text:
    HOUSTON BELT & T. RY. CO. v. CHRISTIAN.
    (No. 7620.)
    (Court of Civil Appeals of Texas. Galveston.
    Jan. 14, 1918.
    Rehearing Denied Feb. 20, 1919.)
    1. Commerce <®=8(6) — Federal Employers’ Liability Act — Applicability.
    Where plaintiff was injured while employed by a railroad company on work connected with interstate commerce, the federal Employers’ Liability Act (ü. S. Comp. St. §§ 8657-8665) governs, and the defense of assumption of risk is available.
    2. Master and Servant <§=>288(2) — Injuries to Servant — Assumption op Risk — Jury Question.
    In an action by the engineer of a wrecker used to move derailed cars, for injuries received when the cables broke, the question whether he assumed the risk of injury from defective cables and from the fact that no outriggers were used before attempting to move a derailed box car, held, under the evidence, for the jury.
    3. Master and Servant <§=>222(2) — Injuries to Servant — Assumption op Risk.
    In determining whether an engineer of a railroad wrecker, who was injured while complying with commands of his foreman, assumed the risk of injury because outriggers were not set out, the question is not whether the engineer used ordinary care in ascertaining whether outriggers were set out, but whether he had actual knowledge of the necessity for using them, or whether the omission was so plainly observable that he would be presumed to have known of it.
    4. Appeal and Error <§=>1170(9) — Review— Harmless Error.
    In an action by the engineer of a railroad wrecker injured when cables broke while he was working under a foreman, a charge on assumption of risk, though erroneous, in allowing the jury to consider certain promises to repair, held harmless, under rule 62a (149 S. W. x), in view of the circumstances and the fact that the foreman knew of the defects, and was in a position to judge of the weight of the car to be lifted.
    Appeal from District Court, Harris County; Henry J. Dannenbaum, Judge.
    Action by W. W. Christian against the Houston Belt & Terminal Railway Company. From judgment for plaintiff, defendant appeals.
    Affirmed.
    Andrews, Streetman, Burns & Logue, of Houston, for appellant.
    W, J. Howard and Clarence Kendall, both of Houston, for appellee.
   GRAVES, J.

This appeal proceeds from a judgment for $8,000 damages for personal injuries in favor of Christian against the railway company, entered upon a verdict returned in response to special issues. Since the facts showed the work in which the accident occurred to have been in furtherance of interstate commerce, thus bringing the action within the purview of the federal Liability Act (Act April 22, 1908, c. 149, 35 Stat. 05 [U. S. Comp. St. §§ 8657-8065]), and consequently making the common-law doctrine of assumed risk applicable, the court, pursuant to appropriate pleadings by appellant interposing it, accordingly gave a charge upon that defense, around which most of the questions presented to this court revolve.

It is first said there should have been an instructed verdict for it, as appellant requested below, upon its claim that as a matter of law, under the undisputed evidence, Christian assumed the risk of every danger and hazard that could have been a proximate cause of his injuries. This contention necessarily brings in review the entire case as made, but could not prevail if any one of the four separate and distinct grounds of negligence alleged was not only in the first instance properly established, but thereafter maintained as against the defense of assumed risk.

Christian was employed as engineer on appellant's wrecker, a machine used in clearing away wrecks upon its railway lines, and at the time of his injury was acting under the direction of Morgan, the company’s superintendent, who had charge of the work, in the effort to lift up and place back upon its own trucks on the track a heavily loaded box car, which had previously been derailed. The machinery of the wrecker, which was placed upon and so fitted to an ordinary flat car by means of a large iron pin projecting down from it into a heavy metal casting so imbedded in the floor of the car as to permit rotation of the entire appliance upon this' pin as an axis, consisted of a boiler, boom, and cab, with cables running from; the ca.b over the top of the boom, and thence down to the box car to be lifted. This rotary arrangement allowed the wrecking machinery to describe an entire circle, hence to become directly crosswise, or at right angles with the length of the flat car upon which it rested, and when that was done, its cab extended out beyond the side of the flat car furtherest from the load for several feet. Such was practically its position when the accident here involved was brought about.

In attempting to raise and so shift ono end of the heavily loaded box car, it being full of cotton seed, as to make it fit down properly onto its trucks, the cable upon which its weight was suspended suddenly broke, letting the long boom drop forward down across the box car upon that side, and the cab of the wrecker in which Christian was stationed fall backward to the ground upon the opposite or outer side of the flat car with such force as to throw him out and injure him, the flat car itself being tilted in the same direction up off of one rail to the extent of an angle anywhere from 12 to 45 degrees wide.

Superintendent Morgan’s own statement of the relative duties of both Christian and himself, and of how the accident happened, is shown in these excerpts from his testimony:

“After we came to the point where I decided-we would be in the clear to handle the box car, I had the switch engine cut loose and taken away from the wrecker, and swung the wrecker around; the truck would not quite go under the car, the center plate, the two center plates —the male and female casting — would not pass, by about, I guess, a couple of inches, and I examined it and told Christian tó raise her up a little, and he said, ‘Do you reckon I can do it ?’ and I says, ‘Let’s raise it higher; we have got to have it higher to place it in the truck;’ and when he raised it higher and just about the time the car was up and just as I was going to holler, ‘Whoa,’ why, the lines broke in the boom, snapped. That let the boom fall right across the car of cotton seed, and let the machine, of course, tilt back. The boom was supposed to counter balance the boiler, which is in the back end of the machine, and when the boom fell on the car there was no weight there for it to counter balance with, and, of course, it naturally turned that part back. * * * Mr. Christian was engaged in handling the movement of that wrecker from the time we stopped there; he is the man who swung the wrecker around after the switch engine had been cut off; he is the man who handled tho levers in swinging it around. It took about five seconds to a half a minute to swing that machine around, and tho accident occurred after that just as quick as we could lift up; just as quick as he could get his levers and lift up. I told him to lift it up, and he said did I think she would stand it, and I said it had stood it for about 200 lifts like that, and he made the lift when I told him so.”

Christian's version did not materially differ, he saying upon the same matter, and with reference to Morgan’s authority over him:

“At the time I was injured I was working under Mr. Morgan. Mr. Morgan was supposed to he the general boss out there at the time we were picking up this wreck. Mr. Morgan was giving all the orders during the work. He had the right to give orders, and I was required to take Ms orders. I either had to take his orders or quit. * * * He kept telling me she would stand a little more. We was trying to got this car up off the block. When he told me it would stand a little more, I give her a little more steam, to raise that up a little bit, and get it up off of those blocks; and after we got the car up off the ties, Mr. Morgan says, ‘Swing south just the least little bit,’ and' just as I went to give her a little steam to swing that car, she went off — just turned over like a shot out of a gun just as soon as I began to give her a little steam, and it was all done just like batting your eye. She threw me out of the side door of the machine, and I landed on the side of the ear.”

Now, as applied to this situation, the several respects in which negligence was charged against appellant were in substance and effect essentially these: (1) In using weak and defective cables on the machines; (2) in permitting the work to be done with the metal casting in the floor of the flat car badly broken or cracked; (3) in failing to use “outriggers” as a protection against the very heavy load, it being averred that if these had been properly employed the accident would have been prevented; and (4) in allowing the overloading of the wrecker and cables in the condition they were in at the time.

In response to special issues separately embodying them, the jury found the railway company guilty of negligence in each of the particulars so specified, that each one of such negligent acts had been a proximate cause of Christian’s injuries, and expressly acquitted him of having assumed the risk of any one of the conditions named, except as to the overloading of the wrecker and cables, concerning which alone that particular question was not submitted to them.

It is not contended here nor elsewhere in appellant’s brief, indeed could not properly be under the uncontroverted evidence, that the cable and casting were not in fact defective, nor that the “outriggers” were used, nor yet that the load was not beyond the strength of the cable, but the complaint against these findings is, primarily through the first assignment, of their having been permitted to be made at all, as against the claim that the risks they dealt with had all been assumed by the appellee, and secondarily through a number of succeeding assignments, of the way in which the issues that elicited them were presented to the jury.

The proof was likewise undisputed that for some time prior to the accident Christian had known of the defects in the cable and ■ the casting, but had repeatedly reported and complained about their condition, and had received assurance that it would be remedied, the last time during the month of August before his injury in September, when the master mechanic of the company, Mr. Jacobs, directly promised to repair them, coming out to the machine himself, and having his/machinist take the dimensions of the broken parts, and make upon blueprints an itemized list of what was wanted.

Preceding these several questions as to the detailed acts of negligence charged, the court had, after' first properly defining negligence, ordinary care, and proximate cause of an injury, given this charge upon the question of assumed risk:

“By ‘assumed risk,’ as used in this charge, is meant that if an emploj'é knows of a defect or condition, which thereafter caused an injury to him, and appreciates the danger and injury liable to result to him from such defect or condition if he continues thereafter in the service in question, or if in the performance of the duties of his position he must necessarily have known of such defects or condition, and must necessarily have appreciated the danger and injury liable to result to him from such defect or condition if he continues thereafter in the service in question, then the employs assumes the risk of being injured because of such defect or condition. But the employe does not assume such risk if he was induced to remain in the service by a promise of the employer to repair such defect or condition, if a person of ordinary care would, under all the circumstances, have relied on such promise and continued in the service, and such period of time had not elapsed after the promise was made, that the employs knew or should have known that the promise would not be performed.”

The word “induced” has been italicized here to indicate this court’s view of the meaning and effect of that part of the instruction.

Under the entire controversy thus at least in fundamental substance outlined, did the court err in declining to hold as matter of law that no single ground of liability had both been sufficiently alleged and established, or, to state it differently, that the undisputed evidence showed Christian to have assumed every risk or hazard that could have been a proximate cause of his injuries?

A careful consideration of the record, including the statement of facts, convinces us that it did not. The load being lifted was a very heavy one, the box car itself weighing 32,000 pounds, and the cotton seed within approximately 33 tons more, making an aggregate weight of about 49 tons, whereas the wrecking machine was only built to lift loads of 25 tons at 15 feet, 20 tons at 18 feet, and 30 tons at 12 feet; moreover, it was at night too dark to give a signal with the hand, and a lamp had to be used. Christian was up in his cab on the far end of the wrecker, in no position to observe or know anything about tbe weight of the load, and there is not a syllable of evidence anywhere in the record indicating that he did in fact know anything about it.

' A like condition obtains as to the admitted failure to use the “outriggers.” These were simply movable iron bars so fitted under both ends of the flat car upon which the wrecking machine rested as to be readily pulled out upon whichever side of the car they were needed, at right angles with and to a distance of 4 or 5 feet from its sides, where they were blocked up with sticks of timber placed on the ground, their purpose being to prevent the tilting of the car in that direction.

The witnesses for both litigants united in testifying that outriggers were never set out in lifting light loads, hut only when heavy ones were to be moved, and, as before stated, there was no proof whatever that Christian either knew the weight of the load he was here eomm&nded to lift, or that it was heavy enough to require the use of these appliances. He was subject to the orders of Morgan, his superior, and had a right to assume that the latter would himself determine the question of whether or not the weight of the box car was such that ordinary care called for the placing of the outriggers. Especially is this true when Morgan, the superintendent in charge of the work, occupied a position of vantage over Christian in at least two vital respects: In being the foreman of the work with the right to require obedience to his orders from Christian, and in knowing, or what amounted to the same thing, of being under the duty of knowing the character and weight of the load he was undertaking to lift. In these circumstances the question is not one of ordinary care upon Christian’s part in ascertaining whether the outriggers had been set out, but one either of his actual knowledge of the necessity for using them, and of the conceded failure to do so, or of whether that omission was so plainly observable that he would be presumed to have known of it. Panhandle Ry. v. Brooks, 199 S. W. 669; Gila Valley Ry. Co. v. Hall, 232 U. S. 101, 34 Sup. Ct. 229, 58 L. Ed. 524.

While appellant marshals a number of circumstances, such as the proximity and relative positions of the two cars, the number of openings in the cab of the wrecker, the unobstructed view, etc., from which it is argued that Christian must have known the outriggers were not placed, still he testified positively that he did not know it, and the jury’s findings must be held to have resolved that issue in his favor. Neither can it be properly said, we think, that the circumstances first above detailed did not just as strongly tend to corroborate his denial and to rebut any presumption of knowledge as did those invoked by appellant to indicate the contrary. Obviously, no presumption that he had the knowledge it is sought to thus bring home to him would as a matter of .law arise out of a situation such as this, and the contention must be overruled.

The jury’s further findings that these two negligent acts, that is, the failure to use the outriggers and the overloading of the wrecker and cables, were each a proximate cause of the injury also had ample support in the evidence. At this point it must be recalled that Morgan had precisely the same knowledge Christian did of the defective cable, and in addition had what the latter is thus found not to have had, knowledge of the weight he ordered Christian to lift.

Considering all the facts developed, therefore, it is not perceived how a court could hold as a matter of law that Christian assumed the risk of the two conditions shown with respect to the overloading and the failure to use the outriggers.

But it is said the charge above quoted denied appellant the real benefit of its defenses of assumed risk, in that it failed to affirmatively submit the question of whether or not there had in fact been any promise to repair the defects shown to have existed in the cable and casting.

While we think this charge correct in so far as the substantive law is concerned, and that it closely tracks the rule laid down by the Supreme Court in Railway Co. v. Bingle, 91 Tex. 287, 42 S. W. 971, cited and relied upon in the briefs of both parties here, still, as we view the case, concession might be made that the negative or inferential form in which it permitted the jury to consider the matter of a promise to repair the cable and casting constituted error, without at the same time requiring a reversal, because, in our opinion, there was no such denial of the rights of appellant as was reasonably calculated to . cause and probably did cause the rendition of an improper judgment against it. Bule 62a (149 S. W. x). Surely Christian, although knowing the weakened condition of the cable, could not be held to have assumed the risk of its being overloaded at the direct command of one who possessed like knowledge, but whose orders he was bound to take. In these circumstances, it logically follows that the promise to repair, which related alone to the casting and the cable, might be entirely disregarded without affecting his right of recovery; under this view, it might with like resulting effect be further granted that the defective condition of neither of these two appliances, concerning which the promise to repair was made, had anything to do with, or was approximate cause of, the injury. This is so for the reason that there is sufficient evidence in the record to have justified a specific finding not only that the cable would not have broken, even in its weakened condition, if it had not been grossly overloaded, but also that the accident could still have been prevented by the use of the outriggers, despite the previous parting of the cable. The finding that such was the state of the proof is made after a careful examination of the record, but it is deemed unnecessary to catalogue the testimony here.

If, then, a judgment of affirmance can properly be rested upon the overloading and the failure to place the outriggers, as the fact, findings, and conclusions already stated not merely permit, but require, it is thought no useful purpose would be served by a discussion of the many further questions presented relative to the other acts of negligence.

All assignments are overruled, and the judgment is affirmed.

Affirmed.
      <§=>Eor other eases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


source: Caselaw Access Project

author: LANE, J.

license: Public Domain

text:
    STATE v. HOUSTON & T. C. RY. CO.
    (No. 7603.)
    (Court of Civil Appeals of Texas. Galveston.
    June 19, 1918.
    On Motion for Re-hearing, Jan. 15, 1919.)
    1. Appeal and Error <©=>773(4) — Briefs— Failure to File.
    Where there was no fundamental error apparent of record, and no brief has been filed pointing out any error committed in the trial of the case, the judgment will be affirmed.
    On Motion for Rehearing.
    2. Navigable Waters <®=>8⅛, New, vol. 13 Key-No. Series — Navigation District — Tax-ation.
    The “Harris County Ship Channel Navigation District of Harris County,” though having the same boundaries as Harris county, has no power of taxation, except such as is expressly conferred upon it by the law of its creation.
    3. Navigable Waters <§=>8½, New, vol. 13 Key-No. Series — Navigation District — Taxation.
    The law conferring upon a navigation district the power of taxation will be strictly construed.
    4. Taxation <©=>25 — Nature of Power — Incident of Sovereignty.
    The power of taxation is an incident of sovereignty, and all questions in regard to it address ' themselves to the discretion of the legislative department, whose conclusions, within the limits of the Constitution, are final.
    5. Taxation <©=328 — Delegation of Power-Construction of Statute — Presumption.
    The grant of taxing power to any county or district by the Legislature should be construed with strictness, the presumption being that the Legislature has granted in clear terms all it intended to grant.
    6. Municipal Corporations <®=>95G(1) — Inherent Power to Tax.
    Municipalities have no inherent power to tax.
    7. Counties <©=3190(1) — 'Taxation—Authority of County Court.
    The county court has no power or authority to levy a tax beyond that which may be conferred upon it by law.
    8. Taxation <©=3284 — Railroad Property-Rolling Stock — Intangible Assets — Situs.
    Intangible assets and rolling stock of railroad are of such a nature and character that-they have no actual situs in any particular county or district.
    9. Taxation <©=>253 — Railroad Property-Place of Taxation — Power of Legislature.
    Since railroad’s rolling stock and intangible assets have no actual situs in any particular county or district, it is within the lawful power of the Legislature to determine whether such property shall be embraced within the limits of a taxing district, and whether it shall be taxed for the purposes of such district.
    10. Taxation <©=>253 — Railroads—Intangible Property.
    A railroad corporation has no constitutional right to have its intangible property taxed only at its place of domicile.
    11. Taxation <©=3253 — Personal Property-Situs— Valuation — Power of Legislature.
    Unless restrained by some constitutional provision, the Legislature may fix the situs for taxation of all personal property.
    12. Navigable Waters <©=>8%, New, vol. 13 Key-No. Series — Navigation District-Power of Taxation — Railroad Property.
    In view of Const, art. 8, § 8, and Rev. St. 1911, art. 7525, Legislature may empower navigation district to tax rolling stock and intangible property of railroad, notwithstanding Const, art. 8, § 11, providing that property shall be assessed “in the county where situated,” such property having no actual situs.
    13. Navigable Waters <©=>8½, New, vol. 13 Key-No. Series — Taxing Power of Navigation District — Railroads—Rolling Stock —Intangible Assets — “Within Said District.”
    Navigation district having power to tax property “within said * * * district” has no power to tax rolling stock and intangible assets of railroad, such property not being within said district, in View of Const.' art. 8, §§ 8, 11, and Rev. St. 1911, art. 7525, being property of' such character that it has no actual situs, and not being physically within such district.
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Within the District.]
    14. Taxation <©=3284 — Situs—Railroads.
    Acts 30th Leg. (First Called Sess.) e. 17, authorizing county tax officers to include the intangible values in the values fixed on the tangible property, did not have the effect of fixing a situs for rolling stock and intangible assets of railroad company.

      15. Navigable Waters <§=>8½, New, vol. 18 Key-No. Series — Navigation District-Taxation — Statute — “Within Said District.”
    Law creating navigation district, authorizing district to assess all property “within said navigation district, * * * whether real, personal, mixed, or otherwise,” authorized the taxation of only such property as is actually physically within the limits of the district.
    16. Navigable Waters @=>8½, New, vol. 13 Key-No. Series — Navigation District>-Taxation — Intangible Property — Rollinq Stock — “Mixed or Otherwise.”
    Navigation district’s power to “tax property within said navigation district, whether real, personal, mixed, or otherwise,” gives district no power to tax intangible assets and rolling stock of railroad upon theory that the term “mixed or otherwise” gives such authority, for such words relate back to, and are qualified by, the words “property within said navigation district.”
    17. Statutes <®^219 — Construction.
    The contemporaneous and particular construction of a statute by those whoso duty it is to carry it into effect, though not absolutely controlling, is entitled to great weight by the court.
    Appeal from District Court, Harris County; Henry J. Dannenbaum, Judge.
    Suit by the State of Texas against Houston & Texas Central Railway Company. Judgment for defendant, and plaintiff appeals.
    Affirmed.
    John H. Crooker and H. H. Cooper, both of Houston, for appellant.
    Baker, Botts, barker & Garwood and Mc-Means, Garrison & Pollard, all of Houston, for appellee.

       43 Tex. Civ. App. 533.

   LANE, J.

This suit was instituted by 'J. H. Crooker, district attorney, in behalf of the state of Texas, by authority and order of the commissioners’ court of Harris county, against the Houston & Texas Central Railway Company, to recover certain taxes alleged to be due and payable to the county of Harris for the use and benefit of the Harris County Ship Channel Navigation District, which was duly organized by an act of the 31st Legislature of this state (Acts 31st Leg. e. 15), the boundaries of said district being the same as those oí Harris county.

The taxes sought to be collected by this suit are such as were assessed on the full value of the intangible, assets of appellee as were apportioned to Harris county by the state tax board, and the full value of its rolling stock as apportioned to said county by-the comptroller of the state.

Appellant, plaintiff below, contends that such taxes are assessable and collectable for tile use of said Harris county Ship Channel Navigation District, and appellee contends that there is no law authorizing the assessment and collection of such taxes for such purposes.

The cause was tried before the court without a jury upon the issues submitted. After hearing the evidence adduced and argument of counsel, the court rendered judgment for the defendant.

The cause is one of which the trial court had jurisdiction. The judgment rendered is one which the court could have properly rendered upon the record before us.

No brief has been filed in this court by appellant pointing out any error committed in the trial of the cause. There is no fundamental error apparent of record. Wherefore the judgment of the trial court is affirmed.

Affirmed.

On Motion for Rehearing.

This cause was submitted to this court upon the record and brief of appellee, appellant having filed no brief. Upon consideration of the cause thus submitted we affirmed the judgment of the trial court, as shown by the original opinion.

Since our opinion has been filed, and in due time, appellant has filed its motion for rehearing, and, together with its motion, has filed its brief. Appellant now asks that, because of the importance of the question involved, we grant it a rehearing and upon such hearing that we consider its brief. Appellee urges no objection to the motion. We therefore grant the motion, and will now proceed to consider and dispose of the assignment and propositions presented by appellant’s brief.

By the first and only assignment it is insisted that—

“The court erred in rendering judgment for tile defendant, because the undisputed evidence shows that the taxes sought to be recovered were duly levied and assessed against the rolling stock and intangible property of the defendant in Harris county, Texas, in a manner provided by* law.”

It is agreed that the only question for decision is whether or not “Harris County Ship Channel Navigation District of Harris County” has the power to tax the value of the rolling stock and intangible property of appellee as fixed by the state tax board and apportioned and certified to the tax assessor of Harris county for county taxation purposes.

The propositions presented under appellant’s assignment are, in substance, first, that the rolling stock and the intangible property of a railroad company is property and subject to the payment of taxes in the same manner as other property; second, that the property involved in 'this cause was situated within the limits of the Harris County Ship Channel Navigation District, and is therefore subject to levy and payment of taxes to support and maintain such navigation district, in the same manner and to the same extent as any other property; third, that the commissioners’ court of Harris county has the authority to enforce the collection of delinquent taxes levied upon the rolling stock and intangible assets of a railroad company situated in said county and navigation district for the use of said district.

■ WJhile it is true that the rolling stock and intangible property of the defendant railroad company is property and taxable as such in the manner and place, and for the purposes, prescribed by law, it by no means follows that it is taxable in said navigation district for its use and benefit. The fact that its boundaries are the same as those of Harris county is immaterial. The “Harris County Houston Ship Channel Navigation District of Harris County” has no power of taxation, except such as is expressly conferred upon it by the law of its creation, and in determining such power such law must be strictly construed. Wood v. City of Galveston, 76 Tex. 126, 13 S. W. 227; Carlile v. Eldridge, 1 White & W. Civ. Cas. Ct. App. § 989; Fort Worth v. Davis, 57 Tex. 225; Baker v. Panola County, 30 Tex. 87; Brown v. Graham, 58 Tex. 255.

In the further discussion of the contention of appellant we shall, with some omissions and addition of other matter, copy and adopt. as our own the discussion of these issues found in the very able, comprehenr sive, and condensed brief of appellee, and which is strongly supported by tife authorities there cited.

“It is axiomatic that the power of taxation is an incident of sovereignty, and that all questions in regard to it address themselves to the discretion of the legislative department, whose conclusions, within the limits of the Constitution, are final. It must determine all questions of state, county, district, and municipal necessity <and policy in ordering or authorizing a tax, and in apportioning it.

“In* the construction of any grant of taxing power to any county or district by the Legislature, the rule is that it should be construed with strictness, the presumption being that the Legislature has granted in clear terms all it intended to grant.

“Counties and other municipalities and districts have no inherent power to tax.”

Cooley on Taxation, 1st Ed.

In the case of Baker v. Panola County, the Supreme Court said:

“It cannot be seriously contended that the county court has any power or authority to levy a tax beyond that which may be conferred upon it by law.”

In Brown v. Graham, 58 Tex. 254, the court said:

“The county commissioners’ court can levy no taxes unless the power to do so be plainly and unmistakably conferred.”

Another clear statement of the rule is in the case of Carlile v. Eldridge, 1 White & W. Civ. Cas. Ct. App. § 989:

“It is an unquestioned rule, of universal application, according to all the authorities, to construe a grant of the sovereign power to tax, made by the state to one of its municipalities, with strictness.' Cooley on Taxa- , tion, 209. A municipality does not possess an inherent power to levy taxes; it can do so only through the delegation of the power to it by the state, and, if the state has erred in the directioii of strictness, the Legislature alone can correct” it.

The rule above stated has been uniformly adhered to by the courts of this state, as indicated by the authorities cited.

“Therefore, in the consideration of the case, we start with two established propositions, viz.:
“First. The Harris County Houston Ship Channel Navigation District of Harris County, for whose benefit the tax is sought to be collected, is a voluntary taxing district, created by a vote of its resident property taxpayers, under the authority of an act of the Legislature defining its -rights, powers, and privileges, including that of taxation.
“Second. As to taxation, including things to be taxed and the amount thereof, it has no inherent power, and the grant given it under the act of creation must be strictly .construed.”

“The property involved in this case is not of a nature and in manner of use such as to acquire an actual situs in any particular county or district, it is within the lawful power of the Legislature to determine whether it shall be embraced within the limits of a taxing district, and whether it shall be taxed for the purposes of said district.” Kettle v. City of Dallas, 35 Tex. Civ. App. 632, 80 S. W. 874; City of Galveston v. Guffey, 51 Tex. Civ. App. 642, 113 S. W. 585 (writ of error denied by Supreme Court); State v. Higgins Oil & Fuel Co., 116 S. W. 617; Ry. Co. v. State, 25 Ind. 177, 87 Am. Dec. 358; School v. Bowman, 178 Mo. 654, 77 S. W. 880; B. C. & A. R. Co. v. Wicomico Company. 93 Md. 113, 48 Atl. 853; State ex rel. K. C., St. J. & C. B. R. R. Co. v. Severance, 55 Mo. 378; Ry. Co. v. Alamance, 84 N. C. 504; Langdon v. School Dist., 116 Ky. 562, 76 S. W. 381; Layman v. Tel. Co., 123 Iowa, 591, 99 N. W. 205; Morgan County v. Walton County, 121 Ga. 659, 49 S. E. 776; Ry. Go. v. Wright, 151 U. S. 470, 14 Sup. Ct. 396, 38 L. Ed. 238; Cooley on Taxation (1st Ed.) p. 1175.

“The Constitution provides (article 8, § 11) that all property shall be assessed for taxation and the taxes paid ‘in the county where' situated.’ The Supreme Court held that the intangible tax law and its method of determining value and apportioning same did not violate this provision. Ry. Co. v. Shannon, 100 Tex. 389, 100 S. W. 138; Lively v. Ry. Co., 102 Tex. 557, 120 S. W. 852. As to the rolling stock of railway companies, there is provided a special method for its assessment and apportionment. Article 8, § 8. These properties have no fixed situs. They enter into and become a part of the entire line, adhering to, and being a part of it as a ‘going concern.’ ” Express Co. v. Auditor, 166 U. S. 185, 17 Sup. Ct. 604, 41 L. Ed. 965; State v. Ry. Co., 60 S. W. 886; Id., 94 Tex. 530, 62 S. W. 1050; City of Tyler v. Cocker, 58 Tex. Civ. App. 605, 124 S. W. 729.

As said by the Supreme Court of the United States in the case of Columbus Southern Railway Co. v. Wright, 151 U. S. 470, 14 Sup. Ct. 396, 38 L. Ed. 238, a railroad corporation has not the constitutional right to have its intangible property taxed only at its place of domicile. It is entirely competent for the Legislature to fix its situs for taxation.

Unless restrained by some constitutional provision, the Legislature may fix the situs for taxation of all personal property and a method of ascertaining its value. Morgan County v. Walton County, 121 Ga. 659, 49 S. E. 776; Layman v. Iowa Tel. Co., 123 Iowa, 591, 99 N. W. 205; State ex rel. K. C., St. J. & C. B. R. R. Co. v. Severance, 55 Mo. 378. As to rolling stock of railway companies, the Legislature is not only not prohibited from fixing situs for taxation and apportioning value, but is expressly authorized to do so, the apportionment to be among the “counties” through which the road runs in proportion to distance run through the “county.” The legislative provision (Rev. St. 1911, art. 7525) follows the provisions of the Constitution both as to assessment and apportionment. The “intangible tax” act provides for the “ascertaining of the value of and the apportionment of the intangible assets.” The situs of such assets has not been fixed in the counties, but on the contrary, has been fixed elsewhere.

“These constitutional and statutory provisions are based upon the fundamental idea that these properties of railway companies have no actual situs, and are of a kind and character to justify a limitation and restriction as to how they should be taxed, and for what purposes, i. e., only by the ‘state’ and the ‘county.’ Aside from the question involved in a proper construction of the Constitution as applied to a statute which fixes the place for taxation of property that has an actual situs elsewhere, as in the case of City of Galveston v. Guffey, 51 Tex. Civ. App. 642, 113 S. W. 585, the authorities are uniform, so far as we have been able to ascertain, that ‘what property shall be embraced within a municipal corporation or taxing district, and whether it shall be taxed for municipal purposes, are political questions, to be determined by the lawmaking power.’ ” Kettle v. City of Dallas, 35 Tex. Civ. App. 632, 80 S. W. 874; Norris v. Waco, 57, Tex. 635.

It is clear, therefore, that the Legislature has the power to say whether or not the Harris County Houston Ship Channel Navigation District of Harris County may levy a tax on the rolling stock and intangible assets of railroad companies.

The intangible assets and rolling stock of appellee is not property “within said district,” within the meaning of the Constitution and statutes, and, the power of the district to tax same not being expressly granted by the act of its creation, the tax proposed to be levied is unlawful.

It must be conceded that the intangible assets of a railway company have no situs within Harris county. Prior to the enactment of the act of 1905 (Acts 29th Leg. c. 146), of which chapter 17, Acts Eirst Called Session of the 30th Legislature is an amendment, the law authorized the county tax officers to include the intangible values in the values fixed on the tangible properties; but the act of the 30th Legislature inaugurated the state policy of separating the intangible assets from the tangible properties, and provided a method of doing this and of apportioning the values. It could not, however, be maintained that this act had the effect of fixing a situs for such assets or any portion thereof.

As to rolling stock, our courts have held that they should take.cognizance of the fact that it is required to be constantly in actual use all along the line of road. The Constitution, and the statute passed under its provision, both recognize, in the method adopted for its taxation, that it has no actual situs as a whole. The record in this case does not disclose that any portion of the property in question was in Harris county as of January 1st of any year for which a tax is sought to be collected.

The law which gives the Houston Ship Channel Navigation District its taxing power provides that taxes shall be levied and assessed upon “all property within said navigation district, whether real, personal, mixed, or otherwise.” This means that the property “must be actually physically within the limits of the municipality where itr is sought to be taxed, in order to be subject thereto.” City of Tyler v. Cocker, 58 Tex. Civ. App. 605, 124 S. W. 729. The court in this case further said:

“Laws affecting taxation are generally construed strictly against the government, or taxing power, and will not be extended beyond the plain' import of the language used. Atlantic, etc., Railway v. Lyons, 101 Va. 1, 42 S. E. 932. The terms of our Constitution are as potent in excluding from the taxing powers of cities and towns personal property not ‘lying and being’ within their limits as in conferring the right to tax that which is.”

The property sought to be taxed not being actually physically “within said navigation district,” power must be' sought elsewhere than in the terms locating the property subject to taxation for assessing the tax. It cannot be predicated upon the terms “mixed or otherwise”; for by every rule of construction they relate back to, and are- qualified in their meaning and effect by the “property” which they describe, and that is property “within said navigation district.”

The presumption is that the Legislature expressed in clear and unmistakable terms all it intended to grant. If it had intended that the tax assessor of Harris county, for the benefit of said navigation district, should extend on the tax rolls the value of intangible assets as fixed and certified by the state tax board, and the value of the rolling stock as certified by the comptroller, it would have been, and must be, clearly expressed in the words of the grant.

The Constitution and laws of Texas restrict and limit the payment of taxes on the intangible assets and rolling stock of railway companies to the “state,” and the “counties” through which the road runs, and do not authorize the assessment of same for taxes by, or for the use of, any district created by the voluntary act of the residents of said district.

There was a bill introduced in the same Legislature at which the navigation act was passed, and two years after the intangible assets act was passed, to wit, the 31st Legislature 1909, which bill, in section 57, sought to subject to taxation for school district purposes intangible assets. This bill was finally passed and became a law after being amended in several particulars, one of the amendments being that of section 57, by striking out the word “all,” and “all of the following words in said section,” which included the provision to tax intangible assets for school district purposes. The words stricken out are as follows:

“All intangible assets, as well as all other property, shall be subject to taxation for school purposes, and that part 0⅛ the intangible assets subject to taxation in the county, as fixed by the state tax board, which shall be apportioned to a given district, shall be determined by the tax assessor.”

There was introduced in the Thirty-Second Legislature a bill to require all companies subject to the intangible assets law to pay local taxes on intangible assets to incorporated cities, school districts, and road districts in the state. The reason for its enactment, as stated in the last section, \yhich included the emergency clause, was “that there is now no law in this state providing for a tax on intangible assets of railroad companies,” etc., “by incorporated cities and towns, school districts, and road districts, and the necessity for such a law.” This bill was favorably reported by a committee of the Senate, where it was introduced, but never became a law,

There was introduced in the Thirty-Third Legislature of Texas a bill for the taxation of intangible assets of certain corporations by school districts, and it provided that as a reason for its passage “that there is now no law in this state to authorize the collection of local school taxes for a common school district, and for independent school districts, upon the intangible assets of certain associations, corporations,” etc.. This bill was reported adversely by the committee of the House, in which it was introduced.

The word “intangible” in the act of the 30th Legislature, First Called Session, c. 17, § 8, should be “tangible.” See certified copy of section 8, as finally passed by the Legislature, and filed in office of Secretary of State. Const, art. 8, § 8; Const, art. 10, § 4; Rev. St. 1911, art. 7525; Acts First Called Session 30th Leg. c. 17; Acts 31st Leg. c. 15, § 23; Baker v. Druesedom, 197 S. W. 1043; City of Davenport v. Ry., 10 Iowa, 348; Ry. v. Lyons, 101 Va. 1, 42 S. E. 932; and authorities cited hereinbefore.

It is shown by the 'record that on May 28, 1907, the comptroller of public accounts rendered the following, opinion:

“May 28, 1907.
“Mr. W. H. Stoner, Assessor Victoria Co., Victoria, Texas:
“Dear Sir: Xour letter of the 24th inst., to the Attorney General, making inquiry as to whether the intangible assets of those corporations coming under the provisions of the intangible assets act are subject to taxation by independent school districts, has been referred to this department for attention.
“Section 8 of said act provides that the companies, corporations, firms, and individuals subject to the provisions thereof shall, in addition to the ad valorem taxes on tangible properties, which are now, or which may hereafter be, imposed upon them, respectively, by law, annually, beginning with the first day of January, 1900, pay a tax to the state for the year 1906, and for each year thereafter, on their intangible assets and property, and local taxes thereon to the counties in which this business is or shall hereafter be carried on.
“Section 16 of said act provides that the state tax board shall report or certify to the tax assessor of each county the amount of intangible assets apportioned to his county, and that the assessor shall extend and pro rate upon his tax roll the state and county taxes upon all such intangible assets.
“Section 16 further provides that all such state and county ad valorem taxes upon all intangible property in this state belonging to any individual, company, corporation, or association embraced in said act shall be assessed under its provisions, and not otherwise.
“From the above it will be seen that provision is made for the assessment of this property for state and county taxes only, and that the provisions in section 16 for reports by the state tax board are that such reports shall be made to the county tax assessor only. There is no provision anywhere in the act for reports to be made by the board to independent school districts, nor is there any provision for the assessment of such property for school district taxes.
“I have to advise, therefore, that it is the opinion of this department that independent school districts are not entitled to any apportionment of intangible assets under said act, nor have they the right to assess such property, for school district taxation, separate and apart from the tangible property to which such intangible assets adhere, as is done for state and ■county purposes.
“Yours very truly,
“[Signed] J. W. Stephens, Comptroller.”

And that on April 1, 1914, the Attorney •General rendered the following opinion:

“April 1, 1914.
“Hon. O. H. Eodes, County Attorney, Emory, Texas:
“Dear Sir: We have your communication of recent date, in which you say:
“ ‘There is a school district tax in common school district No. 13 of this county of 50 cents for 1913, and 20 cents for 1912. The Texas Short Line Railroad has 3i/io miles of their track in this district; through an oversight and mistake of the tax assessor of this county, he failed to assess this railroad for the district school tax for either year.
“ T desire to know if the tax collector or assessor now has authority to assess these taxes .against the railroad company for these years, and, if so, whose duty is it to make the assessment. Is the intangible assets of the railroad and the rolling stock subject to the district school tax?’
“Replying to your first question, will say that under the provisions of articles 7565 and 2836, Rev. St. 1911, under the facts stated by you, it would be the duty of the assessor of taxes for your county to list and assess the taxes for the years 1912^-13 against the property of the railroad within the school district mentioned, in the manner provided by article 7565. See, also, State v. St. Louis Southwestern Ry. Co., 96 S. W. 69.
“Replying to your second question, I will say that the intangible assets and the rolling stock of a railroad company are not subject to the local school district taxes. They are liable for county taxes proper, but not for taxes levied by subdivisions of counties.
“Yours truly,
“[Signed] Luther Niehels,
“Assistant Attorney General.”

The construction of the Attorney General of the law applicable to local school districts, shown above, applies with equal force to the ■question here presented.

The contemporaneous and particular construction of a statute by those whose duty it is to carry it into effect, though not absolutely controlling is entitled to great weight by the court. In re Valhoff (D. C.) 238 Fed. 405. In the case of Auditor of Public Accounts v. Cain (Ky.) 61 S. W. 1016, there was involved the construction of a law fixing the fees of clerks for certain services. It had been construed in a particular way for many years by the legislative and executive branches of the government. The court said:

“The executive branch of the government must necessarily give a construction to the laws which it must execute; and if its construction has been followed for years, and in view of, and without interference by, the lawmaking power, then such contemporaneous and long-continued construction should not be departed from without the most cogent reasons. A long-continued practice * * * under suc'h circumstances ripens into an authoritative construction of it.”

The Supreme Court of Texas, in the case of Tolleson v. Rogan, 96 Tex. 432, 73 S. W. 524, in discussing the contemporaneous construction of statutes by officers whose duty it was to construe and enforce them, said:

“The great weight which, from necessity, courts must often give to the contemporaneous construction put upon laws by other departments and officers to whom is committed their practical administration, is so well understood that it need not be dwelt upon. Sound public policy requires the solving of all mere doubts in favor of constructions so made and uniformly acted upon.”

The last case cited was approved and followed in the following cases: State v. Houston Oil Co., 194 S. W. 422; Yoakum County v. Slaughter, 195 S. W. 1129; City of Tyler v. Cocker, 58 Tex. Civ. App. 605, 124 S. W. 729.

The bills which have been introduced in the Legislature of this state since the enactment of the intangible assets law, and the opinions of the Attorney General, offered in evidence in this case, ejearly show that the Legislature and the Attorney General have both construed such law as not being authority for the taxation of the rolling stock and intangible assets of railway companies, except by and for the use of the state and counties. These constructions, and the law as announced by the authorities cited herein, constrain us to hold that the trial court did not err in rendering judgment for the defendant.

We deem it unnecessary to prolong this opinion by further discussion, as the authorities cited clearly sustain the judgment of the trial court. The judgment is affirmed.

Affirmed.
      <&=For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

      <§=^>For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


author: RAINEY, C. J.

text:
    BANKERS’ TRUST CO. v. CALHOUN.
    (No. 8113.)
    (Court of Civil Appeals of Texas. Dallas.
    Feb. 15, 1919.
    On Motion for Rehearing, March 15, 1919.)
    1. Limitation of Actions <§=127(3) — Cancellation of Insteuments.
    Where'an original petition was for false and fraudulent representations which constituted plaintiff’s right to cancel note and recover money paid, and the allegations of the amended petition were in effect the same amplified, there was no new cause of action, and the amendment relates back to filing original petition so far as the statute of limitation is concerned.
    2. Contracts <@=94(1) — Validity—Fkaud.
    Where a contract is induced by material fraudulent representations, it is void.
    3. Principal and Agent <@=156 — Apparent Authority — Fraudulent Representations.
    Where agents acting within the apparent scope ¶ of their authority in selling corporate stock made a sale by means of false and fraudulent representations, the principal was liable therefor, whether authorizing such acts or not.
    4. Evidence <§=434(8) — Contracts — Variance by Parol — Fraud.
    The rule that parol evidence is inadmissible to vary the terms of a written contract does not prevent the use of extrinsic evidence to attack its validity by showing fraud in its inception, notwithstanding the written contract provides that “no conditions, representations, or agreements other than these” contained therein could be considered.
    Appeal from District Court, Dallas County; E. B. Muse, Judge.
    Action by Frank A. Calhoun against the Bankers’ Trust Company. Judgment for plaintiff, and defendant appeals.
    Affirmed.
    John W. Pope, of Dallas, for appellant. Winters, McBrbom & Scott, of El Paso, and Harry P. Lawther, of Dallas, for appellee.
   RAINEY, C. J.

Appellee sued the appellant to cancel and hold for naught a certain note for $9,000 executed by him to the Bankers’ Trust Company, and to recover the further sum of $2,500 paid by him, which said sum and note were induced by the false and fraudulent representations made by one Mujck and one Coleman, duly authorized agents of appellant.

Appellant answered by general and special exceptions, general denial, and specially that the agency of Murck and Coleman was limited, and not authorized to make the alleged representations; that the contract signed by appellee contained no qualifications regarding statements or representations by any one, but advised appellee in effect the extent of said agents’ authority, etc.

The cause ivas submitted to a jury on special issues, and upon the return of the jury’s answers the court rendered judgment for the appellee as prayed for, from which this appeal is taken.

The evidence shows that the Bankers’ Trust Company was incorporated under the laws of Arizona, with an authorized capital stock of $400,000, with permit to do business in Texas. The evidence taken from statements made in appellant’s and appellee’s brief, respectively, show:

“In the spring of 1914 the principal office of the concern was in Dallas, Tex., and W. B. Slaughter was its president and one of its directors, G. G. Wright and R. T. Stuart were also on the board of directors, and Slaughter, Wright, and Stuart comprised the finance board and the sales committee. One Murck and Coleman were employed by the Bankers’ Trust Company in the spring of 1914 to sell stock in said concern. At that time only $109,000 of the stock had been paid in, and the $300,000' remaining was to be sold as preferred stock. Slaughter sent these men out to sell stock with a general letter, ‘Just a letter of introduction letting people know that they had authority to sell stock, and some personal letters to men that I know out there.’ Slaughter testified: T just gave them this letter and told them to go out and sell stock. * * * I don’t know whether the general letter of mine had any limitation of their authority. I don’t recall the contents of my letter. I don’t remember whether there was any restrictions in it or not.’ Appellee Calhoun lived at Chloride, N. M. I-Ie was in the live stock business. In May, 1914, said Murck and Coleman came to see him at his ranch in Sierra county, 15 miles from Chloride, and 40 miles from the railroad. They were brought out by one Bulware, of Silver City, with whom Calhoun was acquainted. They wanted to sell stock in the appellant company, and showed to Calhoun the aforesaid general letter from W. B. Slaughter, constituting them agents to sell said stock and introducing them as such agents. Murck did most of the talking. He stated to Calhoun that the Bankers’ Trust Company was doing business under the laws of the state of Texas; that it had paid a dividend of 30½ per cent, for the two years previous on the stock; that the book value of the stock (the par value being $10 per share) was $11.50. They showed him a pamphlet containing a statement which they stated had been prepared by some bank official of the state of Texas who had examined the Bankers’ Trust Company which corroborated their representation as to the amount of capital stock, book value thereof, and the dividends which had been paid. They stated the capital stock to be $500,000, and that, if Calhoun would buy 1,000 shares at $11.50 per share, he could pay $1,000 down, and give two notes, one for $1,500, due in six months, and one for $9,000, due in one year; that the Bankers’ Trust Company would carry the $9,000 note at 8 per cent. until such time as the dividends on the stock would pay the note. Induced by the representations of these men, Calhoun bought 1,000 shares of stock, gave them a check for $1,000 and executed his two notes for $1,500 and $9,-000, payable in six months and one year, respectively, upon which' Murck ’delivered to him the following receipt:
“ ‘No. 1798. $11,500.00. Chloride, New Mexico, 5 — 10—1914. Received of F. A. Calhoun the sum of $11,500 in full payment of one thousand shares of the capital stock of the Bankers’ Trust Company as per contract the same number as this receipt. Bankers’ Trust Company, by W. B. Townsend, Assistant Secretary. Not valid unless countersigned by A. Murck.
“ ‘[Signed] A. Murck.’
“The name A. Murck is written across the face of the receipt over the word ‘Countersigned’ printed on it. They stated to Calhoun that as soon as the Bankers’ Trust Company would receive his check for $1,000 and the notes they would forward to him his stock. This was never done. Murck seated to Calhoun that there ‘was no promotion in the stock and they were receiving no commission for selling; said they were working on salary; that the Bankers’ Trust Company was paying them a salary to sell this stock.’ As a matter of fact, the $1,500 in excess of the par value which Calhoun paid was paid to the sales committee, consisting of W. B. Slaughter, G. G. Wright, and R. T. Stuart, and out of this the sales committee paid to Murck $1,000 commission for effecting the sale of the stock. Slaughter testified: ‘They were to" get as much cash as they could and get notes the finance board would accept. I don’t know about their getting enough to get a commission, but none of it ever came into our office; they would always keep out their commission. The fellow that was handing over the money was paying us as far as he was concerned; he didn’t know anything about what we did with the money.’ At the same time Calhoun executed the notes and gave his cheek for $1,000, he signed the certificate for the purchase of the stock:
“ ‘No. 1092. Amount, $11,500.00.
“ ‘This is to certify that I hereby purchase one thousand shares of the capital stock of the Bankers’ Trust Company, for which I agree to pay $11,500.00. I further agree that any statement, representatiori, or agreement of warranty made to me by the person taking this contract shall not in any way operate to cancel or annul this contract, unless the same be reduced to writing and filled in on the following line:
“ ‘A copy of the certificate of stock is shown on the back hereof, and forms and constitutes a part of this contract as fully as if incorporated in the- body hereof.
“ ‘The further consideration ⅛' that I will extend to the Bankers’ Trust Company the option of purchase of above-described stock should my stock be for sale.
“ ‘Dated this 18th day of May, A. D. 1914.
“ ‘Address: Chloride, New Mexico.
“ ‘[Signed] Frank A. Calhoun.
“ ‘This stock is taken subject to an advance in price.
“ ‘Witnessed by A. Murck, Salesman.’
“On the back of said contract is printed a copy of the said stock certificate, as follows:
“ ‘No. - Preferred Stock. - Shares.
“ ‘Bankers’ Trust Company.
“ ‘This certifies that - is the owner of -shares of the preferred stock of the Bank* ers’ Trust Company, transferable only upon the books of the company in person or by attorney on surrender of this certificate properly indorsed. The holder hereof agrees with said Bankers’ Trust Company and its stockholders to the following: That the preferred stock of the company is entitled to a cumulative dividend at the rate of 7 per cent, per annum of the par value of said stock, the same to be paid annually on the 1st day of January of each year out of the net earnings of the company; and in case any annual dividend, or any part thereof, is not paid when the same becomes payable, such unpaid amount shall remain a first charge against the net earnings of the company, and be fully paid before the payment of any dividend is made on its common stock. Upon dissolution of the company no part of its assets shall be applied in payment of the common stock, until out of the said assets the par value of the preferred stock shall have been fully paid. The preferred stock shall not have the right to be voted or be represented in any election or stockholders’ meeting of the company; all elections and stockholders’ meetings to be determined and controlled exclusively by vote of the common stock. When the said annual dividend and 7 per cent, shall have been paid on the preferred stock on the 1st day of January of each year, the common stock shall be entitled to a dividend not to exceed 7 per cent, of the par value of said stock to be paid out of the net earnings of the company remaining after the said payment.
“ ‘Any further dividends declared out of the net earnings of the company, after first the preferred stock and then the common stock shall have been paid, the ,7 per cent, dividends mentioned shall be participated jin by both preferred and common stock, share and share alike.
“ ‘In witness whereof the said-has caused this certificate to be signed by its president and its corporate seal to be hereto affixed, and attested by its secretary this - day of -, 191 — .
“ ‘-, President. -, Secretary.’ “That the said Frank A. Calhoun did, upon the same date and being a part of the same transaction with the above-mentioned stock contract, execute and deliver to the appellant, Bankers’ Trust Company, his two certain promissory notes, which are as follows, to wit: “ ‘$1,500.00 Chloride, N. M., '5/18/1914.
“ ‘On or before six months after date for value received, I, we, or either of us promise to pay to the order of the Bankers’ Trust Company, one thousand five hundred dollars, at Dallas, Texas, with 7 per cent." interest per annum from date until paid with 10 per cent, as attorney’s fees in the event of suit or placement for collection.
“ ‘[Signed] Frank A. Calhoun.
“ ‘Address: Chloride, N. M.’
“Marked: ‘Paid November 14, 1914.’
“And also the follo.wing note:
“‘$9,000.00. No. -. Chloride,' N. M.
5/18/1914.
“ ‘One year after date for value received, I, we, or either of us promise to pay to the order of the Bankers’ Trust Company nine thousand dollars, at Dallas, Texas, with 7 per cent, interest per annum from date until paid. And 10 per cent, for attorney's fees in the event of suit or placement for collection.
“ ‘[Signed] Frank A. Calhoun.
“ ‘Date, -.
“ ‘Address: Chloride, N. M.’
“For the difference between the contract price to be paid, which was $11,500, and the totals of the above principals of the above two notes in the sum of $10,500, the appellee paid in cash the sum of $1,000, and on November 14, 1914, paid the said $1,500 note as above mentioned, leaving the $9,000 note unpaid, together with interest thereon.
“Calhoun’s check for $1,000 was cashed, and he paid the $1,500 note at maturity. When the $9,000 note came due the following May, Calhoun was called upon to pay the same, and was notified that it bore interest at the rate of 10 per cent, after maturity. Calhoun did not pay the note, and then started an investigation, and ascertained that all the statements made to him by Murck and Coleman which induced him to purchase the stock were untrue, and on September 7, 1915, filed the instant suit. He testified that he believed all of said statements, relied upon the same, and would not have bought the stock had he not believed said statements to be true. With reference to the certificate of purchase of stock which he signed Calhoun testified: ‘Before I signed it Murck said it was just a matter of form ; that it would never be referred to; it was just a matter of -form that he had to go through, and it was not necessary.’
“There were present at this transaction between Calhoun and Murck and Coleman, John James, Harry James, Edward James, and R. H. Bulware. These men all heard what was said at tlie time, and testified at the trial corroborating Calhoun as to the representations made by Murck and Coleman to induce Calhoun to purchase the stock. Neither Murck nor Coleman testified at trial. The. testimony of W. B. Slaughter, president, and R. F. Henderson, secretary, showed that in truth: (1) The concern had not paid dividends averaging 30½ per cent, for the two years previous to 1914, and that, ‘if Murck and Coleman told Calhoun that the concern had made for 1912 and 1913 an average of 30½ per cent, on $500,000' capital stock, they were telling what was not true’; (2) that the condition of the Bankers’ Trust Company had never been examined by a bank examiner or bank official of the state of Texas; (3) that the book value of the stock in May, 1914, was $1.03 on the stock paid in, and not $1.15 on $500,000 capital stock; (4) that all the proceeds of the sale of stock did not go into the treasury, and that Murck and Coleman were not paid a salary, but that a commission out of the proceeds of each sale of stock was paid to the sales committee composed of Slaughter, Wright, and Stuart, and that this sales committee out of said commission paid Murck and Coleman, the commission on this particular sale amounting to $1,500, out of which Murck and Coleman got $1,000; (5) that Calhoun’s certificate of stock was not sent to him upon the receipt in Dallas of his notes and a certificate of purchase, and was never intended to be so sent him, and that his note for $9,000 was not carried by the Bankers’ Trust Company at 8 per cent, until the same was paid out of the dividends upon Calhoun’s stock, and was never intended to be so carried and paid; (6) the charter of the concern showed that the authorized capital stock was $400,000, not $500,-000, in May, 1914. The amendment increasing the capital stock to $800,000 was not filed in Arizona until June 29, 1914, nor in Texas until the 6th day of July, 1914. The application to sell the additional stock authorized by the amendment under the Texas Blue Sky Law was not approved until August 19, 1914. Ed James testified that among the other yarns told by Murck and Coleman as an inducement to got Calhoun to buy the stock was that a purchaser of same was protected by the Texas Blue Sky Law.”

Opinion.

Appellant complains tliat the court erred in not rendering judgment for it on the ground of two years’ limitation, for the reason that plaintiff filed his original petition September, 1915, but did not file his amended petition until November 20, 1917, setting up fraud and deceit, which was a new cause of action. The contention is that—

“Whenever a cause of action is based upon deceit or fraud of another, the cause of action thereon accrues at the time the deceit or fraud is discovered, or when it should have been discovered by the use of ordinary diligence on the part of the one damaged, and limitation begins to run against such cause of action at that time, and the two-year statute of limitation applies to such action.”

The basis of the original petition was false and fraudulent representations which constituted appellee’s right of recovery, and the allegations of the amended petition were in effect the same, but only amplified said false and fraudulent representations; therefore no new cause of action was set up by said amendment, as the same relates back to the time of filing the original petition.

Appellant’s second assignment of error complains of the court’s action in not rendering judgment for appellant, as it is contrary to the finding of the jury in eight particulars, and presented in its motion for a new trial, and is thus stated:

“The court erred in rendering judgment for the plaintiff, because the jury found that Murck or Coleman did not have authority to make the representations set out in special issue No. 1 requested by the plaintiff.”

The other issues referred to are Nos. 4, 7, 10, 13, 16, 19, and 23, which are couched in similar language as the one quoted, except the number. The jury did not make the-answer as stated by appellant, that Murck and Coleman did not have authority from appellant to make the false representations as stated. But the jury did find that all of said representations were made by Murck and Coleman, and that they were false; that Calhoun believed the same, and was induced by same to sign the contract, and it makes no difference, as they did make said representations, whether they had authority from the trust company to so make them or not, and this brings us to the main issue for solution; that is, conceding that Murck and Coleman had no authority to make said false representations, but having made them, and appellee having believed and acted upon them, did he have the right of action? It is well settled in this state, that, where a contract is induced by material fraudulent representations, such vitiates the contract and it becomes void. This rule applies to the principal parties to a contract, and is there any reason why it does not apply to contracts made where either party is represented by an agent? We do not see any difference; for a principal is bound by the acts of an agent when done within the scope of his authority. The general rule is:

“Where an agent in negotiating a transaction or making a contract on behalf of his principal imakes representations, declarations and admissions in connection, therewith respecting the subject-matter, they will be binding on the principal, where they are made at the time, and as a part of, the transaction, and although they are false and fraudulent, made without the knowledge or authority of the principal, and even though contrary to the instructions of the principal, and constitute a breach of trust against the principal.” Corpus Juris, vol. 2, § 541, p. 956; 21 Ruling Case Law, § 25, p. 844, and section 30, p. 850.

This is the rule in Texas. McAlpin v. Cassidy, 17 Tex. 450; Collins v. Cooper, 65 Tex. 460.

Murck and Coleman were sent out by appellant to sell stock, and were empowered to make representations in relation thereto, and to bind the appellant.

The jury found in answer to special issues that the representations as charged were made by Murck and Coleman as agents of appellant; that said representations were false; that Calhoun believed them, and he was induced thereby to make said contract, and it matters not that appellant did not authorize such representations. Said agents were acting within the apparent scope of their authority, and Calhoun was justified in acting on their representations. Cases in point are Case v. Webb, 181 S. W. 853; Kirby v. Thurmond, 152 S. W. 1099; Gypsum Co. v. Shield, 106 S. W. 724, affirmed by Supreme Court, 101 Tex. 478, 108 S. W. 1165; Jones v. Trust Co. (D. C.) 239 Fed. 771; Tiffany v. Automobile Co., 168 Mo. App. 729, 154 S. W. 865.

The writer can do no better than quote from Gypsum Co. v. Shields, supra. The language of Justice Neill on the question of admitting parol testimony in such a case as this is: .

“It is contended, under these assignments, that it was error to admit such testimony, because : (1) It was immaterial and irrelevant, in that the representations testified to were made prior to signing the contract, and therefore merged in the writing; (2) the testimony was an attempt to change or vary the terms of a written contract, which could not be done by parol evidence; and (3) the contract upon its face bears the following stipulation: ‘It is agreed that this written order and printed terms hereon constitute the entire contract between the parties, and there are no verbal statements or agreements varying the same.’ These assignments are followed in appellant's brief by propositions of law so elementary that no one can gainsay any of them. The gist of them is that parol evidence is inadmissible to vary the terms of a written contract. This rule, however, has no application to extrinsic evidence, when used to attack the validity of a contract, as, in this case, by showing fraud in its inception. If a party were denied the right to show facts which prevent a writing from constituting a contract, such a writing would be free from all defenses, and outside of all rules which determine the validity of contracts. Parsons on- Contracts (9th Ed.) 708; Barrio v. Miller, 104 Ga. 312, 30 S. E. 840, 69 Am. St. Rep. 171; Howie v. Platt, 83 Miss. 15, 35 South. 216. The evidence objected to was not introduced for the purpose of varying the terms of the writing sued upon, which it did not tend to do, but to the end of showing that defendant was induced to sign the paper'by the fraudulent representations of the plaintiff. On this issue it was clearly admissible.”

■ Appellant relies on the case of Bonding & Casualty Ins. Co. v. Barrington, 180 S. W. 936, which we think holds contrary to the principles cited above, but in it is an admission which shows it to be dissimilar to the facts in this case, wherein it states:

“The petition in this case does not seek to reform the contract on the ground of fraud or allege that, as drawn, it was not the contract agreed upon, but only that it was procured through fraudulent representations which induced appellee to sign it. It is insisted by appellant that appellee should not have been permitted to prove any other agreement or promise than those contained in the contract itself for the reason that the recitals in the contract that there were ‘no conditions, representations, or agreements other than these’ contained therein. We were first inclined to believe the proposition presented by appellant to be sound, but under the authority of U. S. Gypsum Co. v. Shields, 106 S. W. 725, and affirmed by the Supreme Court, 101 Tex. 473, 108 S. W. 1165, in which a like provision was contained in an order, in which it was held such provision did not preclude proof of fraudulent representations inducing the contract, and that such proof did not vary the terms of the contract. This case induces us to conclude otherwise. We might note, however, that the grounds set up to avoid the contract in that case were facts outside the contract, and did not purport to be part of the promise or agreement, but were only representations that certain contractors would use the material being sold in the construction of government buildings; and it further appears that the cement ordered by the dealer was for the purpose of sale, and in that particular that case is distinguishable from this.”

We have considered all other assignments not here discussed, but find no reversible error in any of them.

We are convinced that justice has been reached, and the judgment of the court below is affirmed.

Affirmed.

On Motion for Rehearing.

Appellant complains that it was stated in the opinion that “the jury found that the agents Murck and Coleman were authorized to make the representations they made to Calhoun as charged.” The writer confesses to have erred in so stating. The jury found that said agents were not authorized to make such representations, but such representations were made and relied on by Calhoun; but said error does not alter the former holding, as the rule of law as far as Calhoun is concerned is the same.

The motion for rehearing is overruled.
      ©=For other cases see same topic and KEY-NUMBER in‘all Key-Numbered Digests and Indexes


author: TADBOT, J.

text:
    BANKERS’ TRUST CO. v. JAMES et al.
    (No. 8114.)
    (Court of Civil Appeals of Texas. Dallas.
    Feb. 22, 1919.
    Rehearing Denied March 22, 1919.)
    Appeal from District Court, Dallas County; E. B. Muse, Judge.
    ■Action by Edward James and others against the Bankers’ Trust Company. Judgment for
    plaintiffs, and defendant appeals.
    Affirmed.
    John W. Pope; of Dallas, for appellant.
    Winter, McBroom & Scott, of El Paso, and Harry P. Dawther, of Dallas, for appellees.
   TADBOT, J.

This is a companion case to that of Bankers’ Trust Co. v. Prank A. Calhoun, 209 S. W. 826, decided by this court at a former day of the present term. The issues of law and the facts upon which they are to be determined are practically the same as those involved and passed upon in Calhoun’s Case.

Por the reasons given in that case, the judgment of the district court is affirmed.