author: CONNER, C. J.

text:
    CITY OF FT. WORTH v. REYNOLDS.
    (No. 8454.)
    (Court of Civil Appeals of Texas. Ft. Worth.
    Oct. 28, 1916.
    Rehearing Denied Dec. 2, 1916.)
    1. Municipal Cobpobations <S=865(2)— Debts — Pbovision bob Payment — Constitution — “Debt.”
    Where a city, to seeure lands for a reservoir, contracted to pay the owner a fixed price per acre, and, if another owner secured a fixed price or more in condemnation proceedings, to pay an additional price per acre, but it failed to do so, and the landowner sued, if his petition presented only an action on the contract to recover the excess price, the sum sued for was a “debt,” within the meaning of Const, art. 11, §§ 5, 7, providing that no debt shall ever be created by any city unless at the same time provision be made to assess and collect annually a sufficient sum to pay the interest and create a sinking fund.
    [Ed. Note. — For other cases, .see Municipal Corporations, Cent. Dig. § 1837; Dec. Dig. <§=>865(2).
    For other definitions, see Words and Phrases, First and Second Series, Debt.]
    2. Pleading <@=>212 — Demurrer—Waiver.
    In a landowner’s suit against a city to recover the price of land sold the city for reservoir purposes and to foreclose an implied lien, where the petition did not affirmatively show that no provision had been made by the city, to provide for plaintiff’s debt, when it was created, as required by Const, art. 11, §§ 5, 7, and the city’s general demurrer was not called to the attention of, or acted upon by, the court below, the demurrer will be held to have been waived.
    [Ed. Note. — For other cases, see Pleading, Cent. Dig. §§ 521-524; Dee. Dig. <@=>212.]
    3. Pleading <@=>433(2) — Construction apteb Verdict and Judgment.
    After verdict and judgment for plaintiff, defendant having waived its demurrer to plaintiff's petition, the petition should receive the most liberal construction, and should be held sufficient if its terms are broad enough to support recovery on any theory of facts.
    [Ed. Note. — For other cases, see Pleading, Cent. Dig. §§ 1454, 1455; Dec. Dig. <@=>433(2).]
    4. Estoppel <@=>62(6) — 'Vendor’s Dien — En-porcement Against City.
    Where a city, to acquire lands for a reservoir, purchased certain lands from plaintiff, but failed to pay part of the purchase money as agreed, the city could not keep and use the land for its own benefit and profit, and yet repudiate its obligation on the ground that its promise to pay was illegal, because, in creating the debt, it did not provide for its payment as required by Const, art. 11. §§ 5, 7.
    [Ed. Note. — For other cases, see Estoppel, Cent. Dig. § 153; Dec. Dig. @=>62(6); Municipal Corporations, Cent. Dig. §§ 682, 917.]
    5. Conteacts <@=>138(3) — Illegality — Re- '■ COVERY OP PSOPEETY.
    Where property, real or personal, has been acquired by means of a contract forbidden by constitutional or legislative enactment, or otherwise unauthorized, the vendor, while he will be denied an enforcement of the illegal contract, may recover the specific property, in all cases where it can be clearly identified, by a return of all, if anything, that he may have received by virtue of the contract of sale.
    [E'd. Note. — For other cases, see Contracts, Century Dig. §§ 688, 689; Decennial Dig. <§=> 138(3).]
    6. Vendoe and Pubchasee <@=>280(1) — ENFORCEMENT OP DlEN — PLEADING — PSAYEE pob Relief.
    In a landowner’s suit against a city to recover the unpaid portion of the price of land sold it for reservoir purposes and to foreclose an implied lien, where plaintiff’s petition, in addition to the prayer for specific relief, prayed “for all other and further relief, both legal and equitable, to which he may be entitled, both general and special,” the prayer was broad enough to cover any relief, both legal or equitable, to which the plaintiff was entitled under the facts alleged and proven.
    [Ed. Note. — For other cases, see Vendor and Purchaser, Cent. Dig. §§ 784, 785, 789; Dec. Dig. <&=280(1).]
    7. Vendoe and Pubchasee <@=>254(1) — Implied Lien.
    In the absence of distinct waiver, equity raises a lien by implication in favor of a vendor to secure unpaid purchase money.
    [Ed. Note. — For other cases, see Vendor and Purchaser, Cent. Dig. §§ 634, 641, 648, 649, 651; Dec. Dig. <@=254(1).]
    8. Municipal Coepoeations <@=1038 — FORCED Sale op Peopeety — Constitution.
    Where a city purchased land for a reservoir, failed to pay part of the price, foreclosure of a vendor’s lien on part not used was not in conflict with Const, art. 11, § 9, providing that all property owned by a city for public purposes shall be exempt from forced sale, since, as between the city and the vendor, the beneficial title in equity, never passed, and the legal title, if any, acquired by the city, was held in trust for the benefit of the vendor.
    [Ed. Note. — For other cases, see Municipal Corporations, Cent. Dig. § 2211; Dec. Dig. <@=> 1038.]
    9. Vendor and Purchaser <@=98 — Rescission — Tendee Back op Consideration— Partial Rescission.
    Ordinarily a vendor of land cannot rescind the contract in whole or in part without tendering back all paid him by the buyer, and ordinarily a partial rescission and recovery of part of the land cannot be had.
    [Ed. Note. — For other -cases, see Vendor and Purchaser, Cent. Dig. §§ 163-165; Dec. Dig. <@=>98.]
    10. Vendor and Pubchasee <@=>285(3) — Partial Rescission — Vendee’s Right to Complain.
    Where a city purchased land for a reservoir, but failed to pay part of the price and to use part of the land, so that the lands subject to the seller’s lien were not in the city’s actual use and could be detached from the lands in actual use without material injury to the uses originally designed, the city could not complain of judgment foreclosing the seller’s implied lien on such part.
    [Ed. Note. — For other cases, see Vendor and Purchaser, Cent. Dig. § 803; Dec. Dig. <@=> 285(3).]
    11. Eminent Domain <@=>75 — Condemnation op Land pob Reseevoie — Payment.
    Private lands cannot be taken from the owner by a city for public use as a reservoir by an exercise of the right of eminent domain without paying therefor at the time of taking.
    [Ed. Note. — For other cases, see Eminent Domain, Cent. Dig. §§ 19S, 199; Dec. Dig. <@=>75.]
    12. Vendoe and Pubchasee <@=>280(1), 285 (2) — Foreclosure op Lien — Description op Land.
    In suit by the vendor of lands to a city, which failed to use part of them for a reservoir and to pay part of the price, to foreclose his implied lien on the lands not used, the description of the lands, in the petition and judgment foreclosing lien, as all “above high-water mark,” was sufficient, the surveys being named and the approximate number of acres in each given; the term being well understood and easily ascertainable.
    [Ed. Note. — For other cases, see Vendor and Purchaser, Cent. Dig. §§ 784, 785, 789, 800-802; Dec. Dig. <@=>280(1). 285(2).]
    Appeal from District Court, Tarrant County; R. B. Young, Judge.
    Suit by George T. Reynolds against the City of Ft. Worth. From a judgment for plaintiff, defendant appeals. Judgment affirmed, with modification.

      T. A. Altman and B. L. Agerton, both of Ft'. Worth, for appellant. Stephens & Miller and Sidney L. Samuels, all of Ft. Worth, for appellee.
   CONNER, C. J.

Briefly stated, George T. Reynolds instituted this suit on July 6, 1915, seeking to recover $6,637.20, with interest at 6 per cent, per annum from January 20, 1914, and to foreclose an implied vendor’s lien upon parts of certain tracts of land located in Tarrant county, Tex., which it was alleged the city had purchased from the plaintiff bn November 22, 1911. The plaintiff alleged that he and one D. H. Lucas were the owners of the parcel of land composed of a number of different surveys aggregating 663.72 acres, which the city desired to acquire for the purpose of using and appropriating the same in the establishment of a reservoir to supply the inhabitants of the city of Ft. Worth with water, and that on said November 22, 1911, the plaintiff and D. H. Lucas, joined by the wife of D. H. Lucas, executed a conveyance to the city of Ft. Worth to said 663.72 acres of land for a recited consideration of $26,584.80, or $40 per acre, which was paid in cash at the time; that at the time of this conveyance plaintiff and Lucas were insisting that the land was worth $50 per acre, but that it was finally agreed in writing, contemporaneously with said deed of conveyance, that $10 per acre additional should be paid for said land, in event that one Nettie Morgan should secure, on the final termination of a condemnation suit instituted by the city against her, $50 per -acre or more for the land involved in said condemnation suit. It was further alleged that Nettie Morgan secured a final award in the condemnation suit against her of $65 per acre for her land on June 20, 1914, whereupon, by the terms of the agreement stated, the said additional sum of $10 per acre became at once due and payable, and that the plaintiff had, by due assignment, acquired all interest of said Lucas in the agreement referred to. The plaintiff further alleged that a part only of the land conveyed by himself and Lucas to the city was covered by the waters of the defendant’s public reservoir, and the plaintiff sought judgment for his debt with a foreclosure of an implied vendor’s lien upon such parts of the land so conveyed as are not covered by water.

The defendant in answer presented a general demurrer and a general denial, and pleaded specially that the lands described in plaintiff’s pleadings had been purchased for the purpose of use for public municipal purposes, and were essential and necessary for the erection, maintenance, and protection of the reservoir and system of public waterworks for the city of Ft. Worth. This special answer, among other things, was denied by the plaintiff in a supplemental petition, and a contrary allegation was made, to the effect that the lands upon which the plaintiff sought to foreclose the vendor’s lien are not in any way used by the defendant for the purposes set out in the answer; and that there is no necessity for the defendant to have owned or used said lands for the maintenance of its reservoir, and that the foreclosure of the lien will not, in any way, interfere with the maintenance of the reservoir or system of waterworks in the city.

The case was tried before the court without a jury, and on October 14, 1915, the court rendered a judgment in favor of plaintiff against the defendant for the sum of $7,177.02, and decreed a foreclosure of the vendor’s lien upon all portions of the tracts of land described in the plaintiff’s petition which lie above the high-water mark of the reservoir known as Lake Worth, comprising approximately 250 acres.

The court filed his conclusions of fact and of law, from which it appears that the conveyance from the plaintiff, Reynolds, and Lucas to the city, dated November 22, 1911, is a deed of general warranty, reciting as the total consideration the sum of $26,584.80, cash in hand paid. The deed does not contain any provision' reserving a vendor’s lien, and makes no reference to the agreement which was made contemporaneously with it. It was admitted that the plaintiff’s allegations relating to the outcome and final disposition of the Morgan case were true, and the evidence is without contradiction to the effect that the defendant city erected a dam near the land purchased from the plaintiff, and that the same was completed in July, 1914; that the work of construction thereon had been in continuous progress for two or three years prior to that date; that the lands described in the plaintiff’s petition were acquired by the defendant city for a reservoir to be used in connection with the general water supply for all purposes of the city; that water from the reservoir covered part of the land on June 20, 1914, and perhaps as early as 1913. The testimony is also without contradiction that the plaintiff knew, when he conveyed the land to the defendant city that the defendant was purchasing it to be used for the purpose of erecting, maintaining, and protecting a reservoir and water system for the city of Ft. Worth. All of the land purchased by the defendant from the plaintiff is either covered by the waters of the reservoir, or drains directly into it, and is adjacent and contiguous thereto. Among other things, however, the court specially found that the portions of land upon which plaintiff was awarded the' vendor’s lien (about one-third of the whole) “lie entirely above the high-water mark of said reservoir as the said reservoir now exists,” and that the foreclosure of the lien as prayed for by the plaintiff “will not materially interfere with the use by the city of Ft. Worth of Lake Worth as a reservoir to supply water to the inhabitants of said city and for the extinguishment of fires.”

Appellant’s first assignment of error is to the alleged action of the court in refusing to sustain appellant’s general demurrer to the appellee’s petition, in that, as alleged, the cause of action appears to be based upon a contract made by a municipal government to pay money, and the petition does not allege a compliance upon the part of the city with sections 5 and 7 of article 11 of the Constitution of the state, nor is it alleged that the money to be paid under said contract had been provided for, or was for a current expense of the city government. The sections of the Constitution mentioned in the assignment (sections 5 and 7, article 11) provide, among other things, that:

“No debt shall ever be created by any city * * * unless at the same time provision be made to assess and collect annually a sufficient sum to pay the interest thereon and create a sinking fund of at least two per cent thereon.”

And if tlie plaintiff’s petition must be construed as presenting alone an action upon the contract mentioned in the petition to recover the sum due by force of its terms, we would feel impelled, contrary to appellee’s contention, to hold that the sum sued for was a debt within the meaning of the cited sections of the Constitution, and that hence the plaintiff’s petition was subject to a general demurrer, for the want of necessary allegations bringing the case within those constitutional provisions. See McNeal v. Waco, 89 Tex. 83, 33 S. W. 322; Biddle v. City of Terrell, 82 Tex. 335, 18 S. W. 691; Kuhls v. City Laredo, 27 S. W. 791; Rogers National Bank v. Marion County, 181 S. W. 884; City of Austin v. McCall, 95 Tex. 565, 576, 68 S. W. 791; Ault v. Hill County, 102 Tex. 335, 116 S. W. 359; Berlin Iron-Bridge Co. v. City of San Antonio, 50 S. W. 408.

But in this particular case, and as presented, we are of opinion that the assignment must be overruled. The record fails to show that the general demurrer was called to the attention of, or acted upon by, the court below. Ordinarily, at least, under such circumstances, it is held that the demurrer is waived. See Chambers v. Miller, 9 Tex. 236; Bonner v. Glenn, 79 Tex. 531, 15 S. W. 572; Railway v. Rollins, 89 S. W. 1099; Hales v. Peters, 162 S. W. 386; Texas Co. v. Earles, 164 S. W. 28; Railway v. Owens, 166 S. W. 412. No sufficient reason occurs to us why this application of the doctrine of waiver should not be given effect. The petition on its face does not affirmatively show that no provision had been made by the city to provide for the debt of the plaintiff at the time the debt was created, as required by the Constitution. There is a mere absence of allegations to such effect. The fact may have existed notwithstanding such want of allegations. If so, the petition could have been perfected by amendment, which, had the court’s attention been called to the demurrer, the plaintiff might have done. The case, therefore, is distinguishable from those where the vice or illegality which is sufficient to defeat the action is shown to exist by the very terms of the pleading. In such later case it doubtless should be held that the defect in the pleading is fundamental in character, and can be urged át any stage of the trial.

But if it must be said that the error complained of in the assignment is fundamental, and one that' cannot be waived, it must certainly be true, in view of the waiver and after verdict and judgment, that the plaintiff’s petition should receive the 'most liberal construction, and if its terms are broad enough to support a recovery in behalf of the plaintiff upon any theory of the facts, it should be held to be sufficient. iSee Townes’ Texas Pleading, pp. 402-405, and eases cited.

So construed, we think the plaintiff’s petition shows facts entitling the plaintiff to a recovery, even though insufficient to entitle him to the precise relief specifically sought in his prayer. It therefrom appears that the defendant city, seeking to acquire lands for the purpose of establishing city waterworks, purchased from the plaintiff certain lands later occupied and used by the city in the accomplishment of its purpose; that a part of the purchase money as agreed upon at the time has not been paid, and that the lands upon which plaintiff sought to enforce a lien are not materially necessary to the establishment or maintenance of the city waterworks. Under such circumstances, it seems manifestly inequitable and unjust to permit the city to keep and use for its own benefit, and to its own profit, property not necessary for a municipal purpose and secured by a promise to pay therefor, and at the same time extend to the city the right to repudiate its obligation on the ground that its promise to pay was illegal.

The obligation to be just and to do right rests upon all persons, natural or artificial, and hence there is a well-recognized line of authorities, which we approve, holding that in cases where property, real or personal, has been acquired by means of a contract forbidden by some constitutional or legislative enactment, or otherwise unauthorized, the vendor, while he will be denied an enforcement of the illegal contract, may recover the specific property in all cases where it can be clearly identified, by a return of all, if anything, that he may have received by virtue of the contract of sale. Thus, it was held by the Supreme Court of the United States, in the case of Chapman v. Douglas County, 107 U. S. 348, 2 Sup. Ct. 62, 27 L. Ed. 378, that where land was conveyed to a county for a poorhouse and farm under an agreement made by the county commissioners in excess of their authority to pay for it at a definite time, the grantor on default of payment was entitled to a decree that the county surrender possession and reeonvey to him, unless payment should be made of the amount due therefor within such reasonable time, to be fixed by the court, as would be necessary to raise' the same by taxation. Numerous authorities were cited in support of the decision. In the case of Municipal Security Co. v. Baker County, by the Supreme Court of Oregon reported in 39 Or. 396, 65 Pac. 369, a like ruling in principle was made. While it was held in the later case that any voluntary agreement, entered into by a county involving certain liabilities after the boundary of its power to make contracts had been reached, was ultra vires, and that the receipt of benefits under the contract afforded no ground for invoking even an implied liability to pay any compensation therefor, yet that:

“Notwithstanding the incapacity of a municipal corporation, under such circumstances, renders its contracts unenforceable, those who. have parted with their property in dealing with it during its interval- of quiescence are not wholly remediless; for, when such property can be identified, the party entitled thereto may recover it by placing the other in statu quo; the rule being that neither party will be heard to allege the invalidity of a transaction which is simply ultra vires, while holding the fruits thereof.”

This ease also cites numerous authorities, to which may be added Litchfield v. Ballou, 114 U. S. 190, 5 Sup. Ct. 820, 29 L. Ed. 132; Bank v. Appleton, 216 U. S. 196, 30 Sup. Ct. 364, 54 L. Ed. 443; Rankin v. Emigh, 218 U. S. 27, 30 Sup. Ct. 672, 54 L. Ed. 915; Railway v. Railway, 66 N. H. 100, 20 Atl. 383, 9 L. R. A. 689, 49 Am. St. Rep. 582; 7 R. C. L. pars. 679, 680.

The able city attorney, who appeared for appellant in this case, on submission substantially conceded the law as last above stated, but it was insisted that the plaintiff sought no such relief, and that in no event was a court authorized to foreclose a lien because of section 9, art. 11, of the Oonstitution, which declares, among other things, that all property owned and held by a city for public purposes only, or devoted exclusively to the use and benefit of the public, “shall be exempt from forced sale.” But in addition to the prayer for the specific relief sought, the plaintiff’s petition concluded with a prayer “for all other and further relief, both legal and equitable, to which he may be entitled, both general and special.” The prayer, therefore, is- broad enough to cover any relief, legal or equitable, to which the plaintiff is entitled under the facts alleged and proven.

Under our law, in the absence of a distinct waiver, and none is shown in this case, equity raises a lien by implication in favor of a vendor to secure unpaid purchase money, and a special provision in the charter of the appellant city authorizes the city to create mortgage liens:

As to the effect of section 9, art. 11, of the Oonstitution above cited, as will be seen by reference thereto, it is to be observed that it only applies to property owned by the city and devoted exclusively to the use and benefit of the public. And the theory of the cases holding that a corporation may be required to restore property acquired by virtue of a contract it was forbidden to make is that, until paid for, as- between the city and the seller, the beneficial title in equity never passes, and that the legal title, if any, thus acquired is held in trust for the benefit of the vendor. If, therefore, a vendor in a given case is shown to be entitled to recover the whole property, a mere foreclosure of a lien on the whole, or a part thereof, cannot make any material difference, for it is, in effect, but an indirect way of divesting the title and possession out of the unauthorized holder. When this effect can be given a decree of foreclosure, as we think it can here, as will hereinafter more fully appear, then no substantial or prejudicial conflict with section 9, art. 11, can reasonably be affirmed. We. therefore, are in no event inclined to say that no relief whatever can be granted the plaintiff under the allegations of his petition.

It remains, however, to be determined whether the relief actually adjudged can he supported, for the judgment of the trial court is assailed on much the same grounds as has been the plaintiff’s petition. It is clear, however, that the agreement on the part of the city was made as alleged, and that the city received and retained the land conveyed without the payment of $10 per acre as promised. Ordinarily, the plaintiff would not be entitled to rescind the contract, in whole or in part, without tendering back all that was paid by the city, and no such tender or offer was made by the plaintiff. Ordinarily, too, a partial rescission and recovery would not be upheld. Grady v. Pruit, 111 Ky. 100, 63 S. W. 283; Berlin Iron-Bridge Co. v. City of San Antonio, 50 S. W. 408.

But in the ease before us we fail to see that the city can justly complain of the judgment on these grounds. The court clearly finds that the lands originally conveyed are severable, and that the lands subjected to the plaintiff’s lien are not in the actual use of the city, and may be detached from the lands- in actual use without material injury to the uses originally designed; and there is evidence to support these findings. It is not pretended that the lands so segregated and applied to plaintiff’s uses exceed in value the unpaid purchase money that the city contracted to give. Nor has- the city offered to return the entire tract upon the return of the money paid, nor does the city pretend that the lands actually under water and actually devoted to necessary public use are worth less than the amount paid at the time of the purchase. Moreover, the rights of the city are fully guarded. Upon the submission, appellee offered to waive, as will be herein adjudged, any right to an execution against the property of the city generally, consenting to look alone to the property upon which the lien was foreclosed. If, therefore, the said property is worth more, and shall sell for more, than is due from the city by the terms of its agreement, the excess, under the form of the decree, will be paid to.the city. Or the city may prevent the sale altogether by paying off the judgment below. And in this connection it may not be amiss to Observe that while the plaintiff’s pleadings, as already stated, fail to affirmatively so show, it is nowhere insisted by the city, either in its pleadings, evidence, or briefs, that at the time of its original purchase no fund existed out of which it could hare paid, or could yet pay, all that it had promised, as required by sections 5 and 7 of the Constitution. The record rather suggests that such a fund did exist, for the city was at the time engaged by condemnation suits and otherwise in acquiring lands upon which to erect a reservoir sufficient to hold all the water necessary for the use of a large city.

Such lands, under our Constitution and laws, could not be so taken for public use, at least by an exercise of the right of eminent domain, without paying therefor at the time of the taking, and it is hardly reasonable to suppose that the city had not made provision for the necessary funds before undertaking so large a work.

We also wish to further observe that, while it would, perhaps, have been on this phase of the case technically more regular under the authorities to have given the plaintiff a proportional part of the land, the method adopted by the court, so declaring and foreclosing a lien, is in the interest of the city, as hereinbefore shown, and at most but an indirect method of accomplishing the same thing, particularly in view of appellee’s offer to restrict his recovery to the lands upon which the lien was foreclosed.

There is a further contention that the lands upon which the court foreclosed the lien are insufficiently described, both in the plaintiff’s petition and in the judgment. In both, however, it appears that the lands are composed of several different surveys which are named; that the approximate number of acres of each survey is given; and all declared to be above “high-water mark.”

We do not feel willing to state that the description so given will be insufficient to enable an identification of the lands. The “high-water mark of lands” is a term well understood and easily ascertainable. Many of the large engineering structures and maritime questions require a determination of high water and tide lines, and in the case of the construction of reservoirs the high-water mark of impounded waters may be determined by mathematical processes with at least approximate accuracy.

On the whole, we have concluded that the errors, if any, pointed out are more technical than substantial, and that all assignments of error should therefore be overruled, and the judgment affirmed upon the trial court’s findings, which we approve, with the modification that no execution or other process for the enforcement of the judgment shall issue except such is necessary in the enforcement of the lien declared by the court below.

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

      @=>Por other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


source: Caselaw Access Project

author: BUCK, J.

license: Public Domain

text:
    LOESCH v. SUPREME TRIBE OF BEN HUR.
    (No. 8473.)
    (Court of Civil Appeals of Texas. Ft. Worth.
    Nov. 25, 1916.
    Rehearing Denied Dee. 16, 1916.)
    1. Insurance <©=3726 — Benefit Insurance— Contract — Construction,
    The ordinary rules and principles governing the construction of contracts would apply to the construction of a contract of benefit insurance, unless changed, modified, or abrogated by statute.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. §§ 1870-1872; Dec. Dig. <@=3726.]
    2. Insurance <@=3723(7) — Fraternal Insurance — 'Warranties—Family History.
    As statements made with reference to family history cannot be held to be warranties and an insurance policy is to be construed most liberally in favor of the insured, where an applicant for a certificate of benefit insurance believes statements as to family history to be true, their falsity will not necessarily vitiate a certificate, stipulating that the truth of each shall be a condition precedent to any recovery issued on the faith of the answers.
    [Ed. Note. — For other cases, see Insurance, Dec.' Dig. <@=>723(7).]
    3. Insurance <@=>723(7) — Benefit Insurance —Warranties.
    Where the constitution of a fraternal benefit society provided that the executive committee shall have full power and authority to revoke any beneficial membership and to cancel any certificate for fraud or misrepresentation in its procurement, or for any false answer made by an applicant, on notice to the applicant and hearing of charges in this respect, the warranties regarding family history, in an application for certificate, were intended to protect the society only against misrepresentation of facts material to the risk assumed.
    [Ed. Note. — For other cases, see Insurance, Dec. Dig. <@=>723(7).]
    4. Insurance <@=>723(7) — Benefit Insurance —Statement in Application — Notice.
    The fact that an applicant for a certificate of benefit insurance stated in her application that she had one sister dead would put the society, through its medical examiner, on notice as to the cause of said deceased sister’s death.
    [Ed. Note. — For other cases, see Insurance, Dec. Dig. <@=>723(7).]
    5. Insurance <@=>819(2) — Benefit Insurance — Evidence—Sufficiency.
    In an action on a certificate of benefit insurance, evidence held insufficient to show that it was not the family history that the insured’s mother died of typhoid fever, that the applicant willfully concealed any knowledge with refer-once to the death of her sister, or to establish the suicidal death of the sister, or to show that the real facts, as disclosed by the evidence, would have been material if disclosed by insured or affected the risk assumed.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. § 2007; Dec. Dig. <@¿3819(2).]
    6. Insurance <@=>817(2) — Benefit Insurance —Evidence—Burden oe Proof.
    In an action on a certificate of benefit insurance, the burden of proof was on the defendant to establish the alleged falsity of the answer of the insuz'ed in her application as to the cause of her mother’s death.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. § 2001; Dec. Dig. <@=>817(2).]
    Appeal from District Court, Tarrant County; R. B. Young, Judge.
    Suit by H. F. Loesch against the Supreme Tribe of Ben Hur. Judgment for defendant, and plaintiff appeals.
    Reversed and remanded.
    Stanley Boykin, of Ft. Worth, for appellant. Ocie Speer and Marvin H. Brown, both of Ft. Worth, for appellee.
   BUCK, J.

The appellant sued the appel-lee upon a beneficiary certificate in the sum of $2,000, issued on the life of his- wife, deceased, Dollie Loesch. The beneficiary under the original policy was the son of Mrs. Loesch, Lester Lee Harris, but subsequently the appellant was made beneficiary instead. Upon suit being filed upon said policy, the defendant denied liability, and specially pleaded that certain alleged false statements had been made by the said Dollie Loesch in the application for said policy in answer to questions propounded by the medical examiner, and that such answers and representations were in the nature of warranties, and that, being false, they vitiated and made void any obligation based thereon entered into by defendant.

The application containing these questions and answers thereto was not attached to, and made a part of, the policy. The alleged false answers were: (1) To the effect that the applicant’s mother had died at the age of 47 of typhoid fever, and was sick one month, and that her previous health was good; whereas, defendant alleged the truth to be that the mother of deceased died of cancer, and that she was an invalid for more than six months prior to her death. (2) That applicant was asked if she had a sister or sisters, and, if so, the age, or ages, of the living, and, if dead, the age at death, the cause of death, how long sick, and the previous condition of the health of deceased to which,' defendant alleged, applicant answered that she had one sister living, and that her health was good; whereas, in truth and in fact she had one sister dead, who had died a short time prior to the making of the application for the beneficial certificate. (3) That applicant was asked if any member of her family or near relative had “ever committed, or attempted to commit, suicide, or had consumption, raising of blood, rheumatism, insanity, cancer, gout, epilepsy, or other hereditary disease,” to which applicant answered, “No;” whereas, it was alleged that in truth and in fact the deceased sister had died from the effects of poison administered with suicidal intent, and that applicant’s.mother had died, as aforesaid, of cancer.

It was alleged by defendant that if it had known that these answers were untrue and had known the facts to be as defendant alleged them to be, it would not have issued the certificate on the life of the deceased, Dollie Loesch; that said application, together with the constitution and by-laws of the defendant, Supreme Tribe of Ben Hur, constituted a part of the contract of insurance, and that the defendant had issued the policy, relying upon the literal truth of the answers to the questions as written.

Plaintiff, in a supplemental petition, without admitting that Dollie Loesch made any false or fraudulent answers in the application and medical examination, pleaded that the portion of the act of the Thirty-Third Legislature known as article 4830, and also article 4957, of the Revised Statutes, are each unconstitutional and void, for the reason that the subject expressed by said articles, and each of them, was not contained in the title and caption of the act of the respective Legislatures that passed the said laws, as provided by article 3, § 35, of the Constitution of Texas. The unconstitutionality of article 4830 was pleaded upon other grounds not necessary here to mention. It was further pleaded that, even though it should be conceded that in certain respects the answers of the deceased to the questions hereinabove set out were not literally true, and were in part a misstatement of the real facts, yet they were not material to the risk assumed, and therefore were not a sufficient basis for avoiding the policy.

A trial was had before a jury, and at the conclusion both parties requested a peremptory instruction, and the request of the defendant was granted, and plaintiff appeals.

As we view the ease presented by the pleading and proof, it is not incumbent upon us to determine (1) whether article 4948, Vernon’s Sayles’ Texas Civil Statutes is applicable to the character of policy here sued upon; (2) whether article 4830, under chapter 7, and under title “Fraternal Benefit Societies,” is void for unconstitutionality, in that the exemption provided for in this articie was not mentioned in the caption of the original act; (3) nor as to whether article 4957, Id., is void also, as being in contravention of article 3, § 35, of the Constitution of Texas. But we will discuss the questions raised without reference to the constitutionality vel non of the last two mentioned articles, or the applicability of article 4948 to policies issued by fraternal benefit societies. We think it can be safely stated that, even though it should be held that article 4948 has no applieatioh to this character of insurance policies, yet that the ordinary rules and principles with reference to construing contracts would apply, unless they have been changed, or modified, or abrogated by statute, and especially by statutory enactment with reference to fraternal benefit societies.

We will now take up and discuss each of the answers alleged to be false, made by . deceased in her application; and, to make what we have to say the more intelligible, we will here insert question 23 and the answers thereto, as they appear in the application:

23. Family History. In the matter of family history, state the specific cause of death, especially when there may be ¿ suspicion of consumption. Such general terms as “exposure,” “general debility,” “childbirth,” “change of life,” “effects of cold,” “fever,” etc., without explanation are not satisfactory. If the health of any living member of the family is stated as “fair,” or “poor,” state the nature of the ill health. If a doubt exists as to cause of death in any case, make a statement whether there was any suspicion of tuberculosis.

It will be noted that the matters inquired about are under the title of “Family History,” and that presumably the inquiry is expected to elicit information received from that source. It must be conceded that in the main the knowledge one has of the ages, state of health, cause of death, etc., of his relatives must be based upon information received from others, hearsay in its nature. Information as to the age of one’s parents, or older brothers or sisters, or even of one’s own age, is necessarily derived from information received from others. There is no evidence to show that Mrs. Loesch was present at the time of her mother’s death, or knew of the nature, or the duration, of her last sickness, except as she was informed by those present. Nor is there any proof that it was not a part of the family history that her mother died of typhoid fever. Dr. Camp testified for the defendant that he waited upon Mrs. Draper, mother of deceased, and made a microscopic examination, and found her case to be one of malignant cancer, and that such was his diagnosis. There is no evidence to which we have been directed going to show that Dr. Camp imparted the information he had received through the microscopic examination to the insured, or indeed to any member of her family. The application and other evidence show that at the time the application was made, to wit, September 30, 1913, Mrs. Loesch resided in the city of Ft. Worth, and had resided there for 2 years prior to said date, while the evidence further shows that her mother died February 5, 1910, at Joplin, Mo. It is true that Mrs. A. H. Henderson testified that she was a neighbor of Mrs. Draper at the time of her death, and had known her for about six months prior thereto, and nursed her at times during such period, and that the malady or disease from which Mrs. Draper was suffering was cancer of the bowels. There is no evidence to show that Mrs. Henderson confided her information or belief as to the nature of the malady with which Mrs. Draper was suffering to the insured, or that she knew insured. She did testify:

“.She (Mrs. Draper) was confined to her bed from the effects of her malady, illness, or disease, from which she died, about five or six weeks next prior to her death.”

And Dr. Camp testified:

“She was confined to her bed about one month prior to her death.”

There is no contention that Mrs. Loesch died of any cancerous affection, or that she committed suicide. Certainly, we do not think it should be held that the statements made with reference to family history can be held to be warranties. In Assurance Co. v. Cotton Machine Mfg. Co., 92 Tex. 297, 49 S. W. 222, our Supreme Court defines warranty as follows:

“A warranty in an insurance contract is a statement made therein by the assured, which is susceptible of no construction other than that the parties mutually intended that the policy should not be binding unless such statement be literally true.”

See Fidelity & Casualty Co. v. Carter, 23 Tex. Civ. App. 359, 57 S. W. 315, 317.

Certainly,' it was not expected that the applicant, in answer to the questions propounded, could give more than what she believed to be true, based upon the family history. These answers are necessarily largely a matter of expression of an opinion, and under the well-established rule that an insurance policy shall be construed most liberally in favor of the insured, and, as held in Daniel v. M. W. of A., 53 Tex. Civ. App. 570, 118 S. W. 211, where an applicant in good faith believes the statements to he true, their falsity will not necessarily vitiate a certificate warranting the truth of the applicant’s answers, and stipulating that he agrees that the literal truth of each shall be a condition precedent to a recovery on any contract issued on the faith of the answers. See, also, M. W. of A. v. Owens, 60 Tex. Civ. App. 398, 403, 130 S. W. 858, 861. While the last-cited case holds that where answers and an application were expressly made a part of the benefit certificate, and were expressly made warranties, the question of good faith in making tlie answers, if they were false, is immaterial, since express warranties must be literally complied with, yet, as limiting this rule by the particular facts shown on that case, the Court of Appeals for the Third District held that:

“Unless there is some good reason to the contrary, parties to a contract are presumed to have meant what they would reasonably understand each other to mean under the circumstances of the case by the language used. In this case, Owens had previously waited, on his brother, who died of typhoid fever, but it does not appear from this that he knew that the germs of that disease were in his system, and would probably develop in the near future. We take it that his answer that he did not have typhoid fever was true, in the sense that the parties must have understood each other at the time, though a physician may be able to say from the fact that he had typhoid fever three days later that the germs of said disease were then in his system and in process of development.”

In Reppond v. Insurance Co., 100 Tex. 519, 101 S. W. 786, 15 Ann. Cas. 618, 11 L. R. A. (N. S.) 1981, the gupreme Court held that the use of the word “warranty” did not necessarily create a warranty in law, unless it appeared that the parties mutually intended that the policy should not be binding if the statements were not literally true.

As shedding light upon the sense in which the parties to this contract used the words “warranties” and “warrant,” we may refer with propriety to the constitution of the defendant society, by the application and policy made a part of the contract entered into between deceased and the society. Section 21 provides that the executive committee shall have full power and authority to revoke any beneficial membership, and to cancel any certificate “for any fraud practiced, or misrepresentation made, in its procurement, or for any false answer made by an applicant in his application for beneficial certificate or beneficial membership,” etc., and further provides for notice to the insured of the charges of fraud or misrepresentation made, and for a hearing thereon; and said section further provides:

“If the executive committee, after hearing the charges and all the evidence, and being fully advised in the premises, shall find that the allegations and charges are true, and that it is sufficient cause for the cancellation of the beneficial certificate, or the revoking or annulling of the beneficial membership, the executive committee shall thereupon revoke, cancel, or annul such beneficial certificate and beneficial membership,” etc.

gection 103, Id., under the title “False gtatements,” provides, in part:

“Whenever it shall come to the knowledge of the executive committee of the gupreme Tribe that a beneficial certificate has been obtained by false representations or concealment of any material fact (italics ours) * * * they may at once inquire into the fact, and if they find such charges true”

—the section then further providing for a trial upon such charges.

We think it is evident from these extracts from defendant’s constitution that the warranties recited in the application were intended to protect the defendant society only against misrepresentation of facts material to the risk assumed. Therefore we conclude that it cannot be held as a matter of law, that, though it may appear, in the light of the microscopic examination made by the physician, that the mother of deceased, at the time of her death, was afflicted with cancerous affection, the policy should be avoided because the applicant did not so state, See Life Insurance Co. v. Evert (writ denied May 31, 1916) 178 S. W. 643.

As to the contention urged by defendant in its pleading in the trial court that applicant had falsely stated that she had no sister dead, or had fraudulently concealed the fact that she had a sister dead at the time of her application, it will be noted, by reference to the schedule hereinabove inserted, that only two sets of spaces are provided for the answers with reference to applicant’s sisters. On the line next to the bottom, she gives the information concerning her living sister. If the bottom line should be held to contain spaces for information concerning sisters dead, then the fact that she stated that she had one sister dead would have put the defendant society, through its medical examiner, on notice as to the cause of said deceased sister’s death. It does not appear from the testimony of the medical examiner that any further question was asked her, nor iá there any evidence to show that she knew the cause, of her sister’s death. Moreover, the evidence utterly fails to establish that her sister committed suicide. The landlady where she boarded, and the physician who attended her, both testified in the case, and both declined to state that she committed suicide. We are of the opinion that the evidence fails to show (1) that the applicant willfully concealed any knowledge in her possession with reference to her deceased sister; (2) or that if the real facts, as disclosed by the evidence, had been imparted to the examiner, they would have been material, and that the failure of the applicant to impart same in any way affected the risk assumed. In answer to question 3, part 2, in the application, which is as follows:

“Has any member of your family, or any near relative, ever committed, or attempted to commit suicide, or had consumption, raising of blood, rheumatísm¡ insanity, cancer, gout, epilepsy, or other hereditary disease”

—the applicant answered, “No.” For the answer or answers to this question a space perhaps less than two inches in length and a quarter of an inch in width is provided. It will be noted that the concluding phrase, “or other hereditary disease,” specially directs the attention of the applicant to such hereditary diseases as may be included in this long list, and invites an affirmative or negative answer as to that particular kind of diseases. While we do not assume any special knowledge of or learning upon the various diseases to which human flesh is heir, yet it is a matter of common knowledge that the medical profession at least are divided on the question as to whether a number of the diseases mentioned in this category are hereditary or not. Many reputable physicians and pathologists deny that consumption, rheumatism, gout, cancer, etc., are hereditary. If we should adopt the ejusdcm generis rule of construction, it would probably limit the inquiry made to “hereditary diseases,” and under this view, the applicant, though apparently unlearned in the science of diseases, would have had to decide, at the risk of invalidating her policy, which of the diseases mentioned wene hereditary and which not. At least some of us believe that in the form the question, is. asked, the answer given is not shown, even by the testimony of Mrs. Henderson and Dr. Camp, to be untrue, and that by the rule of strict construction, which the appellee invokes herein, the answer given should be limited to those diseases upon whose hereditary character there is no room for division. But be this as it may, all of us are of thei opinion that the question asked, like those under question 23, heretofore mentioned, call only for the family history upon the matters inquired about. As before stated, we are of the opinion that the evidence entirely fails to establish the suicidal death of the insured’s sister, and fails to show that it was not the family history that the insured’s mother died of typhoid fever. Both witnesses who testified to Mrs. Draper’s having died of cancer stated that her final sickness was of short duration, one stating that it lasted a month, and the other six weeks. Dr. Chas. O. Hook, witness for plaintiff, testified, in part, as follows:

“A woman 47 years old suffering from cancer of the rectum and bowels could contract typhoid fever; a person may have any disease and contract typhoid fever; typhoid fever is almost universally infectious, once the germ is introduced, or it is so considered. A person having cancer of the rectum, if they were to contract or become infected with typhoid fever, would, of course, be more susceptible to greater suffering, or to it being more severe with them. Typhoid fever is an infectious disease, and an ulceration of the intestines is its principal manifestation; it is an inflammation of the small intestine.”

The burden of proof was on defendant to establish the alleged falsity of the answer of applicant as to the cause of her mother’s death. Defendant’s witness Dr. L. M. Camp testified:

“Mrs. Draper had an infection of the bowels or intestines, including the rectum. She had cancer of the rectum, with general breakdown of the system. She had an inflammation or ulceration of the rectum or bowels. I made a microscopical examination, and found her case to be malignant cancer. * * * You can determine positively whether any growth or inflammation is malignant or cancerous in its nature by a microscopical examination.”

From the testimony of these two witnesses, both medical experts, it would seem that to the laity the symptoms in a malignant case of typhoid fever and in a cancerous affection of the bowels would be, in some respects, similar; and, as before stated, since it is not shown that in fact the insured had any other information as to the cause of her mother’s death than that recited in her application, and since it is not shown that it was not part of the family history that her mother died of typhoid fever, we are not prepared to hold that the uneontradicted testimony establishes the falsity of such answers, or that the applicant should be charged with notice of the existence of a disease whose discovery was only effected by the physician in charge by the use of the miseroseope.

From what has been said, it follows that, in our opinion, the trial court erred in giving a peremptory instruction in favor of defendant. Hence appellant’s second, third, fourth, and fifth assignments are sustained, and the judgment reversed, and the cause remanded.
      <£=>For other oases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

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


author: DUNKLIN, J.

text:
    DAVIS et al. v. WYNNE.
    (No. 8537.)
    (Court of Civil Appeals of Texas. Ft. Worth.
    June 24, 1916.
    On Motion for Rehearing, Dec. 2, 1916.)
    1. Evidence <§=>448 — Parol Evidence — Preliminary Negotiations.
    In the absence of ambiguity in a written contract, and of fraud, accident, or mistake, evidence to establish preliminary negotiations for the contract, or to show an intention of the parties thereto at variance with its terms, is inadmissible.
    [Ed. Note — For other cases, see Evidence, Cent. Dig. §§ 2066-20S2, 2084; Dec. Dig. <§=> 448.]
    2. Patents <§==>192 — Rights of Assignees— Joint Assignees — Manufacture and Sale.
    Each of several assignees to whom an interest in a patent right is assigned has a right to manufacture and sell the patented article, no matter how small his interest may be.
    [Ed. Note. — For other cases, see Patents, Cent. Dig. § 269; Dec. Dig. <§=>192.]
    3. CONTRACTS <@==>321(1)— CONTBACT TO OB-ganize Corporation — Breach—Remedies.
    The fraudulent breach by defendant of a contract to organize a corporation and convey a patent to it does not authorize the subscribers to the stock to recover on preliminary and tentative agreements for the transfer of an interest in the patent to them which were merged in the subsequent contract.
    [Ed. Note. — F'or other cases, see Contracts, Cent. Dig. § 1508; Dec. Dig. <@=>321(1).]
    4. Specific Performance <@=>31 — Conteacts Enforceable — Definiteness—Contract! to Incoepobate.
    A contract to form a corporation cannot be specifically enforced, where there is no showing of an agreement upon the preliminary steps necessary to its formation, under Vemon’s Sayles’ Ann. ,Civ. St. 1914, art. 1122, such as the names and number of persons who would be directors for the first year, the place or places where the business would be transacted, the term for which it should exist, etc.
    [Ed. Note. — For other cases, see Specific Performance, Cent. Dig. §§ 86-88; Dec. Dig. <§=> 31.]

      5. Contracts <S=»75(2) — Consideration— Consideration tor Other Promise.
    Where the parties had made an- original contract, whereby, in consideration of the subscription of plaintiffs to stock in a corporation to be organized to acquire the patent rights of defendant, the latter agreed to assign his rights to the corporation when it should be formed, the subscriptions could not be also the consideration for a subsequent promise by defendant to assign to each of the other parties an interest in the patent equivalent to the interest he would have had in the corporation.
    [Ed.' Note. — For other cases, see Contracts, Cent. Dig. §§ 280-285; Dec. Dig. <8=>75(2).]
    6. Contracts <S=»65(3) — Consideration — “Novation.”
    Nor could the rights of the plaintiffs under the former contract be a consideration for the latter, where there was no agreement to surrender those rights, but the plaintiffs were insisting on the performance of both contracts, since a novation cannot arise unless there is a previous valid obligation, an agreement of all the parties to the new contract, the extinguishment of the old contract, and a valid new contract.
    [Ed. Note. — For other cases, see Contracts, Cent. Dig. §§ 292, 293; Dec. Dig. <g=»65(8).]
    Appeal from District Court, Tarrant County; R. B. Young, Judge.
    Suit l>y W. D. Davis against W. P. Wynne for specific performance, in which R. E. Gate-wood and others intervened and asked for the same relief as the original plaintiff. Judgment for the defendant, and plaintiff and interveners appeal.
    Affirmed, and motion for rehearing overruled.
    Baskin, Dodge & Eastus, of Ft. Worth, and S. C. Padelford, of Cleburne, for appellants. Ike A. Wynn, of Ft. Worth, for appellee.
   DUNKLIN, J.

W. D. Davis instituted this suit against W. P. Wynne for specific performance of two alleged contracts to convey to him an undivided one-tenth interest in and to a certain patent right covering an invention originated and owned by the defendant, which consisted of an attachment for converting motor-propelled vehicles into tractors. As a basis for his prayer for a temporary writ of injunction pending final trial on the merits of the case, it was alleged that the defendant was proposing to assign the patent right to other persons in hostility to plaintiff’s rights, and thereby to defeat the beneficial results of any judgment that plaintiff might finally procure in the case. R. E. Gatewood, J. H. Harris, and Ben Van Tuyl all intervened in the suit, each of whom alleged like contracts on the part of the defendant to convey to him an undivided interest in the patent right The inter-vener Gatewood filed a separate plea of intervention, containing allegations relative to the contracts made by the defendant, substantially to the same legal effect as the ones alleged by the plaintiff. He also adopted the pleading of the plaintiff in his own behalf, and the plaintiff in turn furthermore adopted his pleadings also. Interveners Har-. ris and Van Tuyl adopted the pleadings of both the plaintiff and Gatewood. The application for the temporary writ of injunction was heard by the trial judge, and was refused without hearing any evidence in support of the allegations, but solely upon the ground of the insufficiency of the pleadings of plaintiff and interveners to show a cause of action for specific performance, and from that order the plaintiff and intervener Gate-wood have appealed.

The first contract alleged by the plaintiff and sought to be specifically enforced was substantially as follows: An agreement by and between the plaintiff and the defendant for the formation of a private corporation to be known as the Automatic Tractor Com-, pany, with a capital stock of $10,000, divided into 1,000 shares of the par value of $10 each, for the purpose of exploiting the patent and the manufacture and sale of the attachments; 550 shares of said capital stock to go to and be taken by the defendant in consideration of the transfer to the corporation of the patent right, and 450 shares of the capital stock to be paid for in money by subscribers therefor, 1000 shares of the capital stock to be subscribed by the plaintiff, and the remainder of said capital stock to be subscribed and paid for by other persons. The defendant agreed to procure other subscribers for the remainder of the capital stock and to procure a legal charter, for the company. According to allegations in plaintiff’s petition, after said agreement was entered into and in pursuance thereof, he signed a subscription contract for $1,000 worth of the capital stock of said proposed corporation and paid to Wynne thereon $150 in cash and agreed- to pay to him $150 when the company was fully organized and the remaining $700 within 30 days thereafter. According to further allegations in the petition, the defendant thereafter failed and refused to procure a charter for said company in accordance with his agreement, in consequence of which the patent right could not be transferred to the proposed corporation, and that thereupon another agreement was entered into by and between the plaintiff and the defendant, by the terms of which the defendant agreed to transfer to the plaintiff an undivided one-tenth interest in the patent right itself.

,The interveners Gatewood, Harris, and Van Tuyl each pleaded two contracts between him and the defendant substantially in the same terms as the two contracts pleaded by the plaintiff, except that Gate-wood agreed to and did subscribe for $500 worth of capital stock, or 1/20 of the whole, and the intervener Harris agreed to and did subscribe for 1/40. of the capital stock or $250 worth, and Van Tuyl subscribed for $200 worth of capital stock or 1/50 of the whole; each of said interveners paying in cash to the defendant 15 per cent, of the amount so subscribed, and agreed to pay 15 per cent, more when the charter should be obtained, and the remaining 70 per cent, of his subscription within 30 days after the issuance of- the charter, and according to the second contract with each of those in-terveners the defendant agreed to transfer to him a corresponding interest in the patent right itself. The defendant addressed a general demurrer and several special exceptions to the petitions of plaintiff and in-terveners.

The pleadings of plaintiff and interveners abound with allegations of conversations and negotiations between them, respectively, and the defendant occurring prior to and culminating in the execution of the subscription contracts for capital stock in the proposed corporation, and the agreement by defendant to secure the balance of stock subscriptions and procure a charter for the corporation. The purport of those allegations was that it was intended and understood by and between such subscribers of stock that the contracts so made would have the legal effect of vesting in each subscriber for stock an undivided interest in the patent right itself, and the prayer for the specific enforcement of those contracts was predicated upon that theory.

In the absence of some ambiguity in the first alleged contracts, and in the absence of fraud, accident, or mistake causing the execution of the subscriptions for stock, it is too well settled to require the citation of authorities that proof would not be admissible to establish such preliminary negotiations, or to show an intention of the parties thereto at variance with the terms of the contracts resulting therefrom; and special exceptions were addressed to those allegations substantially upon that ground.

As noted already, according to the allegations of the complainants, defendant agreed to transfer the patent right to the proposed corporation as soon as the same should be chartered. If this had been done, clearly the entire and exclusive right to manufacture and sell the attachments for vehicles covered by the letters patent would have been vested in the corporation. But if, instead of organizing the corporation, an interest in the patent right had been transferred to each of said subscribers, then each of them by virtue of that interest, however small, would have been vested with the right to manufacture and sell such attachments to the same extent as if he had owned the entire patent right. Blackledge v. Weir & Craig Mfg. Co., 108 Fed. 71, 47 C. C. A. 212; Lalance & G. Mfg. Co. v. National Enam. & Stamping Co. (C. C.) 108 Fed. 77; and authorities there cited.

The pleadings contained allegations of fraudulent breach by defendant of the contracts to organize the corporation, for the purpose of disposing of the patent right to others upon terms more favorable to defendant; but such allegations were wholly insufficient to set aside such contracts and substitute therefor prior alleged preliminary and tentative agreements to transfer to such subscribers interests in the patent right itself, which according to the pleadings were merged into the contracts to form the corporation to take over the entire interest in the patent right, coupled with the written subscriptions by complainants for capital stock in such proposed corporation. Nor did the complainants seek so to do, but, on the contrary, sought a specific enforcement of the contract last mentioned.

Their pleadings fail to contain allegations of an agreement of the parties upon several preliminary steps necessary to the formation of the proposed corporation, such as the names and number of persons who •should be directors of the corporation for the first year of its existence, the place or places where its business would be transacted, the term for which the corporation should exist, etc., and the absence of such allegations would of itself preclude a specific enforcement of the alleged contract, as insisted, in effect, by one of defendant’s special exceptions to the pleadings. Article 1122, Vernon’s Sayles’ Texas Civil Statutes; Rudiger v. Coleman, 199 N. Y. 342, 92 N. E. 665; Loewenberg v. De Voigne, 145 Mo. App. 710, 123 S. W. 99. Furthermore, by articles 1126 and 1127, Vernon’s Sayles’ Texas Civil Statutes, it is provided that no charter of a private corporation shall be filed until “the stockholders of any such company shall furnish satisfactory evidence to the Secretary of State that the full amount of the authorized capital stock has in good faith been subscribed, and fifty per cent, thereof paid in cash, of its equivalent in other property or labor done, the product of which shall be to the company of the actual value at which it was taken, or property actually received.”

As noted already, complainants alleged that the parties agreed to the capitalization of the proposed corporation at $10,000, of which amount defendant was to receive $5,-500 worth of the capital stock in consideration of a transfer by him to the company of the letters patent; but there is no allegation in any of their pleadings of the value of such patent right. On the contrary, it is specifically alleged that the value of the patent right is unknown to them. The absence of such a showing, coupled with the fact that 85 per cent, of the subscriptions by complainants was not due until after the issuance of the charter, is a further barrier to relief by specific enforcement of the contract to form the corporation.

The case of Jones v. Jones, 49 Tex. 683, was a suit for specific performance of a contract to convey land, and in disposing of it our Supreme Court used the following language:

“Neither the petition nor amended petitions of the appellees (the plaintiffs in the court below) present in clear and distinct terms the contract sought to be enforced, as is required in an action of this kind; neither the aggregate amount to be paid for the land, nor time at which the different installments were payable, is stated; and the averments of performance, or of the facts relied upon to excuse literal performance of the contract on the part of the alleged purchaser, are certainly but vaguely and indefinitely stated — if, indeed, the averments of the petition and amended petition in these particulars are not repugnant and contradictory. It is a fundamental rule, in actions of this character, that the consideration for the agreement, the time and manner of its performance, and in fact all of its essential terms and stipulations, must be clearly and definitely alleged as well as proven, to warrant the court in granting the relief here sought.”

To the same effect are Ward v. Stuart, 62 Tex. 333; Guadalupe Co. v. Johnston, 1 Tex. Civ. App. 713, 20 S. W. 833, and authorities there cited.

In the present suit, as above shown, each of the complainants rely on and seek specific performance of two separate and distinct contracts; the first to form a corporation which would take over the entire patent right and issue to them capital stock in the respective amounts subscribed; the second contract being the agreement of defendant to forego the formation of the corporation and to convey to each complainant an interest in the patent right itself.

One of the special exceptions addressed to the latter alleged contract was that it was without any consideration to support it, and therefore was not enforceable. We are of the opinion that this exception is meritorious. It is expressly alleged in the pleadings that the consideration for the second contract was the same as the consideration for the first contract, viz., the subscription for capital stock in the proposed corporation, a payment in cash of 15 per cent, of the amount so subscribed, an agreement to pay 15 per cent, of the balance when the charter was obtained, and an agreement to pay the balance of 70 per cent, within 30 days thereafter. The consideration so alleged could not support both contracts at one and the same time with both in full force and effect. The second contract was not within the contemplation of the parties when the first contract was made, and hence was no part of the first contract, but was subsequent to and entirely different in legal effect from it, and in square conflict with it, and therefore it cannot be said that the consideration for the first also supported the second.

Nor do the pleadings show any agreement that the first contract should be canceled and that the cancellation of the same should be a consideration for the second; in other words, the pleadings fail to allege a novation of contracts, but, on the contrary, preclude even an inference to that effect, for both contracts are alleged as a part of the cause of action asserted by each complainant and specific enforcement of both is expressly prayed for.

In 29 Gyc. 1130, the following is said;

“In every novation there are four essential requisites: (1) A previous valid obligation; (2) the agreement of all the parties to the new contract; (3) the extinguishment of the old contract; and (4) the validity of the new one. A novation is a new contractual relation. It is based upon a new contract by all the parties interested; and in some states it is specifically provided by statute that a novation shall be made by contract and be subject to the rules concerning contracts in general.
“In order that a contract of novation may be effected there must be a previous obligation to be released. This previous obligation, which is to be released, to be within the rule, must be a valid one.”

Again, on page 1133, same volume;

“A novation, like other valid contracts, must be supported by a consideration, which in this case is a discharge of the original debt. If the agreement does not, or was not intended to, operate as a release of the original debt, it is not a novation. The discharge of the old debt must be contemporaneous with and result from the consummation of an arrangement with the new debtor.”

See, also, Pierce Fordyce Oil Ass’n v. Woods, 180 S. W. 1181.

Again, in the absence of any showing that the value of the patent was as much as $5,-500, in connection with the fact that 85 per cent, of the complainants’ subscriptions for stock was not payable until after the procurement of the charter, there is no showing in the pleadings that the proposed charter for a corporation with an authorized capital stock of $10,000 could have been procured, and, in the absence of such a showing, it does not appear from the pleadings that the first contract to form such-, a corporation was a valid and enforceable agreement so as to furnish a sufficient basis for a novation.

For the reasons stated, we conclude, as did the trial judge, that the pleadings of complainants were insufficient to support a judgment for specific performance, and therefore it is unnecessary to determine the merits of other special exceptions addressed to those pleadings. And, if the pleadings were insufficient to support the recoveries sought, it follows as a matter of course that there was no error in refusing the application for the temporary writ of injunction prayed for. Beckham v. Munger Oil & Cotton Co., 185 S. W. 991.

The order denying the temporary writ is affirmed.

On Motion for Behearing.

In our original opinion we said that there was no allegation in any of the pleadings of the plaintiffs of the value of the patent right, which it was alleged defendants agreed to transfer to the proposed corporation in payment of 550 shares of the capital stock of the corporation contemplated. In their motion for rehearing appellants call our attention to an allegation, to the effect that the patent was worth at least $5,500, which defendants agreed to transfer to the proposed corporation in payment of capital stock of tire face value in the same amount.

In the voluminous pleadings, we overlooked that allegation and now here correct the mistake made by us. It is true, however, as stated in our original opinion, that the pleadings of ¡the complainants also contained, specific allegations that the value of the patent right was unknown to them. Our original conclusion on the whole case that there was no error in refusing the application for a temporary writ of injunction was based upon other reasons shown in our original opinion; which were sufficient of themselves to support the conclusion reached, as will appear from the opinion.

With this modification of our original opinion, the appellants’ motion for rehearing is overruled.
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text:
    PRODUCERS’ OIL CO. v. SNYDER.
    (No. 8445.)
    (Court of Civil Appeals of Texas. Ft. Worth.
    Oct. 21, 1916.
    On Motion for Rehearing, Nov. 25, 1916.)
    1. Contracts <@=3163 — Construction.
    Where a contract is ambiguous because of apparent inconsistencies between the written or typewritten and printed parts, the written or typewritten words control; the written words being the immediate selection of the parties themselves.
    [Ed. Note. — For other cases, see Contracts, Cent. Dig. § 745; Dec. Dig. <@=3163.]
    2. Mines and Minerals <@=>78(1) — Gas and Oil Lease — Construction—Working.
    An oil and gas lease of 19 quarter sections held separate leases'of each quarter section, requiring the sinking of a well on each quarter section to avoid forfeiture.
    [Ed. Note. — For other eases, see Mines and Minerals, Cent. Dig. § 205: Dee. Dig. <@=> 78(1).]
    On Motion for Rehearing.
    3. Appeal and Error <@=3934(2) — Presumption.
    Notwithstanding, Rev. St. 1911, arts. 1990, 1991, requiring judgment to be rendered on conclusions of fact found by the judge where they are separately stated, etc., where there is no statement of facts in the record and there are findings of fact, such findings wili support the judgment, although not stating affirmatively every fact necessary to support the judgment, since such facts will be presumed.
    TEd. Note. — For other,cases, see Appeal and Error, Cent. Dig. § 3777; Dee. Dig. <@=> 934(2).]
    Appeal from District Court, Shackelford County; Thomas L. Blanton, Judge.
    Action by C. B. Snyder against the Producers Oil Company and others. From judgment for plaintiff, the named defendant appeals.
    Affirmed.
    T. J. Lawhon, of Houston, John C.' Kay, of Wichita Falls, and Walter L. Morris, of Albany, for appellant. Carrigan, Montgomery & Britain, of Wichita Falls, for appellee.
   BUCK, J.

On July 11, 1913, C. B. Snyder entered into an oil and mineral lease contract with M. W. Bahan, whereby Snyder granted to Bahan certain oil, gas, and other mineral rights in 19 quarter sections of land located in Shackelford county. Subsequently, Bahan transferred, his lease rights to the Producers’ Oil Company, appellant herein. Subsequent to July 11, 1915, and more than two years from the date of the lease contract mentioned, said Snyder filed suit against Bahan, the Producers’ Oil Company, and the Texas Company, in one count in form of trespass to try title, alleging that on said July 11, 1913, plaintiff executed to said Bahan the lease on the said 19 quarter sections, and setting out said lease in the petition in full. Plaintiff further alleged that according to the terms of'said lease the rights therein granted to the lessee were subject to forfeiture unless “operations for the drilling of a well for oil or gas shall be begun within three months from the time of final execution and delivery of this contract.” But that it was further provided that:

“Forfeiture may, however, he saved by the grantee, and the vitality hereof be continued and maintained, notwithstanding operations be not begun within the proper time limit, provided only that for the privilege of delay in such beginning- from time to time the grantee may pay as hereinafter provided fifteen hundred twenty and no/100 ($1,520.00) dollars per quarter for a period not exceeding two years from date hereof.”

It was further alleged that no operations for drilling had been made by the grantees, or any of them, on any one of the 19 quarter sections covered by the lease, and that more than two years having elapsed, plaintiff was entitled to a judgment quieting his title and removing cloud therefrom.

Defendant, Producers’ Oil Company, answered that on July 8, 1915, within two years from the date of the lease contract, operations for drilling had been "begun by it, and that, therefore, plaintiff was not entitled to the forfeiture claimed, and that defendant had fully complied with the terms of the contract in this respect. On the trial plaintiff conceded that as to the quarter section upon which drilling operations had been begun, to wit, the southeast quarter of section 26, Lunatic Asylum land, defendant was entitled to judgment, but insisted that the contract of lease made by plaintiff and Ba-han, and the terms' of which had been assumed by the transferee, the Producers’ Oil Company, provided for a separate lease as to each of the 19 quarter sections, and that the obligation of the grantee to begin operations within two years in order to avoid forfeiture contemplated the sinking within two years of a well upon each quarter section as a condition of nonforfeiture.

The pleadings are voluminous, especially the plaintiff’s first amended original petition, covering some 17 or 18 pages, yet the issue between plaintiff and defendant was as to whether said written contract or lease contemplated the separate lease of each of. the 19 quarter sections and the fulfillment by the grantee of the obligations specified as a condition of nonforfeiture, or whether the said 19 quarter sections were to be considered as one tract of land and the beginning of operations within the two years upon one quarter section should be regarded as a c-omxjliance with the terms of the contract in this respect.

The cause was tried before the court without a jury, and the trial court concluded that the plaintiff’s contention was correct, and gaye judgment for him, ’quieting his title as to 18 quarter sections, and gave judgment for defendant as to the other quarter section. Defendant, Producers’ Oil Company, has appealed.

The record contains no statement of facts, but the court has filed his findings of fact and conclusions of law, and the original lease contract has been sent up with the record for the inspection of this court. This contract is in printed form, and certain inserts have been made in writing and by typewriter. Only those portions of the contract which we deem necessary to consider in order to determine the intention of the parties need be set out in this opinion, and where the words used are written by hand or by the typewriter they will be italicized. After the habendum clause the contract provides:

“1. The considerations of this contract are as follows:
“(a) The sum of fifteen hundred twenty and no/100 dollars, payment whereof by the grantor is hereby acknowledged.
“4. The royalty for natural gas shall be $109.-00 per annum for each well from which gas is used off the premises, the grantor to have the privilege at his own risk and cost to make connections and use gas free of charge for dwelling located on each quarter section, provided gas is produced on said quarter section.
“0. Under penalty of forfeiture of the rights and estates hereby granted, operations for the drilling of a well for oil or gas shall be. begun within three months from the time of final execution and delivery of this contract, and, if so forfeited, the rights and liabilities of both parties shall thereupon be ended. Forfeiture may, however, be saved by the grantee, and the vitality hereof be continued and maintained, notwithstanding operations be not begun within the proper time limit, provided only that for the privilege of delay in such beginning from time to time the grantee may pay, as hereinafter provided, fifteen hundred twenty and no/100 ($1,520.00) dollars per quarter, for a period oi not exceeding two years from delivery hereof. Operations upon a well begun shall be prosecuted with diligence, unavoidable accidents and contingencies only excepted; and when a well is begun, it shall be sunk to a depth of 1,500 feet, unless oil or gas be sooner developed in paying quantities — but a well which may be lost or spoiled may be continued at another location, and to be considered the same as the original. ~When operations are begun the same shall be continuous until the property is developed, unless othermse agreed Try the parties hereto. After a well is begun, no further payments in respect to delay shall be due, ' on the quarter section (160 acres) upon which such well is begun an’d the drilling of such well shall m all events secure said quarter section from forfeiture.
“6a. It is expressly agreed that the drilling of well or wells will stop rental only upon the quarter section and quarter sections upon which sueli well or wells are located, such rental bemg based at $2.00 per acre per year, amd deductions of rental for quarter sections upon which wells may be located shall be tahen from amount of rental as recited in stipulation No. 6.
“6b. In consideration of moneys paid and other valuable considerations, it is expressly agreed that the grantee may at his option surrender any quarter section or quarter sections herein described, and that there will be no further payments due, and liabilities of both parties shall thereupon be ended, and the grantee• agrees to execute a formal release of all such surrenders.”

Plaintiff in his trial petition, and in the second count thereof, pleaded as follows:

“Plaintiff further represents that if he is mistaken in the construction hereinbefore given said lease contract, and if the court should hold that said lease contract, when properly construed, does not upon its face clearly, provide for the separate development of each of said 19 quarter sections of land above referred to, by beginning operations thereon for drilling a well within the time specified in said contract, and if said court should fail to hold that the failure under the circumstances alleged herein-before by the plaintiff (evidently meaning defendant) to begin operations on said land, except on the southeast quarter of section 26, did not have the effect to terminate said lease as to all said quarter sections except that one upon which operations wore begun, then this plaintiff further alleges that the said lease contract above referred to is at least of doubtful meaning and of doubtful construction.”

Plaintiff further pleaded that • grantee, Bahan, who it is alleged was never the beneficial owner of the contract, but was acting for the appellant company and others, and plaintiff orally agreed upon the proposed terms of said lease, and that under said oral agreement the lease contract to be entered into was to be a separate lease upon each quarter section of land, and that each quarter section should be developed separately, or at least be! subject to forfeiture for non-development, and that the lease offered by him (Bahan) did not contain the typewritten portions of paragraph “6,” nor did it contain paragraphs “6a” nor “6b,” nor the written interlineation in paragraph 4, and that these additions and alterations were made at the instance of plaintiff and in order to carry out the mutual understanding of the parties that the lease should provide for the development of each quarter section. Other pleadings were included in plaintiff’s petition which would justify the introduction of parol testimony to explain any ambiguity which might exist in the lease contract.

It is a well-recognized rule of construction that where a part of a contract is written, or typewritten, and part is printed, and the written and printed parts are apparently inconsistent, or there is reasonable doubt as to the sense and the meaning of the whole, the words in writing will control the construction of the contract. The obvious reason for this rule is that the written words are the immediate language and terms selected by the parties themselves for the explanation of their meaning, while the printed form is intended for general use without reference to particular objects and aims. 6 R. O. L. § 237, p. 848.

The trial court found, among other things: (1)That the lease mentioned was finally executed and delivered on July 11, 1913; (2) that on September 20, 1913, M. W. Bahan transferred and assigned in writing said lease to the Producers’ Oil Company, and that said transfer was duly recorded in Shackelford county; (3) that subsequent to the execution of the lease in controversy the Producers’ Oil Company had bored within the radius of a mile and a quarter of 'the land in controversy and on two sides thereof, 15 wells for oil and gas, and that the average cost of said wells was $14,000 each; (4) that seven of said wells produced oil and gas, and that eight of them produced no oil or gas; (5) said Producers’ Oil Company began operations for drilling a well on. the southeast quarter of section 26, July 8, 1915, and continued the same with reasonable diligence until it had reached, at the time of the trial, a depth of 1,945 feet, at a cost of $12,000, and that so far no oil or gas had been found; (6) that no operations for the drilling of any well had ever been begun upon any other quarter section than the southeast quarter of section 26; (7) that the Producers’ Oil Company had paid to plaintiff the sum of $12,160 rental for the two years in quarterly payments of $1,520, the last payment being made three months before the expiration of the two years, each payment being made in advance; (8) that the 3,040 acres of land embodied in this tract prior to the execution of the lease had been patented by the state of Texas in separate patents, each covering a quarter section of 160 acres, specifically described by field notes.

We find that the contract as written is ambiguous, and that the court was authorized under the plaintiff’s pleadings to admit parol testimony in order to explain the seeming ambiguity. While the printed portions of paragraph 6, as well as other printed portions of the contract, would indicate that the lease was intended to cover the 3,040 acres as a whole, and that upon the payment of the rental provided for in said paragraph and the beginning of operations within the two years, the right of forfeiture on the part of plaintiff would be destroyed, yet the typewritten portions of paragraph 6, as well as paragraphs 6a and 6b, and the written portion of paragraph 4, would indicate that the intent of the parties was that the lease should cover the 19 quarter sections separate-, ly, and that in order to avoid forfeiture on any one quarter section not only would the rental provided for have to be paid, but operations for the sinking of a well would have to be begun within the two years prescribed. There being no statement of facts in the record, we feel it our duty to impute to the court findings of fact necessary to sustain the judgment, and that evidence was introduced sufficient to sustain such findings.

Therefore the judgment of the trial court will be in all things affirmed, and it is so ordered.

On Motion for Rehearing.

Appellant refers to the following language in our original opinion, to wit:

“There being no statement of facts in the record, we feel it our duty to impute to the court findings of fact necessary to sustain the judgment, and that evidence was introduced sufficient to sustain such findings.”

Appellant cites us to the eases of Chance v. Branch, 58 Tex. 490, Cousins v. Grey, 60 Tex. 346, Continental Insurance Co. v. Milliken, 64 Tex. 46, Kimball v. Houston Oil Co., 100 Tex. 336, 99 S. W. 852, and articles 1990 and 1991, Revised Statutes, as authority for the proposition that, where the court has filed his findings of fact and conclusions of law, and in the absence of a statement of facts, “the appellant having excepted to and the appellee having acquiesced in said findings of fact, same must be looked to solely as the basis of said judgment.”

Appellant presented only two assignments of error, one attacking the court’s conclusions of law, and the other leveled at the court’s action in rendering judgment for appellee. No finding of fact was assailed. Plaintiff’s pleadings justified the admission of parol evidence to explain the seeming ambiguity in the instrument sued on, and alleged facts which, if proven, would have amply sustained plaintiff’s theory that the contract as agreed upon by the parties, and as evidenced by the written instrument, contemplated the beginning of a well upon each quarter section in order to prevent forfeiture of the lease thereon. We do not think, in our holding, to the effect that we should impute to the court findings in harmony with plaintiff’s pleadings, and in assuming that evidence was introduced in conformity with such allegations, we were in conflict with the cases relied on by appellant, and cited above. As said in Kimball v. Houston Oil Co., supra:

“It may sometimes happen that findings omit any mention of a fact, proof of which would be essential to the correctness of the judgment, and that, in the absence of anything said about it, such fact should be presumed; and we are not to be understood as holding that such findings are to be treated as special verdicts were formerly treated and required to state affirmatively every fact necessary to support the judgment. Thomas v. Quarles, 64 Tex. 493.”

See, also, Paden, Adm’r, v. Briscoe, 81 Tex. 563, 17 S. W. 42.

It certainly is not to be required of the trial court that he shall set forth in his findings of fact every bit of probative evidence sustaining his conclusions, in order for such conclusions to be upheld. Necessarily, many evidentiary facts must be omitted. In preparing his findings of fact and conclusions of law, the trial court need not state the evidence upon which he bases his findings or conclusions. Gordon v. McCall, 20 Tex. Civ. App. 283, 48 S. W. 1111. In the case of Oldham v. Medearis, 90 Tex. 506, 39 S. W. 919, it is held that a finding that “Oldham, being ignorant and illiterate, was not negligent in not discovering the said shortage (in the land) sooner,” would not justify the Court of Appeals in treating the finding of the trial court, that Oldham was not negligent, as based entirely upon.the fact that Oldham was “ignorant and illiterate.” In the instant case, as evidence of the fact that the court held the contract or lease to be ambiguous, and that there was evidence supporting the theory of a separate lease as to each quarter section, it will be noted that in the findings themselves, the stenographer was directed to underscore in black ink with a pen those portions of the original lease shown to be written with pen, and to underscore in red ink with a pen those portions shown to be typewritten. The court further found that the 3,040 acres embraced in the tract had been, prior to the execution of the lease, patented in separate quarter sections. Thus is evidenced the purpose of the court to show that he reached his stated conclusions of law favorable to appellee by reason of evidence showing that the parties dealt with the land as being composed of separate tracts, and that they understood that the lease contract was seyerable as to the various quarter sections. As held by the Supreme Court in the Oldham Case, supra, we are not justified in-concluding that the facts stated constituted the only evidence upon this issue, but we are justified in assuming that there was other evidence to the same effect deemed by the court, in conjunction with the facts stated, sufficient to establish plaintiff’s contention.

The motion for rehearing is overruled.
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