author: ROBERTSON, Justice.

text:
    SECURITY NATIONAL BANK OF LUBBOCK, Appellant, v. WASHINGTON LOAN AND FINANCE CORPORATION and Dallas International Bank, Appellees.
    No. 19555.
    Court of Civil Appeals of Texas, Dallas.
    June 26, 1978.
    Rehearing Denied Aug. 21, 1978.

      James A. Walters, Walters & Associates, Lubbock, for appellant.
    Donald C. McCleary, Wynne & Jaffe, D. Ronald Reneker, Daniel C. Garner, Geary, Stahl, Koons, Rodhe & Spencer, Dallas, for appellees.
   ROBERTSON, Justice.

This is a venue case. Washington Loan and Finance Corporation (Washington) sued Dallas International' Bank (DIB) for breach of a written agreement and Security National Bank of Lubbock (Security) for tor-tious interference with contractual relations between Washington and DIB. DIB answered and asserted a counterclaim and cross-claim for interpleader, requesting Washington and Security to interplead their respective claims to funds held by DIB. Security filed a plea of privilege, asserting its right as a national bank, under 12 U.S.C.A. § 94 (1945), to be sued in the county of its residence. Both Washington and DIB filed controverting pleas, and upon trial to the court, Security’s plea of privilege was overruled. Security now appeals from that order. We reverse and remand.

Early in 1977, an individual named Peter Payne purchased a certificate of deposit from DIB in the amount of $100,000. The certificate was to mature in 1983 and bore interest at the rate of 7½% per annum. After the certificate was delivered to Payne, he assigned his right to receive interest on the certificate to Washington. The day after the assignment was made, Payne borrowed $100,000 from Security, granted Security a security interest in the certificate, and delivered the certificate to be held until he repaid the loan. Later, Security learned that Payne might not be financially able to repay the loan, and demanded payment in full. When Payne did not repay the loan, Security presented the certificate to DIB and demanded early redemption of the certificate, less penalty for redemption prior to maturity. Washington simultaneously demanded that DIB retain the funds until maturity so that the quarterly interest payments would be made in accordance with its assignments from Payne. Both Security and Washington threatened to sue DIB unless their respective demands were met.

Thereafter, when DIB failed to pay an installment of interest on the certificate to Washington, Washington filed suit seeking relief against DIB for breach of its agreement to pay interest under the certificate, and against Security for tortious interference with that agreement. To protect itself from multiple or inconsistent liability, DIB filed a counterclaim and a cross-claim requesting that Washington and Security be required to establish their respective claims in court. Security filed pleas of privilege against the claims of both Washington and DIB, asserting its right, as a national bank, to be sued in the county of its residence, according to the provisions of 12 U.S.C.A. § 94 (1945).

The primary question presented by this appeal concerns the applicability of 12 U.S.C.A. § 94 (1945), which provides:

Actions and proceedings against any association under this chapter [Chapter 2 (“National Banks”) of Title 12 (“Banks and Banking”)] may be had in any district or Territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases.

The provision is a mandatory venue statute which requires suits against national banks to be filed in the county or district of their residence. Mercantile National Bank at Dallas v. Langdeau, 371 U.S. 555, 83 S.Ct. 520, 9 L.Ed.2d 523 (1963); Langdeau v. Republic National Bank of Dallas, 365 S.W.2d 783 (Tex.1963). As a federal statute, it controls over any conflicting state venue provisions. First National Bank of Marshall, Texas v. Texas Foundries, Inc., 512 S.W.2d 690 (Tex.Civ.App.—Beaumont 1974, no writ).

In order to determine whether this statute applies to the present case, we must first decide whether the claims asserted by Washington and DIB are claims “against” Security within the meaning of the statute. If we conclude that they are, we must then determine whether the claims are “local” in nature, that is, allowing suit outside Security’s county of residence, or “transitory,” in which case the suit must be tried where Security resides.

I.

Both Washington and DIB assert that their respective claims are not “against” Security within the meaning of 12 U.S.C.A. § 94 (1945). Washington argues that the primary thrust of its suit is directed against DIB to enforce its right to receive interest under the certificate until its maturity. Even assuming this to be the case, it is apparent that enforcement of that right will prejudice Security’s alleged right to enforce its security interest. Although a decision awarding continued interest to Washington would not result in recovery of damages against Security, the parties are nonetheless in an adversary relationship in the sense that each is asserting a conflicting right. Since a decision to enforce Washington’s rights would preclude Security from exercising its right of redemption, Washington’s claim is necessarily “against” the interests of Security. See Security First National Bank v. Tattersall, 311 So.2d 218, 222 (La.1975) (action held to be “against” national bank where the right to control of a certificate of deposit was to be adjudicated).

Although the United States Supreme Court, in Casey v. Adams, 102 U.S. 66, 68, 26 L.Ed. 52 (1880) (decided under the predecessor statute to the present provision) seems to hold that priority disputes between a bank and other creditors are not actions “against” a national bank, the present suit is not a “priority” dispute. As the term is commonly used, “priority” is the quality or condition of being first in order of right; it implies that there is a second right which, although just, is subordinate to another in enforcement. Lincoln National Bank and Trust Company of Central New York v. Colgan, 71 Misc.2d 908, 337 N.Y.S.2d 412, 413 (1972). Here, Washington does not seek to subordinate the bank’s security interest; rather, it seeks to absolutely foreclose Security’s chances to receive interest on the certificate. If Washington is successful on the merits, Security’s claim with respect to interest on the certificate will not be subordinated, but declared invalid and unenforceable. Accordingly, we hold that this case is not a “priority” dispute within the meaning of Casey v. Adams, supra, but rather a suit “against” Security to declare its right to receive interest under the certificate unenforceable.

DIB also argues that its action is not a suit “against” Security, but for a different reason. It urges that as the initiating party in an interpleader action, it seeks no affirmative relief against Security, but has merely invited Security to present its claim for judicial determination. We disagree. Even assuming that DIB’s action is a true interpleader, we conclude that it is a suit “against” Security within the meaning of the national bank venue statute. An interpleader action is not a mere “invitation” to litigate; a final judgment in interpleader is conclusive of the rights of those claimants named in the action who are properly subjected to the court’s jurisdiction through service of process. See Thaxton v. Whitesides, 54 S.W.2d 1059, 1060 (Tex.Civ.App.—Fort Worth 1932, no writ) (obligor on note has the right to interplead pledgor so that judgment may be res judi-cata of pledgor’s rights); see also Travelers Ins. Co. v. Selinger, 31 Conn.Sup. 528, 324 A.2d 925 (1974) (default judgment entered against claimant in interpleader action held a conclusive determination of that claimant’s rights); cf. Reynolds v. Aetna Life Ins. Co., 6 App.Div. 254, 39 N.Y.S. 885 (1896) (final judgment rendered in inter-pleader action held not conclusive of rights of a claimant not a party to the suit). Accordingly, the effect of DIB’s interpleader action is to force Security to litigate its claim in that particular action. In this sense, Security has the same responsibilities as an ordinary defendant in any civil suit, namely, to litigate or accept foreclosure of its rights by default. We hold, therefore, that an interpleader action is a proceeding “against” Security for the purposes of venue under 12 U.S.C.A. § 94 (1945). See Super Value Stores, Inc. v. Western Film Service Corp., 416 F.Supp. 662, 664 (D.Minn.1976) (holding that the venue of an inter-pleader action on which a national bank is claimant is controlled by the specific provisions of 12 U.S.C.A. § 94 (1945), rather than the general interpleader venue statute, 28 U.S.C.A. § 1397 (1972).

II.

Washington and DIB next contend that § 94 does not apply because their actions are “local” in nature, allowing suit outside Security’s county of residence, rather than “transitory,” in which case the suit must be tried in the county wherein Security resides. This distinction between “local” and “transitory” forms the basis for an exception to the applicability of § 94 in certain eases. It was first enunciated in Casey v. Adams, 102 U.S. 66, 26 L.Ed. 52 (1880), in which the Supreme Court held that an action which is purely “local” in character, such as a suit concerning ownership of realty, need not be tried in the county of the bank’s residence. As the court stated:

Local actions are in the nature of suits in vem, and are to be prosecuted where the thing on which they are founded is situated.

See also Mercantile National Bank at Dallas v. Langdeau, 371 U.S. 555, 83 S.Ct. 520, 9 L.Ed.2d 523 (1963); Michigan National Bank v. Robertson, 372 U.S. 591, 83 S.Ct. 914, 9 L.Ed.2d 961 (1963); Chateau Lafayette Apartments, Inc. v. Meadow Brook National Bank, 416 F.2d 301 (5th Cir. 1969); Kader v. First National Bank of Fort Myers, 387 F.Supp. 535 (W.D.Pa.1975); South Padre Development Co., Inc. v. Texas Commerce Bank National Association, 538 S.W.2d 475, 480 (Tex.Civ.App.—Corpus Christi 1976, no writ); Fort Worth National Bank v. Ballanfonte, 469 S.W.2d 9 (Tex.Civ.App.—Houston [14th Dist.] 1971, no writ); Lone Star Producing Co. v. Bird, 406 S.W.2d 344 (Tex.Civ.App.—Tyler 1966, writ dism’d); Central Bank, National Association v. Superior Court for the County of Sacramento, 30 Cal.App.3d 962, 106 Cal.Rptr. 912 (1973).

In order to determine the nature of the actions here pressed against Security, we must examine the facts alleged in the petitions of Washington and DIB, the principal rights asserted therein, and the relief sought. Brown v. Gulf Television Co., 157 Tex. 607, 306 S.W.2d 706 (1957); South Padre Development Co., Inc. v. Texas Commerce Bank National Association, supra, at 480. Washington’s claim for damages resulting from Security’s “tortious interference” with its contract does not concern a particular res, and although DIB’s “inter-pleader” action purports to decide the right to receive interest on a certificate of deposit, the certificate upon which the inter-pleader is founded is held by Security at its place of residence. For this case to be a “local” action, the certificate which forms the basis of DIB’s interpleader would have to be held by DIB in Dallas County, the county in which the action was filed. Since it is not located in this county, we conclude that DIB’s interpleader is a “transitory” action which must be prosecuted in Security’s county of residence.

Accordingly, the trial court’s order overruling Security’s plea of privilege is reversed and judgment is here rendered transferring this cause to Lubbock County.

GUITTARD, C. J., not participating.

      . Although Washington and DIB argue that Security waived its plea of privilege by filing pleas in bar and in abatement which were not made subject to the previously filed plea of privilege, we conclude that since these pleas were included in Security’s answer, which was made “expressly subject to [Security’s] Plea of Privilege,” these pleas did not waive the plea of privilege.

      .As quoted earlier, the statute, by its terms, only applies to “[ajctions and proceedings against any association under the chapter

      .Significantly, Washington does not contend that its suit for “tortious interference” is not a claim “against” Security.

      . There is some doubt as to whether DIB’s action is a true interpleader. In order to maintain an interpleader action, the party bringing the action must (1) have possession of the thing or fund, and (2) tender the thing or fund into court. Cockrum v. Cal-Zona Corporation, 373 S.W.2d 572 (Tex.Civ.App.—Dallas 1963, no writ); Bennett v. Smead, 180 S.W.2d 663, 664 (Tex.Civ.App.—Texarkana 1944, no writ). Here, DIB has not tendered the disputed funds into court, claiming that the source of the dispute, i. e., the right to receive interest, would be destroyed by deposit into the registry of the court. We note, however, that only an unconditional tender, not a deposit, is required. See Cockrum v. Cal-Zona Corporation, supra, at 575; Richey v. Stanley, 38 S.W.2d 1104 (Tex.Civ.App.—Texarkana 1931, no writ). Moreover, even if a deposit is made, any interest which accrues thereon is payable to the party ultimately adjudged to be its owner. See Sellers v. Harris County, 483 S.W.2d 242, 243 (Tex.1972).


source: Caselaw Access Project

author: COULSON, Justice.

license: Public Domain

text:
    Elia Garza SANCHEZ, Appellant, v. LIBERTY MUTUAL INSURANCE COMPANY, Appellee.
    No. 1829.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    June 28, 1978.
    Rehearing Denied with opinion ordering original opinion withdrawn and substitute opinion delivered and filed July 19, 1978.

      Gary Lee, Bates, Lee & McCool, Houston, for appellant.
    Stan Pfeiffer, Mounger, Whittington & Pfeiffer, Houston, for appellee.
   COULSON, Justice.

Our original opinion in this case has been ordered withdrawn and the following one substituted for it.

Elia Garza Sanchez filed a claim with the Industrial Accident Board of Texas against Liberty Mutual Insurance Company for injuries allegedly sustained while in the course and scope of her employment by Joske’s Department Store. On November 4, 1976 the Board entered its “final award.” On November 10, 1976 the Board received notice from Sanchez that she was dissatisfied with that award and desired to appeal by a suit in district court. Such a suit was filed on November 29, 1976. Liberty Mutual was unaware of the filing of that suit until it was served with citation on January 3, 1977. In the intervening period between announcement of the Board’s award and such service, Liberty Mutual issued a draft in the exact amount of the unpaid portion of the Board’s award and sent it to Sanchez and her attorney. Sanchez and her attorney negotiated the draft and divided the money with Sanchez taking seventy-five percent and her attorney taking twenty-five percent of it as a legal fee. Asserting that Sanchez’s acceptance of the money barred her suit appealing the award, Liberty Mutual moved for summary judgment. The trial court granted that motion and entered a take-nothing judgment against Sanchez from which she appeals. We conclude that since the money paid to Sanchez and her attorney was merely voluntary compensation payment and not consideration for an accord and satisfaction, acceptance of the money does not bar Sanchez’s suit and the case must be reversed and remanded.

A duly perfected appeal from an award of the Industrial Accident Board divests the Board of all jurisdiction with respect to the claim and invests jurisdiction, as of the date of the filing of the suit, in the district court. American Employers’ Ins. Co. v. Scott, 33 S.W.2d 845 (Tex.Cvi.App.—Eastland 1930, writ ref’d). Once the district court has acquired jurisdiction, the Board’s award is vacated and no longer has any force or significance. E. g., Latham v. Security Insurance Co. of Hartford, 491 S.W.2d 100 (Tex.1972). As such, Liberty Mutual’s payment of money in the amount of the Board’s award after the filing of the suit did not constitute a “payment of the Board’s award.” Buffalo Insurance Company v. McLendon, 402 S.W.2d 559 (Tex.Civ.App.—Texarkana 1966, no writ). The Board’s award was a nullity and that amount had no more significance than any randomly chosen figure.

Further, the payment cannot be deemed satisfaction of a compromise settlement agreement since no such agreements entered into after the court had acquired jurisdiction can be given force or effect unless they have received the court’s approval. Texas Employers Ins. Ass’n v. Miller, 137 Tex. 449, 154 S.W.2d 450 (1941, opinion adopted). Unapproved settlements are void and do not form the basis of a plea in bar of recovery. See United States Fidelity & Guaranty Co. v. Lewis, 266 S.W.2d 194 (Tex.Civ.App.—Texarkana 1954, writ ref’d n. r. e.).

The money paid to Sanchez must be viewed simply as voluntary compensation payments. Her attorney should not have retained twenty-five percent of the money as a legal fee, since such fee was not approved by the court as is required by statute. Tex.Rev.Civ.Stat.Ann. art. 8306 § 7d (Supp.1978). Sanchez is entitled to recover that money from her attorney.

Although Liberty Mutual must be given credit for the amount it has paid Sanchez, we decline to require her to deposit the money into the registry of the court as urged in Liberty Mutual’s cross point.

Reversed and remanded.


text:
    TEXAS DEPARTMENT OF HUMAN RESOURCES, Appellant, v. Ricky L. CHAPMAN, Appellee.
    No. 19558.
    Court of Civil Appeals of Texas, Dallas.
    June 28, 1978.
    Rehearing Denied Aug. 18, 1978.

      Steven A. Smith, State Dept, of Public Welfare, Dallas, for appellant.
    Gerald W. Livingston, Bean, Francis, Ford & Wills, Dallas, for appellee.
   ROBERTSON, Justice.

The Texas Department of Human Resources sued Ricky L. Chapman under the provisions of Section 13.01 et seq. of the Texas Family Code to establish a parent-child relationship between Chapman and an illegitimate child. The department brought the action under an assignment from the child’s mother. Chapman filed a plea in bar asserting that the suit was barred by the statute of limitations set forth in Section 13.01 of the Texas Family Code, which provides that a suit to establish the parent-child relationship between an illegitimate child and the alleged natural parent must be brought within one year from the birth of the child. The trial court sustained the plea and dismissed the cause. We affirm.

The initial question on this appeal is whether the one-year statute of limitations set forth in Section 13.01 of the Family Code invidiously discriminates between illegitimate children so as to deny them equal protection of the law. If we conclude that it does not, we must then decide whether the statute denies illegitimate children due process of law.

Equal Protection

The Department first argues that Section 13.01 invidiously discriminates against illegitimates and thereby denies them equal protection of the law. Before deciding this question, we must first determine the applicable standard of constitutional review. Although the Department urges that classifications based on illegitimacy are “suspect” and must be subjected to “strict scrutiny,” we cannot apply that standard. In Mathews v. Lucas, 427 U.S. 495, 96 S.Ct. 2755, 49 L.Ed.2d 651 (1976), the United States Supreme Court rejected the argument that illegitimacy is a “suspect” classification. According to the court, such classifications are “in the realm of less than strict scrutiny.” Thus, the pertinent analytical approach is whether the statute bears a rational relationship to a legitimate governmental interest. Mathews v. Lucas, supra, at 505-510, 96 S.Ct. 2755.

With the proper perspective established, we next consider the case of Gomez v. Perez, 409 U.S. 535, 93 S.Ct. 872, 35 L.Ed.2d 56 (1973), which forms the foundation of the Department’s constitutional attack. In Gomez, the supreme court invalidated a Texas statute which granted support rights to legitimate children but denied that right to illegitimates. The court concluded that the statute violated the constitutional guarantee of equal protection, stating:

[OJnce a State posits a judicially enforceable right on behalf of-children to needed support from their natural fathers, there is no constitutionally sufficient justification for denying such an essential right to a child simply because its natural father has not married its mother. (409 U.S. at 538, 93 S.Ct. at 875)

As this language indicates, a state may not absolutely foreclose the right of an illegitimate child to receive support from the natural father. Indeed, the court recognized the narrowness of its holding in Gomez by stating:

We recognize the lurking problems with respect to proof of paternity. Those problems are not to be brushed lightly aside, but neither can they be made into an impenetrable barrier that works to shield otherwise invidious discrimination. (409 U.S. at 538, 93 S.Ct. at 875) [Emphasis added]

In the present case, however, the challenged statute is not an “impenetrable barrier” to an illegitimate child’s right to support. The statute does not prohibit a suit for support; rather, the statute simply sets forth a time period within which the suit must be brought. As a matter of constitutional law, statute of limitations relate to remedies, and do not destroy fundamental rights. Cathey v. Weaver, 193 S.W. 490 (Tex.Civ.App.—Austin 1917), aff’d 111 Tex. 515, 242 S.W. 447 (1917); Lucia v. United States, 474 F.2d 565 (5th Cir. 1973). Accordingly, we conclude that the present case is not controlled by Gomez, and that our ultimate decision must be based upon whether this limitation on the remedy afforded an illegitimate child is constitutionally deficient.

It cannot be denied that proof of paternity places a burden upon illegitimates which is not shared by legitimate children; however, such a proof requirement is an unavoidable and indispensable element of the child’s claim for support. See Krause, Illegitimacy: Law and Social Policy 82 (1971); note, Illegitimacy and Equal Protection, 49 N.Y.U.L.Rev. 479, 511 (1974). Legitimate and illegitimate children are not similarly situated classes. Illegitimate children are fundamentally different from legitimate offspring, for at birth, they have no legal relationship to their natural father. Therefore, it is not only reasonable but essential that the state require proof of paternity as a condition of asserting an otherwise equal support right. Cessna v. Montgomery, 63 Ill.2d 71, 344 N.E.2d 447 (1976); Krupke v. Witkowski, 256 N.W.2d 216 (Iowa 1977). The question presented here is whether a requirement that this proof be made within one year from the birth of the child is reasonably related to a legitimate state interest. We conclude that it is. No supreme court case has held that illegitimates must be given an unrestricted right throughout their minority to bring a paternity suit. The state has a legitimate interest in preventing the litigation of stale or fraudulent claims. The purpose of statutes of limitation is to compel exercise of rights within a reasonable time, so as to afford the opposing party a fair opportunity to defend while the evidence is readily available. Price v. Anderson’s Estate, 522 S.W.2d 690 (Tex.1975); Gaddis v. Smith, 417 S.W.2d 577 (Tex.1967). It may be that the legislature has concluded that the longer the period between birth and suit, the greater the danger of fraud. At the very least, the defendant’s problems of proof are substantially increased with the passage of time. It has long been held that the legislature, not the courts, is entrusted with the responsibility of considering the public interest of this state regarding limitation of actions. See Williams v. Reed, 160 S.W.2d 316 (Tex.Civ.App.—San Antonio 1942, writ ref’d); Bean v. J. I. Case Threshing Machine Co., 221 S.W. 634 (Tex.Civ.App.—Amarillo 1920, writ ref’d). With respect to paternity actions, the legislative discretion is not subject to judicial review unless the prescribed period is so short as to be tantamount to the “impenetrable barrier” proscribed in Gomez. See Cessna v. Montgomery, supra; Krupke v. Witkowski, supra. A one-year limitation is not insurmountably brief, and although the forfeited right is important, this court is not empowered to invalidate legislative enactments based on our own policy concepts of what a reasonable time would be.

In view of the legitimate state interest in precluding the litigation of stale or fraudulent claims, and the fundamental differences between proving paternity of legitimate and illegitimate children, we conclude that Section 13.01 does not deny illegitimate children equal protection of the law.

Due Process

The Department next contends that Section 13.01 is constitutionally deficient in that it denies illegitimate children due process of law guaranteed under the Fourteenth Amendment to the United States Constitution and Article I, Section 19 of the Texas Constitution. It asserts that the illegitimate child’s rights to paternity determination and support are impermissibly tied to the willingness and ability of the mother to assert those rights within the prescribed time. According to the Department, the interests of the mother do not always coincide with that of the child, for she may choose not to sue for fear of publicity or in consideration of her continued affection for the child’s father. The failure to provide for alternate representation is challenged, and numerous statistics are presented to demonstrate the hardship this provision visits upon the poor, who cannot easily afford paternity suits. However meritorious these considerations may be as matters of policy, they do not rise to the level of constitutional argument. In our judgment, the legislature could reasonably conclude that the support right of an illegitimate child is best protected by requiring the suit to be brought by the mother, and that the potential harm to putative fathers defending stale or fraudulent claims is, on balance, greater than the potential harm to illegitimate children whose support right is forfeited by the mother’s inaction. In re People in Interest of L. B., 179 Colo. 11, 498 P.2d 1157 (1972), cert. denied, 410 U.S. 976, 93 S.Ct. 1497, 36 L.Ed.2d 173 (1973); Krupke v. Witkowski, supra; Cessna v. Montgomery, supra. Accordingly, we hold that Section 13.01 does not deny illegitimate children due process of law under the Fourteenth Amendment or the Texas Constitution.

The Department’s final argument is that Section 13.01 violates the due process clause of the Fifth Amendment to the United States Constitution by treating subclasses of illegitimates differently. It asserts that while the statute allows illegitimates who are legitimized within one year of birth to recover support, it denies that right to those who are not timely legitimized. In support of this argument, the Department cites Jimenez v. Weinberger, 417 U.S. 628, 94 S.Ct. 2496, 41 L.Ed.2d 363 (1974), which holds that to “conclusively deny” one subclass benefits available to another violates the due process clause of the Fifth Amendment. We cannot accept this contention, for the present statute does not “conclusively deny” any illegitimate child the right to support; rather, the statute merely sets forth a time period within which the right to support must be asserted. The right to support is thus preserved for all illegiti-mates, provided, of course, that the paternity suit is filed within the prescribed period. Such a procedural prescription is not a denial of due process, but rather a statutory scheme which, if adhered to, provides due process to all illegitimate children. Therefore, we conclude that Section 13.01 does not violate the due process clause of the Fifth Amendment.

Affirmed.

GUITTARD, C. J., not participating.

      . Section 13.01 provides:
      A suit to establish the parent-child relationship between a child who is not the legitimate child of a man and the child’s natural father by proof of paternity must be brought before the ghild is one year old, or the suit is barred.

      . Since the child was born in January, 1976, and this suit was not filed until February, 1977, it is undisputed that Section 13.01, if constitutional, bars the present action.

      . We do not consider whether the various tolling provisions set forth in the Texas Revised Civil Statutes are applicable to extend the period within which a paternity suit may be filed.


author: MOORE, Justice.

text:
    H. Ray BRIDGES, Appellant, v. TRINITY RIVER AUTHORITY of Texas, Appellee.
    No. 1126.
    Court of Civil Appeals of Texas, Tyler.
    June 29, 1978.
    Rehearing Denied Aug. 31, 1978.

      H. Ray Bridges, Trinity, for appellant. Lloyd C. Martin, Smither, Martin & Jag-gard, Huntsville, for appellee.
   MOORE, Justice.

This is a condemnation suit wherein Trinity River Authority of Texas sought to acquire the fee simple title to a 26.5-acre tract of land for the purpose of constructing a lake known as the Livingston Reservoir. The case was tried before a jury and in response to a single special issue the jury found that the reasonable market value of the land in question was $400 per acre. Pursuant to the verdict, judgment was rendered against Trinity River Authority for the total sum of $10,600. Thereafter, H. Ray Bridges, the landowner, perfected this appeal. For convenience, Trinity River Authority will hereinafter be referred to as the “condemnor” and the landowner will sometimes be referred to as the “con-demnee.”

We affirm.

The record reveals that the condemnee, H. Ray Bridges, purchased the 26.5-acre tract in question on March 1, 1967, from R. C. Kennedy, a co-defendant in the suit, for the sum of $12,000, paying $1,200 in cash and executing a vendor’s lien note for $10,-800, payable in nine annual installments of $1,200 each, including interest. Condemnee admitted in his testimony that at the time he purchased the land he knew that it would be condemned for the purpose of constructing the Livingston Reservoir. Within three months after he purchased the land the condemning authority filed its petition in condemnation and took title thereto on December 3, 1968. The record shows that shortly after the landowner purchased the land until just before it was inundated by the Livingston Reservoir, he cultivated approximately 5 acres of the land, growing and marketing vegetables therefrom in large quantities. The remainder of the tract was wooded and, being near the river, had some sloughs thereon. Condemnee irrigated his crops with water from the sloughs and the river, although he admitted he did not have a permit from the State or the condemning authority to use the river water for such purposes.

Prior to the trial, the condemnor filed a motion in limine requesting the court to exclude any and all evidence from the landowner or any other witness relating to the past, present or anticipated profits to be derived from the business of truck farming or raising various vegetables for sale, either at wholesale or retail, on the ground that such profits were speculative and too uncertain to establish the market value of the land. The trial court sustained the motion and as a result the landowner was not permitted to prove past or future profits from his truck farming operations and hence was not permitted to establish the value of the land by what is commonly known as the “income capitalization” method of valuing land.

Under the first and second points of error, condemnee complains of the action of the trial court in sustaining the motion in limine and in excluding the testimony of the witnesses offered by the condemnee to establish past or future profits derived from his truck farming operations. Condemnee argues that he was entitled to establish market value based on the income capitalization method of valuation and the court therefore erred in prohibiting him from offering any proof of the net income per acre which he derived or could have derived from the truck farming business.

While the condemnee was not allowed to offer any evidence of past or future profits before the jury, such evidence was offered and appears in the record by bills of exception. The testimony offered on the bill shows that the land in question was fertile river bottom land and, being adjacent to the Trinity River, was well suited for growing vegetables and other crops on a year-round basis; that on land such as this a truck farmer could expect to earn, under average conditions and management, between $1,800 and $2,200 per acre annually; and that upon applying the income capitalization method of valuation to the entire 26.5-acre tract it would have a market value of approximately $33,000. Condemnor took the position that the income capitalization approach was too speculative to be used as a means to determine market value and that the proper method of valuation was the market data approach, i. e., what the land would bring on the open market before condemnation.

It is generally held in this State that evidence as to profits from a business is not admissible to prove the market value of land in condemnation proceedings, except in certain limited circumstances. In Reilly v. State, 382 S.W.2d 116, 121-22 (Tex.Civ.App.—San Antonio 1964, writ ref’d n. r. e.), the court stated the rule as follows:

“Under the Texas decisions income or profits from a business are admissible in evidence in condemnation cases in only two situations: (1) In those cases where the landowner’s business has been temporarily interrupted because of a denial of access the landowner can recover his loss of profits as an element of damage. Hart Bros. v. Dallas County, Tex.Com.App., 279 S.W. 1111; City of La Grange v. Pieratt, 142 Tex. 23, 175 S.W.2d 243; Gandy v. State, Tex.Civ.App., 293 S.W.2d 534. (2) In those cases where only a part of the landowner’s land is taken, an owner may show loss of profits as an injury to his business, not as a separate item of damage, but as affecting the market value of the remaining land and improvements for the uses to which they were adapted and were being put. City of Dallas v. Priolo, 150 Tex. 423, 242 S.W.2d 176; Milam County v. Akers, Tex.Civ.App., 181 S.W.2d 719.
“With the exception of the above two mentioned situations, the Courts have held that business profits are too uncertain, speculative, conjectural and remote to be considered as a basis for computing market value. State v. Parkey, Tex.Civ.App., 295 S.W.2d 457. ...”

In cases involving farming operations, our courts have specifically held that profits from a farming business are of no value in passing on the market value of the land because they are too speculative. It is said that profits from a farming business are not reliable because they depend on such speculative matters as weather conditions, labor conditions, market conditions and other factors which vary from year to year. Consequently, since profits depend on so many contingencies, an accurate valuation cannot be based thereon. Lower Nueces River Water Supply District v. Sellers, 323 S.W.2d 324 (Tex.Civ.App.—San Antonio 1959, writ ref’d n. r. e.); Sjolander v. City of Houston, 551 S.W.2d 166 (Tex.Civ.App.—Beaumont 1977, no writ history). Upon applying the foregoing principles of law to the facts in the present case, it appears that the proffered evidence as to profits was properly rejected because such evidence was too uncertain and speculative. It follows that the “income capitalization” method of determining the market value was not applicable and the trial court did not err in sustaining the motion in limine. Accordingly, the first and second points are overruled.

Under the third point condemnee contends that the trial court erred in allowing the condemnor to elicit testimony from witnesses R. C. Kennedy and Wayne Ford and from condemnee while testifying in his own behalf, pertaining to the transaction in which he purchased the property from R. C. Kennedy. Also, in his seventh point, eon-demnee contends that the court erred in permitting the witness Wayne Ford to testify that the land had a market value of $400 per acre, because his testimony was largely based on condemnee’s transaction with Kennedy.

Kennedy testified that at the time the land was sold, condemnee Bridges requested that the interest be included in the payments so that he would know the amount he would have to pay each year. Kennedy testified that on a per-acre basis the sale’s price was probably $350 per acre or something in that neighborhood after deducting the interest thereon, and that he thought he sold it at a good price.

Both Kennedy and Bridges acknowledged in their testimony that the sale of the land in question was a free and open market transaction. Bridges, however, disagreed with Kennedy as to the price per acre of the land. He testified that the purchase price was $500 an acre and offered in evidence a sales agreement in which Kennedy offered to sell him the land for $500 an acre.

Wayne Ford, a land appraiser called by the condemnor, testified that he had been employed to appraise the land in question and that he considered the transaction between Kennedy and Bridges in making his appraisal. He testified that based upon the information he gathered from that transaction, as well as other comparable sales in the area, he was of the opinion that the 26.5-acre tract had a market value of $400 per acre.

Nowhere in condemnee’s points of error does he assert that any of the foregoing testimony was admitted over his objection. We have searched the record in vain in an effort to find where any objection of any nature was made and have found none. Nowhere in his brief does condemnee refer us to any pages in the statement of facts where any objections to the testimony may be found as required by Rule 418, Tex.R. Civ.P. Absent proper and timely objections to the testimony, any complaint as to its admissibility was waived and such complaint will not be considered for the first time on appeal. Rule 418(e), Tex.R.Civ.P.; Hammon v. Texas & New Orleans Railroad Co., 382 S.W.2d 155 (Tex.Civ.App.—Tyler 1964, writ ref’d n. r. e.). The third and seventh points are overruled.

Complaint is made in the fourth, fifth and sixth points of the action of the court in admitting into evidence, over objection, the price at which three other tracts of land had been sold near the time condemnee purchased the 26.5-acre tract in question. He argues that such evidence was inadmissible and harmful because such sales were not comparable in that they were too remote in time and differed as to location, character, use, potential use and, in one instance, size. He also objected on the ground that none of the three tracts were shown to be irrigated.

Wayne Ford testified that he had done extensive appraisal work for the condemning authority on the Livingston Reservoir. In order to appraise the subject property, as well as other properties within the reservoir, he testified he had investigated virtually every sale that had occurred within the area within six years prior to the date of the taking of the subject property on December 3,1968. He went into detail on the manner in which he confirmed the purchase prices paid and the facts concerning the sales and how he utilized those sales in forming an opinion of the value of property in the area, including the subject property. He candidly acknowledged that no two properties were alike and that appraising was not an exact science. He fully explained the manner in which appraisers had to make adjustments of comparable sales in order to value the property that was the subject of their appraisal.

Wayne Ford acknowledged the land in question to be good fertile river bottom land suitable for truck farming. He testified, however, that access to the property was through a lane that went through several properties with the subject property having no county road frontage. He then discussed three other sales which he considered to be comparable to the 26.5-acre tract, explaining the differences between those sales and the subject property and making adjustments for each sale. His approach to value was the market data approach, which entails relying on sales meeting the test of similarity. Based on this approach and his experience as an appraiser, he was able to formulate an opinion of the market value of the land.

The first sale considered by Ford was from Norma Walker to Meta Harrelson in April 1966, involving 20 acres. It was a long, narrow tract about 300 feet in width, had sandy soil and was wooded," although some of it was described as having been cut over. He described it as upland and acknowledged that it could not be irrigated from any public water. The sales price was $200 per acre. As a part of the consideration, the buyer agreed to dedicate to the county a portion of the land for a roadway.

The second sale was from the First National Bank of Huntsville to J. P. Boone in May 1966, involving a 64-acre tract. It was described as being half open and half wooded, with the open portion thereof being used to raise corn and sorghum. It was described as upland which was not being irrigated. The sales price was $250 per acre.

The other sale was from the Gertrude Murphy estate to C. H. Jones in October 1968, involving 331 acres. About 160 acres was open land used to raise grass or hay and the balance was wooded. The sales price was $260 per acre.

Ford testified that in addition to the three aforementioned sales he was familiar with quite a few other sales in the area and that the sale between Kennedy and Bridges, the condemnee, for $350 per acre fell within the upper limits of market values along the river bottom. He testified he placed heavy reliance upon the sale from Kennedy to Bridges since it occurred approximately 90 days before the condemnation proceeding was filed. He testified that on the basis of his experience as an appraiser, and after having taken into consideration those sales mentioned as well as others he had examined, he came up with a figure of $400 per acre, after having given the condemnee the benefit of some enhancement in value. Condemnee offered no evidence whatsoever as to the market value of the land. Consequently, the testimony of Wayne Ford constituted the only evidence before the jury as to the market value of the land.

The use of comparable sales is commented on in Rayburn, Texas Law of Con-' demnation sec. 117, p. 382, as follows:

“Actual market sales, as bearing upon ultimate value issues, have been many times characterized as the best and soundest of the various methods of valuation, for they immediately add strength, reason and weight to an expert opinion witness’s testimony, if his opinion is in line with the price range that is disclosed by a study of the market sales.”

Evidence of sales of comparable properties may be offered (a) on direct examination of expert or lay witnesses as independent substantive evidence of the value of the property to which the comparison relates, or (b) on direct examination of the value witness to give an account of the factual basis upon which he founds his opinion as to the value of the real estate in controversy, or (3) on cross examination of the value witness to test his knowledge, experience and investigation and thus affect the weight to be given to his opinion. Hays v. State, 342 S.W.2d 167, 170 (Tex.Civ.App.—Dallas 1960, writ ref’d n. r. e.); Bruner v. State of Texas, 391 S.W.2d 149, 153 (Tex.Civ.App.—Fort Worth 1965, writ ref’d n. r. e.). Comparable sales are admissible in evidence if it can be shown as a predicate that the lands involved in prior sales are similar to those taken. The trial court has great discretion in determining whether sales offered in evidence are comparable to the land being taken, and a ruling by the court that a prior sale is sufficiently similar and therefore admissible will not be reviewed except to determine whether there has been an abuse of discretion. Crouch v. State, 413 S.W.2d 141 (Tex.Civ.App.—Houston 1967, no writ history); Trinity River Authority v. Hutchings, 437 S.W.2d 383 (Tex.Civ.App.—Beaumont 1969, no writ history). Such comparable sales are generally admissible unless it should appear that reasonable minds cannot differ from the conclusion that the evidence of another sale lacks probative force because of dissimilarity. Hays v. State, supra at 174.

In our view the comparable sales were not so dissimilar as to make them inadmissible as a matter of law, and the action of the trial judge in admitting them into evidence does not reflect error. Even if error, we fail to see how such could have resulted in any harm to the condemnee. Although con-demnee knew that he would not be permitted to establish market value by the income capitalization approach at the time the motion in limine was sustained, he never at any time throughout the trial offered any other evidence to establish market value. As a result, the only testimony in the record as to market value was that given by Wayne Ford. The jury found the market value was $400 per acre, the maximum amount authorized under the evidence. Under the circumstances we fail to see how the alleged error, if any, was calculated to cause and probably did cause the rendition of an improper judgment. Rule 434, Tex.R. Civ.P. The fourth, fifth and sixth points are overruled.

By the eighth and ninth points, con-demnee complains of the refusal of the trial court to submit two of his specially requested issues inquiring as to (1) whether the property in question had a market value and, if not, (2) what the intrinsic value of the property was on the date of the taking. Condemnee sought to establish that the 26.-5-acre tract was “unique” and that the traditional definition of “market value” could not be applied. He sought to establish this by showing that the highest and best use of the land was for truck farming purposes and that its capability was of unparalleled character.

When the whole of a tract of land is condemned, as here, the damages shall be the market value of the property. Tex.Kev. Civ.Stat.Ann. art. 3265, sec. 2. It is only where there is no market value for the property that its actual or intrinsic value may be proved or considered. City of Austin v. Cannizzo, 153 Tex. 324, 267 S.W.2d 808 (1954); Lower Nueces River Water Supply District v. Sellers, supra. We find no evidence that the land in question had no market value. The testimony of the witness Wayne Ford shows that it had a market value and this testimony is supported by evidence showing that the land in question was actually traded on the open market between condemnee and R. C. Kennedy for $350 per acre only a short time before the taking. There being no evidence that the land had no market value, the issue of its intrinsic value was not raised. It follows that the court did not err in refusing to submit the requested issues in this regard. The eighth and ninth points are accordingly overruled.

Under the tenth, eleventh and twelfth points condemnee argues that there was no evidence of probative force to support the jury’s finding that the market value of the 26.5-acre tract of land was $400 per acre. Alternatively, condemnee contends that the evidence was insufficient or that the finding was against the overwhelming weight and preponderance of the evidence.

The only evidence in the record relating to the market value of the land in question is to be found in the testimony of Wayne Ford. The condemnee took the position throughout the trial that he was entitled to establish market value by the income capitalization approach or, in the alternative, that he was entitled to prove intrinsic value since the land had no market value. Although condemnee failed to establish a cause of action on either theory, he rested his case without offering any evidence as to the market value of the land. Hence these points of error direct us to the undisputed testimony of Wayne Ford that the land had a market value of $400 per acre.

The “no evidence” point presents a question of law. Our consideration of this point is limited to a determination of whether the testimony of Wayne Ford constitutes any evidence to support the jury’s finding that the land in question had a market value of $400 per acre. Montgomery Ward & Co. v. Scharrenbeck, 146 Tex. 153, 204 S.W.2d 508 (1947); In re Olsson’s Estate, 344 S.W.2d 171 (Tex.Civ.App.—El Paso 1961, writ ref’d n. r. e.). We hold that the testimony of Ford is of sufficient probative force to support the jury’s finding, and we accordingly overrule the tenth point.

In view of the fact that the evidence relating to market value is uncontroverted, we do not feel that the record would justify a holding that the evidence is insufficient to support the jury’s finding or that the judgment is against the overwhelming weight and preponderance of the evidence. Points eleven and twelve are overruled.

The judgment of the trial court is affirmed.

      . Although there were other co-defendants in the court below, H. Ray Bridges is the only party to this appeal.


author: OSBORN, Justice.

text:
    Angie G. CASILLAS, Appellant, v. GOVERNMENT EMPLOYEES CREDIT UNION OF EL PASO, Appellee.
    No. 6735.
    Court of Civil Appeals of Texas, El Paso.
    July 5, 1978.
    Rehearing Denied Aug. 2, 1978.

      El Paso Legal Assistance Society, Susan E. Perry, El Paso, for appellant.
    Calhoun, Morton, Deason & Preslar, Fred J. Morton, El Paso, for appellee.
   OPINION

OSBORN, Justice.

The Appellee, Government Employees Credit Union of El Paso (GECU), filed suit against Elias Casillas and wife, Angie Casillas, to recover the unpaid balance on a promissory note, plus interest and attorney’s fees, and to foreclose a security interest in certain personal property given to secure the indebtedness. Angie Casillas, who at the time of suit was divorced from Elias Casillas, filed an answer admitting execution of the note but denying all other allegations. She also asserted by way of an affirmative defense and a counterclaim certain alleged violations of the Consumer Credit Protection Act, Title 15, Sec. 1601, et seq., U.S.C.A., popularly known as the Federal Truth-in-Lending Act, and Federal Reserve Regulation Z, 12 C.F.R. 226.1, et seq., and the Texas Consumer Credit Code, Article 5069-2.01, et seq., Tex.Rev.Civ.Stat.Ann. She sought a recoupment and setoff of twice the finance charge in this transaction, plus reasonable attorney’s fees for violation of the Federal Acts. She sought similar amounts by way of a counterclaim under the State Act. She also sought indemnity from her ex-husband who was obligated to pay such debt under the terms of their divorce. Mr. Casillas did not answer. GECU answered the counterclaim with special exceptions and contentions that any errors on its part were bona fide and not intentional. Title 15, Sec. 1640(c), U.S.C.A. It also alleged good faith compliance with rules, regulations and interpretations of the Federal Reserve Board. Title 15, Sec. 1640(f), U.S.C.A. Only one witness testified, and much of the proof, including certain exhibits, was received by way of stipulations. The trial Court entered judgment for GECU denying all relief to Mrs. Casil-las. We reverse and remand.

The Appellant initially presents three points contending that the record does not contain proof of default and the amount due on the note, and that ordering a foreclosure on the security interest was improper. Appellee agrees that the record does not support the judgment in this regard and, therefore, we sustain the first three points of error.

The real battle between these parties is presented by the next three points concerning alleged violations of Truth-in-Lending provisions and the defenses raised by GECU. The Consumer Credit Disclosure form used in connection with this loan states that the loan is secured by a Security Agreement covering “Motor Vehicle(s),” “Household Goods & Appliances” and “Other,” and following each classification of property are several blank lines. On this form, as completed, there are listed two automobiles and certain household goods, and a line is drawn through the blanks after the word “Other.” Beside this part of the disclosure form is the following statement: “Security Interest/The Security Agreement will secure future or other indebtedness and will cover after acquired property.”

Under Section 9.204(d)(2), Tex.Bus. & Comm.Code Ann. (1968), a security interest does not attach under an after acquired property clause as to consumer goods other than accessions unless acquired within ten days after the secured party gives value. But the printed form used in this loan transaction did not so inform the borrowers. This is a violation of Section 1639(a)(8) of the Consumer Credit Protection Act and Section 226.8(b)(5) of Regulation Z. Garza v. Allied Finance Company, 566 S.W.2d 57 (Tex.Civ.App.—Corpus Christi, 1978); Pollock v. General Finance Corporation, 535 F.2d 295 (5th Cir. 1976), reaff’d, 552 F.2d 1142 (1977); Tinsman v. Moline Beneficial Finance Company, 531 F.2d 815 (7th Cir. 1976); Willis v. Town Finance Corporation of Atlanta, 416 F.Supp. 10 (N.D.Ga., 1976); Johnson v. Associates Finance, Inc., 369 F.Supp. 1121 (S.D.Ill., 1974). In the recently decided Garza case, Chief Justice Nye said:

“ * * * The reference to after-acquired property contained in the disclosure statement ignores this 10-day limitation and it purports to secure for the creditor all of defendants’ after-acquired consumer goods.
“Although our Texas courts have not considered this precise question, other courts have consistently ruled that disclosure of an after-acquired property clause without further explanation of the 10-day limitation on personal property subject to the security interest fails to comply with 12 C.F.R. Sec. 226.8(b)(5). * * *
“ * * * this portion of the regulation requires a lender to explain the 10-day limitation of U.C.C. 9-204(4)(d) [sic] so that the borrower is informed that any consumer goods that he may acquire within ten days of the loan transaction are subject to the security interest and that any consumer goods acquired after that date are not. * * * ”

We attach no significance to the fact that a line is drawn through the blanks after the word “Other.” This does not mean, as Ap-pellee urges, that there was to be no security interest in any other property, thus eliminating all after acquired property. It only means that there originally was no other property subject to the security interest other than the listed autos and the listed household goods.

We also agree with Appellant’s assertion that the disclosure form fails to describe the type of security interest taken. Section 226.8(b)(5) of Regulation Z requires a disclosure of the “description or identification of the type of any security interest held or to be retained or acquired * * .” The disclosure statement in this transaction only states the loan is secured by a security agreement on the listed property and that the security agreement will cover after acquired property. A mere recital that a security interest is being retained falls short of meeting the requirement that the security interest be described. McDonald v. Savoy, 501 S.W.2d 400 (Tex.Civ.App.—San Antonio 1973, no writ). Also see, Pennino v. Morris Kirschman and Company, 526 F.2d 367 (5th Cir. 1976).

By way of defense, Appellee relies upon a form “Disclosure Statement of Loan” in a pamphlet prepared by the Board of Governors of the Federal Reserve System. Its defense was made under the provisions of Title 15, Sec. 1640(c) and (f), U.S.C.A., which states:

“(c) A creditor may not be held liable in any action brought under this section for a violation of this subchapter if the creditor shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.”
“(f) No provision of this section or section 1611 of this title imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or interpretation thereof by the Board or in conformity with any interpretation or approval by an official or employee of the Federal Reserve System duly authorized by the Board to issue such interpretations or approvals under such procedures as the Board may prescribe therefor, notwithstanding that after such act or omission has occurred, such rule, regulation, interpretation, or approval is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.”

First, it appears that Section 1640(c) was designated to provide a defense to transactional errors, such as clerical errors, but not to mistakes in judgment about how to comply with the law and applicable regulations. Ives v. W. T. Grant Company, 522 F.2d 749 (2nd Cir. 1975); In re Dickson, 432 F.Supp. 752 (W.D.N.C., 1977); Houston v. Atlanta Federal Savings & Loan Association, 414 F.Supp. 851 (N.D.Ga., 1976); Smyer, “A Review of Significant Legislation and Case Law Concerning Consumer Credit,” 6 St. Mary’s L.Jr. 37 at 69 (1974).

In Ives v. W. T. Grant Company, supra, the Court concluded that a defense under Subsection (f) is legally insufficient when based upon Board pamphlets or staff letters. Also see, Pennino v. Morris Kirschman and Company, supra, footnote 8; and Smyer and O’Gorman, “Significant Recent Developments in Federal Consumer Credit Legislation and Case Law,” 8 St. Mary’s L.Jr. 707 at 722 (1977). The Court, in the Ives case, concluded that the reference in Subsection (f) to “any rule, regulation, or interpretation thereof by the Board” means those requirements of Truth-in-Lending that have become a part of Regulation Z. We concur in that holding and thus Appel-lee may not base its defense upon the 1969 pamphlet. But in any event, the evidence is insufficient to show any reliance upon that pamphlet in this case. The one witness to testify said the Credit Union disclosure form follows the one in the Federal Reserve pamphlet, but not that it was relied upon or served as a basis for drafting the one involved in this credit transaction. We sustain Appellant’s Points of Error Nos. 4, 5 and 6.

The last point contends that Appellant is entitled to damages, attorney’s fees and Court costs under the Texas Consumer Credit Code. The Appellee asserts that it is not licensed under that Code and that it has no application to credit unions. The evidence is without dispute that the Appellee is chartered and operates under the provisions of Article 2461-1.01, et seq., Texas Credit Union Act, and it has no license under Article 5069-3.01, Tex.Rev.Civ.Stat. Ann. Chapter 3 of the Texas Consumer Credit Code appears to apply to regulated loans of those making small loans of $2,500.00 or less, but Chapter 4 applies to installment loans made by “Any bank, savings and loan association or credit union doing business under the laws of this State * * *Such a definition clearly includes the Appellee. Article 5069-2.01(f) states:

“(f) ‘Credit Union’ means any person doing business under the authority of and as permitted by Articles 2461 through 2484, Revised Civil Statutes of Texas, 1925, as amended and the amendments thereto, * * *

And, as shown by the footnote in the Statute, “the amendments thereto” include Article 2461-1, et seq., under which the Appel-lee admittedly was organized and now operates. Thus, Chapter 4 is applicable, and Article 5069-4.03 requires the lender to disclose through a statement in writing certain information concerning the loan which has not been done in this case. The Texas Consumer Credit Code provides in Article 5069-8.01 that any party who fails to perform any duty imposed on him by any provision of this subtitle shall forfeit twice the amount of the interest contracted for and reasonable attorney’s fees fixed by the Court, which is the relief Appellant seeks in her counterclaim. We sustain the Appellant’s last point of error.

The judgment of the trial Court is reversed and the cause is remanded to that Court for a new trial in accordance with this opinion.

PRESLAR, C. J., not sitting.

ON MOTION FOR REHEARING

The Appellee has filed a motion for rehearing urging several errors in our original opinion. First, it is again urged that the line drawn through the blanks after “Other” on the disclosure form shows that no after acquired property was to be covered by the security agreement. We believe the blanks were placed on the form to list property covered by the security agreement other than motor vehicles and household goods and appliances. For instance, if Ap-pellee proposed to have the security agreement cover a sailboat owned by a borrower, it would not describe that property under the categories “Motor Vehicles” or “Household Goods and Appliances,” but under “Other.” If the “Other” category was to list after acquired property, as Appellee asserts, how could that after acquired property be listed under “Other” at the time the disclosure form was completed and before the after acquired property was obtained? The point of error is overruled.

The Appellee next asserts that we erred in holding that the disclosure form did not adequately describe the type of security interest taken. An illustration of a description of a security interest is found in the excerpts from FRB letter of November 2, 1976, No. 1125, where there is approval of a security interest description as follows:

“ * * * This means that if a breach of this contract by the debtor occurs, the creditor may take possession of the collateral and sell it, all at debtor’s expense and for debtor’s account.” See CCH Consumer Credit Guide — Transfer Binder, para. 31,475, p. 66,708.

In this case, Appellee gave no such description of its security interest and it violated Section 226.8(b)(5) of Regulation Z. For reasons stated in the original opinion, the disclosure form was also defective because it did not disclose the ten-day limitation on after acquired property. The second point is overruled.

The third point complains of our rejection of the pamphlet defense and the adoption of the Ives case approach, which Appellee asserts has been overruled by subsequent congressional action. We disagree. The pamphlet provision concerning after acquired property was the subject of two staff letters. See FRB letter of August 22, 1974, No. 829, and FRB letter of December 30, 1975, No. 983. CCH Consumer Credit Guide — Transfer Binder, para. 31,151, p. 66,514, and para. 31,323, p. 66,605. The Court, in Pollock v. General Finance Corporation, 552 F.2d 1142 (5th Cir. 1977), considered both letters, rejected the staff conclusions, and held that the ten-day limitation on after acquired property must be disclosed. That decision was followed in Garza v. Allied Finance Company, 566 S.W.2d 57 (Tex.Civ.App.—Corpus Christi 1978, no writ), where the language in the disclosure form about other indebtedness and after acquired property is identical to the language in the form in this case.

We further conclude that the 1976 amendment, now a part of Title 15, Section 1640(f), U.S.C.A., is of no assistance to the Appellee in this ease. That amendment provides for a reliance on staff interpretations “under such procedures as the Board may prescribe therefor * * *(Emphasis added). Clearly, this is prospective in nature and only applies to interpretations after the legislative act in February, 1976. It has no retroactive effect to cover a 1969 pamphlet. See Black v. G. B. Enterprises Inc., No. 75-890 (U.S.D.C., D.C., January 6, 1977); 5 CCH Consumer Credit Guide, para. 98,229, p. 87,671. The point is overruled.

The next point complains about our holding that the testimony is insufficient to show a. reliance on the FRB pamphlet. Since the defense is not available in this case, the issue of reliance becomes moot and the point is overruled.

The last point urges we erred in holding that Appellant had a valid counterclaim under the Texas Consumer Credit Code. Since the ease must be reversed and the evidence may not have been fully developed on this issue, we sustain this point and remand the matter to the trial Court for further consideration when the evidence is fully developed. We believe our original holding that Chapter 4 of the Texas Consumer Credit Code does apply to credit unions, if they make loans under that Code, is correct. In this case, the evidence is clear that GECU was not licensed and did not operate under the Texas Consumer Credit Code. But that is not the controlling issue. The issue is whether this loan was made under the provisions of the Texas Consumer Credit Code. If not, then the trial Court was correct in denying the counterclaim; otherwise, it was in error on this issue. Point of Error No. 5 is sustained and the issue as to the counterclaim under the Texas Consumer Credit Code is remanded to the trial Court for determination after hearing further evidence.

PRESLAR, C. J., not sitting.

      . In this case, where there has never been any claim made as to after acquired property, this issue seems to raise “considerable nitpicking,” but “that has been mandated as the order of the day.” Ford Motor Credit Company v. Blocker, 558 S.W.2d 493 at 499 (Tex.Civ.App.—El Paso 1977, writ ref’d n. r. e.).


author: AKIN, Justice.

text:
    CITY OF DALLAS, Appellant, v. James Luther ANDERSON et al., Appellees.
    No. 19562.
    Court of Civil Appeals of Texas, Dallas.
    July 6, 1978.
    Rehearing Denied Aug. 21, 1978.

      Douglas H. Conner, III, Asst. City Atty., Dallas, for appellant.
    Eddie D. Vassallo, Jr., McKool & Vassal-lo, Dallas, for appellees.
   AKIN, Justice.

This is a condemnation case in which the city condemned a drainage easement across the landowners’ property, and now appeals from an adverse jury award. The city appeals essentially on the grounds that the trial court erred in concluding as a matter of law that the landowner could not physically cross the easement and in refusing to admit into evidence certain “block-up sales” used by one of the city’s experts in arriving at his opinion of the market value of the property. We hold that the trial court erred in both respects. Accordingly, we reverse and remand.

The easement acquired by the city was, as set forth in the city’s Statement in Condemnation, as follows:

An easement under, over and across [the owners’ property] for the purpose of construction, operation and maintenance of storm-water drainage facilities.

The property is a 4.81 acre (213,675 square feet) rectangular tract which is now bisected through the middle by the city’s drainage easement. Prior to the city’s acquisition, the owners’ land was zoned for residential uses only and was used as open pasture land from which no income was received. There is some evidence that the highest and best use of the property was for townhouse development. Some dispute in the testimony exists as to whether prior to the acquisition a creek or natural draw existed on the property where the city’s easement now lies. The easement is about 25 feet wide at ground level with sloping earthen banks. At one end, the easement bottom is even with ground level. From there, the easement eventually runs to a depth of 3 or 4 feet at its deepest point.

The city on this appeal complains of certain rulings and the exclusion of certain evidence relating to proof of damage to the remainder of appellees’ property due to the taking of the drainage easement across it. In particular, the city complains that the trial court wrongfully hampered its attempt to prove the amount of damage to that part of the owners’ property called' “Remainder C,” the 117,518 square feet of land at the rear of the tract which is not served by any roads and which is separated from the more accessible front part of the property by the drainage easement.

We first address the city’s points of error by which it complains of the trial court’s refusal to submit the following requested instruction explaining the nature of the city’s easement rights in the owners’ land:

The term ‘easement’ as used in this charge is meant the right to use the 4,988 square feet or .114 acres of Defendant’s property for drainage purposes and no other. Title to the property covered by the easement, and as well as the right to use, occupy the subject real property remains in Defendant, landowners, provided such use, occupancy and enjoyment of the subject 4,988 square feet of land or .114 acres does not interfere with the City of Dallas’ drainage easement.

No explanatory instructions were given the jury, and we hold that this instruction should have been included in the charge. It is the court’s duty to explain the extent of the easement taken and describe its incidents to the jury. Texas Power & Light Company v. Cole, 158 Tex. 495, 313 S.W.2d 524, 529 (1958). Moreover, the requested instructions substantially track the language of an instruction approved by this court as basic to the jury’s understanding of condemnation cases where only an easement is taken. See Texas Power & Light Company v. Lovinggood, 389 S.W.2d 712, 714-16 (Tex.Civ.App.—Dallas 1965, writ ref’d n. r. e.).

Furthermore, the failure to give this instruction probably caused the rendition of an improper judgment, because it likely caused the jury to improperly assess the damage io the remainder of the property. In this respect, during trial the judge had consistently ruled, in excluding testimony of the city’s expert appraisers and limiting the city’s scope of cross-examination, that, as a matter of law, the owners had no right to cross the easement by bridge or with utility lines to gain access to Remainder C. The judge apparently believed that this conclusion was warranted because the city’s Statement of Condemnation described only the easement taken and did not specifically reserve any such rights of access over or under the easement to the owners. The refusal of the instruction in question was in keeping with these prior erroneous rulings of the trial judge.

In considering the damage to the remainder of the property, we must assume the jury acted in light of the law of the case as expressed by the judge during trial and as reinforced by the judge’s failure to instruct in such a way as to allow consideration of the owners’ right to cross the easement. The jury’s award of $33,761.65 was no doubt strongly influenced by the testimony of A. C. Moser, the owners’ expert appraiser, who testified that Remainder C was damaged “one hundred percent,” or to the extent of $29,378.56. Moser’s damage calculations were expressly predicated on the lack of access to the rear of the property by virtue of the court’s ruling that the owners had no right to cross the easement. The damage to Remainder C was by far the largest component of the damages by Mos-er's calculations, which were based on a per-acre value of more than twice that of the city’s appraiser. The evidence of damage which the city was allowed to introduce suggests that the market value of the owners’ entire 4.81 acres was less than $20,000. If the trial court’s ruling that the owners had no access rights across the drainage easement was erroneous, then the corresponding failure to give an instruction which would have allowed the jury to consider those valuable rights in determining damage to the property was also not only erroneous, but probably caused the rendition of an improper judgment, and thus constitutes reversible error.

In fact, the trial court was incorrect in declaring as a matter of law that the owners had no right to cross the easement in any manner. The Statement of Condemnation describes that interest condemned by the city to be a storm-water drainage easement under, over and across the owners’ property. Thus, the city could have gone into detail in describing the drainage facility to be built on the easement and in prescribing the city’s rights vis a vis the owners relative to the crossing of the easement and the use of the land under and adjoining the easement, but it was not obliged so to do. Without a specific reservation of a right to cross the easement with a bridge or otherwise, we must look to Texas law to determine whether the trial judge was correct in categorically denying that the owners had such a right.

The property owner, as fee owner of the servient estate, including the land on which the city’s easement lies, may use his land in any manner which does not interfere with the city’s drainage easement. San Jacinto Sand Co. v. Southwestern Bell Telephone Co., 426 S.W.2d 338, 345 (Tex.Civ.App.—Houston [14th Dist.] 1968, writ ref’d n. r. e.), cert. denied, 393 U.S. 1027, 89 S.Ct. 622, 21 L.Ed.2d 570 (1969); Pokorny v. Yudin, 188 S.W.2d 185, 195 (Tex.Civ.App.—El Paso 1945, no writ); Texas-Louisiana Power Co. v. Webster, 59 S.W.2d 902, 905 (Tex.Civ.App.—Dallas 1933), aff’d, 127 Tex. 126, 91 S.W.2d 302 (1936). We know of no Texas case which addresses specifically the right of a servient owner to bridge or cross a drainage easement. The authorities cited, however, do lead us to hold that the trial judge erroneously ruled that as a matter of law the owners could not cross the easement in any manner. It is a question of fact, rather than of law, whether a given crossing of an easement will interfere with the easement holder’s enjoyment of his easement. The city's requested instruction is in accord with the law of this state and, in the context of the record before us, we must reverse and remand for the failure to give it. Indeed, this instruction on the relative rights of the parties seems to us to be the bare minimum to which the jury is entitled in a condemnation case such as this. See Texas Power & Light Company v. Lovinggood, 389 S.W.2d 712, 714-16 (Tex.Civ.App.—Dallas 1965, writ ref’d n. r. e.).

We now address the city’s other points of error for the purpose of guiding the trial court on retrial. Most of these points also relate to the trial judge’s erroneous conclusion that any physical crossing of the easement would, as a matter of law, interfere with the city’s easement. Throughout the trial, the city attempted to elicit testimony from its own expert witnesses and from those of the owners that the damage to Remainder C was minimal since the property owners could cross the easement with a bridge and any necessary utility lines in order to preserve the usefulness of the rear of the property. The trial court sustained objections to all such testimony on the ground of the erroneous substantive ruling discussed above. The excluded testimony is before us by way of bills of exception.

Much of this testimony actually consisted of, or was based upon, the conclusion that the owners had the legal right to cross the easement in a given manner. Such testimony was inadmissible as a legal conclusion unless admitted as an expert opinion. Cockrell v. Craugh, 338 S.W.2d 516, 523 (Tex.Civ.App.—Austin 1960, no writ); Howard v. Sears, 196 S.W.2d 105, 110 (Tex.Civ.App.—Amarillo 1946, writ ref’d n. r. e.). That evidence which should have been admitted was the testimony that a particular manner of crossing the drainage easement, such as with a bridge or gas, sewer or water lines, which would or would not interfere or be inconsistent with the city’s use of their easement as described in the Statement in Condemnation. Also admissible, in our view, would be evidence of the feasibility or difficulty in crossing the easement in a non-interfering manner. Of. course, counsel may argue the weight of all of such evidence before the jury. The jury’s function, of which it should be informed by adequate instructions and definitions by the trial court, is to weigh the evidence on the possibility and feasibility of crossing the easement in a non-interfering manner as it bears on the accessibility of the rear of the property after the taking of the drainage easement. Accessibility is, of course, material to the jury’s determination of the damage to the rear of the property.

Upon having much of its evidence of damage excluded for the reasons noted above, the city requested leave to file a trial amendment to its Statement in Condemnation by which the city “would permit” the property owners the right to cross over the easement, by bridge or otherwise, so long as they do not interfere with the city’s use of the drainage easement. The trial judge denied leave to file this trial amendment and the city attacks that denial. The trial amendment should have been allowed. Even if the “would permit” language does confer a right, the amendment appears to give no right to the owners which the law, in the absence of such an amendment, does not already confer upon them as servient owners. Also, the allowance of this amendment would not prejudice the owners due to their possible reliance on the original statement. Moreover, the right of ingress and egress to the condemnee’s remainder is a proper reservation by trial amendment. State v. Frost, 456 S.W.2d 245, 254-56 (Tex.Civ.App.—Houston [14th Dist.] 1970, writ ref’d n. r. e.). See Wiseman v. State, 406 S.W.2d 253, 255-56 (Tex.Civ.App.—San Antonio 1966, writ ref’d n. r. e.). We have some doubts, however, about the extent of the authority of a city attorney to limit the city by a trial amendment to a Statement in Condemnation previously authorized by the council. Although this particular trial amendment should have been allowed since it did not alter the property interest taken by the city, we express no opinion as to the extent of a city attorney’s authority by way of trial amendment to add to, or subtract from, the property interests condemned by a city.

Lastly, we address the city’s contention that the trial court erred in excluding expert testimony of certain comparable sales on the basis that such sales were “block up sales” and, therefore were not voluntary or sufficiently comparable to the land involved in the suit. The trial judge is given considerable discretion in deciding whether evidence of other sales meets the voluntariness and similarity requirements which are the predicate for admissibility. State v. Childress, 331 S.W.2d 230, 235 (Tex.Civ.App.—Eastland 1960, writ ref’d n. r. e.). The mere fact that individual sales are block up sales does not establish that such sales fail to satisfy these requirements. City of Houston v. Wisnoski, 460 S.W.2d 488, 492 (Tex.Civ.App.—Houston [14th Dist.] 1970, writ ref’d n. r. e.). In the absence of other evidence showing the dissimilarity or involuntariness of the sales, they should have been admitted for the purpose of showing the basis of the expert’s opinion of the value of the subject property. The better view is, of course, to permit a witness wide latitude in offering comparable sales which are the basis for his opinion of the value of the subject property. This is true because use of these “comparable” sales gives the jury a valuable measure of the competence of the witness’ opinion. If a witness uses irrelevant or absurd sales to arrive at his opinion of market value, the jury is likely to give little weight to his opinion. On the other hand, if the trial judge excludes such a sale from evidence the jury is likely to give greater credibility to the expert’s opinion than it deserves. Furthermore, the opposing party is likely denied a valuable tool to use on cross-examination and in jury argument to destroy the credibility of that witness’ opinion. In our view, if the sale is a free and open market sale, it should be admitted into evidence except in that extraordinary instance where it is clearly evident to the judge that the admission of the sale is likely to lead to an erroneous jury verdict. In short, the better policy is for the trial judge to permit the circumstances of a sale to go to the weight of the evidence rather than to its admissibility.

Reversed and Remanded.

GUITTARD, C. J., not participating.

      . Since we are remanding the case we note an error in the amount awarded in the judgment. Although the judgment did award the $33,-761.65 found by the jury to be the damage to the remainder, it failed to include the $1,147.24 found by the jury in answer to Special Issue No. 2 to be the value of the drainage easement taken.


text:
    E. Don ROTT, Appellant, v. W. Robert BROWNE et al., Appellees.
    No. 19529.
    Court of Civil Appeals of Texas, Dallas.
    July 6, 1978.
    Thomas K. Boone, Dalton, Moore, Forde, Joiner & Stollenwerck, Dallas, for appellant.
    B. Robert Baker, Robert D. Hemphill, Saner, Jack, Sallinger & Nichols, Dallas, for appellees.
   AKIN, Justice.

The principal question presented on this appeal is whether appellant exercised due diligence in attempting to obtain a statement of facts when it was discovered that the court reporter would be unable to prepare a statement of facts because he had lost his notes. We hold that appellant need not request the trial judge to prepare or to approve a narrative statement of facts under Rule 377 in this situation. Consequently, his failure so to do does not preclude a finding by this court that he exercised due diligence in attempting to procure a statement of facts. Accordingly, we reverse and remand.

This suit was filed on December 1, 1970, and was tried before the court on March 1, 1973. The trial court pronounced judgment in favor of appellees; however, no written judgment was entered until July 11, 1977. After judgment was entered, appellant requested that the court reporter prepare a statement of facts, but the court reporter was unable to find his notes and could not prepare one. Appellant then prepared a narrative statement of facts, filed it with the court, and submitted it to appellee’s counsel. However, appellee’s counsel rejected the narrative. Appellant then prepared a second narrative which was also rejected by opposing counsel. Appellant did not request the court to approve either narrative until two days before oral argument in this court and well past the sixty-day period in which a transcript and statement of facts must be filed.

Appellant has now filed a motion with this court for leave to file a supplemental transcript containing the trial judge’s certificate stating that he is unable to approve or disapprove appellant’s proposed narrative statement of facts. Appellant relies on Tex.R.Civ.P. 428 which authorizes a supplemental transcript where anything material to an appeal is omitted from the transcript. However, the matter appellant now seeks to bring before us was not omitted material but was material not in existence when the transcript was filed in this court on December 29, 1977. Thus, Rule 428 is inapplicable and we know of no other authority that would permit such an extraordinary procedure. Accordingly, we deny appellant’s motion for leave to file the supplemental transcript.

We turn now to the merits of the appeal. The general rule is that if an appealing party exercises due diligence and through no fault of his own is unable .to obtain a statement of facts for appeal, a new trial is required if appellant’s right to have the case reviewed on appeal can be preserved in no other way. Rogers v. Rogers, 561 S.W.2d 172, 173 (Tex.1978); Smith v. Smith, 544 S.W.2d 121, 123 (Tex.1976); Victory v. Hamilton, 127 Tex. 203, 91 S.W.2d 697 (1936). Our question then is whether appellant has exercised due diligence.

Appellant argues that he has shown diligence by twice submitting a proposed narrative statement to opposing counsel. He asserts that it was not necessary to submit it to the trial judge and relies on language in Morgan Express, Inc. v. Perkins, 525 S.W.2d 312 (Tex.Civ.App.—Dallas 1975, writ ref’d) that an appellant should not have to rely on the unaided memory of the trial judge. We agree. Although Morgan Express was a default judgment case, we conclude that the same rationale applies here. Recognizing that in this instance the trial judge’s memory could have been aided by appellant since he was present at the trial, appellant should not have to rely on the memory of a judge, who although presumably fair, has already decided the merits of the case against appellant. Morgan Express, supra, at 315.

Our conclusion is supported by Waller v. O’Rear, 472 S.W.2d 789 (Tex.Civ.App.—Waco 1971, writ ref’d n. r. e.). In that case, the court reporter lost her notes and was unable to prepare the statement of facts. The court reversed and remanded stating that an appellant is entitled to a statement of facts in a question and answer form, and if such a statement of facts is unavailable through no fault of appellant, he is entitled to a retrial of the case. In that case, appel-lee in his motion for rehearing argued that appellant did not exercise due diligence to obtain a statement of facts because she did not try to get an agreement with opposing counsel for a statement of facts or to get the trial judge to make up a statement of facts citing Tex.R.Civ.P. 377. Attached to this motion was an affidavit of the trial judge stating that, if requested, he could and would have prepared a statement of facts. In response to this contention, the Waco Court of Civil Appeals held that it would place an unfair burden upon the appellant to have to rely upon the trial judge for a statement of facts because the judge had previously determined the facts in favor of appellees. In accord with this decision, we also hold that appellant should not have to rely on the trial judge’s memory in such a situation. This is especially true here where four years elapsed between the time when the judge announced his decision and the time when a final judgment was entered.

Appellees argue, nevertheless, that in order for appellant to satisfy the due diligence requirement he should have submitted the proposed narrative to the trial judge citing Rule 377(d) which provides:

If any difference arises as to whether the record truly discloses what occurred in the trial court, or if the opposing party fails to agree or to disagree within ten days after being furnished with a copy of the proposed statement of facts, the matter shall be submitted to and settled by the trial court. [Emphasis added]

We cannot agree with appellee’s contention that this provision of Rule 377 is controlling with respect to due diligence because the argument ignores Tex.Rev.Civ.Stat.Ann. art. 2324 (Vernon Supp.1978). Article 2324 provides that the official court reporter shall attend all court sessions and shall take full shorthand notes of all oral testimony offered, objections to evidence, and all court rulings. The purpose of art. 2324 is to provide the losing party with a full and complete record so that appellate courts may fully review the rulings of the trial court. This purpose cannot be adequately accomplished if a party is required to resort to a narrative statement through no fault of his own. We conclude, therefore, that Rule 377 must be read in the light of the purpose of art. 2324. Accordingly, we hold that the alternative methods of obtaining a narrative statement of facts under Rule 377 need not be resorted to by an appellant to show due diligence where a reporter took shorthand notes at the trial.

Our holding is supported by Goodin v. Geller, 521 S.W.2d 158 (Tex.Civ.App.—Waco 1975, writ ref’d n. r. e.). In that case, the court reporter lost his notes of the testimony of several witnesses and appellant prepared a proposed stipulated statement of the testimony of these witnesses, but the appellee refused to approve it. Ap-pellee also prepared a proposed stipulated statement of this testimony but appellant likewise refused to approve it. Then the trial judge, upon his own initiative, prepared a statement of facts in narrative form. In reversing and remanding the case, the Waco Court of Civil Appeals held that appellant was entitled to a question and answer statement of facts, unblemished by human interpretation. In commenting on the proposed narrative statement prepared by the trial judge, that court stated:

The narrative form prepared by the court would amount to no more than a translation by an intermediary, and such translation would be inherently permeated by the personal interpretation of the translator. Regardless of his honesty and integrity, the trial judge is subject to all the weaknesses of human nature and the frailties of the human mind in reproducing from memory the testimony introduced in a trial. [Citations omitted] [Emphasis added] 521 S.W.2d at 160.

We agree with the Waco Court of Civil Appeals. In our view, the only way to preserve an appellant’s right to have a case properly reviewed on appeal is by a retrial of the case where a statement of facts in question and answer form is unavailable through no fault of his own. Waller v. O’Rear, supra; Victory v. Hamilton, supra. This is especially true here because art. 2324 only requires the court reporter to keep his notes for three years. To hold as appellees would have us do would permit a successful party to deny the losing party an effective appeal by delaying entry of judgment beyond three years thus likely precluding the availability of a question and answer statement of facts. This would be unconscionable.

Reversed and remanded.

GUITTARD, C. J., not sitting.