source: Caselaw Access Project

author: WALTHALL, J.

license: Public Domain

text:
    NATIONAL SURETY CO. v. MURPHY-WALKER CO.
    (No. 384.)
    (Court of Civil Appeals of Texas. El Paso.
    March 4, 1915.
    Rehearing Denied April 1, 1915.)
    1. Insurance <&wkey; 146 — Construction oe Contract — Fidelity or Guaranty Bond.
    Contracts of a surety company, indemnifying an employer against the dishonesty of employes, entered into for a premium paid after investigation, based upon written representations relative to the extent of the risk, are not differentiated from guaranty insurance, and the same rules of construction must apply thereto as apply to other insurance contracts.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. §§ 292, 294-298; Dec. Dig. &wkey;146.]
    2. Statutes <&wkey;113 — Constitutional Provisions — Title—‘ ‘ Subject.”
    Const, art. 3, § 35, provides that no bill shall contain more than one subject, expressed in its title, but that if any subject embraced in an act is not expressed in its title, the act shall be void only as to subjects not so expressed. Acts 31st Leg. c. 108, not amendatory of any former legislation, is entitled “An act to authorize the incorporation of life, accident, and health companies, to regulate their business and that of foreign companies doing business in the state,” etc., and section 55 thereof (Rev. St. 1911, art. 4955), provides that all the provisions of the laws applicable to life, fire, marine, etc., insurance companies, so far as applicable, shall apply to all companies transacting any other kind of insurance business in the state. Held, that the constitutional provision was mandatory, and intended to apprise the legislators of the contents of bills so as to prevent surprise and fraud, that the word “subject” as used therein meant that which was to be governed by the particular law, and that the title did not indicate its intended application to insurance companies other than those enumerated therein, so that it was ineffectual as to a surety company issuing fidelity or guaranty bonds.
    [Ed. Note. — For other cases, see Statutes, Gent. Dig. §§ 141-144; Dec. Dig. &wkey;>113.
    For other definitions, see Words and Bhrases, First and Second Series, Subject.]
    3. Statutes &wkey;>145 — Codification — Reenactment.
    Such invalidity was not relieved by its incorporation into Rev. St. 1911, art. 4955, without change, since under the bill to adopt and establish the Revised Civil Statutes, reciting, “Be it enacted by the Legislature of the state of Texas that the following titles, chapters and articles shall hereafter constitute the Revised Civil Statutes of the state of Texas,” Final Title, § 16, declaring the statutes to be construed as a continuance of existing laws, and not as new enactments of the laws then in force, and Const, art. 3, § 43, providing that the first session of the Legislature thereunder should provide for revising and publishing the laws, and that in the adoption and effect of such revision the Legislature should not be limited by sections 35 and 36, the latter of which provides that no law shall be revised or amended by reference to its title, but shall be re-enacted and published at length, there was no enactment or re-enactment so as to make it effective legislation and enlarge its application so as to apply to all insurance companies doing business in the state.
    [Ed. Note. — For other cases, see Statutes, Cent. Dig. § 214; Dec. Dig. e&wkey;145J
    4. Insurance <&wkey;285 — Action on Policy— Defenses — Statutes .
    Under the express provision of Rev. St. 1911, § 4948, it is no defense to a suit on a surety or fidelity bond, construed as insurance, that misrepresentations were made in the application for the bond, unless the insurer shows that within 90 days after discovering their falsity it notified the insured that it refused to be bound thereby.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. § 657; Dec. Dig. &wkey;>285.]
    5. Appeal and Erbob <&wkey;247 — Theory Below — ADHERENCE TO ON APPEAL.
    Since under Rev. St. 1911, art. 4947, the falsity of answers or statements made in an application for a fidelity bond constitute no breach of contract on the part of the insured and no defense to his suit thereon, unless their materiality or contribution to the loss be shown at the trial, where it was not alleged in the answer that the answers and statements were material to the risk or actually contributed to the contingency which made the bond payable; the insurer cannot complain on appeal of the lack of evidence to support the court’s finding that the misrepresentations were not material.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 1426-1431; Dec. Dig. <&wkey;> 247.]
    6. Insurance <&wkey;285 — Fidelity Insurance-Application of Statutes.
    Rev. St. 1911, art. 4741, declaring that all policies shall provide that statements by the insured shall, in the absence of fraud, be deemed representations and not warranties, article 4947, providing that misrepresentations in any contract or policy of insurance must be material to avoid the contract or policy, article 4948, providing that no defense shall be based upon misrepresentations made in applications for policies or contracts unless defendant shows that, within 90 days after notice thereof, he notified the insured it would not be bound by the contract, article 4951, requiring policies of insurance to be accompanied by a copy of the questions asked in the application therefor, and article 4954, providing that the policy shall contain the entire contract, apply to surety or fidelity bonds.
    [Ed. Note. — For- other cases, see Insurance, Cent. Dig. § 657; Dec. Dig. <&wkey;285.]
    Appeal from District Court, Presidio County; W. C. Douglas, Judge.
    Action by the Murphy-Walker Company against the National Surety Company. Judgment for plaintiff, and defendant appeals.
    Affirmed.
    Jones, Jones & Hardie, of El Paso, for appellant. H. H. Kilpatrick, of Marfa, and J. F. Woodson, of El Paso, for appellee.
   WALTHALL, J.

This suit was brought by appellee, Murphy-Walker Company, against the appellant, National Surety Company, on a certain contract in writing, designated by various terms and expressions in the pleadings and briefs filed as “contract of insurance,” “fidelity bond,” “guaranty bond,” but each designating that certain instrument given by appellant to appellee in the penal sum of $1,000 as indemnity against loss, which appellee, the employer of W. G. Lempert, might sustain by or through the personal dishonesty, amounting to larceny or embezzlement of said Lempert, in the performance of his duties in the position of cashier in' the service of appellee, and which contract appel-lee alleged to .be a policy of insurance. The appellee alleged a loss of $1,820.41, specifying the several items aggregating that sum, occurring within the time covered by the contract, alleged that said loss was covered by the terms of the contract, and prayed judgment for the sum of $1,820.41, as the damages sustained, and for interest and costs. The appellant presented general and special exceptions to the petition, and answered, denying that appellee had suffered any loss through dishonesty of Lempert, amounting to larceny or embezzlement; traversed each of the allegations in the petition, except those admitted, putting them in issue. The answer specially pleaded as defense to the action matters claimed to be conditions precedent in the nature of certain questions and answers, and which appellant alleges to be untrue, and other express conditions which appellant alleges to be express warranties and assurances, affirmative and promissory, and made for the purpose of inducing the execution of the contract, all of which appellant alleges appellee failed to comply with and carry out, and that in said matters, ap-pellee had breached the terms of the contract, and that by reason of said breach, appellant was released from liability. Appellee filed a supplemental petition, admitting that the contract contained certain clauses pleaded by appellant, that it offered to comply with others pleaded, and denied that it willfully or knowingly made any false representations; denied that the provisions pleaded as warranties were in fact warranties. The issues presented in the pleadings will be stated as fully as it may be necessary to state them, under the assignments to which they apply. The case was tried before the .court without a jury. The court filed its findings of fact and conclusions of law, and rendered* its judgment for plaintiff (appellee) for $1,000. The appellant filed a motion for new trial, and, it being overruled, gave notice of and perfected an appeal to this court.

Preliminary to a discussion of any of the assignments of error, in view of some of the assignments, it might be well to determine whether the contract on which this suit is brought is a form or policy of insurance, and in any way covered or affected by the statutes of this state on the subject of insurance. The contract in this case was executed on the 11th day of February, A. D. 1911, and extended until noon on tbe lltb day of February, 1912, and by subsequent contract of January 13, 1912, extended until noon on tbe lltb day of February, 1913. Tbe trial judge applied to tbe contract tbe provisions of tbe Revised Civil Statutes of this state of 1911, embraced in articles 4917, 4948, 495T, 4955, and 4741 (4). Appellant assumes, in many of its assignments and propositions discussed, and very earnestly contends in others that none of these articles of tbe statute, should have been applied by tbe trial court. That tbe importance of the above article of tbe statute as applied to tbe issues both of fact and law in this case in connection with article 4955 may be readily seen, it- will be necessary to quote them here:

“Art. 4955. All the provisions of the laws of this state applicable to the life, fire, marine, inland, lightning, or tornado insurance companies, shall, so far as the same are applicable, govern and apply to all companies transacting any other kind of insurance business in this state, so far as they are not in conflict with provisions of law made specially applicable thereto.”
“Art. 4741. No policy of life insurance shall be issued or delivered in this state, or be issued by a life insurance company organized under the laws of this state, unless the same shall contain provisions substantially as follows [subdivision 4]. A provision that all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties.”
“Art. 4947. Any provision in any contract or policy of insurance issued or contracted for in this state, which provides that the answers or statements made in the application for such contract, or in the contract of insurance, if untrue or false, shall render the contract or policy void or voidable, shall be of no effect, and shall not constitute any defense to any suit brought upon such contract, unless it be shown upon the trial thereof that the matter or thing misrepresented was material to the risk or actually contributed to the contingency or event on which said policy became due and payable, and whether it was material and so contributed in any case shall be a question of fact to be determined by the court or jury trying such case.”
“Art. 4948. In all suits brought upon insurance contracts or policies hereafter issued or contracted for in this state, no defense based upon misrepresentations made in the applications for, or in obtaining or securing the said contract, shall be valid, unless the defendant shall show on the trial that, within a reasonable time after discovering the falsity of the misrepresentations so made, it gave notice to the assured, if living, or, if dead, to the owners or beneficiaries of said contract, that it refused to be bound by the contract or policy; provided, that ninety days shall be a reasonable time; provided, also, that this article shall not be construed as to render available as a defense any immaterial misrepresentation, nor to in any wise modify or affect article 3096aa (4947).”
“Art. 4951. Every contract or policy of insurance issued or contracted for in this state shall be accompanied by a written, photographic or printed copy of the application for such insurance policy or contract, as well as a copy of all questions asked and answers given thereto. The provisions of the foregoing articles shall not apply to policies of life insurance in which there is a clause making such policy indisputable after two years or less, provided premiums are duly paid; provided, further, that no defense based upon misrepresentations made in the application for, or in obtaining or securing, any contract of insurance upon the life of any person being or residing in this state shall be valid or enforceable- in any suit brought upon such contract two years or more after the date of its issuance, when premiums due on such contract for the said term of two years have been paid to, and received by, the company issuing such contract, without notice to the assured by the company so issuing such contract of its intention to rescind the same on account of misrepresentations so made, unless it shall be shown on the trial that such misrepresentation was material to the risk and intentionally made.”

The application of the above-quoted articles of the Revised Statutes of 1911, to the contract sued on, depends upon the question: Is the contract sued on (a fidelity or guaranty bond) to be' construed as one of insurance; and appellant also insists that the application of the above articles depends upon the constitutionality, or at least, upon the application to this case of article 4955; second, is article 4955, above quoted, void as being unconstitutional, or inapplicable to this kind of insurance, as claimed by appellant?

The obligation sued on is one of that class of contracts that have come before the courts in recent years having for its object the indemnity of the employer against loss due to dishonesty of the employe. They are compensated sureties, the contract entered into for a premium paid after the fullest investigation, based upon written representations relative to the extent of the risk, and by a company incorporated for the express purpose of furnishing guaranty bonds as a means of revenue to the corporation and its stockholders. There are in principle no facts which differentiate such contracts from guaranty insurance, and the same rules of construction must apply thereto as apply to other insurance contracts. People v. Rose, 174 Ill. 310, 51 N. E. 246, 44 L. R. A. 124; Briefs on Law of Insurance, Cooley, vol. 1, p. 8 (f); Remington v. Fidelity, etc., Co., 27 Wash. 429, 67 Pac. 989; Cowles v. United States, etc., Co., 32 Wash. 120, 72 Pac. 1032, 98 Am. St. Rep. 838; Frost in Law of Guaranty Insurance, § 2; 19 Cyc. 516; Title Guaranty & Surety Co. v. Bank of Fulton, 89 Ark. 471, 117 S. W. 537, 33 L. R. A. (N. S.) 676.

Article 4955, Revised Statutes 1911, was formerly section 55 of chapter 108, General Laws of Texas 1909, p. 192. The subject-matter of chapter 108, as expressed in its title was:

“An act to authorize the incorporation of life, accident and health insurance' companies and defining same; and to authorize such companies to transact business in the state of Texas; to authorize other like companies incorporated under the laws of other states, territories and countries to transact business in this state; to regulate the business of such companies; to define the duties and powers of the commissioner of insurance and banking and give to him authority to issue, suspend and revoke permits to such companies to transact business in this state and to apply for the appointment of a receiver for such companies when they become impaired ; defining the method of - arriving at the value of personal property of such companies for purpose of state, county and municipal taxation, and exempting such companies from an_ occupation or gross receipts tax; to fix the situs of personal property of such companies for purpose of taxation; to permit the deposit of securities in the office of the state treasurer; fixing venue of suits and providing, the method and manner of service of process; providing penalties for violation of the provisions of this act; repealing all laws in conflict herewith; and declaring an emergency.”

Article 3, § 35, of the Constitution of this state provides:

“No bill (except general appropriation bills, which may embrace the various subjects and accounts, for and on account of which moneys are appropriated) shall contain more than one subject, which shall be expressed in its title. But if any subject shall be embraced in an act, which shall not be expressed in the title, such act shall be void only as to so much thereof as shall not be so expressed.”

Is the subject-matter of section 55 (now article 4955, Revised Statutes 1911) quoted above, germane to.and expressed in the title of the bill? If not, under the provision of article 3, § 35, not coming under the exception, it would be inoperative, except as to life, accident, and health insurance companies, prior to its incorporation-as one of ¿he articles of the Revised Civil Statutes of 1911, which we will consider later. The provision of the Constitution is mandatory. Cannon v. Hemphill, 7 Tex. 208; Giddings v. San Antonio, 47 Tex. 548, 26 Am. Rep. 321. The word “subject,” as used in the Constitution, means that which is to be dominated or controlled by the particular law. Day Land & Cattle Co. v. State, 68 Tex. 527, 4 S. W. 865. It was intended to reasonably apprise the legislator of the contents of the bill, to the end that surprise and fraud in legislation may be prevented. Doeppenschmidt v. Railway Co., 100 Tex. 536, 101 S. W. 1081. A casual reading of the title of chapter 10S, quoted above, will readily disclose that there is nothing in the title to indicate that the Legislature intended in that bill to make all the provisions of the laws of this state applicable to life, fire, marine, inland, lightning, and tornado insurance companies to govern and' apply to 'all companies transacting any other kind of insurance business in this state. It might be that if the section of the bill quoted had confined its application to life, accident, and health insurance companies, and other like companies, the subject of which in-corporations and the regulation of their business in this state was indicated in the title, the subject-matter of section 55 would be indicated by the title. But that is not the question now before us. Does the title indicate its intended application to any other insurance company not made the subject of the legislation in the bill? We think not.

Was the incorporation of section 55, c. 108, 31st Leg. 1909, into the Revised Civil Statutes of 1911 as article 4955, an enactment or a re-enactment of the section, so as to relieve it of its former invalidity and make it effective legislation and enlarge its application? It will be noted that said chapter 108 was not an amendment of any former legislation; nor was section 55 of that chapter an amendment of any legislation theretofore enacted, but the entire chapter was initiatory of everything contained therein. The Revised Civil Statutes of 1911 was a compilation of laws previously existing and declared by the Legislature in section 16 of the final title, to be construed as a continuation thereof, and not as new enactments of the laws then in force, and enacted under the sanction of article 3, § 43, of the Constitution of this state, providing that:

“The first session of the Legislature under this Constitution shall provide for revising, digesting, and publishing the laws, civil and criminal ; and a like revision; digest and publication may be made every ten years thereafter; provided, that in the adoption of and giving effect to any such digest or revision, the Legislature shall not be limited by sections 35 and 36 of this article.” ,

Section 35 is quoted above and section 36 provides that no law shall be revised or amended by reference to its title, but shall be re-enacted and published at length. Relieved of the limitations in the Constitution that apply to ordinary bills, the Legislature passed—

“A Bill to be entitled ‘An act to adopt and establish the Revised Civil Statutes of the state of Texas, and declaring an emergency.’ ”

The first section of the bill recites:

“Be it enacted by the Legislature of the state of Texas, that the following titles, chapters, and articles shall hereafter constitute the Revised Civil Statutes of the state of Texas”

—one of which articles was section 4955, unchanged and unaltered as it stood, in the original bill in 1909. The case of Judd v. State, 25 Tex. Civ. App. 418, 62 S. W. 543, in which a writ of error was denied by the Supreme Court, the Fifth Court of Civil Appeals had under discussion section 19 of the “final title” of the previous Revised Statutes. Section 19 of that bill is the same as section 16 of the bill adopting the Revised Civil Statutes of 1911.

“Section 16. That the provisions of the Revised Statutes, so far as they are substantially the same as the statutes of this state in force at the time when the Revised Statutes shall go into effect, or of the common law in force in this state at said time, shall be construed as continuations thereof, and not as new enactments of the same.”

The court said:

“This section declares that the Revised Statutes are not a re-enactment of the laws, but merely a continuation thereof”

—and held that the fact that an act, invalid because in violation of Const, art. 3, § 35, prohibiting two subjects to be included in the same bill, was included in the Revised Statutes as a separate article did not constitute a re-enactment of the article.

In Fischer et ux. v. Simon, 95 Tex. 234, 66 S. W. 447, on a certified question from the Court of Civil Appeals for the First Supreme Judicial District, the Supreme Court had under consideration the proper construction of article 2369 of the Revised Statutes of 1895.

The solution of the question in a measure depended upon the question whether it was the intention of the Legislature which enacted the Revised Statutes to make them a mere compilation of the laws then existing, or to incorporate in the revision, by changes and amendments, new legislation. The court said:

“This is not an open question in this court. The point came before us for consideration in the case of Insurance Co. v. Walker [94 Tex. 473], 61 S. W. 711, and it was there held that the Revised Statutes of 1895 were but the continuation of the former laws.”

The court made a quotation from the Insurance Co. v. Walker Case a portion of which follows:

“The commissioners for revision were not authorized to make: changes in the substance of the statute laws of the state, but simply to arrange them in convenient form. To make sure that the laws of the state were not materially changed by such revision, the Legislature which adopted the Code as revised enacted a chapter of general provisions to govern the construction and application of the laws embraced in the Revised Statutes, of which general provision section 19 is in these words [then quotes the section, which is the same in verbiage as section 16 of the final title of the bill, adopting the Revised Statutes of 1911, and above quoted].

In the case of Corbett et al. v. Sweeney, 151 S. W. 858, it was insisted by appellant that since the adoption of the Revised Statutes of 1911 a different construction of the particular provision in question in article 3759 of that revision is required, and that Fischer v. Simon (above quoted) is not applicable. Article 3759 in the Revision of 1911 is in the exact language of article 2369 of the Revision of 1895, and of the original act of March 21, 1889. The court held that what was said by the Supreme Court in Fischer v. Simon is applicable to a case arising since the adoption of the Revised Statutes of 1911, that is, that although the article in question had passed through the revisions since its original passage in 1889, although it may be with some change in its phraseology, yet the construction of the original statute should govern and be determined just as if the Revised Statutes had never been adopted by the Legislature.

Under the above authorities, we hold that article 4955 was not enacted or re-enacted by the bill adopting the Revised Civil Statutes of 1911, and that its application was not enlarged so as to apply to all insurance companies doing business in this state. To hold that a law inoperative prior to the revision, but brought forward and given a separate article in the revision, and thereby reenacted by tlie bill adopting the revision, would give the bill an effect directly opposed to what the Legislature intended and so declared in section 16 of the final title. Article 4955 being a mere continuation of section 55 in the original act, and not an enactment or re-enactment thereof, it follows from the cases above cited that the constitutional defect, inherent in its inception, if intended to be applied to all insurance companies, still exists, and renders it inapplicable beyond the effect to be given it in the original bill.

Appellant complains in its first assignment of error of the findings and judgment of the court as being against the law, and by propositions thereunder, too lengthy to restate them here, undertakes to show that the bond sued on contained statements made by ai>pel-lee in answer to questions as to the duties of the applicant, Lempert, which appellant asserts to be conditions precedent and promissory warranties, all of which appellant says were breached and violated by appellee, and that because breached and violated, the trial court should have found that the bond was breached by appellee, and have rendered judgment for appellant. The alleged breach lies in the fact that Lempert was, at all times after the execution of the bond, the cashier of the West Texas Grocery Company, in addition to that of plaintiff; that he was also head bookkeeper and made entries and directed entries to be made, and that notice thereof was not given to appellant and its consent obtained. Appellee was asked:

“4. What is the applicant’s position in which bond is now requested? A. Cashier.
“5. State fully the duties which devolve upon applicant. A. Cashier in mercantile business.”
“7. Will applicant indorse checks, drafts, money orders or other bankable papers? A. No.”
“Will applicant handle any cash? If so, state the largest sum applicant is likely to handle at any one time. A. $1,000.00.”

Answering other questions, plaintiff said he had so systematized his business that books, accounts, and vouchers kept by employes would serve as a check upon Lempert and enable plaintiff to detect and discover any act of fraud. There are other questions and answer's, but the above will be sufficient to indicate the matters decided. Appellee made the foregoing and other answers not copied, and then stated before signing:

“The foregoing answers are to be taken as conditions precedent to and the basis of said bond applied for, or any other bond that may be executed by the National Surety Company for the undersigned upon applicant above named in said position or any renewal or continuation of such suretyship, and the undersigned is aware of no reason why the National Surety Company cannot safely assume the risk on account of said applicant.”

The bond on appellee’s statement provided as follows:

“7. All written statements and declarations concerning the employé, or his duties or accounts, made to the company by the employer, or any officer of the employer, at any time, are hereby made the basis of this bond, or any renewal or continuation thereof as to the em-ployé and they each and all are warranted by the employer to be true. If any of such statements or declarations be false or untrue in any particular, or if any willful suppression or misstatement be made in any claim for or proof of any loss under this bond, or if any fact affecting the risk of the company at any time, then this application shall be void, and the company shall in no case be liable hereunder.”
“8. This bond is entered into on the condition that the business of the employer shall be continued to be conducted and tbe duties of the employe shall remain in accordance with the written statements made by the employer to the company relative thereto; and if during the continuance of this bond or any continuation or renewal hereof, any circumstance occur or change be made which shall have the effect of making the actual facts different from such statements or any of them without immediate written notice thereof being given to the company at its principal offices in the city of New York, and a written consent and approval of the company being obtained, then the company shall not be liable hereunder for any act of the employé thereafter committed.”

The trial court made the following findings (which vre adopt and make our own, some of which we very extensively abbreviate and others, on more important features, we copy in full, indicated by quotation marks):

That defendant executed the bond sued on in the sum of $1,000, guaranteeing the plaintiff against loss by dishonesty of Lempert, amounting to embezzlement or larceny for one year from February 11, 1911, and thereafter extended the liability until the 11th of February, 1913; that in connection with the execution of the bond, plaintiff’s manager, Murphy, made certain representations to defendant in writing in reply to questions, which representations appear on the employer’s statement; that said bond was also based on the written application of Lempert; that at various times and under various circumstances and from different persons (the court in his findings giving dates, circumstances, persons from whom received, and amounts) Lempert received amounts of money and checks within the time covered by the terms of the bond, amounts aggregating $1,542.96; that Lempert appropriated the said funds of plaintiff to his own use; that at various times of said appropriations Lempert was in the employ of plaintiff as cashier; ■ that the several appropriations occurred in Presidio county, Tex., and under circumstances amounting to embezzlement or larceny.

“(16) During the period of time beginning February 11, 1911, and for some time prior thereto, and until about December 5, 1912, W. G. Lempert was employed by plaintiff and held the title of cashier. The duties which he actually performed during the whole of said period of time included the receiving and custody of and accounting for all cash and cash items of any and all descriptions which were received by plaintiff in the course of its business from any and all sources; also the paying out for and on behalf of plaintiff; said Lempert also had and exercised supervision over the two bookkeepers employed by plaintiff, and Lemp-ert kept the plaintiff’s cashbook and also made occasional entries in the journal and in the plaintiff’s ledger. The plaintiff was during all of said time an incorporated company, doing a general mercantile business in the town of Slarfa. The West Texas Grocery Company, also an incorporated company, had its books of account and transacted its office business in the office of the plaintiff. Lempert was also cashier for said West Texas Grocery Company, and performed like duties for said company as those performed by him for plaintiff. No notice prior to December 10, 1912, was given to defendant, at its home office, of Lempert being engaged in the performance of any duties other than those of cashier for plaintiff, except that Charles Kraemer, the soliciting agent for defendant at Marfa, knew the exact nature of the duties of Lempert at the time he solicited and procured the issuance of the bond herein sued upon.
“(17) With reference to the indorsing of checks received by plaintiff in the course of its business, the rule of plaintiff and the practice almost exclusively followed was that the name of Murphy-Walker Company was placed on the back thereof by a rubber stamp with a line underneath, on which W. P. Murphy signed his name and affixed his title as manager and treasurer. On some few occasions, because of Mr. Murphy’s absence, Lempert would sign the name of Murphy on this line on the back of the checks, but this was done against the plaintiff’s rule, and without the knowledge or consent of its officers or of Mr. Murphy.
“(18) Plaintiff’s cashbook shows that during the years 1911 and 1912, the cash receipts represented by actual cash and cash item, the bulk of which were checks, ran from $12,000 to $30,-000 per month, and cash receipts of the West Texas Grocery Company amounted to about the same. The average cash receipts of the two companies combined averaged about $35,000 per month, $17,500 each. Deposits were made daily by Lempert of these receipts in the Marfa State Bank.
“(19) The plaintiff provided for Lemperl’s use in giving receipts for payments made by customers on account, credit slips in pads. The system under which plaintiff conducted its business provided that Lempert should give the customer one of these credit slips as a receipt for each payment made, and required Lempert to keep a carbon copy of such slip so issued for the files of the company and as a basis for making the proper entry on the cashbook. These carbon copies so retained by Lempert wore detached and loose. Had the plaintiff provided a bound book containing such credit slips, with detachable duplicates for the customer, the $150 Frank Spencer defalcation and the $02.10 Fleinman defalcation, and the $17 Campbell Davis defalcation could not have occurred without prompt detection by plaintiff. The loose-slip system facilitated concealing of said defalcations by enabling Lempert to extract the corresponding credit slips from the files without same being missed by any one.
“(20) The only system by communicating with its customers which plaintiff conducted and operated under for the purpose of ascertaining whether Lempert was making proper entry of all payments made on account by customers was to send a statement of account to each customer at the end of the month, showing thereon the items charged against the customer and the credit items allowed him on the boobs of plaintiff, such statements containing at the bottom in conspicuous type the following: ‘This statement is sent you as being correct; if not so, advise us at once.’ In addition to this, when the customer had allowed his account to run for 66 or 90 days without any payment being made, Mr. Murphy, the plaintiff’s manager, would write such customer, inquiring whether or not the account as rendered the customer was correct, and requesting a payment thereon. These monthly accounts were made out by the bookkeeper and placed upon the desk of Manager Murphy. Murphy inspected the accounts, and caused the same to be made out to the customer.”

The court further found that at the time of signing the statement, Lempert was not indebted to plaintiff; he was then indebted in the sum of $73; that plaintiff’s custom was to allow its employes 60 days time on accounts; that during 1911 and 1912 Lemp-ert’s account with plaintiff amounted to more than his monthly salary; that plaintiff’s rule did not permit Lempert to overdraw Ms account in cash; that defendant wrote plaintiff immediately after the defalcation was reported to defendant, suggesting that plaintiff cause criminal proceedings to be instituted against Lempert, which plaintiff declined to do; that early in September, 1912, complaint was made to Murphy of two items; that Murphy reported the complaint to Lemp-ert, and instructed him to investigate it; that Murphy knew in 1911 and 1912, and before Lempert was made cashier, that Lempert occasionally took a drink of intoxicating liquors, but never knew of Ms having drunk to excess.

In the twenty-seventh paragraph the court found:

“Neither the application signed by Lempert nor the employer’s statement signed for plaintiff by Murphy, nor the employer’s declaration signed for plaintiff by Murphy, were attached to the bond herein sued upon, nor did said papers, or any of them, accompany the said bond, nor was plaintiff furnished with a copy of said papers or any of them at any time as a part of or in connection with the execution of said bond.”

In the twenty-eighth paragraph the court found:

“The defendant refused payment on the bond herein sued upon on the ist day of April, 1913.”

In the twenty-ninth paragraph, the court found as follows:

“None of. the representations made by Lemp-ert in his application or by Murphy in the employer’s statement and the employer’s declaration were made with the intent of misleading the defendant; none of them were fraudulently made; no matter not disclosed by the answers to the questions contained in said papers was withheld with the intent of misleading or deceiving defendant or withheld fraudulently. None of said representations were material except the representation as to the eleventh question, propounded in the employer’s statement as shown by finding of fact No. 1 (and this only in event it was plaintiff’s duty to furnish the credit slip in book form), and said representation was material, and entered into and affected only three of said appropriations by Lemp-ert, aggregating $229.10, as shown in said finding of fact. None of said representations (except the one referred to last above, set out in finding of fact No. 19) contributed to the event on which the bond became payable.”

The trial court stated Ms conclusions of law in 11 paragraphs, applying the articles of the statutes quoted above, but, for brevity, we copy only one, the eleventh, and do so because it embraces the others and it is partly law and fact. It is in these words:

“It fully appearing from the finding of fact and conclusions of law aforesaid that plaintiff suffered loss to the extent of $1,542.90 through the dishonesty, amounting to embezzlement, of W. G. Lempert, while said Lempert was cashier of plaintiff’s mercantile company between February 11, 1§12 and December 5, 1912, and that all of said loss was sustained through no fault of plaintiff, and no material variance of any representation made to defendant for the issuance of said bond having been proved, and the defendant having refused payment on said bond on April 1, 1913, it is my conclusion that plaintiff should have judgment against defendant for the sum of $1,000 (being the penalty provided for in said bond), together with interest thereon at the rate of 6 per cent, per annum from April 1, 1913, until paid, and all costs of suit therein.”

There are at least two reasons why appellant’s first assignment of error cannot be sustained:

First. Having concluded that the guaranty bond sued on is insurance, under article 4948 above quoted, no defense based on any misrepresentation made in the applications for or in obtaining or securing the contract is valid unless the defendant shall show that, within 90 days after discovering the falsity of the misrepresentations made, it gave notice to the plaintiff that it refused to be bound by the contract. Defendant’s answer and the facts: found by the court show that the' defendant had notice of the defalcation of Lempert on the 30th of December, 1912, but the answer does not allege that it did not, at that time, know of the falsity of the misrepresentations, if defendant wished to rely upon such as a defense, nor does the answer show when it discovered the falsity of them, or that it ever gave notice to defendant that it refused to be bound by the contract. National Life Ass’n v. Hagelstine, 156 S. W. 353. In that case, the court said:

“The agreed statement of facts shows that appellant did not give such notice. It follows that it could not make the defenses offered by it, and it is immaterial as to what errors may have been committed in admitting evidence or in the charge of the court. An instruction to return a verdict for appellee would have been justified.”

Second. Under article 4947, above quoted, if the answers' or statements made in the application for the bond sued on were untrue or false, it would not constitute a breach of the contract on.the part of the plaintiff, as claimed in the assignment, and would be no defense to the suit, unless it was alleged in the answer and shown as a fact on the trial that the answers and statements made by the plaintiff, claimed by defendant to be false, were material to the risk, or actually contributed to the contingency or event which made the bond payable. Its materiality and effect was a fact to be determined by the court. The defendant did not make such an issue in its answer, but, even in the absence of such issue made in the pleadings, the trial court found in the twenty-ninth paragraph above quoted that none of the representations were material or contributed to the loss, except the items named, and which items the court excluded in its estimate. Not having made the materiality of the answers and statements an issue to be determined by the court, appellant cannot now be heard to complain of want of evidence to sustain the facts found, or the conclusions of law on such facts. These issues of fact were peculiarly within the province of the court to determine, made so by the statute. However, we have read the evidence of the witnesses and believe the finding of the court sustained by the-proof. Under the provisions of the statutes of this state, a contract of insurance cannot be breached by the insured, upon a fact or facts not found by the court or jury to be material to the risk or actually contributing to the contingency or event which made the bond payable. The assignment is overruled. What we have said above applies to assignments 2, 3, 4, 5, 6, 7, S, 9, 10, and 11, and they are each ovei'ruled.

Appellant’s twelfth and thirteenth assignments of error are based upon the trial court’s ninth and tenth conclusions of law, the ninth going to the application of article 4955, Revised Civil Statutes, and the tenth to the application of articles 4741, 4947, 4948, 4951, and 4953, Revised Civil Statutes, to the facts of this case, and holding that none of the representations made by appellee were warranties.

We have already discussed the application of article 4935 to the facts of this ease. However, should the provision of the laws of this state applicable to insurance companies mentioned in article 4955 be made applicable to the facts of this case by other articles of the statute so far as the provisions of said other articles are invoked; and independently of the provisions in said article 4955, to the effect that the provisions of the laws of said companies should have general application to all other companies transacting any other kind of insurance, it would ■ be immaterial chat the court in his conclusion stated that said articles would embrace insurance companies “such as the one involved in this suit.” There is nothing in article 4955, except its provision to make all the laws, applicable to the companies named, have general application. We have not found and our attention has not been called to a reported case where article 4955 has been invoked, to enable the court to apply the provisions of other articles of the statute.

In the case of Scottish Union & National Insurance Co. v. Wade, 127 S. W. 1186, and in which a writ of error was refused, the court had under' discussion the application of articles of the statute now embraced in numbers from 4947 to 4951, both inclusive, and in which it was insisted that the act embracing said articles were intended to apply to life and accident insurance only, and that it should be so held. The court, after stating the history of the legislation and quoting the words' of article 4947, said:

“This language is very broad, and indicates that it was the intention of the Legislature that it should cover every kind and class of insurance, and there is nothing in the entire act, except the proviso contained in article 3096 EEE (now 4951), which has already been quoted, and which has no application to fire insurance, tending to limit its scope.”

To the same effect is National Life Association v. Hagelstine, 156 S. W. 353.

It is our oimiion that the articles of the statute referred to by the court in the conclusions of law in paragraph 10 have application to this case, independently of article 4955, and the court wasi not in error in applying the provisions of the statute named. The assignments are overruled.

Appellant’s fourteenth, fifteenth, sixteenth, seventeenth, eighteenth, nineteenth, twentieth, twenty-first, and twenty-second assignments are disposed of by what has been said in discussing other assignments. If the appellant was in a position to complain, the fourteenth assignment might be sustained, as the item of $140 is shown by the evidence to have been deposited in the bank as a part of the daily deposits to the account of appel-lee, although no entry was made on the cashbook. But the elimination of the amount would still show a defalcation of more than the amount for which judgment was rendered. The $150 item complained of in the fifteenth assignment was not estimated by the court.

We find no error, and the judgment is affirmed.
      (j^=>For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

      &wkey;»For other oases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


author: WILLIS, Special Justice. HATHAWAY, Special Chief Justice.

text:
    CRAWFORD et al. v. WELLINGTON RAILROAD COMMITTEE et al.
    (No. 607.)
    (Court of Civil Appeals of Texas. Amarillo.
    Feb. 6, 1915.
    On Motion for Rehearing, March 27, 1915.)
    1. Appeal and Error >&wkey;643 — Correction op Record — Time and Necessity — Rule op Court.
    Under rules 8 and 11 of the Courts of Civil Appeals (142 S. W. xi), providing that a motion to correct the transcript shall be filed within 30 days after its filing, and shall show a necessity therefor appearing on the record, a motion to correct a transcript filed more than 30 days after filing the transcript, and on which it appeared that the appellee’s affidavits opposing an application for a change of venue were never presented to the court or acted upon by it, would be denied because too late, and as showing no necessity for correction.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 2791-2794; Dec. Dig. &wkey; 643.]
    2. Appeal and Error &wkey;>766 — Brieps—Fil-ing.
    Where the parties, by an agreement on file in the court, abrogated the rules with regard to the filing of briefs, and the appellant did not object to the filing of appellee’s brief, though not presented within the time agreed, the clerk would be directed to file the brief as of the date when presented.
    [Ed. Note. — For other cases, see Appeal and Error-, Cent. Dig. §§ 3101, 3120; Dec. Dig. >&wkey;> 766.]
    3. Subscriptions ⅞ — >15 — Rescission — Performance op Conditions Precedent.
    In a suit by a committee of local subscribers to a railroad project for the possession and cancellation of certain promissory notes issued in aid of, railroad construction, on the ground of a total failure of consideration by failure to complete the grade work within the time allowed by the contract, which was declared of the essence of the contract, where it appeared that the committee knew that the contractor had been enjoined, and that the injunction suit was due to its own failure to furnish title to a part of the right of way, the committee was itself in default, and was not entitled to relief.
    [Ed. Note. — For other cases, see Subscriptions, Cent. Dig. §§ 14-17; Dec. Dig. &wkey;15.]
    4. Subsceiptions <&wkey;15 — Performance—Repudiation by Other Party.
    In such case where the committee filed a pleading repudiating its liability upon any of the notes, it could not recover for any failure of performance on the part of the railroad.
    LEd. Note. — For other cases, see Subscriptions, Cent. Dig. §§ 14-17; Dec. Dig. &wkey;15.]
    5. Subscriptions <&wkey;i5 — Performance of Conditions.
    In such case, the further performance of the contract by the railroad was excused by the committee’s express repudiation of its notes made and delivered for the benefit of the railroad.
    LEd. Note. — For other cases, see Subscriptions, Cent. Dig. §§ 14-17; Dec. Dig. <&wkey;15.]
    6. Judgment &wkey;>256 — Findings of Jury — Verdict — Conformity.
    Vernon’s Sayles’ Ann. Civ. St. 1914, art. 1985, providing that, upon appeal or writ of error, an issue not submitted and not requested by a party shall be deemed found by the court, so as to support judgment, if there is evidence to sustain such a finding, does not affect articles 1986, 1990, declaring that, as between the parties, a special verdict shall be conclusive as to the facts found, and that, unless the verdict be set aside, the court shall render judgment thereon, nor authorize the trial court in rendering judgment to disregard findings upon material issues; and hence, where all the material findings of the special verdict entitle one of the parties to judgment, the trial court can only set aside the verdict and grant a new trial, or render judgment in conformity with the verdict, and can in no case render judgment contrary to the verdict.
    [Ed. Note. — For other cases, see Judgment, Cent. Dig. §§ 446-454; Dee. Dig. &wkey;>256.]
    7. Trial «&wkey;356 — Findings—Effect.
    Where all the material findings were in favor of the plaintiff, but judgment was rendered for defendant on motion, the action of the jury in failing to agree upon findings deciding anything material in favor of defendant, necessary to judgment in his favor, was tantamount to a mistrial.
    [Ed. Note. — For other cases, see Trial, Cent. Dig. §§ S49-854; Dec. Dig. &wkey;3356.]
    8. Venue <&wkey;42 — Change of Venue — Statutes.
    Under Vernon’s Sayles’ Ann. Civ. St. 1914, art. 1912, providing for change of venue on application stating prejudice against a party preventing a fair trial, and article 1913, providing that, where application for change of venue is made according to the preceding article, it shall be granted unless the credibility of the applicant, his means of knowledge, or the truth of the facts alleged by him are attacked by affidavit of a credible person, a .change of venue is mandatory on the prescribed showing; and, independently of such provisions, a contractor suing a committee on its railroad aid notes would be entitled to a change of venue, where many citizens were directly or indirectly interested.
    [Ed. Note. — For other cases, see Venue, Cent. Dig. § 64; Dee. Dig. <§=>42. ]
    On Motion for Rehearing.
    9. Subscriptions <&wkey;21 — Construction 'of Pleading — Rescission.
    A subscriber’s committee, impleaded in a contractor’s action against the railroad, which answered, setting up failure to comply with the construction contract and nonliability on aid 1 notes, and which in its plea in reconvention alleged failure to construct the railroad, breach of the construction contract, and failure of consideration for its notes, and sought to have such notes canceled and delivered to it, evidenced an intention to rescind the contract.
    [Ed. Note. — For other cases, see Subscriptions, Cent. Dig. §§ 25-29; D'ec. Dig. <&wkey;21.]
    10. Appeal and Error <&wkey;390 — Appeal
    Bond — Amendment.
    Under Vernon’s Sayles’ Ann. Oiv. St. 1914, art. 2104, authorizing the amendment of appeal bonds, both as to matters of form and substance, appellee, on the filing of a defective appeal bond giving the Court of Civil Appeals jurisdiction, should have filed a motion pointing out the defect in time, whereupon appellant could have amended, if found defective.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 2077-2088; Dec. Dig. <S&wkey; 390.]
    Appeal from District Court, Collingsworth County; J. A. Nabers, Judge.
    Action by C. W. Crawford and another against the Altus, Lubbock & El Paso Railroad Company and another, who impleaded the Wellington Railroad Committee. Judgment for defendants, and plaintiffs appeal.
    Reversed and remanded.
    W. W. Wilkinson, of Ft. Worth, Reynolds & Hill, of Shamrock, J. L. Lackey, of AVell-ington, J. M. Elliott, of Memphis, L. D. Miller, of Wheeler, -and R. E. Taylor, of Henrietta, for appellants. 6. A. Brown, of Oklahoma City, and R. H. Cocke, Jr., and R. H. Templeton, both of Wellington, for ap-pellees.
   WILLIS, Special Justice.

Appellees filed in this court on October 10, 1914, their motion to correct the record in this cause, accompanied by a certified copy of the instrument asked to be filed, which consists of objections to a motion for change of venue and affidavits, filed by appellees in the district court on November 11, 1912. Appellants have filed in this court their objections to said motion of appellees to correct the record, and they suggest that the motion to correct the record is not filed within the time prescribed by rules,8 and 11 (142 S. W. xi) for the government of this court.

Appellees urge as a necessity for the filing of this additional transcript:

“That appellants urge in their brief that their motion for change of venue was uncontroverted by appellees.”

An examination of the transcript of the record on the subject does not show that the record is incomplete. It appears that appellants had filed in the trial court an application for a change of venue in November, 1912, to which appellees’ proffered record was a response at that time, but we are not informed of the grounds of the first application of appellants. A subsequent motion of appellants to change the venue appears in the transcript filed on November -, 1913. It does not appear that the controverting affidavits sought to be supplied by appellees were ever presented to the court or acted upon by it in reference to the motion for change of venue which appears in the transcript, or that they were in any way called to the attention of the court at that time. The record does not show any necessity for filing the corrections, and the motion to correct the transcript is filed more than SO days after filing the transcript in this court. Under rules 8 and 11 for the Courts of Civil Appeals, where a motion for certiorari to perfect the record is filed more than 30 days after the filing of the transcript, and no necessity appears for the same from the record, the Court of Civil Appeals cannot entertain such motion.

Appellees also filed a motion to be allowed to file their briefs, which appear to have been placed with the clerk of this court on October 10, 1914, but not filed by him, because not presented within the time agreed upon between the respective parties. Appellants do not object to this motion, and it appears that the parties, by their agreement on file in this court, have abrogated the rules with reference to filing of briefs. It is therefore ordered that the motion of appellees-be granted, and the clerk of this court is directed to file the briefs of appellees, as of the date presented, to wit, October 10, 1914.

It seems indisputable from this record that a contract was made between the Altus, Lubbock & El Paso Railroad Company and the Wellington Railroad Committee, composed of numerous citizens of Collingsworth county, by the terms of which said railroad company is obligated to complete a grade for a standard gauge railroad from Wellington, Tex., to Hollis, Okl., by March 1, 1910, and to complete said railroad thereon by January 1, 1911, time being the essence, in consideration that the committee would furnish depot grounds and right of way in Collingsworth county and pay to the railroad company $4,-000 in cash, and notes aggregating $36,000, to be deposited in Wellington banks; $16,-000 worth to become due when the grade was completed, and the balance when the railroad was completed.

The contract was made April 15, 1909, and we quote from its provisions as follows:

“Third. That said party of the second part [the Wellington Railroad Committee] shall deposit in the banks of Wellington, Texas, the sum of four thousand dollars in cash, subject to the checks of Edward Kennedy, president of the said first party railroad company, for engineering and promoting said line of proposed road from Wellington, Texas, through said Collings-worth county, Texas; also said second party shall deposit in said banks of Wellington, Texas, good notes for the sum of thirty-six thousand dollars, $16,000.00 of which shall become due and payable when said first party completes said grade of said railroad between the towns of Wellington, Texas, and Hollis, Oklahoma, according to this contract; the remaining $20,-000.09 of which shall become due and payable to the first party upon the -completion of said railroad between the said towns of Wellington, Texas and Hollis, Oklahoma, according to the terms of this contract;’’
“Fourth. The said party of the first part shall make a preliminary survey of the said road between the towns of Wellington, Texas, and Hollis, Oklahoma, within sixty days, and shall make a complete-and permanent survey within sixty days from the making and signing of this contract.
“Fifth. That the said parties of the second part shall begin securing deeds of right of way within ten days from the time of notice that survey locating said right of way has been completed, and continue same with due diligence until deeds to the entire right of way have been secured. Said deeds of right of way are to be delivered to party of the first part upon its obtaining a charter from the state of Texas, to build and maintain over permanent survey; in case condemnation proceedings are necessary to secure any part of said right of way, said party of the first part shall institute proper proceedings to secure same upon notice by party of the second part that such condemnation proceedings are necessary, and said second party shall pay all cost, expense of court and damage that may be awarded by such proceedings; said second parties are to secure legal services for the institution and prosecution of such condemnation proceedings.
“Sixth. It is agreed by and between both of the parties hereto that the grading of said railroad shall begin at Wellington, Texas, within sixty days from the date of this contract, and pushed to completion as rapidly as possible, and be completed not later than March 1st, Í910, after date hereof, and failure to complete said grade on or before said date forfeits all rights, interests and privileges under and by virtue of this contract.”
“Eleventh. The party of the first part obligates itself to construct, equip and complete said line of railroad from Hollis, Oklahoma, to Wellington, Texas, on or before January 1st, 1911, and failure by party of the first part to complete said road according to the terms of this contract and in the time herein specified thereby forfeits all rights, interests and claims upon the said second party by virtue of this contract. It is hereby agreed that time is made an essential of this contract, and it is a part of this consideration passing from the said second party.”
“Thirteenth. It is agreed and understood that should the party of the first part fail to begin actual work on -said grade within the time specified in the contract, or fail to complete the grade within the said time herein specified and stipulated for the completion of same, said first party hereby forfeits any and all rights, interests and claims by virtue of this contract upon said second party. It is further agreed and stipulated that if the said party of the first part, or its assigns, fails to construct, equip, complete and operate said line of road from the said town of Hollis, Oklahoma, to Wellington, Texas, within the time herein specified for the completion of the same, and in the manner herein specified, said first party shall thereby forfeit any and all further claims to interest by virtue of this contract.”

The notes provided for in the contract were made and were delivered to the committee in trust, which committee delivered the grade notes in escrow to O. J. Glenn, cashier of the First National Bank of Wellington, and the balance of the notes were retained in possession of the committee. The grade notes were indorsed and delivered by O. J. Glenn to appellants Crawford and Collingsworth, who distributed them to various other claimants.

Hines and Crawford were subcontractors and assumed to complete the grade under the contract, but were interrupted by an injunction suit, brought by a claimant of the portion of the right of way known as “the Stan-sell land,” which delayed them until after March 1, 1910, the time for completion of the grade. On March 24, 1910, O. W. Crawford and P. T. Collingsworth instituted this suit against the railway company and Edward Kennedy for 'possession of the notes as assignees and subcontractors, and on April 4, 1910, said railway company and Kennedy answered in the case and impleaded the Wellington Railroad Committee, alleging a breach of the contract by said committee and praying for judgment against said committee for the amount of the grade notes. On May 16, 1910, the Wellington Railroad Committee answered in the cause and alleged a failure to construct the railroad according to contract and nonliability upon any of the notes. On May 17, 1910, the Wellington Railroad Committee filed a plea in reconvention, making additional parties, and praying judgment for possession of the grade notes, and for cancellation of the construction contract and of all of the notes, on account of alleged failure to construct the railroad in accordance with tlie conttact. The pleadings in the case assumed numerous transformations, by dismissal of parties and reinstatement, and at the trial the Wellington Railroad Committee, appellees, had assumed the role of plaintiffs', asking for possession and cancellation of the notes as against all parties. The trial was had on November 22, 1913, before a jury, and the case was submitted upon numerous special issues, to most of which the jury answered that they could not agree. About the only material findings of the jury were as follows:

“(2) Special question requested by the defendants : Did the Wellington Railroad Committee, or any of the members thereof, have any information or notice prior to March 1, 1910, that an injunction proceeding was instituted to restrain the grade contractors from entering upon and doing the grade work upon the Stansell property, described as section 47, block 10, of the Houston & Great Northern Railroad Company, in Collingsworth county, Tex.? Answer: Yes.”
“(9) Did said railway committee fail to furnish any of the deeds or title to any of the right of way over lands which the Altus, Lubbock & El Paso Railroad Company was surveyed and ran into and through Collingsworth county, Tex.? Answer: Yes.
“(10) If you answer in the affirmative, then state over what and whose land the said railroad committee failed to get the right- of way over the land same was surveyed and ran. Answer : The Stansell land.”

The court rendered judgment for appellees for the possession and cancellation of all the notes and for cancellation of the contract.

With the above findings of the jury in the record, and as we view the entire record, without any material findings evidencing a noneomplianee with the contract in constructing the grade, we are at a loss to know upon what theory the trial court could have rendered a judgment against appellant, unless presumably it was upon the doctrine of entirety of contract, which we hold, however, has no application whatever to this record. All the special issues submitted to the jury are incorporated in the judgment with the responses of the jury thereto, and exhibiting a failure to agree upon material issues necessary to sustain a judgment in favor of appellees; and it is apparent upon the record that the trial court committed fundamental error in the rendition of this judgment.

The appellees pleaded total failure of consideration by breach of the contract on the part of those who were to construct the grade and railroad. They instituted their suit but a few days after the grade could have been completed, asking for the cancellation of the grade notes, at a time long prior to the date for the final completion of the railroad under the contract. Their original pleading alleged breach of the contract only as to the grade notes by reason of the failure to comply. They could not at that time have complained of the failure to construct the railroad according to contract, because the time for its construction lacked more than seven months until the expiration date. The same suit continued until their amended pleading upon which they went to trial, in which they relied for breach of the contract upon the failure to complete the grade and the railroad by the dates named in the contract. Their suit was an equitable one, and it devolved upon them to show that the railroad company and its assigns were in default, without the fault of appellees themselves. The principle appears to be authoritatively recognized that whether the suit be one in equity for a specific performance, or an action at law for the breach of the agreement, the plaintiff must have performed “the precedent conditions incumbent on him.” Mitchell v. Sheppard, 13 Tex. 491. Nevins v. Thomas, 80 Tex. 599, 16 S. W. 332. The material findings of the jury not only failed to show that the appellees, as plaintiffs, had discharged their burden in this respect, but further showed that they failed to furnish the right of way over the Stansell land, as their contract bound them to do, after they knew that an injunction had been issued, restraining the grade contractors from doing the grade work on that property. This placed the plaintiffs in default to such an extent that they had violated a material provision of their contract, essential to their right to recover, and the rendition of the judgment was contrary to the findings of the jury, recited in the judgment, which, as stated, is fundamental error, apparent of record.

It is insisted by appellees that the failure to construct the railroad upon the grade placed the railroad company and its assigns in default. We hold, however, that the further performance of the contract in this regard was excused by the pleadings of the appellees. There is an agreement in the record, showing that on May 16, 1910, the ap-pellees, the railroad committee, filed in this canse their pleading in which they repudiated their liability upon any of the notes, and the railroad was not to be completed under the contract until January 1, 1911.

“Where one'party assumes to renounce a contract (that is, by anticipation, refuses to perform it), he thereby, so far as he is concerned, declares his intention then and there to rescind the contract. Such a renunciation does not, of course, amount to a rescission of the contract, because one party to a contract cannot by himself rescind it; but by wrongfully making such a renunciation of the contract he entitles the other party, if he pleases, to agree to the contract being put an end to, subject to the retention by him of his right to bring an action in respect to such wrongful rescission.” Bost v. McCrea, 172 S. W. 561, not yet officially published, decided by this court November 28, 1914; Greenwall v. Markowitz, 97 Tex. 479, 79 S. W. 1069. 65 L. R. A. 302; Cornelius v. Harris, 163 S. W. 349.

The appellees by their original and amended pleadings placed themselves in the attitude of repudiating the contract by refusing to pay the notes, and thereby could not recover for any further lack of performance upon the part of appellants. Hardeman-ICing Lumber Co. v. Hampton Bros., 104 Tex. 585, 142 S. W. 867; Id., 130 S. W. 647; Mc-Lane v. Elder, 23 S. W. 758.

As stated, incorporated within the judgment are numerous special issues submitted to the jury, some of them very material to this cause of action, to which the jury answered, “We cannot agree.” For instance, the jury were requested to find whether or not the injunction suit was the cause of the grade not being completed pn time, and whether or not it could have been completed on time, had the injunction suit not been instituted, and whether or not the grade was sufficient for a standard gauge railroad, provided for in the contract, and numerous others, to ¿11 of which they answered that they did not agree. All the real material findings, as we view them, are in favor of appellants, and none of them are in favor of appellees. It is true the jury found that the grade was not completed by March 1, 1910, but this must be coupled with their other findings in which they found that an injunction was issued preventing work upon the grade over the Stansell land, on the right of way, that the railroad committee knew of this and failed to furnish the right of way over said land, thus finding that ap-pellees breached the contract and prevented its further performance. And the further finding that they did not complete the road by January 1, 1911, becomes immaterial, in view of the pleading of appellees repudiating and renouncing the contract-—said pleading filed several months before the railroad could have been finished—thereby excusing performance on the part of the contractors. Of course, upon another trial, if the jury find that the contractors did not construct the grade in substantial conformity with the contract, the case is at an end in favor of appellees, irrespective of the time in which the same was built. Following the verdict, the appellees moved the court to render judgment in their favor, which was granted, thus disregarding the material findings of the verdict. The statute with reference to special verdicts was amended in 1897, which amendment is now incorporated in article 1985 of Vernon’s Sayles’ Civil- Statutes 1914, providing that:

“Upon appeal or writ of error, an issue not submitted and not requested by a party to the cause shall be deemed as found by the court in such manner as to support the judgment: Provided, there be evidence to sustain such a finding.”

But this amendment does not authorize the trial court, in rendering judgment, to disregard findings of the jury on material issues. The amendment does not in any way affect articles 1986 and 1990, and these declare that, as between the parties, a special verdict shall be conclusive as to the facts found, and that, unless the verdict be set aside, the court shall render judgment thereon. So it seems quite clear that when a special verdict has been returned, which entitles one of the litigants to a judgment, there are but two alternatives for the trial court: One is to set aside the verdict and grant a new trial, and the other is to render judgment upon and in conformity with the verdict. And the court cannot properly decline to pursue either course, and render judgment contrary to the verdict. Scott v. Farmers’ & Merchants’ Nat. Bank, 66 S. W. 493; Casey Swasey Co. et al. v. Manchester Fire Insurance Co., 32 Tex. Civ. App. 158, 73 S. W. 865; Fant v. Sullivan, 152 S. W. 515; Weinstein v. Acme Laundry, 166 S. W. 126.

In so far as the findings deciding anything material in favor of appellees necessary for an adjudication in their favor, the action of the jury in failing to agree is tantamount to a mistrial.

Upon what we have said we will sustain the eighth, ninth, twelfth, and thirteenth assignments of error, all of which are based on the proposition that the court erred in rendering judgment against the jury’s findings upon the evidence. All other assignments of error are overruled, except the first assignment.

In the first assignment of error the appellants complain of the court’s action in overruling a motion to change the venue of the cause. The application was made to conform to article 1912 of Vernon’s Sayles’ Civil Statutes 1914, in stating that there was so great a prejudice against the appellants they could not obtain a fair and impartial trial, and there were no controverting affidavits filed thereto. Article 1913 of said statute provides:

“Where application for a change of venue is made in conformity to the requirements of the preceding article, the same shall be granted, unless the credibility of the persons making the application for a change of venue, or their means of knowledge, or the truth of the facts set out in the said application, are attacked by the affidavit of a credible person.”

Under the statute, the change of venue is mandatory, when the prescribed showing is made, and entitles the applicant thereto as a matter of right. Freeman v. Ortiz, 136 S. W. 116; 4 Encye. Plead. & Prac. 440.

Independent of the statutory provisions, we are of the opinion that a record could be made in a cause of action such as presented by this record, which would warrant the court in changing the venue, especially where a great number of citizens of means are shown to be directly or indirectly interested, and where the jury, by their failure to answer uncontroverted issues, indicate such a dissentious state of feeling.

For the errors indicated, the cause is reversed and remanded.

On Motion for Rehearing.

HATHAWAY, Special Chief Justice.

Appellees, in their motion for rehearing, in their fourth assignment, insist that we were in error in holding that the original pleadings of appellees evidence an intention to rescind the contract between the railroad committee (appellees) and the Altus, Lubbock, Roswell & El Paso Railroad Company and Edward Kennedy. The assignment then undertakes to set out the contents of the original pleadings of the parties, but we do not find such pleadings, as contended by appellees, in this record, hence cannot be considered. The original pleadings we find condensed by agreement of all parties in the statement of facts, that of appellees as follows:

“May 16, 1910.
“The Wellington Railroad Committee and other makers of the railroad bonus notes filed in said cause No. 1ST, there answered to the petition of Crawford and Collingsworth and to the cross-action of the Altus, Lubbock. Roswell & El Paso Railroad Company and Edward Kennedy, setting up failure to comply with the construction contract and nonliability on the grade and other bonus notes.”
“May 17, 1910.
“The Wellington Railroad Committee and others (now prosecuting as plaintiffs in this action) filed in said cause No. 1S1 their plea in reconvention in due form against the Altus, Lubbock, Roswell & El Paso Railroad Company and Edward Kennedy, C. W. Crawford, and E. T. Collingsworth, alleging, in substance, the failure to construct the railroad between the towns of Plollis and Wellington, and breach of the construction contract with the Altus, Lubbock, Roswell & El Paso Railroad Company and Edward Kennedy, the failure of consideration for the railroad bonus notes, including the $16,000 in grade notes sued for and other notes, aggregating $20,000, payable upon completion of said railroad, and alleging that said grade notes were then in possession of the First National Bank of Wellington and C. J. Glenn, who hold the same in escrow for the party finally entitled thereto under the construction contracts, and praying that the bank and said Glenn be made parties to said action and for judgment against all parties declaring said construction contract and all said bonus notes canceled, null, and void, and for possession of said grade notes.”

Now, if the substance of the original pleadings of appellees, as set out in the statement, of facts and agreed to by all parties, is incorrect, and does not show the true issues as-presented in the whole pleading, we are unable to go outside the record to find such error, if in existence; and such affirmative-pleading in reconvention filed before the maturity of the contract, in connection with-pleadings subsequently filed, exhibit a continued and systematic manifestation of a repudiation of the contract and a disposition-not to be bound upon the same, claiming that said contract was void against said railroad, committee.

Counsel, in their oral argument on this: motion, strenuously insist that the contract between the appellees and Kennedy and the-railroad company is an entirety. We agree-with them that the contract on its face is:' entire, with payments in installments, as. held in Jones v. Gammel-Statesman Publishing Co., 94 S. W. 195; and Id., 100 Tex. 331, 99 S. W. 701, 8 L. R. A. (N. S.) 1197; but before the expiration of the time for the completion of the contract, and when appellants claim that the first installment is due,, the appellees, by their pleadings, as above quoted, refused payment and repudiate the-contract and declare the contract and all bonus notes canceled, which not only in-eludes the grade notes but the notes for final payment not yet earned by the final completion of the railroad, thus seeking to abrogate ■ the whole contract before it can or is required to be performed by the railroad company. Appellees thereby place themselves in a position that they cannot complain if the railroad company refuses to complete the-eontract (Hardeman-King Lumber Co. v. Hampton Bros., 104 Tex. 585, 142 S. W. 867; Id., 130 S. W. 647), which cause, as shown by the opinion of the Court of Civil Appeals (130 S. W. supra), affirmed by Chief Justice Brown of the Supreme Court, in reality upon an analysis involved an entire contract, but which was repudiated by the lumber company before final performance. Also see McLane v. Elder, 23 §. W. 757, above-cited.

After an extended oral argument by counsel for appellees, we have carefully gone over this record again, and believe that this case had been properly reversed as to all the • appellants.

It was suggested in oral argument by appellees’ counsel that the appeal bond in this case is defective in that it is not made • payable to all the opposite parties, and that therefore this court is without jurisdiction. The Acts of 1905, c. 115, now article 2104 of ’ the Revised Statutes, Vernon’s Sayles’, au-' thorizes the amendment of appeal bonds. from all courts, both as to matters of form and substance. When the appeal bond was filed, this court acquired jurisdiction of this c-ause, and, if it was informal either in matters of form or substance, appellees should i have filed their formal motion, pointing out the defect in time., that appellants could have amended, if found defective. Oliver v. Lone Star, etc., Ass’n, 136 S. W. 608.

The motion for rehearing is therefore overruled.

HENDRICKS, X, concurs. WILLIS, Special Justice, absent.
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author: HIGGINS, J.

text:
    BAILEY v. LOOK.
    (No. 403.)
    (Court of Civil Appeals of Texas. El Paso.
    March 11, 1915.
    Rehearing Denied April 8, 1915.)
    1. Witnesses <§=>390 — Contradiction—Party to Suit — Previous Silence Inconsistent with Present Claim.
    In an action between parties previously associated in the ownership of lands, evidence of
    ?ne to whom controversies had been submitted or arbitration and of one who had heard many conversations between plaintiff and defendant on the matters concerned, that plaintiff had not set up any claim to certain lots was admissible to discredit the present claim, as tending to show that it was a fabrication and afterthought on the part of plaintiff.
    [Ed. Note. — For other cases, see Witnesses, Cent. Dig. § 1247; Dec. Dig. <g=>390.]
    2. Witnesses <§=>414 — Party to Suit —Impeachment by Proof op Previous Nonas-sertion op Claim — Corroboration.
    Where the good faith of plaintiff’s claim had been impeached by testimony that witnesses had never heard him mention it, under circumstances when he might reasonably have been expected to do so, it was his right to show prior statements made consistent with his claim, corroborative of his testimony, to rebut the inference that such claim was a recent fabrication.
    [Ed. Note. — For other cases, see Witnesses, Cent. Dig. §§ 1287, 1288; Dec. Dig. <§=>414.]
    Appeal from District Court, El Paso County; A. M. Walthall, Judge.
    Action by Tom Bailey against George Look. Judgment for defendant, and plaintiff appeals.
    Reversed.
    C. L. Galloway and E. M. Whitaker, both of El Paso, for appellant. Jno. L. Dyer and A. R. Grambling, both of El Paso, for appel-lee.
   HIGGINS, J.

This is a suit by Bailey against Look and is the second appeal, former opinion appearing in 164 S. W. 407. The petition is in two counts; the first upon the theory that a partnership did not exist between the parties, and was for the recovery of certain moneys alleged to have been paid out by Bailey for account of Look. The second count was upon the theory that a partnership existed and an accounting between the parties was sought. Upon trial before a jury, a verdict was returned, finding that a partnership existed and in favor of Look for a balance due of $1,714.60. A remittitur of $946.66 was entered, and judgment finally rendered in Look’s favor for $767.94.

Prior to the litigation, efforts to settle had been made, and the parties had submitted to a Mr. Booker statements of the amounts which they claimed to have expended. In the statement filed by Bailey, no mention was made of any claim of interest in certain lots in Casas Grandes, Mexico, owned by Look, and Booker was permitted to testify in Look’s favor that no such claim was made by Bailey to him. The witness Wood was also permitted to testify that he had heard many conversations between Bailey and Look with reference to their partnership agreement, and he had heard nothing said about Casas Grandes lots. The parties agreed to engage in the ranch business in Mexico, raising, buying, and selling horses and cattle. The ranch lands were owned by Look individually, and after the agreement to form a partnership was made certain wells were placed upon the premises at an expense of $3,000, which was paid by Look, but was charged up to the partnership account. Bailey claimed that because the placing of the wells upon the premises constituted a permanent improvement upon the realty owned by Look, Look had, for that reason, agreed to reimburse him for his share of the cost of the wells by conveying to him a one-half interest in the Casas Grandes lots. Upon the stand he testified to this agreement. Upon cross-examination, he admitted that he had not itemized this claim upon the memorandum which he gave Booker, and explained its omission by saying that Booker was not arbitrating their differences; that Look had theretofore promised to pay him his money back, and he simply gave to Booker a statement of the' moneys which he had expended; that there was no dispute at that time over the lots. The Casas Grandes lots were owned by Look, Luis Terrazas, and the Mexican Northwestern Railroad Company. Look desired to have his share segregated and set apart to him, and Bailey took this matter up with Terrazas and Harris Walthall, the representative of the railway company. Bailey offered to prove by Walthall that when Bailey conferred with him relative to the proposed segregation of Look’s lots, he (Bailey) stated to Walthall that he owned a one-half interest in the Look lots. Upon objection, the testimony was excluded, and it is here contended that evidence of this claim of ownership was admissible, in view of the previously admitted testimony of Booker and Woods relative to nonclaim. The evidence of Booker and Woods as to Bailey’s nonclaim of an interest in the lots was properly admitted for the purpose of discrediting the claim of an interest therein and as tending to show that it was a fabrication and afterthought on Bailey’s part. But when Bailey’s testimony was thus impeached, it was clearly his right to offer evidence of prior statements made consistent with his claim, corroborative of his testimony, and to rebut the inference which might otherwise be drawn that his story was a recent contrivance and prompted by the necessity of the case. The statement to Walthall was made at a time when no motive to fabricate existed, and evidence of the declaration should have been admitted. Ins. Co. v. Eastman, 95 Tex. 37, 64 S. W. 863; Railway Co. v. Fox (Sup.) 166 S. W. 693; Lewy v. Fisehl, 65 Tex. 311; Railway Co. v. Garren, 96 Tex. 605, 74 S. W. 897, 97 Am. St. Rep. 939; Richard Cocke & Co. v. New Era, etc., 168 S. W. 988; Stephenson v. Jackson, 128 S. W. 1196; Streight v. State, 62 Tex. Cr. R. 453, 138 S. W. 742 ; 2 Wigmore on Evidence, § 1129.

The error indicated requires a reversal, and it is therefore unnecessary to pass upon those assignments which question the sufficiency of the evidence.

The questions raised by the last four assignments will not arise upon retrial.

Reversed and remanded.

WALTHALL, J., did not sit in this case.
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text:
    ROGERS et al. v. EZELL.
    (No. 402.)
    (Court of Civil Appeals of Texas. El Paso.
    March 11, 1915.
    Rehearing Denied April 8, 1915.)
    1. Appeal and Error ®=>1051 — Harmless Error — Erroneous Admission oe Evidence.
    Error in admitting parol evidence to prove a fact confessed by the pleadings is harmless.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 4161-4170; Dec. Dig. <©=> 1051.]
    2. Appeal and Error 742 — Questions Reviewable — Instructions—Statement.
    An assignment of error complaining of an instruction will not be considered, where the statement supporting it does not show that objections wore presented to the court before the instruction was read and that exception was taken to the instruction as required by Acts 33d Leg. c. 59.
    I Ed. Note. — For other' cases, see Appeal and Error, Cent. Dig. § 3000; Dec. Dig. <$=o742.]
    Appeal from District Court, Reeves County; S. J. Isaacks, Judge.
    Action by T. A. Ezell against Annie D. Rogers and others. From a judgment for plaintiff, defendants appeal.
    Affirmed.
    W. P. Brady, of Pecos, and Walthall & Gamble and George Estes, all of El Paso, for appellants. Ross & Hubbard and Ben Palmer, all of Pecos, for appellee.
   WALTHALL, J.

This is a suit by appel-lee, T. A. Ezell, against appellants, Annie D. Rogers and W. H. Rogers, her husband, and J. L. Tyler, to set aside for fraud a deed conveying land from W. H. Rogers to his wife, and from her to Tyler. Plaintiff alleged that in November, 1912, he recovered judgment against W. H. Rogers in the district court of Reeves county, Tex., for the sum of $4,438.47, with interest, with foreclosure of attachment lien on lands described, situated in Culberson county, Tex.; that at said time the records of Culberson county showed that W. PI. Rogers had the legal title; that an order of sale issued under said judgment, and advertisement of salé was made, when plaintiff was advised for the first time that Annie D. Rogers claimed to be the owner; that a deed conveying said property had been executed November 10, 1910, by W. H. Rogers to Annie D. Rogers, and recorded November 12, 1910, in the clerk’s office of El Paso county, Tex., but such deed had been by inadvertence or mistake omitted from the transcript of the records of the territory formerly embraced in El Paso county, which now comprises Culberson county. Plaintiff alleges that said deed of conveyance was fraudulent, that at the time of conveyance W. H. Rogers was insolvent, that the conveyance was intended to defraud his creditors, and that the consideration stated in the deed was fictitious and no consideration passed. Plaintiff further alleges that defendant J. L. Tyler had purchased some interest in the property; that such claim asserted by him is also fictitious, is based upon no consideration, and that said Tyler is in collusion with defendants to defraud plaintiff. Defendants Rogers answered admitting the execution of the deed on November 10, 1910, conveying the property to Annie D. Rogers; denied that the conveyance was fraudulent, but allege same to have been in good faith and for a valuable consideration; that she paid for the land out of her separate estate, not knowing of the alleged indebtedness to plaintiff Ezell; that said W. H. Rogers was not insolvent at the time of delivery of the deed but had other property which could have been reached. Defendant Annie D. Rogers denied the making of the contract with Tyler was for the purpose of defrauding plaintiff. Defendant J. L. Tyler answered alleging that the property acquired by him from Annie D. Rogers was purchased in good faith for valuable consideration, without notice of plaintiff’s claim, and denied any fraud. The trial of the ease was before a jury and resulted in a verdict for plaintiff, as against all of the defendants. Annie D. Rogers and W. H. Rogers appeal.

Appellants’ first assignment of error is to the action of the court in permitting the plaintiff to prove by oral testimony that he had theretofore obtained the judgment against W. H. Rogers alleged in his petition, assigning the error to be that oral testimony was incompetent and not the best evidence; that the only evidence competent to prove the fact was the record of said judgment or certified copy.

The original petition was filed May 5, 1913, alleging the fact of the judgment. Defendants’ original answer was filed November 21, 1913, and did not plead to the fact of plaintiffs judgment, and must be taken as confessed on tbe record. No proof to establish the judgment was necessary, and no error could be made in admitting oral testimony as to the fact of the judgment pleaded. The assignment is overruled.

Appellants’ second assignment alleges error in admitting oral testimony to show the execution and delivery of the deed from W. I-X. Rogers to Annie D. Rogers on the ground the oral testimony was not the best evidence of the fact, but what is said in disposing of the first assignment applies also to the second. It is overruled.

Appellants’ third assignment cannot be considered because the statement supporting same is insufficient in failing to show that objections to the charge complained of were presented to the court before the same was read to the jury and proper exception taken to the giving of the charge, as is now required by chapter 59, Acts of Thirty-Third Legislature.

What has been said in overruling defendants’ third assignment of error equally applies to the fourth and fifth, and they cannot be considered.

Finding no fundamental errors of law apparent upon the record, the same is affirmed.
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