author: REYNOLDS, Justice.

text:
    STAHL PETROLEUM COMPANY, Appellant, v. PHILLIPS PETROLEUM COMPANY, Appellee.
    No. 8762.
    Court of Civil Appeals of Texas, Amarillo.
    April 6, 1977.
    Rehearing Denied May 2, 1977.

      Stone, Stone & Chambers, John C. Chambers, Amarillo, for appellant.
    Phillips Petroleum Co., Jack Ritchie, T. L. Cubbage, II, David B. McCall, T. L. Cub-bage, Amarillo, Lloyd G. Minter, C. J. Roberts, Bartlesville, Okl., for appellee.
   REYNOLDS, Justice.

The question presented by this appeal is whether Phillips Petroleum Company is liable to Stahl Petroleum Company for interest on the additional amounts Phillips computed and paid Stahl under their gas purchase contract after federal approval of a portion of the interstate commerce gas prices Phillips had been receiving for its sales, a weighted average of which was the basis of the payments to Stahl. In the declaratory judgment action, the trial court held that Phillips was contractually obligated for the payment made, but was not liable for. any interest thereon. For the reasons hereinafter stated, we conclude that Phillips was liable for interest. Affirmed in part; reversed and rendered in part.

By a contract dated 5 December 1957, Phillips Petroleum Company agreed to buy, and Panhandle Gas Compression Company agreed to sell, casinghead gas owned or purchased by Panhandle which is produced from wells located on the

SE/4 of Section 1, Block 26, and S/2 of Section 12, Block A-9, and Section 61 and E/2 of Section 62, Block 25, H&GN RR. Co. Survey, Gray County, Texas.

Stahl Petroleum Company is the successor in interest to Panhandle, which is now defunct.

Contractually, upon delivery of the gas, title vests in Phillips without regard to the disposition made of the gas by Phillips. Payment for the gas delivered each month is to be made not later than the last day of the succeeding month. As to price, the contract states:

7. PRICE — As full consideration for the gas and all components thereof purchased by Buyer [Phillips] hereunder, Buyer shall pay Seller [Stahl] a price which shall be the sum of the computations prescribed in A and B below:
A. Multiply the volume of gas delivered by the applicable “Rate in Cents Per Thousand Cubic Feet” shown in Table II.
B. Multiply the difference between the volume of gas Seller was entitled to have delivered for lease operation and the volume (determined by estimate or measurement) that was delivered for such purpose, by one-half of the first 2.6798$ or less of the weighted average price per thousand cubic feet during the month preceding that for which settlement is made, and by two-thirds of the amount by which said weighted average price exceeded 2.6798$.
8. DEFINITION S — * * *
The phrase “weighted average price per thousand cubic feet” shall mean the weighted average price received by Buyer and its subsidiaries from the^ sale, to oth¡-ers than Buyer and its subsidiaries of gas (whether sweet, sour or casinghead), and any components thereof, delivered by Buyer in the form of gas within the Panhandle Field of Texas, adjusted as hereinafter provided.

The price adjustments provided are for the inclusion of amounts received for, or deductions to be made under certain circumstances because of, transportation, purification, dehydration or compression of the gas Phillips delivers to its purchasers.

The contract is subject to all valid statutes and rules and regulations of any federal or state regulatory body having jurisdiction. Prior to the execution of the contract, it was determined in Phillips Petroleum Company v. State of Wisconsin, 347 U.S. 672, 74 S.Ct. 794, 98 L.Ed. 1035 (1954), that Phillips, as an independent natural gas producer selling gas to interstate pipeline companies for interstate transportation and resale, was a “natural gas company” within the meaning of the Natural Gas Act, 15 U.S.C. § 717 et seq., and that its gas sales in interstate commerce are subject to the jurisdiction of and regulation by the Federal Power Commission.

The Panhandle Field of Texas is a part of the Hugoton-Anadarko Area, a rate making area within the jurisdiction of the Federal Power Commission. Gas sales made by Phillips within the Panhandle Field are for both intrastate and interstate commerce; thus, the sales made for interstate commerce are subject to the jurisdiction of and the rate approved by the Federal Power Commission.

Beginning 7 June 1954 and continuing past the execution date of the Phillips-Stahl contract, Phillips had numerous gas price rate increase applications, some of which related to sales in the Panhandle Field, pending with the Federal Power Commission. Increases in gas prices subject to the jurisdiction of the Commission operate prospectively only. 15 U.S.C. §. 717c(d); Atlantic Refining Co. v. Public Service Commission of the State of New York, 360 U.S. 378, 389, 79 S.Ct 1246, 1253, 3 L.Ed.2d 1312, 1319-20 (1959). Generally, a proposed increase in rates will take effect after thirty days’ notice, 15 U.S.C. § 717c(d), unless the Commission, pending a hearing and decision, suspends the operation of the proposed rate schedule for not longer than five months beyond the time the change would go into effect. 15 U.S.C. § 717c(e). If an order has not been made at the expiration of the suspension period, the proposed change shall go into effect upon the motion of the natural gas company making the proposal. In that event, the Commission may require the natural gas company to furnish a bond to refund the portion of such increased rates, with interest, the Commission finds is not justified. 15 U.S.C. § 717c(e).

With respect to Phillips’ proposed rate increases, the Commission suspended the effectiveness of the increases, some thirty-one of which related to Phillips’ gas sales in the Panhandle Field. Thereafter, upon the posting of a corporate obligation, Phillips was permitted by the Commission to sell gas in the Panhandle Field for interstate commerce at its proposed rate increases, subject to refund with interest of all monies collected from its purchasers in excess of the just and reasonable rates to be determined by the Commission. It would not be known until the Commission entered its final order what portion, if any, of the amounts Phillips received in excess of the then established interstate commerce rates would be refunded with interest to Phillips’ purchasers, or what portion, if any, would constitute interstate commerce sales at approved just and reasonable rates. All proceeds Phillips received from its sales, including the monies subject to refund, were deposited in Phillips’ general fund.

Meanwhile, for the gas purchased under the contract, Phillips paid Stahl the prescribed percentage of the weighted average price received by Phillips from Panhandle Field intrastate gas sales at prices not subject to the Commission’s jurisdiction and from interstate sales at rates theretofore established by the Commission for sales within its jurisdiction. Consequently, none of the then unapproved increased prices received by Phillips from, and subject to refund to, its purchasers were included in the calculations of the payments due and made to Stahl.

Eventually, on 18 September 1970, the Federal Power Commission issued Opinion 586 and accompanying order, establishing the sales prices pursuant to Phillips’ and other consolidated applications and requiring refunds of amounts collected, except for certain excused amounts, in excess of the established rates. 44 F.P.C. 761 (1970). Court review ensued in In re Hugoton-Ana-darko Area Rate Case [The People of the State of California v. Federal Power Commission], 466 F.2d 974 (9th Cir. 1972). There, the Commission’s order was affirmed, and no petition for writ of certiora-ri was filed on or before 29 October 1972, the last day permitted by law.

When the rate order became final on 30 October 1972, Phillips recalculated the amounts payable under the contract on the basis of the collected interstate commerce sales amounts Phillips was entitled to retain. The computed amount was an additional $24,258.81, which Phillips paid to Stahl on 7 December 1972. So far as this record reveals there was neither an agreement that the payment was in full settlement nor a contemporaneous claim by Stahl for interest or a specific reservation of right to later sue for interest.

Almost three years later, Phillips filed this declaratory judgment action. It sought a declaration that under the contract, it was not liable to Stahl for any sums in excess of payments made based on prices approved by the Federal Power Commission at the time the payments were made. Alternatively, Phillips asked that if it was accountable to Stahl on the basis of prices finally approved by the Commission, then it be declared that it is not liable for interest thereon, and, in no event, for interest prior to 30 October 1972, the date the rates became final.

Stahl counterclaimed. It sought judgment decreeing that it was entitled to receive payment based on the rate ultimately approved by the Federal Power Commission with interest thereon from the respective dates on which Phillips received the funds. Among the matters Stahl established by admissions were that the interest calculated to date of payment of the $24,258.81 would be $14,094.12, and that interest on that interest would accrue at the rate of $2.3168 per day, which the trial court calculated to be $3,011.84.

During the pendency of this action, Stahl declared, in response to an interrogatory, that the date a cause of action ripened in Stahl whereby Stahl could sue Phillips to force payment of the additional proceeds was 30 October 1972. Phillips requested that, among other matters, Stahl admit as matters of fact, and Stahl admitted, that: (1) the paragraphs of the contract relating to the purchase price and payment are not ambiguous; (2) until 30 October 1972, the amounts of additional money, if any, that might be payable was uncertain and unliq-uidated and the amount ultimately calculated to be due was unknown; (3) prior to 30 October 1972, Stahl had no legal right to force Phillips to pay, on a month-by-month basis, a sum in excess of the one computed in relation to a weighted average price calculated on interstate gas sales at the approved Federal Power Commission rates and on intrastate gas sales in the Panhandle Field; (4) on 30 October 1972, the additional purchase price of $24,258.81 recalculated on the sales prices approved by FPC Opinion 586 accrued, was on that day ascertainable, liquidated and became due and payable to Stahl; and (5) the payment due 30 October 1972 was subject to Phillips’ right to a reasonable time, not to exceed three months, to complete administrative action to cause the payment to be made.

The trial court heard and on 28 June 1976 determined the matters without the aid of a jury. The court’s judgment declared that under the unambiguous payment provisions of the contract, Phillips was not expressly, but was impljedly,, obligated .to-,pay Stahl,-upon the finality of the Federal Power Commission action, the $24,258.81 difference between the price previously paid and the price that would have been paid had the higher approved price been in effect, but that Phillips was not liable for interest. Stahl’s claims for interest were denied. The judgment is buttressed by fifty-one denominated findings of fact and eleven main conclusions of law, some of which are the same as Stahl’s admissions.

Stahl has appealed. Accepting the adjudication that $24,258.81 was due under the contract for its gas, Stahl contends, first, that it is entitled to judgment for $14,094.12 interest accruing thereon to date of payment and, second, that it is entitled to $3,011.84 interest on the $14,094.12 to date of judgment, together with interest on the judgment. In resisting Stahl’s claims, Phillips does not challenge the trial court’s determination that it was contractually obligated to pay the additional $24,258.81 it paid.

Admittedly in this cause, the paramount question is whether the contractual payment bears interest under Texas law. In citing Texas law, as well as law from other jurisdictions, in support of their respective positions, both parties converge on and differ as to the efficacy of Phillips Petroleum Company v. Adams, 513 F.2d 355 (5th Cir. 1975), cert. denied 423 U.S. 930, 96 S.Ct. 281, 46 L.Ed.2d 259 (1975). In Adams, a claim for interest arose out of the identical factual situation presented in the case at bar. The United States District Court for the Northern District of Texas at Amarillo determined, in an unpublished opinion, that neither equity nor Texas law supported an award of interest. The Fifth Circuit, recognizing that the factual situation had no close parallel in Texas case law, concluded that Texas law does not preclude and, therefore, permits, and that equity requires, the award of interest because Phillips had the unrestricted use of the Adams’ money from the datés of its receipt. 513 F.2d at 364, et seq.

Stahl contends that Adams correctly applies Texas law,-answers ¡the- arguments now advanced by Phillips, and obligates Phillips to pay the interest claimed. Amici curiae briefs filed here are to the same effect and in some instances advance additional rationale why Phillips is liable for interest. Phillips responds that Adams is erroneous in not stating the correct Texas law and that some of the arguments it makes here were not made in Adams. Be that as it may, our determination of the question is founded on principles of statutory and decisional law of this state applied in a manner different from the application of principles stated in Adams.

Ninety years ago, Texas jurisprudence embraced the common law principle that interest cannot be allowed eo nomine — i. e., under that name — unless especially provided for by statute, except where interest is assessed, sans statutory sanction, as damages to indemnify a party for a wrong done to him. Heidenheimer v. Ellis, 67 Tex. 426, 3 S.W. 666, 667 (1887). Accord, Watkins v. Junker, 90 Tex. 584, 40 S.W. 11 (1897). Heidenheimer, without sanction of statute, allowed “interest” on a stated account from the time the principal ought to have been paid, not as an incident to the debt, but by way of punishment for the wrong inflicted by the wrongdoer. In Watkins, prejudgment interest was allowed on breach of contract damages unliquidated but fixed by conditions existing at the breach. The court said, “It is true that interest, strictly speaking, exists only by statutory law, but it is likewise true that courts have recognized the fact that compensation for detention of that which is due on account of injury inflicted is an element of damages necessary to the complete indemnity of the injured party; . . . ” The court immediately noted that while it may not be technically correct to designate as “interest” the compensation allowed as damages on account of the injury inflicted, the term is so familiar that it is perhaps the most expressive and intelligible term that could be used.

Here, we are not concerned with the situation of the infliction of a tortious injury where “interest” may or may not be an element of damages; rather, because the interest claims arise ex contractu, any interest payable under the contract is interest eo nomine authorized by statute. At the time the Phillips-Stahl contract was executed, the legislature had defined “interest” as “the compensation allowed by law or fixed by the parties to a contract for the use or forbearance or detention of money.” Vernon’s Ann.Civ.St. art. 5069. That statutory definition was replaced on 1 October 1967 by the enactment of V.A.C.S. art. 5069-1.01 reading, in part: “(a) ‘Interest’ is the compensation allowed by law for the use or forbearance or detention of money.”

In contractual undertakings, the transactors may, of course, provide for interest; but, absent contractual provisions, the question of whether interest is allowable under an existing state of facts is a question of law. Here, the written Phillips-Stahl contract has no provision for the payment of interest; therefore, if any interest is payable by virtue of the contractual undertaking, it is by authority of some enabling Texas statute.

The statute having application to written contracts when the contract before us was executed was V.A.C.S. art. 5070, and the applicable statute when this litigation arose is V.A.C.S. art. 5069-1.03, in both of which identical language was used to state:

When no specified rate of interest is agreed upon by the parties, interest at the rate of six percent per annum shall be allowed on all written contracts ascertaining the sum payable, from and after the time when the sum is due and payable; .

When the statutory prerequisites are present, the statute creates a legal liability for interest. Thus, the subsidiary questions arising are: (1) Is this a written contract ascertaining the sum payable as meant by the statute? (2) When is the sum, as ascertained, due and payable?

Without in any way referring to the statute, Stahl claims interest because Phillips used Stahl’s money which Phillips was contractually obligated to pay throughout although the exact amount was not known until the Federal Power Commission’s order became final. Phillips contends that the statute does not impose interest because, and points to Stahl’s admissions that, under the contract the sum payable was neither ascertainable nor due and payable until the finality of the Commission’s order.

The statutory phrase “ascertaining the sum payable” was first interpreted in Federal Life Ins. Co. of Chicago v. Kriton, 112 Tex. 532, 249 S.W. 193 (1923). The court said at 195:

. (T)he words “ascertaining the sum payable” have reference to the sum or amount the party executing the obligation may be reasonably expected or required to pay, in view of all the circumstances incident to the matter or business he .is contracting about, if by reason of the provision of the contract he becomes at any time liable to pay thereunder; and it is not necessary in a case like the present one that the contract shall itself establish a fixed liability in a definite amount as of a date certain. It is sufficient to come within the meaning of the statute if the contract provides the conditions upon which liability depends and fixes a measure by which the sum payable can be ascertained with reasonable certainty, in the light of the attending circumstances.

Given these principles, we turn to the contract in which the rights of the parties rest. There never was any contention that the contract or any of its terms are ambiguous; indeed, the parties are committed to the proposition that the contract is unambiguous. As a consequence, and because we find the contract to be without ambiguity necessitating an inquiry beyond the contract’s language, the meaning of the contract becomes a question of law for the court. Myers v. Gulf Coast Minerals Management Corporation, 361 S.W.2d 193, 196 (Tex.1962). As a matter of law, the meaning of the contract is determined by the language used therein, Tower Contracting Company v. Flores, 157 Tex. 297, 302 S.W.2d 396, 399 (1957), which is to be construed by the court. Republic National Life Insurance Company v. Spillars, 368 S.W.2d 92, 94 (Tex.1963). The terms the parties used are to be given their plain, ordinary and generally accepted meaning unless the instrument itself shows the terms are used in a different sense. Western Reserve Life Ins. Co. v. Meadows, 152 Tex. 559, 261 S.W.2d 554, 557 (1953).

As is evident from the contract, a part of the price Phillips contracted to pay, and Stahl contracted to take, is a percentage of the “weighted average price received” by Phillips from the sale of all gas within the Panhandle Field. Except for the specified adjustments to the price received by Phillips from its sales, the phrase “price received” is not otherwise defined in the contract. The phrase consists of two words of ordinary meaning. In the more common sense, according to Webster’s New International Dictionary (2nd Ed.), the noun “price” means the amount of money received in exchange for anything, and the transitive verb “received” means to take as something paid or to accept payment. This ordinary meaning is the one we should attribute to the phrase.

At the time the contract was executed, Phillips, as permitted during the pendency of its applications for increases in the interstate commerce rates for its gas sales, was receiving from its purchasers and accepting as payment for its gas an amount of money in excess of the then established rates. Albeit the excess was subject to possible refund, none of the excess was contractually excluded from the “price received” by Phillips and on which payment to Stahl was contractually based. Phillips candidly concedes that neither statutory or decisional law nor the rules and regulations of the Federal Power Commission prohibit Phillips from including the excess in the amount on which calculation of payment to Stahl was made. It naturally follows that the portion of the prices exceeding the then approved interstate commerce rate received by Phillips from its gas sales in the Panhandle Field was, under the plain meaning of the language of the contract, a part of the “price received” on which the month-by-month payments to Stahl were to be based. Hence, within the meaning of the statute, the written contract is one ascertaining the sum payable, and interest is allowable on each unpaid sum which was due and payable monthly under the contract. And there is nothing in the contract to alter this legal consequence even though it later developed that Phillips was required to refund to its purchasers a portion of the purchase prices it had received.

The trial court decreed, and Stahl does not dispute, that the $24,258.81 which Phillips paid Stahl on 7 December 1972 was the difference between what Phillips previously paid Stahl each month and what would have been paid under the contract had the higher rates been in effect when Stahl’s gas was sold to Phillips. The interest on that amount, which is statutorily imposed, is fixed at $14,094.12. Consequently, when Phillips made the $24,258.81 payment, Phillips owed Stahl a total of $38,352.93 for the sums ascertainable to be payable month-by-month under the contract with accrued interest thereon from the time the monthly payments were due and payable.

With respect to the $24,258.81 additional payment, all this record shows is that the payment is the recomputed amount Phillips would have paid in monthly increments at the later established rate, and the amount Stahl admitted and the trial court found was due at that rate, for the casinghead gas Phillips had purchased from Stahl under their contract. This record does not disclose any agreement concerning the payment, but it does affirmatively reflect that at the time this suit was filed, a genuine controversy existed between Phillips and Stahl as to whether Phillips was obligated under the contract to account to Stahl for any sum over the payments already made based on' the Federal Power Commission’s rates in effect when the payments were made, and if so, whether Phillips was liable for interest on the additional sum.

It is the universal rule, and the rule followed in Texas, that where the parties have not otherwise agreed, a partial payment on a single obligation consisting of principal and interest is first applied to extinguish the accrued interest and the balance is then applied toward discharging the principal. Community Savings and Loan Association v. Fisher, 409 S.W.2d 546, 550 (Tex.1966); Tooke v. Bonds, 29 Tex. 419, 427 (1867); J. I. Case Co. v. Laubhan, 64 S.W.2d 1079, 1080 (Tex.Civ.App., Amarillo 1933, no writ), and authorities there cited. Under the circumstances present in the record we review, this rule applies.

Computably, then, $14,094.12 of the $24,258.81 payment is applied to extinguish the interest which had accrued to the date of payment. The $10,164.69 balance of the payment reduces the principal owed at that time to $14,094.12. Interest on that sum, as unpaid principal, at the statutory rate of six per cent per annum to the date of judgment is not challenged to be $3,011.84. Therefore, Stahl was, and is, entitled to judgment for $17,105.96, consisting of $14,094.12 unpaid principal and $3,011.84 prejudgment interest. To this extent, Stahl’s two points of error are sustained.

Some further observations concerning consideration given matters injected in this appeal but not heretofore mentioned are appropriate. Because the interest allowed is interest eo nomine imposed by statute absent any finding, or any evidence to support one, that the principal payment was in full settlement, the recovery of interest is not barred under Phillips’ cited authorities denying interest as damages where the principal sum due is paid and accepted.

Arguably from the parties’ performance under the contract, the term “price received” was understood and intended by them to mean the price Phillips was lawfully entitled to retain, and that such construction should be given controlling weight. The immediate answer is that the lack of ambiguity in the term forecloses the application of the principle. In the usual case, the contract alone will be deemed to express the intention of the parties, for it is objective and not subjective intent that controls. Spillars, supra, 368 S.W.2d at 94. If the contract is so worded that it can be given, as we have given the contract here, a certain or definite legal meaning or interpretation by applying the pertinent rules of interpretation, the contract is not ambiguous, and parol evidence will not be received to create an ambiguity or to give the contract a meaning different from that which its language imparts. Universal C. I. T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154, 157 (1951). This rule obtains even to the extent of prohibiting proof of circumstances surrounding the transaction when the instrument involved, by its terms, plainly and clearly discloses the intention of the parties, or is so worded that it is not fairly susceptible of more than one legal meaning or construction, Lewis v. East Texas Finance Co., 136 Tex. 149, 146 S.W.2d 977, 980 (1941), for no intention, however discovered, can contradict or destroy the legal effect of the terms used. Reynolds v. McMan Oil & Gas Co., 11 S.W.2d 778, 781 (Tex.Com.App.1928, holding approved).

Our interpretation of the written contract is, of course, at variance with both the recited interrogatory declaration and “admissions” made by Stahl and the legal conclusions drawn by the trial court to determine that Phillips is not liable for interest. Stahl’s declaration and admissions amount to no more than expressions of opinions on matters of law which have no legal effect. Reynolds, supra, 11 S.W.2d at 786. As previously stated, the meaning of this unambiguous contract is a matter of law for the court. In interpreting it, we have reached conclusions of law as the necessary legal consequence of the same factual situation before the trial court and, insofar as the trial court’s legal conclusions drawn from those facts conflict with ours, we deem them erroneous.

That part of the trial court’s judgment denying Stahl any recovery and imposing costs is reversed, and judgment is here rendered that Stahl Petroleum Company recover from Phillips Petroleum Company the sum of $17,105.96, together with interest thereon at the rate of nine percent per annum from 28 June 1976, the date of the trial court’s judgment, until paid, V.A.C.S. art. 5069-1.05 (Supp.1976), and all costs. In all other respects, the judgment is affirmed.

ON MOTION FOR REHEARING

By its motion for rehearing, Phillips Petroleum Company submits that we gave undue emphasis to the meaning of the word “received” and failed to give adequate attention to the meaning which the word “price” must have in the context of the contract. The ultimate contention is that, when the contract is viewed in its entirety in relation to the federal statutes and rules and regulations to which it is subject, “price” means the actual proceeds Phillips received and had a lawful right to retain after refunding the amounts received in excess of the “just and reasonable” rate or charge finally determined by the Federal Power Commission. Therefore, Phillips says, it is not reasonable to reach a conclusion that the parties contracted on the basis of prices other than those which Phillips would be lawfully entitled to retain.

The reasons for denying the contention, which was considered on original submission and reconsidered on rehearing, are two-fold. First, the contract was drafted when Phillips was receiving a price in excess of the established “just and reasonable” rate, although subject to refund, but the ordinary meaning of “price received,” to which Phillips’ obligation to pay was related, was not qualified to express the intention to exclude any refundable price received. Second, the contention can be justified only by invoking arbitrary rules of construction which, under the rationale stated in our original opinion, may not be resorted to where the contractual expressions are, as the parties have agreed and as we found them to be, unambiguous.

The Supreme Court, whose pronouncements- on the law bind us) hás declared that where the contractual language is plain, clear and unambiguous, we are not at liberty to revise a contract under the guise of professing to construe it or to make for the parties a contract different from the one they entered into. See, e. g., General American Indemnity Company v. Pepper, 161 Tex. 263, 339 S.W.2d 660, 661 (1960). Thus, rather than ascribing to the language a meaning different from that which it clearly imports, all we may do is state and enforce the contract the parties have written.

The motion for rehearing is overruled.

      . The attached Table II shows the rate in cents per thousand cubic feet is determined by the test gasoline content and the price of gasoline in cents per gallon.

      . It is recorded in fn. 10 at p. 362 of Phillips Petroleum Company v. Adams, 513 F.2d 355 (5th Cir. 1975), that Phillips has included the excess in calculating payments under similar contracts pursuant to agreements that any overpayment would be returned with interest.


source: Caselaw Access Project

author: GUITTARD, Chief Justice.

license: Public Domain

text:
    Fred BELL, Appellant, v. Adlene HARRISON, Appellee.
    No. 19159.
    Court of Civil Appeals of Texas, Dallas.
    April 7, 1977.
    Michael M. Daniel, Dallas Legal Services Foundations, Inc., Dallas, for appellant.
    Joseph G. Werner, Asst. City Atty., Dallas, for appellee.
   GUITTARD, Chief Justice.

This appeal is from the dismissal by the district court of a statutory contest of an election concerning amendments to the charter of the City of Dallas. The dismissal was on the ground that notice was not personally served on the mayor as required by Tex. Election Code Ann. art. 9.05 (Vernon 1967). We affirm.

Insofar as here pertinent, articles 9.30 and 9.31 of the election code provide, in effect, that in a contest of a city election, other than for a city office, the mayor of the city shall be made the contestee and shall be served with a notice of the contest and a statement of the grounds. Article 9.03 requires that the notice and statement of grounds shall be delivered to the contes-tee within thirty days after the return day of the election. Article 9.05 provides for the manner of service, as follows:

The notice, statement and reply required by the two preceding articles may and shall be served by any person competent to testify, and shall be served by delivering the same to the party for whom they are intended in person, if he can be found in the county, if not found, then upon the agent or attorney of such person, or by leaving the same with some person over the age of sixteen (16) years at the usual place of abode or business of such person [emphasis added].

Since election contests are matters of public interest and the procedure is entirely statutory, service in the manner prescribed by the statute has been held to be jurisdictional and not subject to waiver. Landrum v. Centennial Rural High School District, 134 S.W.2d 353, 354 (Tex.Civ.App.—Austin 1939, writ dism’d jdgmt cor.); Bahn v. Savage, 120 S.W.2d 644, 647 (Tex.Civ.App.—San Antonio 1938) writ of error ref’d 132 Tex. 113, 122 S.W.2d 191 (1938) (this point not presented on application); Adamson v. Connally, 112 S.W.2d 287, 289 (Tex.Civ.App.—Eastland 1937, no writ).

The election in question was held on April 3, 1976. At that time and until April 26, the acting mayor was the Honorable Adlene Harrison. Mayor Harrison appeared as a witness and testified that she was not out of the city at any time in April 1976 and was at City Hall every day except Sunday. On each Monday she presided over City Council meetings. She made no attempt to evade service by contestant, and she did not even know that he was attempting to serve papers on her.

Contestant testified that within the thirty-day period after the election he visited City Hall and attempted to find Mayor Harrison. One of the city employees said that he would try to locate her, and then reported that she was not in the building. Contestant asked for her home telephone number, but was advised that it could not be given out without her permission. Contestant then delivered the notice personally to the city secretary, Harold Shank, and made no further effort to deliver the notice to her personally.

Contestant testified further that he did not go to any City Council meeting in an attempt to serve Mayor Harrison. He had no recollection of going to City Hall on April 12, April 19, or April 26, when the City Council met, but he said, “I don’t usually go to Council meetings.” He acknowledged, however, “I usually go for special situations, Council meetings, or to City Hall.”

The trial court made findings of fact to the effect that contestant did not exercise reasonable diligence in attempting to serve Mayor Harrison personally and that by the exercise of reasonable diligence he could have found her in Dallas County for personal service within thirty days after the return day of the election.

On this appeal, contestant argues that article 9.05 does not require reasonable diligence and that the only prerequisite to substituted service is the statutory phrase, “if not found.” Contestant insists that substituted service on the city secretary was authorized by the statute by virtue of the fact that he made one trip to City Hall in an effort to find Mayor Harrison and did not find her. Contestant argues that the substituted service was as good as personal service, since Mayor Harrison had no personal interest in the litigation, but was named as contestee in her official capacity, and she evidently received the notice from the city secretary since she filed an answer to the contest within the thirty-day period.

We cannot agree that the statute does not require reasonable diligence. Since personal service is preferred to substituted service, a perfunctory attempt at personal service is not sufficient. The statutory requirement of personal service on the contestee “if he can be found in the county” necessarily implies that some degree of diligence must be used to find him, and the standard must be reasonable diligence, since no other standard is prescribed. Cf. Sgitcovich v. Sgitcovich, 150 Tex. 398, 241 S.W.2d 142, 147 (1951) (reasonable diligence required before substituted service is authorized under Tex.R.Civ.P. 106). What is reasonable varies with the circumstances, and if some diligence is shown, as by contestant’s one visit to City Hall in this case, reasonableness is ordinarily a question of fact.

The trial court’s finding that contestant did not use reasonable diligence is not challenged by contestant, but we review this finding because of the public importance of the election. We hold that this finding is controlling, since the evidence does not establish as a matter of law that contestant used reasonable diligence. Contestant’s own testimony shows that he was no stranger to City Hall or to the proceedings of the City Council. It is a fair inference from his testimony that he had attended meetings of the council in the past. He apparently knew when the City Council held its weekly meetings and knew that Mayor Harrison would probably preside. Her testimony establishes that she was present at all the meetings within the thirty-day period and was frequently at City Hall on other days during that period. We hold that this evidence is sufficient to support the trial court’s finding that the contestant did not use reasonable diligence to serve Mayor Harrison personally and, accordingly, that substituted service was not authorized. Consequently, the trial court’s order dismissing the contest was proper.

Affirmed.


author: McDONALD, Chief Justice.

text:
    Marion HUCKABEE, and Doris Huckabee, Appellants, v. The LOMAS & NETTLETON COMPANY, Appellee.
    No. 5690.
    Court of Civil Appeals of Texas, Waco.
    April 7, 1977.
    Rehearing Denied May 19, 1977.

      Michael R. Knox, Thompson, Coe, Cousins & Irons, Dallas, for appellants.
    John Guittard, Locke, Purnell, Boren, La-ney & Neely, Dallas, for appellee.
   OPINION

McDONALD, Chief Justice.

This is an appeal from summary judgment plaintiffs Huckabee and wife take nothing in their suit against defendant Lo-mas & Nettleton for wrongfully and negligently not having plaintiffs’ personal property insured against loss by fire.

Plaintiffs owned a home in Mesquite, Texas which they purchased in 1963. Bettes Company had a deed of trust on the property which required it to accept funds with regular payments, to be held in escrow, and to pay insurance premiums therewith. Plaintiffs had the home insured for $17,000. and their belongings insured for $6,800. Lomas & Nettleton succeeded to the interest of Bettes.

In 1971 plaintiffs’ insurance company cancelled plaintiffs’ insurance effective November 22, 1971. Plaintiffs requested Mesquite Insurance Agency to issue a replacement policy in like amounts, which they wrote with American States Insurance Company for $17,000. on the house and $6,800. on the belongings, effective November 19, 1971 and which they mailed to Lo-mas & Nettleton. Lomas & Nettleton refused to accept the policy and returned it to Mesquite Insurance Agency, although sufficient funds were in the escrow account to pay for same; but instead purchased a policy on the house for $17,000. from their own insurance agency written with Republic Insurance Company effective November 22, 1971. No insurance was purchased on plaintiffs’ belongings.

On June 8, 1972, plaintiffs’ house burned, being damaged $5,614.73, and plaintiffs lost personal property in excess of $6,800.

Plaintiffs’ damages and loss not being paid, plaintiffs filed suit March 19, 1973 against both American States and Republic Insurance Companies, for $5,614.73 damage to the house and $6,800. loss of belongings.

American States Insurance Company filed Third Party Action against Lomas & Nettleton alleging plaintiffs had sued it on its policy; denied that its policy was in effect; alleged Lomas & Nettleton wrongfully refused to accept its policy; that Lo-mas & Nettleton were thus directly liable to plaintiffs; and that if it had any liability it was entitled to indemnity from Lomas & Nettleton.

Thereafter Republic Insurance Company paid plaintiffs $2,807.36 (½ of the house damage) and plaintiffs nonsuited as to Republic; and thereafter American States Insurance Company advanced plaintiffs $2,807.37, plus 80% of the $6,800. sued for; recited such as a loan without interest repayable only if plaintiffs were successful in prosecuting a claim against Lomas & Net-tleton.

Plaintiffs dismissed with prejudice as to American States, and filed its 1st amended original petition against Lomas & Nettleton alleging Lomas & Nettleton wrongfully refused to accept the tendered policy with American States though escrow funds were available to pay its premium; that plaintiffs’ house burned and plaintiffs were damaged in the loss of their belongings.

Lomas & Nettleton filed motion for summary judgment asserting plaintiffs had sued American States Insurance Company on the policy issued by it; that plaintiffs received from American States and Republic Insurance Companies 100% of their real property damage and received from American States 80% of their personal property damage claim; that by such action plaintiffs elected as their remedy claim on the insurance company policy; by settling they affirmed the contract; and have waived and are estopped to assert claim against Lomas & Nettleton for failure to take actions to render the policy effective.

The trial court granted such motion and rendered judgment plaintiffs take nothing.

Plaintiffs appeal on 7 points contending:

The trial court erred in ruling that the acceptance of a compromise settlement by plaintiffs constituted an election of remedies as a matter of law.

The controlling facts succinctly stated are:

Plaintiffs own a home upon which they had $17,000. insurance plus $6,800. insurance on their belongings. Lomas & Nettle-ton serviced the lien and were required by the Deed of Trust to make insurance premium payments. Plaintiffs’ insurance carrier cancelled; plaintiffs’ secured replacement policy for the $17,000. on the house and $6,800. on their belongings and caused it to be sent to Lomas & Nettleton, who refused the policy; had the house insured for $17,-000. with its own ageney, but did not insure plaintiffs’ personal property in the home.

Thereafter plaintiffs’ house burned damaging the house $5,614.73 and damaging plaintiffs’ personalty $6,800.

Plaintiffs were not paid. Plaintiffs sued the two insurance companies for the total damages. Republic paid ½ of the house damage and was nonsuited. Américan States settled with plaintiffs for the other of the house damage plus 80% of the personalty damage. Pacts are alleged which if true would have rendered Lomas & Nettleton liable for wrongfully not having plaintiffs’ personalty insured.

The issue for determination is whether plaintiffs are barred as a matter of law in their suit against Lomas & Nettleton by the doctrine of election of remedies.

Custom Leasing, Inc., v. Texas Bank & Trust Company of Dallas, S.Ct., 491 S.W.2d 869 holds:

“An election of remedies is the act of choosing between two or more inconsistent but co-existent modes of procedure and relief allowed by law on the same state of facts. When a party thus chooses to exercise one of them he abandons his right to exercise the other remedy and is precluded from resorting to it. * * * Where remedies pursued against different persons are repugnant and inconsistent, the election of one bars the other, but concurrent and consistent remedies may all be pursued until satisfaction is had. The bar of an election does not apply to the assertion of distinct causes of action against different persons arising out of independent transactions with such persons. * * * It has been said that the doctrine of election of remedies is not a favorite of equity and should not be extended * *

Plaintiffs’ house burned and they were damaged $5,614.73 to their house and $6,800. to their personalty. Two insurance companies had insured the house, and one company had insured the personalty (although neither paid plaintiffs prior to suit and American States denied coverage), Lo-mas & Nettleton wrongfully prevented plaintiffs from having insurance on their personalty, (if the policy was not in effect).

Plaintiffs had a remedy on the policies. Plaintiffs had an inconsistent remedy against Lomas & Nettleton for wrongfully preventing the American States policy from being in effect.

Plaintiffs’ cause of action against the insurance companies was on the policies of insurance and on the premise such policies were in effect. Plaintiffs’ cause of action against Lomas & Nettleton was on the premise the American States policy was not in effect due to wrongful action of Lomas & Nettleton. The remedies in the two causes of action are repugnant and inconsistent.

But the bar of an election does not apply to the assertion of distinct causes of action against different persons arising out of independent transactions with different persons.

Plaintiffs’ cause of action against the American States arose out of plaintiffs having ordered insurance from Mesquite Insurance Agency on their house and personalty. Plaintiffs’ cause of action against Lomas & Nettleton arose out of Lomas & Nettleton’s alleged breach of the requirement in the Deed of Trust or in their alleged negligence in not accepting the American States policy. We think the causes of action arose out of independent transactions.

In Wilcox v. St. Mary’s University of San Antonio, Inc., S.Ct., 531 S.W.2d 589 the court citing Custom Leasing held the election of remedies doctrine did not bar a plaintiff pursuing a claim against a title insurance company for failure of an insured title, after filing trespass to try title action against other defendants to get title to the property.

And in Liberty Mut. Ins. Co. v. First Nat. Bank in Dallas, S.Ct., 245 S.W.2d 237, the court held the election of remedies doctrine did not bar a plaintiff, who suffered a loss because of unauthorized checks written on its account by an employee, from first claiming indemnity from its insurer, and then suing the bank to recover the amounts paid out on the unauthorized checks.

To the same effect are: Northwestern National Insurance Company v. Kirchoff, Tex.Civ.App. (Houston 14th) NWH, 427 S.W.2d 638; Constitution Indemnity Co. v. Armbrust, Tex.Civ.App. (San Antonio) Er. Ref., 25 S.W.2d 176; Russell v. Sarkeys, 5th Cir., 286 F.2d 736. See also: 25 Am.Jur.2d pp. 24, 25 and 116 ALR p. 601 Et. Seq. citing authorities pro and con.

Whatever the ultimate disposition of equities between American States and Lomas & Nettleton, under this record, the doctrine of election of remedies, cannot as a matter of law, bar plaintiffs being made whole the unrecovered 20% of their loss on personalty, in their suit as alleged against Lomas & Nettleton.

Plaintiffs’ contention is sustained.

' "reversed AND REMANDED.


author: AKIN, Justice.

text:
    Lette Yvonne HAGGARD, Appellant, v. Bobby Jack HAGGARD, Appellee.
    No. 19074.
    Court of Civil Appeals of Texas, Dallas.
    April 8, 1977.

      Lawrence E. Ackels, Lawrence E. Ackels, Jr., Dallas, for appellant.
    Burt Barr, Dallas, for appellee.

      .Although the judgment and findings recite $3,000, appellee admitted in oral argument that $5,000 was correct. We, therefore, reform the judgment in this respect.

   AKIN, Justice.

Our former opinion is withdrawn, and the following substituted.

Lette Haggard appealed from the division of community property pursuant to a divorce decree. Bobby Haggard moved to dismiss the appeal due to Mrs. Haggard’s acceptance of benefits under the judgment. In a prior opinion we dismissed the appeal on the authority of Carle v. Carle, 149 Tex. 469, 234 S.W.2d 1002 (1950), which holds that a party cannot appeal from a judgment where he has voluntarily accepted benefits under it. In her original appeal, no reason was given for accepting benefits under the judgment; however, in her motion for rehearing, supported by affidavit, Mrs. Haggard asserts that she accepted the benefits because of economic hardship which, she insists, is an exception to the general rule that a party cannot appeal from a judgment after accepting benefits under it. We reinstate the appeal, but we hold that the trial court did not abuse its discretion in dividing the property. Accordingly, we affirm.

Acceptance of benefits due to financial duress has been held not to constitute voluntary acceptance and is, therefore, an exception to the rule applied in Carle. Cherokee Nation v. United States, 355 F.2d 945, 949 (Ct.Cl. 1966); McCartney v. Mead, 541 S.W.2d 202, 205 (Tex.Civ.App. —Houston [1st Dist.] 1976, no writ). Here, according to Mrs. Haggard’s affidavit, she accepted four $100 checks under the judgment because she was then without sufficient funds to provide the necessities of life. This affidavit is not challenged by Mr. Haggard. We hold, therefore, that Mrs. Haggard did not voluntarily accept the benefits under the judgment and is not estopped to attack the judgment under the rule enunciated in Carle.

In this respect, we note that strict application of the Carle rule can lead to harsh results and does not seem to be consistent with more recent, enlightened decisions in this area. Carle recognizes that the general rule is subject to an exception to the effect that an appeal may be maintained where the reversal of the judgment cannot possibly affect the appellant’s rights to the benefits accepted. Carle, 234 S.W.2d at 1004. Some of the, decisions following, Carle are, in our view, unduly restrictive. In Roye v. Roye, 531 S.W.2d 242, 244 (Tex.Civ.App.—Tyler 1975, no writ), the husband was awarded a pick-up truck, household furnishings in his possession, and one-half of the residue of a fund after debts and attorneys’ fees were paid. The court held that the husband was not entitled to these specific items as a matter of right and that his retention of these items, therefore, es-topped his appeal from the property division. In Clark v. Clark, 362 S.W.2d 655, 657-58 (Tex.Civ.App.—Houston 1962, no writ), the wife’s acceptance of the home and furnishings was held to preclude an appeal concerning the award of certain community property to her husband.

In our opinion, these holdings go further than Carle requires. The Carle court was ultimately concerned with possible prejudice to the appellee and was concerned with the fact that the appellant in that case could not return the funds awarded so that the court, upon retrial, could render a different division of the community property. We are of the opinion that a spouse should not be estopped from appealing an award pursuant to a divorce unless the other spouse would be prejudiced by the appeal to the extent that the wrong could not be remedied upon retrial or unless the appealing spouse has clearly acquiesed in the judgment. Gordon v. Gordon, 218 Kan. 686, 545 P.2d 328, 333 (1976); see Brackin v. Brackin, 182 So.2d 1, 5 (Fla.1966); see also In re Marriage of Fonstein, 17 Cal.3d 738, 131 Cal.Rptr. 873, 552 P.2d 1169, 1173 (1976); Piper v. Piper, 234 N.W.2d 621, 623 (N.D.1975); O’Connor v. O’Connor, 253 Ind. 295, 253 N.E.2d 250, 251-52 (1969); Kassebaum v. Kassebaum, 178 Neb. 812, 135 N.W.2d 704, 705-06 (1965); Bohl v. Bohl, 72 S.D. 257, 32 N.W.2d 690, 692 (1948); Katz v. Katz, 10 Ill.App.3d 39, 293 N.E.2d 904, 906 (1973). Mere possession of a portion of the community estate awarded should not conclusively establish acquiescence in the judgment. As stated by the North Dakota Supreme Court in Piper, 234 N.W.2d at 623:

It is both practical and just that if one jointly or individually possesses an asset during the pendency of a divorce action and is subsequently awarded that asset by the divorce judgment, he should not have to divest himself of that asset before appealing the judgment. This is most obvious when the asset is a necessity of life.

Similarly, use of cash awarded one spouse should not preclude an appeal where the rights of the other spouse would not be prejudiced. E. g., Kassebaum, 178 Neb. 812, 135 N.W.2d at 706. Here, there is no danger that Mr. Haggard’s interest in the $400 received by Mrs. Haggard would be prejudiced by the appeal; he does not contend that his rights to any real or personal property are being prejudiced by her use of it while the appeal is pending. Indeed, the trial court could take the $400 paid to Mrs. Haggard into consideration in the event of a redivision. E. g., Fonstein, 17 Cal.3d 738, 131 Cal.Rptr. 873, 552 P.2d at 1173. If Mrs. Haggard is not awarded sufficient cash to repay it, the court could order assets awarded her sold. The evidence clearly shows that, in the event of redivision, she will necessarily be awarded property worth more than $400; a division that did not award her this amount of property would clearly be an abuse of discretion. Mr. Haggard’s rights would not be prejudiced, therefore, by this appeal.

We proceed, therefore, to consider the merits of the appeal. Mrs. Haggard contends that the trial court erred in its conclusions of law that Mrs. Haggard received approximately $35,000 and Mr. Haggard received only $20,000 of the community property. The court in its findings of fact awarded Mrs. Haggard the community home of an approximate value of $50,000, with a $17,000 lien against it, all household furniture and fixtures, all insurance on her life, and a note in the amount of $5,000 to be secured by property given to Mr. Haggard, payable at the rate of $100 per month with interest at 7½% per annum. Mr. Haggard received his Zale Corporation profit sharing and retirement benefits accrued in the amount of $17,133.06, subject to a $4,000 lien, a house in McKinney, Texas, worth $7,000, subject to, ,a $4,000 lien, 53.8 acres in Fannin County valued at $22,600, subject to a $17,000 lien, the Federal Land Bank account, and all of the stock in the Zale Corporation. Appellant’s basic complaint is that Mr. Haggard actually received $54,233.06 of the community property, rather than the $20,000 as the trial court concluded. In her brief, she states:

Mr. Haggard was awarded the following property with the accompanying valuations placed thereon by the trial court:
1. Vested profit sharing and retirement benefits in Zale Corporation $17,133.06
2. House and lot in McKinney, Texas 7,000.00
3. 53.8 acres of farmland in Fannin County 22,600.00
4. Federal Land Bank account 900.00
5. Zale stock 6,600.00
Total value $54,233.06

These calculations fail to take into account any indebtedness against the property. The trial court, in its findings, assigned values with accompanying indebtedness to the profit sharing and retirement benefits, the McKinney house, and Fannin County farmland. The actual value of this property, as found by the trial court, was $21,-733.06. No value was assigned to the Federal Land Bank account or the Zale stock in the findings of fact; however, Mr. Haggard’s testimony was that the Federal Land Bank account was worth about $1,000 and that the Zale stock was worth approximately $6,670, subject to a $4,000 debt. Thus, he received an additional $3,670, bringing the total to $25,403.06. On the other hand, Mrs. Haggard was awarded the home, which had a net value of $33,000, and the $5,000 note. Additionally, she received the household furnishings which were not valued by the trial court; however, there is evidence that they were worth about $2,000. We conclude, therefore, that she received community property in the total amount of $40,-000. Although this reflects a division slightly more favorable to Mr. Haggard than that recited .in the trial court’s conclusions of law, it is still clear that Mrs. Haggard received property worth substantially more than that received by Mr. Haggard. We note, also, that Mr. Haggard assumed approximately $3,000 in community debts. Since the trial court, in dividing the community property in a divorce, is given wide discretion in dividing the community property of the parties, that division will not be disturbed on appeal unless the court has clearly abused its discretion. Bell v. Bell, 513 S.W.2d 20, 22 (Tex.1974). We find no abuse of discretion here.

Mrs. Haggard also argues that the trial court erred in refusing to permit testimony concerning Mr. Haggard’s alleged adultery as a basis for an unequal division of the community property. Fault in breaking up the marriage is recognized as one factor to be considered by the trial court in deciding whether to make an unequal distribution. Cooper v. Cooper, 513 S.W.2d 229, 234 (Tex.Civ.App.—Houston [1st Dist.] 1974, no writ). Appellant sought to offer the testimony of two private detectives, at which time the following dialogue occurred:

The Court: Mr. Ackels, I understand the direction in which you are going, in regard to what you want to establish in the way of fault.
Mr. Ackels (attorney for appellant): Yes sir.
The Court: We have established the divergence in income; we have established the divergence of health. If you present this testimony, I assume it will be on the basis of argument for disparity in the division of the property. Mr. Ackels: Yes sir.
The Court: I don’t believe the Court will need it.

Thus, the trial court was apparently satisfied that an unequal division was justified, and it ultimately made such a division, as we have already pointed out. Consequently, for the testimony of the private detectives to be relevant, it would have to indicate that Mrs. Haggard was entitled to an even greater portion of the community property than that awarded. Since the testimony was not preserved in a bill of exception, we cannot presume that it would have established her right to a greater proportion of the community property. Biddle v. National Old Line Ins. Co., 513 S.W.2d 135, 139 (Tex.Civ.App.—Dallas 1974, writ ref’d n. r. e.).

Mrs. Haggard also asserts that the property division is unjust because she was not given sufficient liquid assets in that the bulk of the property awarded to her consists of the house, against which there is a substantial indebtedness. In McKnight v. McKnight, 535 S.W.2d 658 (Tex.Civ.App.—El Paso) rev’d 543 S.W.2d 863 (Tex.1976), the court of civil appeals held that the trial court abused its discretion because the husband was left without liquid assets and, consequently, awarded to the husband certain liquid assets which the trial court had awarded to the wife. Id. 535 S.W.2d at 660. The supreme court reversed the court of civil appeals’ redivision of the property, but affirmed its finding of an abuse of discretion and remanded the case to the trial court for a redivision. Thus, it appears that failure to award sufficient liquid assets to one spouse, apart from the value of property awarded each spouse, may constitute an abuse of discretion in certain circumstances. We hold, however, that no abuse of discretion is shown here. The only liquid assets available were the Federal Land Bank account and the Zale stock worth a total of $7,670, with a $4,000 debt against the stock. Thus, the available liquid assets totaled $3,670. Mrs. Haggard was awarded $5,000 to be paid in $100 monthly installments. Although the trial court could have ordered the sale of other assets, it was not required to do so. Additionally, the trial court was aware that Mr. Haggard was entitled to a bonus from his employer, the amount of which had not been determined at the time of trial. Since the bonus was not awarded in the division of the community property, the parties became joint owners of the bonus. Thus, Mrs. Haggard is entitled to seek a partition of the bonus in an action brought for that purpose. Busby v. Busby, 457 S.W.2d 551, 554-55 (Tex.1970). This, of course, will provide additional cash for Mrs. Haggard. We conclude, therefore, that considering the nature and extent of the community estate, no abuse of discretion has been shown in this regard.

Mrs. Haggard also argues that the trial court abused its discretion in failing to require appellee to pay her attorney’s fees. The award of attorney’s fees is one factor which the trial court may take into consideration in dividing the community estate, and the court has broad discretion in deciding whether attorney’s fees should be charged against the other spouse. Carle, 234 S.W.2d at 1005; Merrell v. Merrell, 527 S.W.2d 250, 256 (Tex.Civ.App.—Tyler 1975, writ ref’d n. r. e.). Since the trial court awarded a greater portion of the community assets to Mrs. Haggard than it did to Mr. Haggard, we cannot say that it abused its discretion in refusing to award attorney’s fees to Mrs. Haggard’s attorney.

As noted, supra, both parties agree that the judgment was in error with respect to its recitation that the note awarded to Mrs. Haggard was $3,000. Instead, the correct amount should be $5,000. Accordingly, we modify the judgment to reflect a $5,000 note to Mrs. Haggard. In all other respects, the judgment is affirmed.

      . The evidence shows that Mr. Haggard could not withdraw funds from the vested retirement fund at this time unless he left the company.
      There is no indication that he is considering a change in employment.


text:
    John G. O’HARA, Appellant, v. Louis J. HEXTER, Appellee.
    No. 19117.
    Court of Civil Appeals of Texas, Dallas.
    April 11, 1977.
    Rehearing Denied April 28, 1977.

      Clyde M. Marshall, Jr., Callaway & Marshall, Fort Worth, for appellant.
    Wm. Andress, Jr., Andress, Woodgate & Lodewick, Dallas, for appellee.
   AKIN, Justice.

Appellee, Louis Hexter, sued appellant, John O’Hara, on an alleged loan evidenced by a letter agreement. O’Hara answered by filing a general denial, and Hexter moved for summary judgment which was denied. Thereafter, the cause was set for trial, but O’Hara failed to appear and judgment was rendered against him following a hearing before the court. O’Hara filed a timely motion for new trial which the trial court overruled. Although the judgment is not technically a default judgment, we hold that the trial court’s discretion in ruling on the motion for new trial is subject to the same guidelines as those governing motions for new trial in default cases. Since we also hold that the trial court abused its discretion under this standard, we reverse and remand for trial.

This controversy arose through a joint venture arrangement between Hexter and O’Hara to purchase several buildings. As a part of various oral and written agreements between the parties with respect to this venture, they executed the following letter agreement which is the basis of. this suit. That letter reads:

October 8, 1975
Dear John:
In accordance with our agreement, there are attached three checks:
Check # 5559 payable to you and Home State Savings Association in the sum of $18,000.00
Check # 5560 payable to you and Hor-witz Funding Corporation in the sum of $18,000.00
Check # 5561 payable to you in the sum of $3,390.00
We have borrowed $40,000.00 and from it have prepaid the interest of .$40,000.00 for sixty days which amount is $610.00. The remainder of that loan, therefore, is $3,390.00 which is the amount of the check payable to you.
It is distinctly understood that you will not endorse the checks nor cash your cheek until there has been executed the agreements as prepared by Holt Smith. Should there be any complications or hitches in the execution, call me from Cincinnati and we can determine what we can give predicated upon their objections.
It is also understood that the $40,000.00 is a loan to you and is not to be construed directly or indirectly as affecting my capital gains on my sale of my share of the option agreement.
Very truly yours,
s/ Louis J. Hexter
Louis J. Hexter
This letter is certainly the way I understand the deal.
s/ John O’Hara
[emphasis added]

Because the funds referred to in this letter were expended without obtaining the desired contract for a loan or loan commitment, Hexter sued O’Hara upon the language that “the $40,000.00 is a loan to you.”

Hexter first contends that the judgment is a judgment nihil dicit which carries with it an admission of the cause of action substantially as stated in the petition. Thus, he argues that a party who permits a judgment nihil dicit to be taken against him impliedly confesses judgment and waives all errors in pleading or proof except those which the record shows were not intended to be waived, citing O’Quinn v. Tate, 187 S.W.2d 241, 245 (Tex.Civ.App.—Texarkana 1945, writ ref’d). However, in Frymire Engineering Co. v. Grantham, 524 S.W.2d 680, 681 (Tex.1975), the supreme court recognized that a true nihil dicit judgment occurs only where there is no answer filed after an appearance in the cause, as where the defendant has entered a dilatory plea, but has not placed the merits of plaintiff’s case in issue, or where the defendant has placed the merits in issue by answering, but then withdraws the answer. See 4 McDonald, Texas Civil Practice, § 17.25 (1971). Neither of these situations occurred here since the defendant had an answer on file, but did not appear at the trial. In this situation the question of whether a new trial should have been granted is governed by the standards set forth for default judgments taken where the defendant has failed to appear or answer. Ivy v. Carrell, 407 S.W.2d 212, 213 (Tex.1966). This standard was set out in Craddock v. Sunshine Bus Lines, 134 Tex. 388, 133 S.W.2d 124, 126 (1939), as follows:

A default judgment should be set aside and a new trial ordered in any case in which the failure of the defendant to answer before judgment was not intentional, or the result of conscious indifference on his part, but was due to a mistake or an accident; provided the motion for new trial" Sets up a meritorious defense and is filed at a time when the granting thereof will occasion no delay or otherwise work an injury to the plaintiff.

The record establishes as a matter of law that O’Hara’s failure to answer was neither intentional or the result of conscious indifference. He originally employed an attorney, Holt Smith, to represent him in this action. Smith filed a general denial and successfully defeated a motion for summary judgment. Because of a possible conflict of interest, Smith requested permission to withdraw. O’Hara agreed to his withdrawal and stated that he would have Clyde Marshall, who was representing O’Hara in a divorce suit, assume responsibility for the case. The trial court entered its order approving the substitution of Marshall as attorney of record, but due to a misunderstanding between Smith and O’Hara as to who was to inform Marshall that he was attorney of record, Marshall was not so advised. Consequently, when Marshall received a notice of the setting, he thought that he was notified simply as a courtesy because the outcome of this case would affect the property division in the divorce case. Upon learning of the default judgment, O’Hara contacted Marshall, who then assumed responsibility for the case and filed the motion for new trial, which was overruled. This evidence excludes any reasonable inference that O’Hara’s failure to appear for the trial was intentional or was the result of conscious indifference.

Hexter relies on Burnett v. Meletio, 351 S.W.2d 912 (Tex.Civ.App.—Dallas 1961, writ ref’d n. r. e.), where this court held that the trial court did not abuse its discretion in overruling a motion for new trial on the ground that the defendant had failed to show a reasonable excuse for his failure to appear, saying: “No reason, other than his own conduct in the nature of inadvertence or misunderstanding, is assigned for his failure to do that which an ordinary prudent person should have done.” Id. at 916. But the Craddock test is the absence of an intentional failure or conscious indifference rather than negligence. Craddock, 133 S.W.2d at 125. Thus, insofar as Burnett held that negligence is a bar to a new trial when the defendant answers, but does not appear for trial, it has been overruled by Ivy v. Carrell, supra, which expressly rejected the negligence standard in applying the Craddock rule to this situation. See Farley v. Clark Equipment Co., 484 S.W.2d 142, 146 (Tex.Civ.App.—Amarillo 1972, writ ref’d n. r. e.).

With respect to the requirement in Craddock that the defendant must set up a meritorious defense in his motion for new trial, O’Hara asserts three alleged meritorious defenses: (1) that part of the letter agreement which stated that the $40,000 was a loan to O’Hara was included solely for tax purposes and did not reflect the intent of the parties, (2) the agreement was subsequently orally modified, and (3) the parties had orally settled the case before the judgment was rendered. We find sufficient evidence in the record to “set up” the oral modification defense under the Ivy rule; therefore, we need not pass on the merits of the other defenses. O’Hara testified that he was unable to obtain a contract for the loan as contemplated by the letter agreement, that he called Hexter who authorized delivery of the checks to the lending institutions in an attempt to secure a loan commitment, that this change in the method of financing substantially increased the risk of loss of the money paid to the lending institution, and that Hexter agreed to assume this increased risk.

Hexter argues, nevertheless, that the oral modification defense was not raised by the general denial, which was the only defensive pleading on file, because it was an affirmative defense which must be affirmatively pleaded under Tex.R.Civ.P. 94 and that O’Hara’s motion for a new trial may only set up meritorious defenses which were raised by his answer. Essentially, Hexter’s position requires an implied confession of all defenses not pleaded; that is, the nihil dicit standard would be applied to defenses which were not raised by the pleadings. We cannot agree with this contention. Ivy v. Carrell expressly applied the Craddock standard to the situation where a party fails to appear for trial, and, since Craddock permits a party to set up a defense where no defensive pleading exists, we see no logic in requiring a more stringent requirement where an answer has been filed. We hold, therefore, that a meritorious defense may be set up for the first time on motion for new trial where the rule in Craddock is met.

O’Hara also has the burden of negating delay or injury to Hexter due to a new trial. United Beef Producers, Inc. v. Lookingbill, 532 S.W.2d 958, 959 (Tex.1976). Injury may be negated by an offer to pay costs incurred by the plaintiff as a result of the judgment, which O’Hara did in his motion for new trial. Id. His motion for new trial was filed four days after judgment was entered, and the hearing thereon was held twenty-three days later. At this hearing, there was testimony that O’Hara’s original attorney had informed Hexter’s counsel of O’Hara’s desire for a jury trial and that the earliest possible jury setting was February 22,1977, approximately eight months after the judgment. Thus, we conclude that defendant sufficiently established that no undue delay would have been caused by the trial court’s granting a new trial.

Although the trial court does have discretion in granting a new trial where defendant failed to appear for trial, this discretion is not unlimited. Since O’Hara has met the requirements for a new trial set forth in Craddock and Ivy, it was an abuse of discretion to deny the new trial

Reversed and remanded.


author: OSBORN, Justice.

text:
    The BANK OF EL PASO, Appellant, v. Ralph POWELL and Phil Statler, Appellees.
    No. 6570.
    Court of Civil Appeals of Texas, El Paso.
    April 13, 1977.

      Edwards, Belk, Hunter & Kerr, John W. Welsh, Jr., El Paso, for appellant.
    Bruce J. Ponder, Charles E. Vinson, El Paso, for appellees.
   OPINION

OSBORN, Justice.

This appeal involves a hold harmless agreement signed by a Bank customer in an effort to stop payment on a Bank money order, and a setoff of income earned by the Bank while holding the funds used to purchase the Bank money order. We affirm the trial Court’s judgment allowing such setoff.

On December 15, 1970, Ralph Powell purchased a Bank money order from The Bank of El Paso, which was payable to the order of Eduardo R. Castro in the sum of $20,-820.04. On December 22, 1970, and prior to any payment, Powell signed a stop payment order which included an agreement to hold the Bank harmless for said amount, as well as all costs and expenses incurred by the Bank through refusing payment of its money order. After payment was refused, Castro sued the Bank. Ralph Powell and Phil Statler each filed petitions in intervention, claiming all or part of the sum involved. The Bank did not deposit the $20,820.04 into the registry of the Court until after September 30, 1974, and, shortly thereafter, it filed a cross-claim under its hold harmless agreement.

In August, 1974, Castro, Statler, and Powell entered into a release and compromise settlement agreement under which Castro was to receive the full amount of the money order, and he was to pay to Statler and Powell $9,700.00. On September 27, 1974, the Court entered an order of dismissal with prejudice as to the petitions in intervention, and it provided that Powell and Statler take nothing against the Plaintiff, Castro, and the Defendant, The Bank of El Paso.

Based upon the settlement agreement, on January 9, 1975, the trial Court entered a final judgment ordering the District Clerk to pay to Castro $11,120.04, and awarded him $4,722.67 from the Bank for interest on the sum held by the Bank from December, 1970, until the end of September, 1974. The Court ordered the Clerk to hold $9,700.00 until disposition of the Bank’s cross-claim, which was severed. Upon trial of the severed issue, which results in this appeal, the Court awarded. The Bank of El Paso $4,722.67 for the interest it was required to pay to Castro, plus $2,500.00 as its reasonable attorney’s fees, but allowed the Defendants, Powell and Statler, an offset of $5,317.03 as the amount the Bank earned on the $20,820.04 during the period the Bank held those funds. Thus, the Bank actually recovered $1,905.64 on its cross-claim, and Powell and Statler were awarded the balance of the $9,700.00 held by the Clerk.

The Bank presents five points of error contending that the trial Court erred in allowing any offset against the sums the Bank was permitted to recover under the hold harmless agreement. First, we should note that a bank money order, or a cashier’s cheek, is accepted for payment when issued and it is not subject to countermand by either the purchaser or the issuing bank. Wertz v. Richardson Heights Bank and Trust, 495 S.W.2d 572 (Tex.1973). We also note that at the time of the entry of the order of dismissal of the petitions in intervention, the claims subsequently made for the offset were not before the Court, and the dismissal was only as to the claims for a part of the $20,820.04. That order, therefore, could not be res judicata of a claim which had not yet been made, and which was later presented by way of a setoff to the Bank’s cross-claim. Bernard v. Gulf Insurance Company, 542 S.W.2d 429 (Tex.Civ.App.—El Paso 1976, writ ref’d n. r. e.). Although the issue of res judicata was urged in oral argument, no point of error presents such issue for review.

In this case, the Bank did accept a stop payment order as a courtesy to its customer, but required that it be held harmless for the amount of the money order as well as all costs and expense incurred by the Bank through refusing payment of its money order. As the Court said in New York Central Railroad Company v. General Motors Corporation, 182 F.Supp. 273 (U.S. D.C. Ohio 1960), “ ‘Hold harmless’ means to assume all expenses incident to the defense of any claim and to fully compensate an indemnitee for all loss or expense * *.” The net effect of the agreement was that the customer agreed to indemnify the Bank for any loss it incurred, but not to discharge the liability of the Bank. Russell v. Lemons, 205 S.W.2d 629 (Tex.Civ.App.—Amarillo 1947, writ ref’d n. r. e.). The distinction was discussed by Justice Reavley in Hernandez v. Great American Insurance Company of New York, 464 S.W.2d 91 (Tex.1971), where he said:

“The traditional rule of strict indemnity requires the indemnitor to reimburse only actual loss and not to discharge the liability of the indemnitee. 41 Am.Jur.2d Indemnity Secs. 28 et seq. Chief Justice Hemphill criticized this rule in 1857 in Pope v. Hays, 19 Tex. 375, but it is a firmly established part of the law of indemnity contracts. It is consistent with the favoritism of the law for guarantors and indemnitors. McKnight v. Virginia Mirror Co., 463 S.W.2d 428 (Tex.1971). It has been said to follow the maxim: ‘As a man binds himself, so shall he be bound;’ and thus one who agrees to indemnify against loss should not be required to pay more than what is actually lost. Russell v. Lemons, 205 S.W.2d 629, 631 (Tex.Civ.App.1947, writ ref’d n. r. e.).”

In Kramer v. Linz, 73 S.W.2d 648 (Tex.Civ.App.—El Paso 1934, no writ), this Court considered the effect of an indemnity agreement given to an investor to secure him against loss on certain stock which he purchased. In a suit on the indemnity agreement after the stock became worthless, the Court held that dividends received by the stockholder should be considered in arriving at his loss, and said:

“ ‘As a general rule, in suits on ordinary contracts of indemnity, the measure of damages is the loss actually sustained or the amount actually paid. * * * ’ 31 C.J. Sec. 28, p. 434.
“This being true and the rule of construction of indemnity contracts being that they must be strictly construed in favor of the indemnitor, we are of the opinion that the amounts received by ap-pellee as dividends should have been taken into consideration in determining whether or not he had sustained a loss and, if so, the amount thereof.”

Thus, we conclude that the trial Court properly determined that the Bank is accountable for any benefits which accrued to it as a result of its holding in its demand deposits the sum of $20,820.04 (less the reserve for federal reserve requirements) for the period from December, 1970, to September, 1974. Otherwise, the Bank has not been reimbursed just for its loss, but it has in effect made a substantial profit on funds held by it for nearly four years.

We review the case with an agreed statement of facts, and while the evidence may be meager, it is sufficient to support the trial Court’s findings as to the amount earned by the Bank on the funds held for payment of its money order.

The Appellant’s points of error are all overruled. The judgment of the trial Court is affirmed.


author: BISSETT, Justice.

text:
    STATE of Texas et al., Appellants, v. Lila Faye NORRIS, Appellee.
    No. 1166.
    Court of Civil Appeals of Texas, Corpus Christi.
    April 14, 1977.
    Rehearing Denied May 12, 1977.

      Harold G. Kennedy, Asst. Atty. Gen., Austin, for appellants.
    Ernest H. Cannon, Riddle, Murphrey, O’Quinn & Cannon, Houston, for appellee.
   OPINION

BISSETT, Justice.

This is a suit brought under Tex.Rev.Civ. Stat.Ann. art. 6252-19 (Supp.1976), commonly called the Texas Tort Claims Act. Lila Faye Norris filed suit against the State of Texas, the State Department of Highways and Public Transportation, and the State Commission for Highways and Public Transportation to recover damages for personal injuries which she sustained in an automobile accident on January 23, 1974, which allegedly occurred because a traffic signal light at an intersection in Bay City, Texas, was malfunctioning. Trial was to a jury. All issues were answered favorably to plaintiff. Judgment was rendered that plaintiff recover from defendants the sum of $82,597.43. Defendants have perfected an appeal from that judgment.

Defendants contend in point of error 6 that the trial court erred in submitting Special Issue 1 inquiring of a “malfunctioning condition”, because the same constitutes a global submission which is not limited to a controlling issue. The issue, as submitted, reads:

“Do you find from the preponderance of the evidence that the traffic signal at Avenue C and 7th Street in Bay City, Texas, was in a malfunctioning condition on the occasion in question?”

The jury answered: “we do,”

Rule 277, T.R.C.P. (Supp.1976), as amended in 1973, permits the trial court, at its discretion, to submit broad issues to the jury. An issue is not now objectionable because it is general. The rule, as now amended, should be given a liberal construction. Security Federal Savings & Loan Association v. DeWitt, 536 S.W.2d 262 (Tex.Civ.App.—Amarillo 1976, writ ref’d n. r. e.); Members Mutual Insurance Company v. Muckelroy, 523 S.W.2d 77 (Tex.Civ.App.—Houston [1st Dist.] 1975, writ ref’d n. r. e.); Shasteen v. Mid-Continent Refrigerator Co., 517 S.W.2d 437 (Tex.Civ.App.—Dallas 1974, writ ref’d n. r. e.). Point 6 is overruled.

The jury further found: the traffic signal light system at the intersection of Avenue C and 7th Street in Bay City, Texas, was in a malfunctioning condition on the occasion in question; and that the malfunctioning condition constituted a dangerous condition (12). Those findings (Nos. 1 and 12) are attacked by points 1 and 4, “no evidence” points, and by points 8 and 15, “factually insufficient evidence” points.

The collision made the basis of this suit occurred shortly before noon on January 23, 1974, in Bay City, Texas in the intersection of Avenue C and 7th Street. State Highway 35 traverses that portion of 7th Street in the area of the intersection. Plaintiff, immediately preceding the accident, was driving her automobile north along Avenue C. She entered the intersection of Avenue C and 7th Street, hereinafter referred to as “the intersection,” and while she was in the intersection her automobile was struck by a truck which was then being driven by Mr. Jessie Figueroa, who was proceeding east on 7th Street.

In Bay City, 6th and 7th Streets run east and west; 7th Street is north of 6th Street. Avenue C runs north and south and crosses both 6th and 7th Streets.

It is undisputed that the State Highway Department, in the year 1970, assumed the maintenance of the traffic signal light system, hereinafter referred to as “the light,” at the intersection in question. At all times pertinent to this appeal, it was the duty and responsibility of the Highway Department to maintain the light at the intersection where the collision occurred in proper working order.

The color of the lights which are shown for traffic on the intersecting streets, as well as the time each color is exhibited and the cycle of change, is regulated by a “controller,” an electronic device. The controller actuates the relay system for the traffic signal light.

Plaintiff testified that immediately before the collision, she was proceeding west on 6th Street. At the intersection of 6th Street and Avenue C, she observed that the traffic signal light facing south on Avenue C at the intersection of 7th Street and Avenue C was red. She turned right (north) onto Avenue C and proceeded toward 7th Street. She stated that the traffic signal for traffic moving north on Avenue C turned green before she reached 7th Street, and further stated that it was green when she entered such intersection to turn left (west) on 7th Street. Her automobile was struck by the truck before she cleared the intersection. Mr. Figueroa, the driver of the truck, testified that the signal facing him (for traffic proceeding east on 7th Street) was green when he entered the intersection.

The evidence with respect to whether both plaintiff and Figueroa had a green light when each entered the intersection is conflicting. But it was within the province of the jury to resolve conflicts and inconsistencies in the testimony of any witness as well as in the testimony of different witnesses. Ford v. Panhandle & Santa Fe Ry. Co., 151 Tex. 538, 252 S.W.2d 561 (1952). “The credibility of witnesses is a matter which is evaluated by a court or a jury sitting as a fact and truth finder.” Great American Insurance Company v. Murray, 437 S.W.2d 264, 266 (Tex.Sup.1969).

The State Highway Department correctly observes that the only witnesses who testified directly that the light was green for both drivers of the vehicles when each entered the intersection were the drivers themselves. It contends that such testimony “constitutes no evidence of a malfunction of the traffic signal, or at most, no more than a mere scintilla.” We do not agree. Figueroa was a disinterested witness in this case. Plaintiff’s testimony was positive, unequivocal, and is as competent to raise an issue of fact as the same evidence coming from a disinterested witness. Bishop v. Bishop, 359 S.W.2d 869 (Tex.Sup.1962). There was ample evidence, both direct and circumstantial, all of which had probative value to support the jury’s findings that the light showed “green” simultaneously for both plaintiff and Figueroa, that it was in a malfunctioning condition on the occasion in question, and that the malfunctioning condition constituted a dangerous condition. Points 1, 4, 8, and 15 are overruled.

The jury also found: the State Highway Department had notice of the malfunctioning condition prior to the accident (Special Issue No. 2); the State Highway Department failed to correct the malfunctioning condition within a reasonable time after notice of the malfunctioning condition (Special Issue No. 3); such failure was negligence, which was a proximate cause of the accident (Special Issues Nos. 4 and 5); the failure by the State Highway Department to warn motorists of the malfunctioning condition was negligence, which was a proximate cause of the accident (Special Issues Nos. 10 and 11); the State Highway Department had knowledge of the dangerous condition prior to the accident (Special Issue No. 13).

Defendants attack the answers to Special Issues Nos. 2, 3, and 13 by “no evidence” points (2, 3, and 5), and the answers to Special Issues Nos. 2, 3, 5, 6, 7, 9, and 13, by “factually insufficient evidence” points (9, 10, 11, 12, 13, 14, and 16). They further contend in point 7 that Special Issue No. 2, which inquired into whether the State Highway Department had “notice” of the malfunctioning condition of the traffic signal system should not have been submitted over defendants’ objection because “actual notice” is required.

The pertinent provisions of the Texas Tort Claims Act, hereinafter called “the Act,” read, in part, as follows:

“Sec. 3. Each unit of government in the state shall be liable for money damages proximately caused by the death or personal injuries so caused [proximately caused by the negligence or wrongful act or omission of any officer or employee acting within the scope of his employment or office] from some condition or some use of tangible property, real or personal, under circumstances where such unit of government, if a private person, would be liable to the claimant in accordance with the law of this state . . .”
******
“Sec. 14. The provisions of this Act shall not apply to:
******
(12) Any claim arising from the absence, condition, or malfunction of any traffic or road sign, signal, or warning device unless such absence, condition, or malfunction shall not be corrected by the governmental unit responsible within a reasonable time after notice, or any claim arising from the removal or destruction of such signs, signals or devices by third parties except on failure of the unit of government to correct the same within such reasonable time, after actual notice
******
“Sec. 18(b). As to premise defects, the unit of government shall owe to any claimant only the duty owed by private persons to a licensee on private property, unless payment has been made by the claimant for the use of the premises. Provided, however, that the limitation of duty contained in this subsection shall not apply to the duty to warn of special defects such as excavations or obstructions on highways, roads or streets, nor shall it apply to any such duty to warn of the absence, condition or malfunction of traffic signs, signals or warning devices as is required in Section 14 (12) hereof.”

The parties in the trial court disagreed as to the issues that were to be submitted to the jury. The trial judge submitted the case both ways in accordance with the parties’ own interpretation of the Act. Special Issues 2 through 5 submitted the case on plaintiff’s theory that only “notice” of the malfunctioning traffic signal system was required to support her recovery in the action brought by her under the Act. Special Issues 6 through 9 submitted the ease on the State Highway Department’s theory that “actual notice” is required.

The provisions of the Act, insofar as those which are applicable to this case are concerned, provide for governmental liability on any claim arising out of the failure to correct the malfunction of a traffic signal light within a reasonable time after the proper governmental unit receives “notice” of such malfunction. Sparkman v. Maxwell, 519 S.W.2d 852, 857 (Tex.Sup.1975); City of Denton v. Mathes, 528 S.W.2d 625, 628 (Tex.Civ.App.—Fort Worth 1975, writ ref’d n. r. e.).

Notice is defined in 41 Tex.Jur.2d, Notice, § 2, as follows:

“Notice may be defined as information concerning a fact actually communicated to a person by an authorized person, as information actually derived by him from a proper source, or else as information presumed by the law to have been acquired. Presumed information is considered the equivalent, in legal effect, of full knowledge. . . .”

The above-quoted definition was approved in Flack v. First Nat. Bank of Dalhart, 148 Tex. 495, 226 S.W.2d 628 (1950). It has also been determined that “imputed actual notice carries with it the same legal consequences as conscious knowledge.” Champlin Oil & Refining Company v. Chastain, 403 S.W.2d 376, 388 (Tex.Sup.1965).

The term “condition,” as used in Subsection 12 of Section 14 of the Act, refers to the maintenance of a sign, signal or warning device “in a condition sufficient to properly perform the function of traffic control for which it is relied upon by the traveling public.” Lawson v. Estate of McDonald, 524 S.W.2d 351, 356 (Tex.Civ.App.—Waco 1975, writ ref’d n. r. e.).

The reports pertaining to the light at the intersection from January 10, 1973 through January 23, 1974 were introduced in evidence. Mr. John M. Lipscomb, the State Highway Department’s traffic engineer for the Bay City area, testified that the reports for that year showed that twelve trips, each labelled “emergency,” were made to the intersection because “there were malfunctions in that light.” Both the reports and the testimony of Mr. Manuel Ramos, a repairman for the State Highway Department, show that emergencies because the light was “not functioning properly” occurred on January 31, 1973; February 1, 1973; August 29, 1973; August 30, 1973; October 16,1973; October 17,1973; December 21, 1973; December 22, 1973; December 29, 1973; December 31, 1973; January 10, 1974; January 23, 1974. It is undisputed that the State Highway Department’s Electric Shop was contacted following each of the emergencies. Ramos, whose responsibility was to inspect traffic signal lights (including the light in question), “to see to it that they were maintained properly,” testified that he put out “flashing” stop signs when the lights were not operating properly, and called “the electrical shop and they would come out and take care of it.” On the occasion in question, he arrived at the scene of the accident about 1:15 p. m. He filed the following report with the State Highway Department:

“It is a light malfunctioning and was placed on flashing and signs put out, stop signs, and I called the traffic shop, the electrical shop.”

He further testified that it was possible for the light facing the direction that plaintiff was travelling and the light facing the direction that Figueroa was proceeding to both show green at the same time. He also said that the light had been out of order part of the year 1973. He also testified that on December 29, 1973, he made the following report to Mr. Jarvis, the “traffic signal man” for the Highway Department in the Bay City area, concerning the light at the intersection:

“Traffic signal not functioning properly.”

Mr. Jimmy Messer, who worked at a service station at the intersection for approximately a year before the accident, testified that shortly after the collision he heard “tires squealing,” looked up and saw “the lights were messed up” and “not working like they were suppose to,” were showing green for traffic on both streets, “and everybody had the right-of-way.” He further testified that during the year he worked at the service station before the collision, the lights malfunctioned on several occasions, and “they had a lot of trouble with it.”

Mr. Donald Belyeu, a maintenance employee for the State Highway Department, was sent to the scene of the accident pursuant to Ramos’ request that, “the controller be replaced.” He arrived there the morning of January 24,1974. He found the light “on flashing.” He tested the system and found that the lights were not operating properly. He replaced the controller. Thereafter, the lights worked properly. He admitted that a controller can malfunction in a manner to show green at the same time for both lights at an intersection.

It is undisputed that the controller in the traffic light system which was in use on the date of the accident was old and in need of replacement. It is established that several of the controllers which were installed and either replaced or exchanged during the year preceding the occurrence in question did not function properly over any extended period of time. The “emergencies” herein-before noted, during that year demonstrate that the frequency in the number of breakdowns with respect to the controllers was increasing with the passage of time and the intervals between breakdowns were steadily decreasing. In the latter part of December, 1973, and in the early part of January, 1974, traffic signal problems caused by the traffic light in question “not functioning properly” occurred at intervals of one day, seven days, two days, ten days, and finally thirteen days until the date of the accident. The increasing frequency of the breakdowns gives rise to a clear and reasonable inference that the State Highway Department could expect the light to malfunction and thereby create a dangerous condition every few days or so, and certainly in less than the period of thirteen days that elapsed between January 10,1974, when the last “emergency” occurred, and the date of the accident.

The State Highway Department could not ignore the probability that the light would malfunction within the thirteen day period between January 10 and January 23, 1974; yet, an alternative system was not employed by the State for the protection of the travelling public. There is a conflict in the evidence presented by the State Highway Department in connection with just when the controller that was in use on January 23, 1974 was last installed in the traffic light at the intersection. There is evidence that on December 29, 1973, Ramos requested that that controller then in use, No. G-5682, be replaced. However, according to his testimony, the same controller was still in use when he arrived at the scene of the accident. The State Highway Department’s records show that controller No. G-5682 was replaced on December 31, 1973 and that controller No. G-7072 was installed and that it was in use when the accident occurred.

From all of the evidence adduced at the trial, it follows that the State Highway Department, through its “repairman” and its “traffic engineer,” had notice that the traffic signal light system at the intersection of Avenue C and 7th Street in Bay City, Texas, was defective, and particularly that the controllers which controlled the colors of the several lights were malfunctioning for a period of several weeks before January 23, 1974, when plaintiff was injured in the collision. The State Highway Department was on notice that the traffic light could not be expected to function properly for more than a few days before there would be a breakdown. We are of the view that the State Highway Department had notice that the controllers that had been installed at various times subsequent to October 16,1973 were all generally defective, since the general defective condition was of the same general character as the particular defect which caused the accident. The State Highway Department, which was charged with the duty of maintaining the traffic light in a reasonably safe condition for the travelling public, failed in that duty.

We hold that “actual notice” of the malfunction was not required in order to subject the State Highway Department to liability for plaintiff’s injuries. All that is required to render the State Highway Department liable in this case is that the “malfunction shall not be corrected by the governmental unit responsible within a reasonable time after notice,” as provided in the first sentence of Subsection 12 of Section 14 of the Act. Sparkman v. Maxwell, supra; City of Denton v. Mathes, supra. If the legislature had intended that the governmental unit having responsibility should have “actual notice” in a malfunctioning light case, it would have said so, as it did in the second sentence of Subsection 12, concerning claims arising from the removal or destruction of “signs, signals or devices” by third persons. This is not a “premises defects” case. It is not a case where there has been an injury which resulted from the removal or destruction of a traffic signal. There is nothing in the evidence which intimates that the defective condition in the traffic light was caused by the conduct of a third person. It is not necessary for us to reach the question of notice requirements which must exist in order to hold a governmental unit liable in damages for either “premise defects” or “removal or destruction” of traffic signals by third persons, since the facts of this case rule out claims under those circumstances and conditions.

The State Highway Department had actual knowledge that the traffic signal light system in question was old, in need of replacement, frequently malfunctioned, and, in general, was in a defective condition. It is enough under the Act, as applied to the facts of this case, that the governmental unit, the State Highway Department, had notice of either the “condition” or the “malfunction” in order to make it liable for damages which resulted from a malfunction. The State Highway Department had such notice. From a review of all the evidence, together with the inferences that may be legally and reasonably drawn therefrom, the jury was warranted in finding that the State Highway Department had notice of the malfunctioning condition of the light; that it failed to correct this condition within a reasonable time after notice; and that such failure was negligence which proximately caused the accident. Accordingly, points 2, 3, 5, 7, 9, 10, 11, 12, 13, 14 and 16 are overruled.

The jury awarded plaintiff $62,400.00 damages for loss of earning capacity which, in reasonable probability, she will sustain in the future. The State Highway Department in point 17 says the evidence is insufficient to support the award, and that the “amount is excessive and is manifestly unjust.” It is argued that this Court should determine “what amount would reasonably be compensation for the injury sustained, and treat the balance as excess.” We do not agree. We have carefully considered all of the evidence relating to damages. The award finds ample support in the evidence. Point 17 is overruled.

The judgment of the trial court is AFFIRMED.