author: MOURSUND, J.

text:
    CHURCH v. HAYNER et ux.
    (No. 5959.)
    (Court of Civil Appeals of Texas. San Antonio.
    Feb. 13, 1918.
    Rehearing Denied March 20, 1918.)
    1. Homestead <&wkey;118(3) — Incumbrance by Husband Alone.
    A deed of trust covering a homestead given by a husband alone, unless given in order to acquire it, or pursuant to an agreement, relating to its acquisition, or unless he had the power to give it in adjusting equities against the homestead, cannot be sustained.
    2. Homestead t&wkey;118(2) — Right of Husband —Existence of Puechase-Monet Lien.
    The existence of a purchase-money lien against the homestead did not authorize the husband alone to deal with the property, by giving deed of trust covering it.
    3. Homestead <&wkey;118(2) — Incumbrance by Husband — Fraud on Wife.
    Unless there is a reasonable necessity shown for such action by the husband alone, he cannot convey or mortgage the homestead in order to cancel or adjust equities.
    Appeal from District Court, Bexar County ; S. G. Tayloe, Judge.
    Suit by F. W. Church against Denio B. Hayner and wife. From a judgment for defendants, plaintiff appeals.
    Affirmed.
    Wm. C. Church and Lipscomb & Lipscomb, all of San Antonio, for appellant. Lewright & Douglas, of San Antonio, for appellees.
   MOURSUND, J.

This suit was an action of trespass to try title, instituted by F. W. Church against Denio B. Hayner and wife to recover lot 18 and part of lot 17, block 2961, Mission Field addition to San Antonio. Defendants answered by plea of not guilty.

We shall state only the facts deemed material to the disposition of the appeal, and in stating same shall give the note referred to the legal status it has under the finding of the jury in answer to the only issue submitted, which status, we think, was established by the undisputed facts. Berry v. Boggess, 62 Tex. 239; Jones v. Male, 26 Tex. Civ. App. 181, 62 S. W. 827.

Pursuant to a contract for the purchase by Denio B. Hayner from Pompeo Coppini of the property in controversy, said Hayner and wife took possession thereof on Blarch 15, 1913, and on May 1, 1913, Coppini and wife, by deed dated April 20, 1913, conveyed such property to Hayner expressly reserving a vendor’s lien to secure a note in favor of Ira S. Smith for $2,000, dated April 30, 1913, due five years after its date. The deed was delivered May 3, 1913, and" the property became the homestead of Hayner and wife, burdened with a valid vendor’s lien to secure the payment of the Smith note. Smith, who was a brother-in-law of Hayner, wanted the money on the note and sent it to Hayner to negotiate. In five or six weeks Hayner, through a broker, negotiated a deal for the sale of the note to Mrs. Chittim, through F. W. Church, her agent. Under date of June 28, 1913, Smith made a transfer of the note and the vendor’s lien to Mrs. Chittim. The attorney representing Mrs. Chittim and. Church suggested that Hayner make a deed of trust on the property to secure the payment of the note, and Hayner agreed to do so. Accordingly, under date of April 30, 1913, but in reality on July 14, 1913, Hayner, without the joinder of his wife,' executed a deed of trust in favor of F. W. Church, trustee, conveying said property to secure the payment of said note. Mrs. Chittim paid $2,-000 for the note on July 14, 1913, of which amount -Smith received $1,800, the broker $100, and, under instructions from Smith, Hayner received $100 for his services in the matter.

On August 31, 1915, Mrs. Chittim filed suit against Hayner and Smith to foreclose the vendor’s lien given to secure the payment of said note, and on April 6, 1916, an amended petition was filed in' such suit in which Mrs. Chittim still sought a foreclosure of said vendor’s lien. Hayner was duly served in such suit, .and the same was pending when this case was tried.

On April 4, 1916, William C. Church, as substitute trustee, executed a deed to F. W. Church for said premises, reciting therein the resignation of F. W. Church as trustee and the appointment of William C. Church as substitute trustee on February 16, 1916, by Mrs. Chittim. The deed of trust required that the substitute trustee should be appointed in writing, but neither the deed nor the evidence showed that the appointment was thus made. The deed of trust provided that:

“The recitals in the conveyance to the purchaser shall be full evidence of the truth of the matters therein stated and all prerequisites to said sale should be presumed to have been performed.”

On April 6, 1916, F. W. Church filed this suit. The trial court rendered judgment for the defendants, reciting that the law and facts are with defendants, and that there was no consideration for the deed of trust conferring the power of sale, and such judgment must be affirmed if the deed of trust, or the sale thereunder, is invalid for any of the reasons relied upon by appellees.

It will be seen from the facts above stated that the deed of trust was not given pursuant to any agreement made for the acquisition of the homestead, and that the giving thereof was the voluntary act of the husband, at a time when the vendor’s lien note had nearly five years to run, and no installment of interest was due; also that no benefit whatever accrued or was thought by the husband to accrue to the homestead rights of himself and wife by reason of the transaction, but he gave the deed of trust with power of sale solely for the purpose of assisting his brother-in-law to sell the note. The deed of trust was not substituted for the existing security, but constituted additional security, which if valid authorized the divestiture ol the homestead rights by private sale instead of through judicial proceedings, and its execution and delivery, if valid, imposed upon the homestead an additional burden. As the deed of trust was not given in order to acquire a homestead or pursuant to an agreement relating to the acquisition thereof, it cannot be sustained as valid unless the husband had the power to give the same under our decisions which authorize him to adjust equities against the homestead. We do not understand that the existence of a purchase-money lien authorizes him to deal with the property as if it were not a homestead, nor do we understand that the sole limitation upon his power is that he must not perpetrate actual fraud upon his wife with the intention of depriving her of homestead rights. In Speer’s Law of Marital Rights, § 406, we find the following statement:

“Tlie principle is that there must exist a reasonable necessity for the sale by reason of the incumbrance; in other words, the sale must have been made for the purpose of discharging a lien or adjusting an equity.”

In the case of Gibbons v. Hall, 59 S. W. 814, in which a writ of error was denied, it was held that the mere fact that there was an incumbrance against the homestead would not authorize the husband to convey, even where the purchaser assumes the indebtedness. In that case no actual fraud as against the wife was shown. In the case of Wheatley v. Griffin, 60 Tex. 209, Judge Stay-ton laid great stress upon the fact that the purchase money was not due, and that the record failed to disclose any necessity for the sale. We have investigated many decisions on the subject, but it would not be profitable to undertake to discuss the same. Our conclusion is that, unless there is a reasonable necessity shown for action by the husband, he cannot be said to convey or mortgage in order to cancel or adjust equities, and his acts operate as a legal fraud on the homestead rights of the wife. We cdnclude that the deed of trust executed hy I-Iayner was void, and that therefore the judgment must be affirmed.

This makes it unnecessary to discuss the two additional grounds relied upon by appel-lees for the sustaining of the judgment.

The judgment is affirmed.
      tgc^For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


source: Caselaw Access Project

author: PLEASANTS, C. J.

license: Public Domain

text:
    HOUSTON TRANSFER & CARRIAGE CO. et al. v. WILLIAMS.
    (No. 7463.)
    (Court of Civil Appeals of Texas. Galveston.
    Dec. 20, 1917.
    Rehearing Denied Jan. 24, 1918.)
    1. Good Will <&wkey;6(2) — Sale—Violation op Contract.
    Covenant of good will in a sale of a transfer and storage business is not violated by the seller’s devisee and heir renting her stables to others engaged in the same business and permitting them to use the telephone number formerly used by the seller.
    2. Witnesses <&wkey;129 — Competency—Action by Heir — Transaction with Deceased.
    The action on a note given deceased is within Vernon’s Sayles’ Ann. Civ. St. 1914, art. 3690, prohibiting either party to an action by heirs of decedent in which judgment may be rendered for or against them as such, testifying against the other as to a transaction with or statement by deceased; the petition, alleging he died leaving a will “bequeathing all his property to petitioner, petitioner being his only heir, and by reason thereof is the owner and holder of the note,” showing plaintiff brought the action and claimed ownership both as legatee and sole heir.
    3. Witnesses <&wkey;159(5) — Competency — Transaction with Decedent.
    Vernon’s Sayles’ Ann. Civ. St. 1914, art. 3690, proxuoiting either party to an action by an heir testifying against the other as to his transaction with decedent, applied to defendants’ testimony, in an action on a note given to deceased for price of a business, showing that he had failed to deliver to them the goods he had agreed to deliver.
    Error from District Court, Harris County; Wm. Masterson, Judge.
    Action by Mrs. Emma Williams against the Houston Transfer & Carriage Company and others. Judgment for plaintiff, and defendants bring error.
    Affirmed.
    Kennerly, Williams, Lee & Hill, of Houston, for plaintiffs in error. A. R. & W. P. Ham-blen, of 'Houston, for defendant in error.
   PLEASANTS, C. J.

This suit was brought by defendant in error against the Houston Transfer & Carriage Company as maker, and against several other defendants as indorsers of nine promissory notes for the aggregate sum of $1,450, with interest and attorney’s fees. The notes were payable to C. C. Williams, the deceased husband of plaintiff, and were given in part payment of personal property sold by said Williams to the Houston Transfer & Carriage Company. In addition to a general demurrer and general denial defendants pleaded failure of consideration for the notes upon which the suit was brought. These pleas allege, in substance, .that the notes were executed in part consideration of the sale to the defendant transfer company of a transfer and storage business owned and conducted by C. C. Williams in the city of Houston, together with the good will of the business and all the accounts and bills receivable due it; that the entire consideration for said sale was $8,000, and defendant had paid to said Williams all said consideration except that portion evidenced by the notes sued on; that the good will of the business and the covenant of Williams not tq engage in a similar business in the city of Houston,' and accounts due said business which Williams represented were secured by goods deposited in his warehouse, composed the larger portion of the consideration for the $8,000 paid and promised to be paid for said 'business and the property and appliances belonging thereto, which was the subject-matter of the contract of sale; that by renting her stables to others who were engaged in the transfer business in competition with defendant transfer company and permitting said tenants to use the telephone number formerly used by C. C. Williams in carrying on the business sold by him to said defendant, plaintiff had violated the covenants contained in the ■ contract, of sale and destroyed the value of the “good wiU” transferred by said contract; that $1,800 of the accounts represented by O. C. Williams to be unpaid and due said business and secured by goods deposited in his warehouse were either paid or were not secured by goods as represented by Williams and were wholly worthless; and that because of the facts above stated the consideration for the notes suied on had wholly failed. Upon the trial in the court below defendants George A. Hill, president, and H. B. Hildebrand, director, of the defendant company, who are .sued as indorsers for the notes, testified in substance that after the business was turned over to the defendant transfer company they had the goods in the warehouse checked over, and found that there were no goods in the warehouse to secure a number of accounts which .Williams had represented as being secured by goods placed for storage in said warehouse. Upon motion of plaintiff this testimony was stricken out on the ground that it was not admissible under the provisions of article 3690, Vemon’s Sayles’ Texas Civil Statutes, and the jury were instructed to return a verdict in favor of plaintiff for the amount due upon the notes. A verdict was returned in accordance with this instruction and judgment was so rendered.

If the testimony was admissible it was sufficient to raise the issue of failure of consideration, and the case should not have been taken from the jury. In so far as plea of failure of consideration is based upon the allegations in regard to plaintiff renting the stables formerly used by her deceased husband in connection with his transfer business and permitting the tenant who engaged in business in competition with defendant to use the telephone number formerly used by Williams in the conduct of his business, we think the plea is insufficient. The facts pleaded, if fully proven, do not show a violation of the covenant of “good will” in the contract of sale, and furnish no basis for a claim for damages, or failure of consideration for the notes.

The disposition of this appeal depends upon the one question of whether the trial court erred in holding that the testimony of the defendants before stated, as to the condition of the accounts turned over to them by Williams, was inadmissible. The question is not without difficulty, but we have reached the conclusion that the court did not err in the •rtuling mentioned. The article of the statute upon which the ruling was based provides, in substance, that in actions by or against executors, administrators, guardians, heirs, or legal representatives of a decedent in which judgment may be rendered for or against them as such, neither party shall be allowed to testify against the other as to any transaction with or statement by the deceased, unless called to testify thereto by the opposite party. Appellants first assail this ruling of the court on the ground that plaintiff’s petition shows that she sues as legatee under the will of her deceased husband, and therefore the article of the statute above referred to has no application. After alleging the execution and delivery of the notes by defendants to O. C. Williams, the petition alleges:

“That after the execution and delivery of said notes said O. C. Williams departed this life in Houston, Harris county, Tex., leaving a written will which has been duly probated, bequeathing all property to your petitioner, your petitioner being his only heir, and by reason thereof your petitioner is the owner and holder of said notes, whereby defendants became liable, indebted, undertook, agreed, and promised to pay your petitioner said sums of money as evidenced by said notes, interest, and attorney’s fees.”

It was admitted and agreed upon the trial by plaintiff and defendants:

“That 0. 0. Williams died on the I9th day of February, 1910, leaving a will which was duly probated at the following term of the probate court of Harris county, Tex., March 10, 1910, leaving all his property real and personal, to the plaintiff in this suit, and that plaintiff in this suit is his only heir.”

We think the language of the petition before quoted shows that plaintiff brought this suit and claimed ownership of the notes both as legatee and sole heir of her deceased husband. It cannot be doubted that, upon the allegations of the petition, if plaintiff had failed to establish her title to the notes as legatee, she would have been entitled to establish her ownership by showing that she was the sole heir of O. G'. Williams. This being true, judgment might have been rendered for or against her as such heir, and article 3690 of the statute forbids the defendants in such suit from testifying against her as to their transactions with the deceased, or statements made by him; they not having been called to testify thereto by the plaintiff. The fact that under the pleadings and evidence she was both legatee and heir, and judgment might have been rendered for or against her as either or both, does not affect the application of the statute. Spencer v. Schell, 142 S. W. 111.

Appellants further contend that the •statute was not applicable to tbe testimony of tbe defendants as to their checking the goods in the warehouse after its possession was delivered to them, and what the checking or inventory showed with regard to the goods which Williams had represented as being on deposit in the warehouse and security for the accounts transferred by him to defendants, because such testimony was only a statement of what the defendants themselves had done under the contract of sale. This contention cannot be sustained. The testimony is inlore than a statement of what the defendants had done under the contract. It shows what the deceased had not done, and that he had failed to deliver to defendants the goods he had agreed to deliver under the contract. We think this must he held to be testimony as to the 'transaction between deceased and defendants out of which the cause of action asserted in this suit arose, and is within the inhibition of the statute. Lengelet v. Piper, 13S S. W. 480.

In our opinion, the judgment of the court below should be affirmed; and it has been so oi’dered.

Affirmed.
      other oases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


author: HIGGINS, J. HIGGINS, J.

text:
    EL PASO UNION PASSENGER DEPOT CO. v. LOOK et al.
    (No. 798.)
    (Court of Civil Appeals of Texas. El Paso.
    Feb. 14, 1918.
    On Rehearing, March 14, 1918.)
    1. MUNICIPAL CORPORATIONS <&wkey;721(2) — Public Parks — Appropriation for Sidewalk — Abutting Owners — Injunction.
    A union depot company, owning and operating a station abutting a regularly dedicated city park on which it has, under agreement with the city, spent thousands of dollars for grading, fencing, and beautifying, is entitled to injunction against appropriation of any part thereof for sidewalk purposes.
    2. Municipal Corporations <&wkey;721(2) — Public Parks — Change of Use — Charter Provisions — Injunction.
    Under El Paso Special Charter, § 54, providing that all parks owned by the city are inalienable, and no part thereof shall ever be devoted to other than park purposes, the appropriation of park grounds for streets or sidewalks will be enjoined.
    3. Municipal Corporations &wkey;>721(l) — Public Parks — Improvements—Limitation to Park Use.
    While the city of El Paso has exclusive control over its parks, and may lay out sidewalks therein where necessary for park purposes, such right does not extend to diverting park grounds to general street and sidewalk purposes.
    4. Municipal Corporations <&wkey;721(3) — Public Parks — Delegation of Control — Maintenance.
    While the city of El Paso may not delegate its authority and control of public parks to create in a union depot company a vested right to keep and maintain the same, and prohibit the city’s control and improvement thereof, yet the city may contract for maintenance of park.
    5. Municipal Corporations <&wkey;1021, 1022-Ordinances — Construction — Presentation of Claim Precedent to Action.
    El Paso City Charter, § 71, providing that no suit of any nature shall be maintained against the city, without averring and proving previous application to city council for redress, being in derogation of the common-law right, must be strictly construed.
    6. Municipal Corporations <&wkey;1021, 1022— Actions — Presentation of Claim Precedent to Action — Injunction.
    El Paso City Charter, § 71, providing that no suit of any nature shall be maintained against the city, without averring and proving-previous application to city'council for redress, does not apply to equitable remedy by injunction to prevent irreparable injury to abutting owners by diversion of park property to other -uses.
    7. Constitutional Law <&wkey;106 — Vested Rights — Remedy—Construction.
    While remedies, remedial rights, and process are subject to legislative control, to construe a law, requiring presentation of claim to the city counsel for redress precedent to suit for injunction for irreparable injury, would make it invalid as amounting to a denial of all remedy.
    Appeal from District Court, El Paso County ; Ballard Coldwell, Judge.
    Suit by the El Paso Union Passenger Depot Company against the City of El Paso, George Look, and others. Judgment for defendants, and plaintiff appeals.
    Reversed and rendered.
    Turney, Culwell, Holliday & Pollard, of El Paso, for appellant. Jno. L. Dyer and J. H. McBroom, City Atty., both of El Paso, for appellees.
   Statement of Case.

HIGGINS, J.

This case was tried upon agreed facts. A condensed statement of the material facts is as follows: Appellant was incorporated for the purpose and is the owner of and is conducting a Union Passenger Railway Station in the city of El Paso, at which; passengers arrive and depart upon all trains entering and leaving said city. The station was located and built under and by virtue of an ordinance of the city approved November 15,1902, which authorized the construction and maintenance of said station. The eighth section of this ordinance provides that:

“The city of El Paso hereby obligates itself to acquire by -Condemnation or otherwise, the north one-half of the west one-half of block 171, according to the map of Campbell’s addition to the city of El Paso, Texas, provided the said Union Depot Company agrees and does keep and maintain the same as a public park for the use and benefit of the people of the city of El Paso. The said public park here referred to shall be open to the public by the city of El Paso between the time of the acceptance of this ordinance by the railroad companies interested therein, including the company to be organized, for the purpose of erecting the proposed new Union Passenger Depot, and the time when said depot is completed and in use.”

The tract of land referred to in this section is situate in front of the station and across the street therefrom. On December 3, 1903, the city council adopted a resolution, reciting that by the ordinance of November 15th the city agreed to open a new street and to acquire by condemnation said land, “provided the Union Depot maintains the same as a public park.” The land upon which the park is situate was owned by O. O. Coffin, and it was thereafter condemned by the city and acquired by it for a public park and park purposes, and since its acquisition has been used as a public park and is now owned by the city. Upon its acquisition it was turned over to appellant for the purpose of improvement and to be made into a public park. When it was so turned over the land was a depression, and in order to make it a part, it was necessary to fill in a depth of 8 or 10 feet and to build a retaining wall on its south and east sides and to build a fence on the south to prevent people from falling into the depression on the south. All of this was done by appellant at a cost of several thousand dollars, and it also planted the same in grass and trees and made other improvements necessary to its use as a park. Appellant, for itself and the railroads entering El Paso, accepted the provisions of the ordinance of November 15th and has done all of the things required of it by such ordinance. San Francisco street, which separates the park from the station, is at least 75 feet wide. The maintenance of the park and its beautification benefits appellant by making its property more attractive and inviting. In January, 1917, there was pending a suit by the city of El Paso against George Look and D. Storms, wherein the city sought to recover a small tract of land close to the park. The parties to this suit were desirous of compromising it, and to that end the city council, in January, 1917, by resolution authorized its mayor to enter into a compromise agreement with Look and Storms by the terms whereof the city was to dismiss its suit and to dedicate to street and sidewalk purposes all that portion of the park which lies west of the east line of Crossby street as shown on Campbell’s addition map, and to construct a sidewalk upon a portion thereof; to construct a curb along the westerly line of the sidewalk, and to pave all that so dedicated for street and sidewalk purposes not covered by said sidewalk. The city was also to dedicate the southerly 14 feet of the park for permanent sidewalk purposes, so that it should at all times be kept open and used for sidewalk purposes and no other. The city further agreed to pass all ordinances' necessary to accomplish the dedication of said 14 feet for sidewalk purposes. By the terms of said resolution Look and Storms were to convey to the city for street and sidewalk purposes the land sued for in the suit mentioned; also to build the sidewalk on the southerly 14 feet of the park which the city had agreed to dedicate to permanent sidewalk purposes as above stated. Thereafter the city, Look, and Storms entered into a contract embodying the provisions authorized by said resolution, and proceeded in its performance. In performance of said contract and acting for the city, Look began the construction of a cement sidewalk upon said southerly 14 feet of the park, as Look and Storms in said contract had agreed to do, and was proceeding to build the same with the permission, warrant, and authority of the city, as evidenced by said resolution and contract. No more injury was done to the trees, grass, etc., upon the park than was necessary in properly constructing said sidewalk. It is the purpose of Look to construct business houses upon property owned by him adjoining the park on the south; in front' of said houses will be the 14 foot sidewalk. Such houses would be separated from the park by the sidewalk only, and Look would have the benefit .of a sidewalk in front of his houses but the same would also afford a passageway and be a sidewalk for the use of the general public. The building of the sidewalk would, to that extent, lessen the area of the park available for grass, trees, etc. Plaintiff is a citizen and taxpayer of the city and county of El Paso, and has no adequate remedy at law for any loss which may be sustained by it in the premises, and the amount of its damage is incapable of exact ascertainment.

Appellant brought this suit against the city of El Paso, Look, and Storms and W. E. Fletcher, an employs of Look, to enjoin the appropriation of any part of the park for street and sidewalk purposes or devoting the same to any purpose other than that for which it was condemned, and to restrain them from doing anything which would interfere with the maintenance of the park by plaintiff, etc. From a judgment refusing any relief the plaintiff prosecutes this appeal.

Opinion.

The park property was acquired by the city in condemnation proceedings for public park purposes, and it was thereby dedicated to such use. The facts disclose a design and effort to now appropriate a part thereof to street and sidewalk purposes for the use of the general public, and in which Look and Storms would have a special interest by reason of a right of ingress and egress which would be thereby afforded to business houses which Look proposes to erect immediately south of the park. That such appropriation would be to a use inconsistent with the use for which it was originally dedicated is clear. Mr. Dillon says that individual owners of lots adjacent to a public square, the value of which is affected by an illegal diversion of the use of the public place, have such rights and interests that they may maintain a bill in equity to enforce the trust or to restrain the appropriation of the public square by the original proprietors or others to any use inconsistent with the purpose for which it was dedicated. 3 Dillon, Mun. Corps. (5th Ed.) 1132 (661).

Upon its property just across the street appellant maintains and operates a Union Depot Station, at which passengers arrive and depart from all trains entering and leaving the city. Such places at all times have present a greater or less number of weary travelers and others who are awaiting the arrival and departure of trains. At times they spend hours there in a hot and fetid atmosphere and amid throngs of people. What can more conduce to their comfort and the attractiveness of such a place than the presence, of an open park just across the street, with flowers, grass, etc., where they can go and to some extent relieve their discomfort and lessen the tedious wait. Considering the nature of appellant’s use of its property, the adjacent park is of very great value to it, and to divert the same or part thereof to crowded streets and sidewalks would materially affect and depreciate the value of appellant’s property. Not only this, but appellant, upon the faith of an agreement upon the part of the city to devote the same to park purposes, has spent thousands of dollars in raising the grade, building retaining walls, a protecting fence, planting trees, grass, and otherwise beautifying and improving the park. All of these facts together disclose such a special right and interest in the continued use and maintenance of the property as a park, and such damage to the value of appellant’s property necessarily resulting from the' proposed diversion, as entitles it to an injunction. The case falls within the rule announced by Mr. Dillon, which has been often approved by the courts of Texas. Corporation v. Ireland, 58 Tex. 383; Richardson v. Lone Star Co., 20 Tex. Civ. App. 486, 49 S. W. 647; Shephard v. Barnett, 52 Tex. 638; McBride v. Rockwall Co., 195 S. W. 926.

The doctrine announced and conclusion reached is regarded as well settled, but, in addition to this, section 54 of the special charter of the city of El Paso approved February 25, 1907, provides that:

“All public parks now owned or hereafter acquired by the city of El Paso, by gift, purchase or otherwise, are hereby declared to be inalienable and no part thereof shall ever be devoted to other than park purposes, nor shall any buildings ’be erected thereon except such as are intended for and devoted exclusively to park purposes.”

In this connection appellees urge that the city by its charter is given exclusive control over its streets, alleys, parks, and public places, and could, as regards this or any other park, erect improvements thereon or make changes therein, provided it was not inconsistent with the dedication, and that the laying of a sidewalk in a park is not an inconsistent use. That the laying out of walks or even streets around or through a park is not at all inconsistent with the dedication for park purposes must be conceded where the same are necessary or contribute to the full enjoyment of the property for park purposes. But there is nothing in this record to indicate that the property proposed to be diverted to street and sidewalk purposes is at all so essential. The facts clearly disclose the contrary. The resolution of the city council, adopted in January, 1917, expressly provides that the southerly 14 feet of the park property is to be dedicated to permanent sidewalk purposes and no other. As to the balance of the property agreed to be diverted, it is plainly inferable from the resolution itself that it was to be dedicated .to the general use of the public for street and sidewalk purposes as distinct from any connection with the use and enjoyment of the park for park purposes. Not only this, the resolution and contract made in pursuance thereof was for the purpose of enabling the city to acquire title to the premises involved in the suit pending in the district court. Look and Storms agreed to convey that property to the city, and the consideration inducing them so to do was the undertaking of the city to devote a part of the park property to street and sidewalk purposes which would be of special interest and profit at least to Look. This is a diversion and devotion of a part of the park property to purposes other than park purposes in violation of section 54 of the city’s charter. It is therefore held that the action of the city was unauthorized, and appellant had the right to enjoin it and its codefendants from diverting any part of the park property to the proposed street and sidewalk purposes.

Appellees urge that though section 8 of the ordinance of November 15, 1902, constituted an agreement with appellant whereby the latter should keep and maintain the property as a public park for the use and benefit of the people of the city, such agreement was a delegation by the city of its authority and control of the park which was unauthorized, and did not create any vested right in appellant to keep and maintain same so as to prohibit the city from controlling and improving the park. It is true the city has no right to surrender the control and management of its parks to any one. But no reason is apparent why a contract could not be made with appellant to maintain it. MacDonell v. Railway Co., 60 Tex. 590; City of Brenham v. Water Co., 67 Tex. 554, 4 S. W. 143; City of Corpus Christi v. Central, etc., 8 Tex. Civ. App. 94, 27 S. W. 804. The city must employ some one to do it, and appellant in so doing is only the agent and representative of the city. Appellant could acquire no vested right to maintain the park to the exclusion of the city’s right and duty so to do. But these considerations have no controlling influence upon the question of the city’s right to divert the use.

Section 71 of the charter of the city of El Raso provides that:

“The city council shall have the management and control of the finances and property, real, personal and mixed, belonging to the city; provided, that no suit of any nature whatever shall be instituted or maintained against the city of El Paso unless the plaintiff therein shall aver and prove that previous to the filing of his original petition he applied to the city council for redress, satisfaction, compensation or relief, as the case may be, and that the same was by the city council refused.”

Appellees contend that the judgment should be affirmed because compliance with this provision was neither pleaded nor proven by appellant. Such provisions are in derogation of common right and will be strictly construed. 19 R. O. L. 1042. They are in furtherance of a public policy to prevent needless litigation and to save unnecessary expenses and costs, by affording an opportunity arnica-

bly to adjust all claims against municipal corporations before suit is brought. 4 Dillon, Mun. Corps. (5th Ed.) 1612 (937).

A literal construction of section 71 would embrace suits of every kind and character and require as a condition of their institution and maintenance a previous application to the city council. But such a construction ought not to prevail if it is opposed to the intention of the Legislature apparent from the statute; and if the words are sufficiently flexible to admit of some other construction, it is to be adapted to effectuate that intention. The intent prevails over the letter, and the letter will, if possible, be so read as to conform to the spirit of the act. And while the intention of the Legislature must be ascertained from the words used to express it, the manifest reason and the obvious purpose of the law should not be sacrificed to a literal interpretation of such words. Furthermore, the general terms of a statute are subject to implied exceptions founded on rules of public policy and the maxims of natural justice, so as to avoid absurd and unjust consequences. 2 Lewis’ Sutherland Stat. Const. (2d Ed.) §§ 376, 381, 385. The clause relied upon by appellees is attached as a proviso to that portion of the section which gives to the city council the management and control of the finances and property of the city. The proviso is to be regarded as in aid of the management and control of the city’s finances and property, vested in the council, and in furtherance of the considerations of public policy upon which such provisions are founded. It was manifestly intended to protect the city against the institution of suits upon pecuniary demands until it had been afforded an opportunity to investigate and amicably adjust the same. Also to protect the city against needless suits affecting its management and control of its own property. This suit does not fall within either of those classes. It is not upon a pecuniary demand, and does not in any wise affect the finances of the city. In so far as it undertakes to enjoin the illegal diversion of the use of the park property, it is not an attempted interference with the management and control of the park. A diversion of the use is a matter quite distinct and apart from any question of management and control. In so far as the petition sought to restrain the city from doing anything which would interfere with the maintenance of the park by appellant, this, it may be conceded, would be a question affecting the right of management and control vested in the city council, and would fall within the letter and spirit of the act. It is therefore held that the proviso in question does not apply to the right to maintain the suit to enjoin the diversion of the use of the property. Considering the section as a whole, it is believed the proviso is susceptible of this construction, and yet preserves fully the intent and purpose of .the Legislature. An examination of the authorities discloses that it is very generally held that such provisions are construed as not applying to actions purely equitable in their nature. 19 R. C. L. 1042 ; 28 Cyc. 1451; note in 50 L. R. A. (N. S.) 1S6; Davis v. Appleton, 109 Wis. 580, 85 N. W. 515; Joyce v. Janesville, 132 Minn. 121, 155 N. W. 1067, L. R. A. 1916D, 426; Kiser v. Douglass County, 70 Wash. 242, 126 Pac. 622, 41 L. R. A. (N. S.) 1066, Ann. Cas. 1914B, 721; Lonsdale v. Woonsocket, 25 R. I. 428, 56 Atl. 448; Gerow v. Liberty, 106 App. Div. 357, 94 N. X. Supp. 949; Lamay v. Fulton, 109 App. Div. 424, 96 N. X. Supp. 703; Sammons v. Gloversville, 175 ,N. X. 346, 67 N. E. 622. Only by adopting this construction can absurd and unjust consequences be avoided and the act be harmonized with maxims of natural justice. Appellant has no remedy to prevent the consummation of the threatened injury except by promptly invoking the equitable power of the courts to enjoin the same. If, as prerequisite to instituting and maintaining such a suit, appellant must first apply to the city council, it would be helpless. It must first await the sitting of the council, then await its deliberation and decision, and by that time the wrong would have been accomplished, the injury done, and appellant left without a remedy. While remedies and remedial rights and process are always subject to the control of the Legislature, yet it is not competent, directly or indirectly, to deny all remedy. Ins. Co. v. Shearman, 43 S. W. 1063; De Cordova v. Galveston, 4 Tex. 470; Black’s Const. Law (3d Ed.) 602; 1 Cyc. 704. Appellant’s special interest in the continued use of the property for which it was dedicated was a vested right, and it may well be doubted whether it could be deprived of that right, though the operation of a statute which so delayed its right to apply to the courts for protection as in effect deprives it of such protection. We do not, however, care to base our decision upon this consideration, but rest it upon the construction placed upon section 71.

The cause will be reversed, and judgment here rendered for appellant, enjoining the defendants, and each of them, their officers, agents, and employés, from appropriating any part of the park property for street and sidewalk purposes, as authorized by the resolution of the city council adopted in January, 1917, and as provided in the contract entered into between the defendants in pursuance thereof, and that said city, its officers, agents, and employés be further enjoined from diverting any part of said property to any use other than for public park purposes. All further relief asked is refused.

Reversed and rendered.

WALTHALL, J., did not sit, being absent on committee of judges assisting the Supreme Court.

On Rehearing.

HIGGINS, J.

Appellees in their motion for rehearing say that it is not their purpose to divert any part of the park property to street purposes. This motion is the first information this court has had of this fact. The original record reflects the contrary.

It is stated in the motion that the only part intended to be used for street purposes is the west part of the park as at present laid out; that as at present laid out, the park encroaches upon San Francisco street, formerly Crosby street, and extends west of the west line of the north one-half of the west one-half of block 171, according to the map of Campbell’s addition. The park property referred to in the decree rendered by this court is not to be construed as embracing any premises except those lawfully dedicated to park purposes. It is not to be construed as determining where the west line of the north one-half of the west one-half of block 171, according to the map of the Campbell addition, is situate.. Nor it is to be construed as determining what part, if any, of the park as now laid out is situate in San Francisco street. If any controversy exists concerning these matters, they may be determined in proper proceedings raising the question. Certainly all of the north one-half of the west one-half of block 171 has been lawfully dedicated to park purposes, and no part thereof under our decree can be diverted to either street or sidewalk purposes.

With this explanation of the scope of the decree rendered, the motion for rehearing is overruled.
      dto^Eor other oases see same topic and KEY-NUMBER, in all Key-Numbered Digests and Indexes


author: JENKINS, J.

text:
    INTERNATIONAL & G. N. RY. CO. v. CONCRETE INV. CO.
    (No. 5770.)
    (Court of Civil Appeals of Texas. Austin.
    May 16, 1917.
    Rehearing Denied Nov. 7, 1917.)
    1. Reference &wkey;89(l) — Report of Referee— Effect as Adjudication.
    The report of a referee, being equivalent to a special verdict by a jury, is a proper basis for a judgment, but is not evidence of an adjudication until it has been accepted and judgment rendered thereon.
    2. Reference <&wkey;48 — Authority of Master —Order of Appointment.
    The master in chancery has authority to adjudicate only that which has been referred to him by the order of his appointment.
    3. Receivers <&wkey;151 — Authority of Receiver-Claims.
    Under an order appointing a receiver for a railroad company and providing that he should hear proof as to the correctness and validity of debts and pass on liens and their priority and classify claims as to their liens and priority, the receiver had authority to determine the claim of an intervener which had accrued against the railroad company before he took charge of its property.
    4. Judgment &wkey;>739 — Res Adjudicata — Receivership Proceedings.
    Claims against a railroad company under Rev. St. 1911, art. 6625, enacted September 1, 1910 (Acts 31st Leg. [4th Called Sess.] c. 4), providing that the purchaser of any sold out railroad may form a corporation to take over the company’s property and franchises, and that the property and franchises so purchased shall be charged with the payment of certain subsisting liabilities and claims, could not have been adjudicated in receivership proceedings had prior to the enactment of such statute, and therefore prior to the existence of the purchasing corporations.
    5. Judgment &wkey;>714(l) — Res Adjudicata — Identity of Claims.
    In order for a judgment to be res adjudi-cata, it must have litigated the same claim involved in the second suit, and not a different claim, though both may have grown out of the same transaction.
    6. Judgment <&wkey;719 — Res Adjudicata — Pleadings.
    In passing on a plea of res adjudicata, the issues involved in the suits are determined from the pleadings therein.
    7. Judgment <&wkey;713(2) — Res Adjudicata — Pleadings — Amendment.
    That a claim under Rev. St. 1911, art. 6625, providing that the purchaser of any sold out railroad may form a corporation to take over the company’s property and franchises, and that the property and franchises so purchased shall be charged with the payment of certain subsisting liabilities and claims, could have been asserted by amendment of a plea of intervention filed prior to the enactment of such statute did not make the determination of the plea res adjudicata as to such claim; it being essential, in order to sustain a plea of res adjudicata, that the issue shall have been presented by the pleadings, and not sufficient merely that it might have been so presented.
    8. Judgment &wkey;>735 — Res Adjudicata — Identity of Issues.
    A judgment is not res adjudicata to a prior suit where the matter in issue in the subsequent suit was not in issue in the prior suit.
    9. Election of Remedies <&wkey;7(3) — What Constitutes.
    Where an intervener in receivership proceedings sets up, by amendment, in addition to a claim of priority under the doctrine of equity, a claim under Rev. St. 1911, art. 6625, providing that the purchaser of any sold out railroad may form a corporation to take over the company’s property and franchises, and that the property and franchises so purchased shall be charged with the payment of certain subsisting liabilities and claims, the claims are cumulative and not inconsistent; and hence an intervener, by failing to so amend, was not estopped, on the ground that he had elected, between two distinct and inconsistent remedies, to set up in a subsequent suit his claim under the statute.
    10. Courts <&wkey;264(3) — Jurisdiction.
    Where a federal court of competent jurisdiction has obtained possession of the res by the appointment of a receiver and has taken possession of all of the property of a railroad company, it has exclusive jurisdiction in all matters affecting the same during the pendency of the suit, with power to protect its decree against all other courts, and, to protect the purchaser of the property, may retain jurisdiction over same after it has been sold by the receiver and delivered to the purchaser.
    11. Courts <&wkey;4S9(l) — Jurisdiction—Receivership.
    Where the only matters determined in a suit in federal court wherein a receiver was appointed for a railroad company were the validity and priority of claims under the principles of equity, a decree in such suit, providing that “all questions not hereby disposed of, including ⅜ * * the disposition of all claims heretofore filed herein or hereafter to be so filed, in accordance with the provision of this decree, are hereby reserved for future adjudication, and the court reserves jurisdiction of this cause and of the property affected by this decree, for the purpose of final disposition of all such matters, did not reserve jurisdiction so as to preclude a state court from determining a claim under Rev. St. art. 6625, against property purchased from the receiver.
    12. Railhoads <&wkey;30 — Property — Purchasing Corporation — “Subsisting- Liabilities and Claims.”
    Debts represented by notes were not “subsisting liabilities and claims” within Rev. St. 1911, art. 6625, providing that the purchaser of any sold out railroad may form a corporation to take over the company’s property and franchises, and that the property and franchises so purchased shall be charged with the payment of certain subsisting liabilities and claims, where debts and claims within such statute had been paid with money procured by giving the notes without any assignment of the claims or agreement that the lender should be subrogated to the rights of the creditors whose claims were paid with the borrowed money, particularly where the creditors were not parties to the transaction.
    13. Subrogation <®=ml — Kinds.
    Subrogation is of two kinds, one by operation of law, the other by contract.
    14. Subrogation (&wkey;31 — Indorsement of V ouchers — Assignment.
    The indorsement of vouchers to a bank which advanced money to pay claims against a railroad company of the character mentioned in Rev. St. 1911, art. 6625, constituted an assignment of the vouchers to the bank, which, in consequence, became subrogated to the rights of the original holders.
    15. Railroads <&wkey;30 — Sale of Property — Sufficiency of Evidence.
    Evidence, in a suit to enforce against railroad property purchased from a receiver a claim under Rev. St. 1911, art. 6625, providing that the purchaser of any sold out railroad may form a corporation to take over the company’s property and franchises, and that the property and franchises so purchased shall be charged with the payment of certain subsisting liabilities and claims, held to show that the stockholders of the old company received stock in and control over the new company in consideration of their holdings in the old company.
    Appeal from District Court, Travis County; George Calhoun, Judge.
    Suit by the Concrete Investment Company against the International & Great Northern Railway Company. Prom judgment for plaintiff, defendant appeals.
    Affirmed.
    S. W. Fisher, of Austin, and Wilson, Dab-ney & King, of Houston, for appellant. George L. Edwards, of St. Louis, Mo., and Lightfoot, Brady & Robertson, of Austin, for appellee.
   Findings of Fact.

JENKINS, J.

(1) On February 27, 1908, and prior thereto, the International & Great Northern Railroad Company was incorporated under the laws of Texas, and owned and operated about 1,100 miles of railway through various counties of Texas, including Travis county.

(2)On said date, and prior thereto, the National Bank of Commerce of St. Louis was a banking corporation , under the national banking laws of the United States.

(3) Prior to January 13, 1908, the International & Great Northern Railroad Company had applied to said bank for a loan of $150,-000. On said date the bank granted the loan to said railroad company for $50,000, to be used in payment of operating expenses of said railroad, and' said money was so used. The said railroad executed therefor its two promissory notes of $25,000 each, due six months after date, with interest from maturity at the rate of 8 per cent. Except the sum of $8,268.70, none of the money so loaned has been repaid.

(4) It had been the custom of said railroad company to issue to its employes vouchers for money expended in the operation of said road, payable at said bank, and when presented the bank paid the amount shown by the vouchers, the payee indorsing the. same, and the bank would then send these vouchers to' the treasurer of the company, who, if he found them correct, would draw a draft on the bank for the aggregate amount of such vouchers for each day.

(5) From February 22d to 26th, vouchers of the character mentioned were presented to said bank, and the amounts thereof were paid to the holders of such vouchers to the amount of $53,500. These vouchers were presented to the treasurer of the railroad company, who drew checks on various depositories in Texas of the railroad company, aggregating said amount of $53,500.

(6) At the time these checks were drawn the railroad company had a sufficient amount of money in said depositories to pay the same, but payment thereof was stopped by Thos. J. Freeman, who, on the 26th day of February, 1908, was appointed receiver of ' said road.

(7) On February 26, 1908, by virtue of certain judicial proceedings in the United States Circuit Court for the Northern District of Texas, wherein the Mercantile Trust Company, trustee, and others, holders of the bonds of said railroad company in cause No. 2501 in equity, were complainants, all of the railroad track, equipment, property, and franchises owned by said railroad company were taken from its possession and control and placed in the hands of Thos. J. Freeman, as receiver of said railroad company.

(8) Prior to the institution of said suit the said railroad company had executed its first, second, and third mortgage bonds, which were duly recorded.

(9) On May 10, 1910, a decree of foreclosure was entered in said cause No. 2501, wherein and whereby the second mortgage on said railroad was foreclosed, and all of said property was ordered to be sold to the highest bidder at public auction, in accordance with the terms, notices, and conditions provided in said decree.

(10) On November 27, 190S, pending said receivership proceedings, the National Bank of Commerce, appellee’s assignor herein, by order of said court filed its two intervention claims, Nos. 1773 and 1774, alleging the indebtedness represented by said notes, and by the amount that it had paid on said vouchers, and claiming priority over said mortgages by reason of the alleged fact that the $50,000 had been borrowed for the purpose of paying the operating expenses of said road, and had been used therefor, and that the $53,500 paid on said vouchers were for the operating expenses of said road, and that the revenues of said road had been diverted to the payment of interest on the bonded indebtedness and for permanent improvements.

(11) On June 13, 1911, all of the property of said railroad company, including its franchises, were sold to Erank C. Nicodemus, who purchased same for himself and his associates.

(12) On August 10, 1911, said Nicodemus and his associates organized and incorporated under the laws of the state of Texas the International & Great Northern Railway Company, the appellant herein, for the purpose of acquiring, owning, maintaining and operating the said railroad and property theretofore belonging to the International & Great Northern Railroad Company.

(13) On September 16, 1911, Thos. J. Freeman, receiver as aforesaid, turned over to appellant all the property and franchises formerly belonging to said sold out railroad company, and appellant is still in possession and control of said property, and is operating said railroad.

(14) On September 25, 1911, the master commissioner, who made said sale, duly reported the same to- the honorable United States Circuit Court for the Northern District of Texas, which on said date in all things approved said sale, and fully and finally discharged the receiver.

(15) On January 16, 1912, the appellant herein filed its petition of intervention in said cause No. 2501, setting forth the facts as to the sale of said railroad property, and its incorporation, and alleging that it was the owner and in possession of all of said property and franchises, subject to the reservation and conditions in the decree of foreclosure; that there were pending under said decree various claims against said property, and that the petitioner desired to contest such of said claims as were unjust or excessive, and praying that > it be allowed to become a party to said cause, which petition on said date was granted.

(16) On the - day of -, 1912, the master in chancery, to whom said plea of intervention had been referred, filed his report therein, in which he found in favor of the intervener as to the amount of the indebtedness, -but against the intervener as to. the priority of its claim, finding that there had been no diversion of funds, and that the claims were not entitled to priority. No exception was filed to this report.

(17)On the-- day of December, 1912, the National Bank of Commerce of St. Louis, being then the owner and holder thereof for a valuable consideration, transferred said notes and its claim thereon, and its claim for the money paid out on said vouchers, to the appellee herein.

Opinion.

Appellant has filed 51 assignments of error. We shall not attempt to discuss them seriatim, as the matters involved can be grouped under comparatively few points.

It is the contention of appellant that the matters here involved were finally adjudicated by the federal court in the proceeding referred to in our findings of fact, and, if not, that they are still pending in that court, by reason of its having retained jurisdiction thereof in its final decree.

First. As to res adjudicata. Was there any judgment of the federal court on the issues raised by the bank’s pleas of intervention? A master in chancery was appointed; he investigated the bank’s pleas of intervention, and reported thereon favorably as to the amount claimed to be owing the bank by the International & Great Northern Railroad Company, but adversely as to its claim of priority over the mortgage indebtedness. This report concludes as follows:

“I conclude that the claim of intervener is a common claim, and I recommend (italics ours) its allowance in class 5 in accordance with the master’s recommendation as to a general classification. All of which I respectfully submit.
“W. H. Flippen, Mastery in Chancery.”

It was agreed that no exceptions were filed to this report. Appellee asserts in its brief that no- judgment was entered on this report. Appellant, though it filed a supplemental brief herein, has not denied this statement, but assumes that this report became a judgment because it was not excepted to. We have been cited to no authority to sustain this contention, and we know of none. A report of a referee (which the master in chancery was) is equivalent to a special verdict by a jury, and is a proper basis for a judgment (23 Cyc. 776, 784), but it is not evidence of an adjudication until it has been accepted and judgment rendered thereon. 23 Cyc. 1123. The report is not a judgment. 34 Cyc. 849.

If the report of the master in chancery be treated as a judgment, what did it adjudicate? He had no authority to adjudicate anything, except what was referred to him by the order of his appointment. 16 Cyc. 441. The only portion of said order which could possibly be construed as embracing the matter here in controversy is the following:

“He is Hereby authorized, cb'rected and empowered to investigate, hear proofs and report on all claims made and filed bv said claimants as will be hereinafter provided, and which may have accrued against the said International & Great Northern Railroad Company prior to the time the receiver herein took charge of the property of said International & Great Northern Railroad Company. * * * It is further-
ordered and directed that said master in chancery shall not only hear proof as to the correctness and validity- of said debts, but also upon the question and issues as to liens and their priority, if any, and he shall report as to the amount of such claims, and whether the same are valid and due and owing by the said International & Great Northern Railroad Company, and the amount thereof, and shall classify such claims as to their liens and priority, in the event any of same have any priority or preference.”

The claim of the intervener, the bank, “accrued against the said International & Great Northern Railroad Company prior to the time the receiver herein took charge of the property of the said International & Great Northern Railroad Company,” and so was embraced in the order appointing the receiver. The pleadings of the intervener raised the issue as to what, if anything, was due it by the International & Great Northern Railroad Company. Upon this issue the master in chancery found in favor of the intervener, and in the instant case no issue is raised as to the amount found by the master in chancery, the same being the amount here sued for. The pleadings raised the further issue as to whether or not, under the facts and the law as it existed at the time said plea of intervention was filed, by reason of a diversion of said funds advanced by the intervener, it had a prior lien on the property of said railroad company. If the appellee is asserting such prior lien in the instant case, assuming that the master’s report amounts to a judgment, the plea of res adjudicata ought to be sustained.

But it is the contention of appellee that it is not here asserting any lien on the property of the International & Great Northern Railroad Company, but that it is asserting a debt against the International & Great Northern Railway Company, the appellant herein, under and by virtue of the act of the Texas Legislature of September 1, 1910, which is carried forward in the Revised Statutes as article 6625. Said article provides that the purchaser of any sold out railroad may form a corporation to take over the property and franchises of the sold out company; “provided, that, notwithstanding such incorporation, the property and franchises so purchased shall be charged with, and subject to the payment of all subsisting liabilities and claims for death, and personal injuries sustained in the operation of the railroad by the sold out company * * * and for the current expenses of such operation, including labor, supplies and repairs; provided, that all such subsisting liabilities shall have accrued within two years prior to the beginning of the receivership resulting in the sale of such property and franchises.”

Was the liability of the appellee for the claims herein sued on adjudicated in the receivership proceedings in the federal court? We think not, for the reason that appellee’s assignor, the St. Louis bank, did not allege any such liability in its plea of intervention. It could not have done so for the reasons that, the statute referred to not having then been passed, and the appellant not being then in existence, no such liability against it could have then existed.

That the complainant in the federal court believed that said statute created a liability against the purchaser of the railroad about to be sold, which did not theretofore exist, is evidenced by its petition to postpone the sale of said road, filed herein on September 7, 1910; said sale having been advertised to be made on September 15, 1910. Said petition set out substantially the decree of sale,. and recited that the owners of the third mortgage bonds had arranged for their protection to buy said railroad properties at said sale, but that said act of September 1, 1910, if valid, would increase the liabilities of the purchasers, over and above those provided for in the decree of sale in an amount of approximately $2,250,000. In said petition it was alleged that the liabilities as to unpaid indebtedness which the court had or might decree-as superior to the mortgage indebtedness “were those and those only which, under the-rules of equity established by decisions of the courts of the United States, are entitled to priority or preference in payment in similar cases, and that such liabilities did not, and were not intended to, include claims or liabilities of the character and description mentioned and set forth in said act of the Legislature of Texas approved September 1, 1910, above mentioned.” We think that this was a correct construction of this act. It is probable that the court was of the same opinion, as it postponed said sale. Said sale-was not made until June 13,1911.

In order for a judgment to be res ad-judicata, it must have litigated the same claim involved in the second suit, and not a different claim, though both may have grown out of the same transaction. Horton v. Hamilton, 20 Tex. 606; Mortgage Co. v. Macdonell, 93 Tex. 405, 55 S. W.737; Houston v. Walsh, 27 Tex. Civ. App. 121, 66 S. W. 109; Evans v. Borchard, 8 Tex. Civ. App. 276, 28 S. W. 259, 260; Manning v. Green, 121 S. W. 725; Kerr v. Blair, 55 Tex. Civ. App. 349,118 S. W. 793; Norton v. Wochler, 31 Tex. Civ. App. 522, 72 S. W. 1026; Noel v. Clark, 25. Tex. Civ. App. 136, 60 S. W. 360; Walsh v.. Ford, 27 Tex. Civ. App. 573, 66 S. W. 857.

The issues involved in a suit are determined from the pleadings. Freeman v. McAninch, 87 Tex. 135, 27 S. W. 97, 47 Am. St. Rep. 79; Bradford v. Knowles, 78 Tex. 116, 14 S. W. 307.

The pleadings of the intervener in cause-No. 2501 in the federal court show that it was asserting a priority against the property of the International & Great Northern Railroad Company, by reason of its indebtedness incurred under certain alleged facts. The pleadings in the instant case show that it is claiming a prior lien against the property of International & Great Northern Railway Company, a different corporation, by reason, not only of the indebtedness of the International & Great Northern Railroad Company, which is not disputed, but also by reason of the fact that the new corporation, the appellant herein, by virtue of its articles of incorporation, agreed that its property which it purchased from the sold out company should be liable for such debt. In obtaining its charter, and taking over the property of the sold out railroad, the appellant agreed that such property should be liable for the debts of the International & Great Northern Railroad Company, of the character mentioned in article 6625, Revised Statutes, without regard to whether or not such indebtedness constituted a lien against the property of the sold out company. Appellee alleged in its petition herein that the claims here sued on were of that character.

Appellant contends that the action of the federal court in reference to the bank’s plea of intervention should be held to be res adjudicata as to the matter involved in this suit, for the reason that, although the intervener’s claim here asserted by its assign- or, the appellee herein, could not have been asserted when said plea of intervention was filed, it could have been asserted by amendment after the passage of the act of September 1, 1910, which was prior to the report of the master in chancery, and prior to the sale of the International & Great Northern Railroad. It is not sufficient to sustain a plea of res adjudicata that an issue might have been presented by the pleadings, but it must also appear that it was so presented. Norton v. Woehler, 31 Tex. Civ. App. 522, 72 S. W. 1026; Cromwell v. Sac Co., 94 U. S. 351, 24 L. Ed. 195.

It is also a well-established principle of law that a judgment will not be held to be res adjudicata to a subsequent suit vhc. e it affirmatively appears that the matter in issue in the subsequent suit was not in issue in the prior suit. James v. James, 81 Tex. 380, 16 S. W. 1087; Teal v. Terre; 1, 48 Tex. 491; Converse v. Davis, 90 Tex. 466, 39 S. W. 277; Groesbeck v. Crow, 91 Tex. 77, 10 S. W. 1028; Dinberg v. Einks, 7 Tex. Civ. App. 391, 25 S. W. 791; Williams v. Wiley, 96 Tex. 152, 71 S. W. 12.

We think the pleadings of intervener in cause No. 2501, as well as the judgment therein, if the report of the master in chancery be treated as a judgment, show that the issue here involved was not adjudicated in the federal court. For the reasons stated, we overrule appellant’s assignments as to res adjudi-cata.

We do not think that there is any merit in appellant’s assignment to the effect that appellee is estopped by the proceedings in the federal court upon the doctrine of election of "emedies. This doctrine rests upon the ground that where a party has two distinct and inconsistent remedies, by electing to prosecute one of them he thereby abandons the other. Bandy v. Cates, 44 Tex. Civ. App. 38, 97 S. W. 711.

Had the intervener in cause No. 2501, in addition to his alleged claim of priority under the doctrine of equity, set up by amendment the right here asserted of subjecting the property purchased by appellant to appel-lee’s claims by virtue of the act of 1910, the claims would not have been, inconsistent, but , cumulative.

The next issue which we will consider is whether the district court of Travis county was without jurisdiction to try this cause by reason of reservations made by the feder-' al court in its final decree herein. A court of competent jurisdiction having obtained possession of the res, as did the federal court in cause No. 2501 by the appointment of a receiver, who took possession of all of the property of the International & Great Northern Railroad Company, has exclusive jurisdiction in all matters affecting the same during the pendency of such suit, with pbwer to protect its decree against all other courts, and may, for the purpose of protecting the purchaser of such property, retain jurisdiction over the same after it has been sold by the receiver and delivered to the purchaser.' Railroad Co. v. Adelbert College, 208 U. S. 38, 28 Sup. Ct. 182, 52 L. Ed. 386; Julian v. Trust Co., 193 U. S. 93, 24 Sup. Ct. 399, 48 B. Ed. 629; Ex parte Chetwood, 165 U. S. 445, 17 Sup. Ct. 385, 41 L. Ed. 788.

When the federal court entered its final decree discharging the receiver, and turned the property over to the purchaser, it lost control of the res, and all matters pertaining thereto, except in so far as it rightfully retained jurisdiction for the purpose of protecting such purchaser. In Julian v. Trust Co., supra, where the final decree of the court expressly reserved the right to retake possession of the property and to resell the same under certain contingencies, it was held that another court was without jurisdiction to enter a judgment which in effect nullified the judgment of the court in which the receivership had been pending, by holding that the sale made under the order . .. said court was null and void, in that the purchaser, not being a domestic corporation, had no right to become such purchaser.

In the Adelbert College Case, supra, the federal court, in confirming the decree of sale, likewise reserved the right to retake and resell the property if necessary to protect the right of parties, which the court might thereafter adjudge to be superior to the mortgage lien. In the instant case the final decree purported to invest the purchas-ér with full title to all of the property of the sold out road, subject, among other things not material to the issues in this suit—

“to any unpaid indebtedness or liability contracted or incurred by said defendant railroad company in the operation of its railroad, which the court may hereafter order or decree herein to be prior to or superior to the lien of said mortgage [the second mortgage]. * * * That all questions not hereby disposed of, including1 ⅜ * ⅜ the disposition of all claims heretofore filed herein, or hereafter to be so filed, in accordance with the provision of this decree, are hereby reserved for future adjudication; and the court reserves jurisdiction of this cause and of the property affected by this decree, for the purpose of final disposition of all such matters.”

What matters? Evidently claims asserted to be superior to the mortgage indebtedness, which had been filed, but not adjudicated, or which might thereafter be filed. If the bank’s claim of superiority of its indebtedness had theretofore been adjudicated, as claimed by appellant herein, it was not included in said reservation. If it had not been adjudicated, the federal court retained jurisdiction to adjudicate the same. But, as we have heretofore stated, the claim here asserted is not that its claim against the sold out company is, under the principles of equity, superior to the mortgage indebtedness, but that in obtaining a charter from the state of Texas, appellant assumed such indebtedness, and agreed that property which it purchased at said sale should be held by it subject to the same, if of the character mentioned in said article 6625, without reference to whether or not it was superior to the mortgage indebtedness. Such being the case, if the appellee should now apply to the federal court to adjudicate, under its reserved power above referred to, whether or not its claim filed in its assignor’s plea of intervention was superior to the mortgage indebtedness, and that court should decree that it was not, such decree would be immaterial'to the issue here involved, viz. the liability of appellant under its charter contract.

For the reasons stated, we overrule appellant’s assignments attacking the jurisdiction of the district court of Travis county.

Having disposed of the questions of res adjudieata and jurisdiction of the trial court, the next issue in logical sequence is:

“Are the debts and claims herein asserted of the character mentioned in article 6625, Revised .Statutes?”

One of these debts is that evidenced by the two promissory notes mentioned in our findings of fact herein. This case was submitted to a jury upon special issues, among which were the following:

Question No. 1: “At the time of the execution of the two notes sued upon in this case, and described in plaintiff’s petition, was there any understanding or agreement existing between the International & Great Northern Railroad Company and the National Bank of Commerce in St. Louis, that the proceeds of said notes should be used by said railroad company in the payment of its current expenses of operation, including labor, taxes, supplies, and repairs?” To which the jury answered: “Yes.”
Question No. 2: “Did the International & Great Northern Railroad Company use the proceeds of said notes for the payment of the current expenses of operation, including labor, taxes, supplies, and repairs?” To which the jury answered: “Yes.”

We think that the evidence is sufficient to sustain these findings, and we therefore find the facts to be as indicated by said questions and answers.

But, notwithstanding these facts, we are of the opinion that the debt evidenced by these notes is not of the character mentioned in article 6625, viz. “subsisting liabilities and claims” of a certain character. The debts and claims paid with the money borrowed were of this character, but, having been paid by the railroad company, they no longer subsist, and if the property of the sold out company is liable therefor in the hands of appellant, it is so upon the doctrine of subrogation. Had these claims been assigned to the bank, it would have been subrogated to the rights of the original holders thereof. There was certainly no express assignment. Had there been an agreement between the railroad company and the bank that the bank should be subrogated to the rights of the creditors whose debts were to be paid with the borrowed money, the bank’s assignor, the appellee herein, might enforce such agreement under the doctrine of subrogation. There was no such agreement, unless the mere fact that the money was borrowed because it was needed to pay operating expenses, and that this fact was made known to the bank, amounts to an implied agreement that the bank should be subrogated to the right of such creditors. We do not think that it does. In Bank v. Railway Go., 36 6. W. 134, the court said:

“If A. should borrow from B. a sum of money which A. uses to discharge a lien held by another or appropriates it to the payment of a debt due and owing by such other, or if A. should purchase property with the money borrowed, in neither case would B., the lender, in the absence of a contract or agreement between the parties, have any lien or interest in the debts or lien discharged or in the property purchased.”

We think that this is a correct statement of the law. Bank v. Bank, 80 Ark. 197, 96 S. W. 749, 117 Am. St. Rep. 85, 10 Ann. Gas. 211; Trust Co. v. Bridges, 57 Fed. 774, 6 O. O. A. 539; Re Construction Co., 38 N. J. Eq. 433; McDonald v. Railway Go., 93 Tenn. 281, 24 S. W. 253; Morgan v. Railway Co., 137 U. S. 171, 11 Sup. Ct. 61, 34 L. Ed. 625.

Subrogation is of two kinds: One by operation of law, as where a party is compelled to pay off! a prior incumbrance in order to protect himself; the, other arises by contract, as where a debt secured by a lien is assigned to him, or where he furnished the money with which such debt is paid, with the agreement on the part of the debtor that he shall have the benefit of the security of the debt, so paid.

Where the creditor is not a party to the transaction there can be no assignment of his debt. Railroad Co. v. McCaughey, 62 Tex. 271. In the instant case, those who held the claims for operating' expenses against the International & Great Northern Railroad Company knew nothing of the transaction between the bank and the company. They only knew that their debts were paid by the railroad company; they are not shown to have known where the railroad company got the money.

Appellee cites the case of Mcllhenny v. Binz, 80 Tex. 1, 13 8. W. 655, 26 Am. St. Rep. 705. In that case the laborers who had the prior lien were parties to the contract. The court said:

“The claims so accruing in the hands of the boarding house keepers, and in the hands of the grocers, were properly treated as claims originally due laborers, etc., and duly assigned to the holders.”

There are numerous cases in this state, in which it has been held that a party loaning money to pay off a debt secured by a lien will be subrogated to the rights of the lienor whose debt has been paid, but in every such case, so far as we have been able to find, there was a contract in which the debtor who borrowed the money agreed at the time of the loan that the lien held by the creditor should inure to the benefit of the lender. Thus subrogation was created by contract. Pridgen v. Warn, 79 Tex. 593, 595, 15 S. W. 559; Hicks v. Morris, 57 Tex. 658; Ellis v. Singletary, 45 Tex. 27; Clark v. Burke, 39 S. W. 308; Ford v. Ford, 22 Tex. Civ. App. 453, 54 S. W. 773; Warhmund v. Merritt, 60 Tex. 24; Dillon v. Kaufman, 58 Tex. 696; Eyler v. Eyler, 60 Tex. 315; Savings Bank v. Paschall, 12 Tex. Civ. App. 613, 34 S. W. 1001; Park v. Kribs, 24 Tex. Civ. App. 650, 60 'S. W. 911; Loan Ass’n v. Everheart, 18 Tex. Civ. App. 192, 44 S. W. 888; Downard v. Loan Ass’n, 22 Tex. Civ. App. 570, 55 S. W. 981.

The trial court submitted the following questions as to the vouchers:

“Question No. 5: Was the payment by the National Bank of Commerce to the holders of pay checks and vouchers which are claimed by the plaintiff to have been drawn by the auditor of said railroad company upon its treasurer in favor of its employés for labor and in favor of those furnishing it supplies for supplies, and made payable at said bank, intended as a payment by said bank to the holders of said pay checks and vouchers on behalf of said railroad company of the indebtedness so owing by said railroad company for labor and supplies, thereby discharging said railroad company from further liability on account of such indebtedness?" To which the jury answered: “No.’,’
“Question No. 6: Was the payment by the National Bank of Commerce of said pay checks and vouchers referred to in question No. 5 intended merely as a purchase by said bank of said pay checks and vouchers for the convenience of said railroad company, which were in turn to be paid by said railroad company to said bank from day to day?” To which the jury answered: “Yes.”

The issues submitted to the jury in said questions were proper for their determination. Wood v. Trust Co., 128 U. S. 416, 9 Sup. Ct. 131, 32 L. Ed. 474. We think the evidence is sufficient to sustain the findings of the jury. Such being the case, the in-dorsement of the vouchers to the bank amounted to an assignment of the same. 37 Cyc. 380. The claims evidenced by the vouchers were of the character mentioned in article 6625, R. S., and the bank, as assignee of the same, was subrogated to the rights of the original holders thereof. Moore v. Raymond, 15 Tex. 555; Murray v. Able, 19 Tex. 213, 70 Am. Dec. 330; McAlpin v. Burnett, 19 Tex. 500; White v. Downs, 40 Tex. 232; Burnham v. Bowen, 111 U. S. 776, 4 Sup. Ct. 675, 28 L. Ed. 598; Dudley v. Railway Co., 65 Mich. 655, 32 N. W. 887.

The court also submitted the following question to the jury:

“Question No. 3: Did the stockholders of the International & Great Northern Railroad Company (the old company) receive any benefits through the plan or method under which the properties of the old company were acquired by the International & Great Northern Railway Company (the new company, and which new company was organized to acquire the properties of the old company) ? By benefits are meant such as stock in or control over the new company in consideration of their holdings in the old company.”
“To aid the jury in answering question No. 3, they are instructed that if they find from the evidence that new securities were to be delivered to the stockholders of the International & Great Northern Railway Company on account of money advanced by them and on account of being a third mortgage holder, or either, and not on account of being stockholders of the International & Great Northern Railroad Company, then in said event the jury will answer question No. 3 in the negative.”

To this question the jury answered: “Yes.”

Appellee assigns error as to this answer for the reason that there was no evidence to sustain it. This ease is in one aspect similar to the case of Railway Co. v. Boyd, 228 U. S. 482, 33 Sup. Ct. 554, 57 L. Ed. 931, in that it was in effect a suit by the Goulds against themselves. They owned a majority of the stock of the third mortgage bonds. These bondholders were the original plaintiffs. They owned practically all of the International & Great Northern Railroad Company, ■ the original defendant. Afterwards the owners of the second mortgage bonds brought suit to foreclose their lien, and the causes were consolidated. The railroad company accepted service in both suits. A consent decree was entered May 10, 1910, at which time the owners of the third mortgage bonds had acquired the second mortgage bonds. The property of the International & Great Northern Railroad Company was sold to Frank C. Nicodemus, who acted in behalf of the third mortgage bondholders. A new corporation was formed, to which all of the property of the old corporation was delivered, subject to the lien of the first mortgage bondholders, and certain other debts amounting in the aggregate to $13,520,-463. The Goulds own the new corporation. The claims of the second and third mortgage I bonds amounting to .$16,805,647.38 were provided for by new securities and cash; aggregate liabilities $30,326,110.88. The property bought was valued by the Railroad Commission at $30,365,047.97. This, together with $5,000,000 in cash contributed by the Goulds, aggregating $35,365,047.97, was its capital stock. From this deduct its liabilities $30,326,110.8S, and it leaves $5,038,-937.09, against which it could issue stock. It issued $4,822,000 of stock, leaving $316,-937.09, which was absorbed in the expenses of reorganization. Of the stock issued, $3,-400,000 was preferred stock now owned by the Goulds, and $1,422,000 was delivered to a Virginia corporation, which is also virtually owned and controlled by the Goulds by virtue of their ownership of the majority of the stock of that company. All this seems very simple, but we have been able to ascertain these facts, as well as the interest of the Goulds in the new company as hereinafter stated, only by examining several hundred pages of the statement of facts, and the voluminous briefs and supplemental briefs of appellant and appellee, dealing with the evidence as to the reorganization, which, if not intended to confuse, is well calculated to do so. From the evidence it appears that the transaction of buying the property of the old company was carried on through the medium of committees, trustees, and syndicates, with written proposals, acceptances, and agreements, in such profusion as are well calculated to be confusing.

It appears that it was originally contemplated that the Goulds, under the name of the syndicate, should have bonds and stocks aggregating $7,500,000, but, by reason of the property being valued at less than was contemplated, this could not be done. To obviate this difficulty, and apparently to evade the Texas stock and bond law, there was organized under the laws of Virginia a holding company. To this company there was delivered $1,422,000 of the common stock of the International & Great Northern Railway Company (the new company), and $5,078,000 of what are denominated “interim certificates” of the International & Great Northern Railway Company, total, $6,500,000. These interim certificates were issued by the International & Great Northern Railway Company, and entitled the holder to a like amount of the common stock of said company, as and whenever the same can be issued, and are in effect a contract of sale of such stock as and when, by reason of the future increase in the value of the property of said company, the same can be issued. In payment of said stock and interim certificates the Virginia corporation issued its stock. Notwithstanding all that has been stated, the Goulds, who are the owners of the new company, are entitled to all of its stock that they paid for.

The real issue now under consideration is, Did the Goulds, who owned the old railroad, and who own the new railroad, get anything of value in the reorganization which they did not pay for? If so, it must be presumed that they got the samé by reason of their control of both corporations. The Virginia company issued of its stock ($6,500,000) to the Goulds, $2,500,000, and the remainder, $4,000,000, pro rata to the owners of the third mortgage bonds, of which the Goulds owned 63.8 per cent. Thus they received of the Virginia corporation’s stock $2,552,000 in addition to the $2,500,000 above mentioned, or a total of $5,052,000. In addition to this, they received refunding) bonds, $1,600,000, preferred stock $3,400,000, total, $5,000,000. So it appears that for the $5,000,000 cash paid by the Goulds they received:

Refunding bonds and preferred

stock . $5,000,000.00

Stock in the Virginia Corporation . 5,052,000.00

Total .$10,052,000.00

In view of these facts, we cannot say that there was no evidence to sustain the finding of the jury to question No. 3.

There are numerous other assignments of error, a discussion of which, by reason of the length that this opinion has attained, wo forego, but which we overrule.

For the reason that we think the $50,000 indebtedness sued on herein, and evidenced by notes, is not of the character mentioned in article 6625, Revised Statutes, we find that the appellee is not entitled, to recover same by virtue of said statute.

For the reason that we think that item of $53,000 herein sued on is of the character mentioned in said statute, we find that ap-pellee is entitled to recover herein as to said item by virtue of said statute.

For the reason that the evidence sustains the verdict of the jury as to legal fraud, we affirm the judgment of the trial court in its entirety.

Affirmed.
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