R. A. Pickett in the district court of Freestone county for the amount of his indebtedness and for foreclosure of his deed of trust liens on the 120-acre tract of land out of the Kelly survey and on the 134-acre tract out of the McGraw survey. No foreclosure was sought on the tract of 40 acres or on the tract of 32 acres out of the Kelly survey, covered by the deed of trust executed in the year 1931, and which two tracts of land were included in the homestead designation of R. A. Pickett and wife, executed in April, 1933; the plaintiff thereby recognizing that he had no lien on said 40-acre and said 32-acre tracts.

Defendant admitted being indebted to the plaintiff on the note sued on, and admitted the validity of the lien securing same on the 120-acre tract out of the Kelly survey, but asserted that the lien on the 134-acre tract out of the McGraw survey was void. .Defendant pleaded that shortly prior to April 7, 1933, he proposed to plaintiff that, he would secure his debt by a lien on 184 acres out of the McGraw survey, in lieu of the lien held by plaintiff on defendant’s 120 acres, 30 acres and 42 acres out of the Kelly survey; that plaintiff, after inspecting- defendant’s lands, agreed to the exchange of liens; that on April 7, 1933, plaintiff and defendant met in the office of an attorney in Teague, and the agreement made between them was consummated. He further pleaded that he was seventy-one years of age; that he and plaintiff had had business dealings with each other over a period of more than twenty-five years; that he had great confidence, faith and trust in plaintiff and believed he would do anything he agreed to do; and that defendant, relying on plaintiff’s promise, executed the deed of trust on the 134-acre tract without reading the same to determine whether the lands on the Kelly survey were being released therein; that plaintiff made said promise fraudulently, with the intention not to comply therewith, for the purpose of securing additional security for his debt; that pláintiff refused to release his liens on defendant’s lands on the Kelly survey, and was thereby estopped to assert the validity of the deed of trust lien on the 134-acre-tract ; that defendant had no adequate remedy at law and was entitled to cancellation of the lien in question.

Defendant further pleaded that on 'April 7, 1933, and continuously since said date, he was a married man, and, with his family, was occupying as his homestead the premises described in the aforementioned deeds of trust; that the lien on the 134-acre tract was therefore void; that if he did execute the homestead designation dated April 7, 1933, the same was procured by the fraudulent promises of the plaintiff set forth above, and was a part of the original plan and scheme of the plaintiff to secure additional security on the homestead of defendant; that it was represented to defendant by plaintiff and plaintiff’s attorney that to carry out the substitution of liens, it was necessary to execute said homestead designation. Defendant further pleaded that if he did execute the extension of lien, dated January 2, 1934, he was told by plaintiff and plaintiff’s at•torney that such instrument was a renewal of the note and lien as changed with respect to the substitution of the land' on the McGraw survey for that on the Kelly survey, and that the same covered only the lands on the McGraw survey; that he relied on said representations, had had no reason to check his title, and signed same without reading it, and would not have signed such agreement had he known that it recited he had given a deed of trust lien on the 120 acres on the Kelly and a deed of trust on the 134 acres of land as additional security for the plaintiff’s debt; that he did not discover the fraud perpetrated on him until about the 1st day of March, 1936, when he was attempting to secure a loan on his land. He pleaded possession of the lands in controversy, and that limitation, by reason of such possession, had not run against him. Defendant prayed for cancellation of the deed of trust on the 134-'acre tract on the McGraw survey and offered to do equity. He also filed a cross-action, setting forth the facts above stated, seeking cancellation of the deed of trust on the 134-acre tract of land, asking that said lien be removed as a cloud on his title, and that said tract of land be fixed as a part of his homestead.

By supplemental petition, plaintiff pleaded the two and four-year statutes of limitation, laches, estoppel, waiver and ratification.

J. J. Coppedge, J. G. Anderson and L. W. Shepperd intervened in said cause, seeking foreclosure of an alleged lien on defendant’s land created by the filing and recording, on December 12, 1934, of an abstract of judgment in the Judgment Records of Freestone county.

Defendant, in answer to interveners, pleaded that the tracts of 134 acres and SO acres out of the McGraw survey were his homestead at the time of the filing of said abstract of judgment, and therefore no lien was fixed on said tracts.

The plaintiff made out his case by the introduction of his note, his deeds of trust and extension agreement. The interveners relied on their judgment and the abstract thereof. The defendant and his wife took the witness stand, they being the only persons who testified during the trial.

At the conclusion of the evidence the court gave an instructed verdict in favor of both the plaintiff and the intervener Coppedge and against the defendant; and thereupon rendered judgment in favor of plaintiff for his debt and for foreclosure of his deed of trust liens on the tract of 120 acres of land on the Kelly survey and the tract of 134 acres on the McGraw survey. Judgment was entered in favor of the intervener, foreclosing his judgment lien on the 50-acre tract on the McGraw survey, less the 8 acres off the west end included in the homestead designation; and foreclosing said lien on the 134 acres of land on the McGraw survey, subject, however, to plaintiff’s first lien thereon.

To these proceedings the defendant duly excepted and perfected his appeal to this court;

It would serve no useful purpose to attempt to set forth in this opinion the testimony of the defendant and that of his wife bearing on the question here involved. Suffice it to say that the trial court afforded defendant’s able attorneys every opportunity to elicit from the defendant and his wife all the relevant and material facts bearing on the issue of fraud.

We have carefully read and considered all the evidence, and have reached the conclusion that the defendant’s assignment of error directed to the action of the trial court in instructing a verdict in favor of plaintiff should be, and the same is, overruled.

Accepting the testimony of defendant and that of his wife as true, the same was not of sufficient probative force to authorize the court to submit the issue of fraud to the jury. Defendant pleaded and testified that the agreement entered into between himself and plaintiff shortly prior to April 7, 1933, and confirmed in the attorney’s office in Teague on said date, was that defendant would execute a deed of trust on his lands on the McGraw survey in exchange for the release by plaintiff of the liens then held by him on defendant’s lands on the Kelly survey. If this was the agreement, the execution and delivery by defendant of his deed of trust was to be contemporaneous with the execution and delivery by plaintiff of the release which defendant says he agreed to execute and deliver. If defendant’s testimony be true, then at the very time that he executed the deed of trust on the 134 acres on the Mc-Graw survey, he mflst have known that he was then entitled to receive from the plaintiff a release of his lands on the Kelly survey. When he left the attorney’s office on that occasion he knew he had not received this release. The defendant’s own testimony shows that he was fully aware of the fact that it was necessary to procure a release to clear the title to his 120-acre tract of land. He did not testify that Riley agreed to execute the release at a later date and have the same recorded, nor did he testify to any fact or circumstance which would excuse his failure to demand on that occasion the release which he now says he was entitled to receive. By his testimony, defendant placed himself in the paradoxical position of insisting that the sole consideration for his execution of the deed of trust he now questions was that the plaintiff was to release the liens which plaintiff then held on defendant’s 120-acre tract of land in order that defendant might have a home that was clear; and, having performed his part of the bargain, and being then in a position to demand and receive the release that he sought, he loses all interest in the matter and walks out of the attorney’s office without even making a 'request that the release be delivered to him. Neither the defendant, his wife, nor anyone else, testified that John Riley, or any one of the attorneys present on that occasion, at any time made any statement to the defendant or his wife that the deed of trust - executed by the defendant on April 7, 1933, was other than what it purported to be, or said or did anything to prevent defendant from reading said instrument. The defendant was not illiterate; it appears from the statement of facts that he could read and write; that he had bought several tracts of land and had executed notes and liens in payment therefor, and it does not appear that any of his faculties were impaired. The defendant did not testify that he thought when he signed the deed of trust on April 7, 1933, that such instrument released the lien held by the plaintiff on defendant’s tract of 120 acres of land on the Kelly survey. He did not testify that when he executed the renewal agreement dated January 2, 1934, and which recited that the deed of trust on the 134-acre tract was given as additional . security, the plaintiff, or anyone else, made any statement to him in respect to the contents thereof, other than that the same was a renewal contract in reference to the note he owed plaintiff; nor did he testify that he was prevented from reading the renewal agreement or having the same read to him. He testified that he did not know until February or March, 1936, that plaintiff had not released his lien on the 120-acre tract and was claiming that the deed of trust on the 134-acre tract was given as additional security; but in this connection he offers no explanation of his testimony to the effect that in March, 1934, an oil company, because plaintiff had a loan thereon, refused to accept from him a lease on his 184 acres of land on the McGraw survey, and likewise .refused to accept from him a lease on 152 acres of his land on the Kelly survey, until plaintiff and he had signed and agreed to said leases. The defendant admitted that after he discovered the alleged fraud practiced upon him he made no complaint to anyone, except that he asked plaintiff’s attorney on that occasion if the release had not been executed as Riley promised. On the contrary, he testified that several months thereafter he paid plaintiff $200 on his debt and at that time said nothing to plaintiff about being defrauded. Although the deed of trust executed by the defendant and the homestead designation executed by defendant and his wife oil April 7, 1933, were forthwith recorded in the records of Freestone county, in which defendant resided, and although the extension agreement executed by the defendant in April, 1934, was likewise placed of record in said county forthwith, the defendant offers no reason or excuse for not ascertaining: (1) that the deed of trust on the 134 acres of the McGraw survey recited that it was given as additional security; (2) that the extension agreement executed by him recited the same fact; (3) that no release had been executed by John Riley and placed of record covering the 120 acres o'f land prior to April, 1936; except to state that he signed the deed of trust and renewal agreement without reading them or having them read, and that he had no occasion to check his title until 1936.

Neither defendant nor his wife testified to any facts which would show that any special relationship of trust and confidence existed between them and the plaintiff, John Riley.

The weight of authority sustains the proposition that a person who, having capacity and opportunity to read a contract, is not misled as to its contents, and who sustains no confidential relation to the other party, can not avoid the contract on the ground of mistake if he signs it without reading it, at least, in the absence of special circumstances; that every contracting party owes the duty to the other party to the contract to learn and know the contents of the contract before he signs and delivers it. Jones v. Guilford Mortgage Co., Tex.Civ.App., 120 S.W.2d 1081, 1083. The rule that one who signs a contract is presumed to know its contents, has been applied even to contracts of illiterate persons, on the ground that that if such persons are unable to read, they are negligent if they fail to have the contract read to them. The courts have well said: “To permit a party, when sued on a written contract, to admit that he signed it but to deny that it expresses the agreement he made, or to allow him to admit that he signed it but did not read it or know its stipulations, would absolutely destroy the value of all contracts. The purpose' of the rule is to give stability to written agreements, and to remove the temptation and possibility of perjury, which would be afforded if parol evidence was admissible.” Jones v. Guilford Mortgage Co., supra. See also: Patterson v. Yellow Cab Mfg. Co., Tex.Civ.App., 298 S.W. 918; Boren v. Boren, 38 Tex.Civ.App. 139, 85 S.W. 48; Texas & P. Ry. Co. v. Poe, 131 Tex. 337, 115 S.W.2d 591; Texas Midland R. Co. v. Hurst, Tex.Civ.App., 262 S.W. 172; Indemnity Ins. Co. of North America v. Macatee & Sons, 129 Tex. 166, 101 S.W. 2d 553.

The deed of trust now questioned by the defendant was open to his inspection and he should have known its contents before he signed it. He can not, we think, carelessly fail to examine the instrument and escape the consequences of his own negligence by charging Riley with fraud, without showing acts which Riley did or words which the latter spoke that would prevent or excuse him from reading it and knowing its contents before he executed it. “Where a party with all the solemnity of the law makes a deed containing such a declaration, he will not- be heard to say he did not make it, unless he is induced thereto by fraud which disarmed him and prevented him from reading or knowing its contents. He cannot negligently close his eyes. They must have been plastered down by fraud.” Parker v. Schrimsher, Tex.Civ.App., 172 S.W. 165, 172. This latter rule, we think, should prevail in this case.

Defendant’s assignment of error directed to the action of the trial court in instructing a verdict in favor of inter-vener and in awarding ⅜ judgment against him in favor of the intervener, is sustained. The defendant pleaded and he and his wife testified to the fact that at the time inter-vener’s abstract of judgment was filed in Freestone county, and on all intervening dates, the defendant was a married man and the -head of a family; that on each of said dates he and his family lived on, used and occupied as their homestead the 50-acre tract and the 134-acre tract of land on the McGraw survey, and that the same was therefore exempt and could not be ■subjected to intervener’s lien. Defendant’s wife testified, and the plat introduced in evidence showed, that each of defendant’s •tracts of land adjoined. The fact that defendant and his family lived on the 120-•acre tract of land would not. prevent the defendant from claiming as a part of his homestead the land owned by him on the McGraw survey. The issue of what land constituted the defendant’s homestead on the date that intervener’s abstract'of judgment was filed in Freestone county should have been submitted to the jury for its determination.

The judgment of the trial court in favor of John Riley and against R. A. Pickett is affirmed; and said judgment in favor of the intervener and against the defendant R. A. Pickett is reversed and remanded.


author: CODY, Justice.

text:
    ASHORN et ux. v. FARMERS ROYALTY HOLDING CO. et al.
    No. 11168.
    Court of Civil Appeals of Texas. Galveston.
    April 3, 1941.
    Glenn & Hill, of Sealy, for appellants.
    Dudley, Hyde, Duvall & Dudley, of Oklahoma City, Old., and Hollis Massey, of Schulenburg, for appellees.
   CODY, Justice.

This suit is one in trespass to try title to two tracts of land in Austin County brought by appellants against appellees. Appellants alleged that on December 16, 1931, and for a long time prior thereto, certain tracts of land constituted their homestead; that on said date Farmers Royalty; Holding Company and G. T. Blankenship unlawfully entered upon an undivided half interest of the minerals in and under said tracts of land, and dispossessed them, and have ever since by themselves and their successors in interest withheld possession thereof from appellants. They also alleged that two certain deeds to Farmers Royalty Holding Company and G. T. Blankenship respectively had been obtained from appellants to the said interest in minerals upon certain specified acts of fraud. Appellants further alleged that the notary public taking the . acknowledgment of appellant Mrs. Mary Ashorn, the wife of appellant Willie Ashorn, was not taken privately and apart from her husband, and that the description of the land, wherein the undivided half interest of the minerals were situated, contained in said deeds at the time of their delivery was fatally defective. And upon said grounds appellants sought the cancellation of said deeds.

Appellees answered, among other things, by a plea of res adjudicata in bar of appellants’ suit, that on or about the 12th day of March, 1934, said appellants, as plaintiffs, filed in the same court (i.e., the district court of Austin County), a suit entitled Willie Ashorn et ux. v. G. T. Blankenship et al., numbered on the docket of said court No. 7028, and that on June 29, 1934, said court entered judgment therein. The copy of the judgment which appellees pled in bar was attached to their said answer.

By agreement of the parties, the court first took up and passed upon appellees’ plea of res adjudicata. In support of said plea, appellees introduced the following:

(1) The pleadings which had been filed by the parties in cause No. 7028.

(2) An application to the Court signed by appellants and their attorney, requesting that an agreed judgment (the substance of which was set forth) be entered in said cause, concluding with these words: “In acknowledgment of our entire satisfaction with this disposition of said cause, we especially implore and invoke this character of judgment in this, the above-entitled and numbered cause.”

(3) The agreed judgment which was rendered by the court on June 29, 1934.

From an examination of appellants’ petition in cause No. 7028, it appears that, in substance, the allegations thereof present substantially the same grounds for relief, as is presented in their present petition. However, appellants have added in their present petition the allegation that the description contained in the aforesaid deeds (dated December 31, 1931) was not contained in said deeds at the time appellants executed them.

From the judgment it appears that appellants appeared before the court in cause No. 7028 in person and by attorney, and further,

“It appearing unto the court that the plaintiffs and defendants have importuned this Court to enter a judgment in said cause in conformity with an agreement; and,
“It appearing unto the Court that such agreement is fair; that it is advantageous to both the interest of the plaintiffs and the defendants; that it is fairly made and fairly entered into and should be made the judgment of this Court; and,
“It appearing unto the Court that the mineral deeds as set forth and described by the plaintiffs in their original petition, executed by them to the Farmers Royalty Holding Co. and G. T. Blankenship, the rescission of which is a part of the subject matter of this suit, is hereby in all respects denied, and said mineral deeds are hereby fixed and established as valid and subsisting mineral deeds, divesting the plaintiffs of three-eighths of the mineral fee estate in said land in favor of the defendant Farmers Royalty Holding Co., and a one-eighth of the mineral fee estate in said land in favor of the defendant G. T. Blankenship, so that the ownership of the entire mineral fee estate in said land is hereby established and fixed, as between the plaintiffs and defendants, and a one-half of the entire mineral fee estate in said land in the plaintiffs; three-eighths of the entire mineral fee' estate in said land in the defendant Farmers Royalty Holding Co.; and a one-eighth of the entire mineral fee estate in said land in the defendant G. T. Blankenship, so that each cotenant shall hold such undivided interest as is herein accredited freed from the claim of the other, each being entitled to all of the rights appendant and appurtenant arising out of the estates herein accredited unto each separately as each separately owns an undivided interest in the entire mineral fee estate in said land.” The judgment, in an exhibit thereto attached, fully described the land by metes and bounds.

It is appellants’ contention on this appeal, phrased in various ways, that the court erred in sustaining appellees’ plea of res adjudicata “because”, as appellants state, “nothing was legally adjudicated in the former suit since the judgment of 1934 attempted to validate void deeds.”

Among the issues made by appellants’ petition in cause No. 7028 was one that the mineral deeds described in their petition in said cause was void because said mineral deeds undertook to convey an undivided mineral interest in their homestead, and that such deeds were not executed by the wife in the manner required by law to convey an interest in homestead property. It is quite clear from the record in cause No. 7028 that the court had jurisdiction over appellants in cause No. 7028, and over the defendants in said cause. It is equally clear from the record in said cause that the court had jurisdiction of the subject matter of the suit. The court therefore had the jurisdiction to determine the issues made by the pleadings in said cause. If the court had jurisdiction to determine the issues made by the pleadings in cause No. 7028 and, not being infallible, it had the power, at least it was subject to the possibility, of deciding such issues erroneously. The remedy of a party to an erroneous judgment is to correct it by appealing the cause, and having the error of the trial court corrected. Indeed, it is only the entire want of power in a court to render the judgment which it does render which can make the judgment void. Simmons v. Arnim, 110 Tex. 309, 220 S.W. 66, 68. A party to an erroneous judgment cannot disregard it, and at a later date file a new suit which puts in issue matters which have been determined against him in another suit against the same parties or their privies. “The doctrine of res adjudicata rests upon the salutary and sound principle that there must be an end to litigation.” Ruling Case Law, Vol. IS, p. 969; 39 Cyc.; Nichols v. Dibrell, 61 Tex. 539; Thompson v. Lester, 75 Tex. 521, 14 S.W. 20; Freeman v. McAninch, 87 Tex. 132, 27 S.W. 97, 47 Am.St.Rep. 79, in which case the Supreme Court announced the following test in determining the issues of res adjudicata: “ ‘A party cannot litigate matters which he might have interposed, but failed to do, in a prior action between the same parties, or their privies, in reference to the same subject-matter. And if one of the parties fail to introduce' matters for the consideration of the court that he might have done, he will be presumed to have waived his .right to do so.’ ” Dallas Trust & Sav. Bank v. Brashear, Tex.Civ.App., 39 S.W.2d 148, 151.

The issue of whether the mineral deeds in question were invalid was expressly made by appellants’ pleadings in cause No. 7028, and not one which was waived by not being raised by the pleadings. Had the cause been tried upon the merits, the judgment rendered therein would have been binding upon the parties thereto, and upon their privies. But an agreed judgment was entered in cause No. 7028, and “ ‘Any judgment which the parties to a suit cause to be entered by a bona fide agreement, no fraud being practiced in it, is binding upon them regardless of what the pleadings and evidence may be, and such judgment is conclusive as an estop-pel.’ ”

“To the same effect are the holdings in Sandoval v. Rosser, 86 Tex. 682, 26 S.W. 933; Dunman v. Hartwell, 9 Tex. 495, 60 Am.Dec. 176; Tait v. Matthews, 33 Tex. 112; Shawver v. Masterson, Tex.Civ.App., 65 S.W.2d 1111.” Logan v. Mauk, Tex.Civ.App., 126 S.W.2d 513, 515. And, “Just as any other judgment, a consent judgment is conclusive as to matters adjudicated and is not subject to collateral attack except on jurisdictional grounds. ‘A final judgment on the merits is just as conclusive on the merits if entered by consent as if entered after contest.’” 25 Tex.Jur., p. 389, par. 26.

The appellees in this suit are the same persons as were defendants in cause No. 7028, or they are successors in interest to them in and to the mineral interest in the land. And appellants are the same persons as the plaintiffs in cause No. 7028. The judgment entered in cause No. 7028 concluded against the appellants, and' in favor of appellees or their predecessors in interest, the rights which appellants in the instant case seek to re-litigate. The court correctly sustained appellees’ plea,, and the judgment of the trial court is 'therefore in all things affirmed.

Affirmed.