author: COLEMAN, Chief Justice.

text:
    TEXAS EMPLOYERS INSURANCE ASSOCIATION, Appellant, v. Leonard Ray BEWLEY, Appellee.
    No. 16957.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Dec. 1, 1977.
    Rehearing Denied Jan. 5, 1978.

      Clark, Thomas, Winters & Shapiro, Bar-ham J. Bratton, Mary Joe Carroll, Austin, for appellant.
    Helm, Pletcher, Hogan & Burrow, Richard P. Hogan, Houston, Dillon, Giesen-schlag, Sharp & Delaney, John M. Delaney, Bryan, for appellee.
   COLEMAN, Chief Justice.

This is' a worker’s compensation case. After a jury trial a judgment was entered in favor of Bewley for partial permanent compensation benefits. The Insurance Association asserts that the judgment should be reversed for the reasons that the finding that Bewley was an employee of Lambert Construction Company is without support in the evidence. The Association also asserts that there is no evidence, or in the alternative insufficient evidence, that Bewley worked 210 days in the same employment or in similar employment during the year immediately preceding the date of his injury, and further that there is no evidence or insufficient evidence to support the jury’s finding on wage rates.

Bewley is the owner of a business which supplies heavy equipment and trained operators to construction projects. In June 1973, pursuant to an oral contract with Lambert Construction Company, Bewley was operating a backhoe with a front-end loader on Lambert’s construction site. Bewley drove the machine into a partially constructed building to pick up sidewalk fill. As the top of the backhoe was being raised, it hit a joist, causing several beams to fall. One or more of the beams struck Bewley causing the injuries for which he seeks compensation.

Article 8309, Sec. 1 Tex.Rev.Civ. Stat.Ann. (1967), expressly excepts independent contractors under the definition of “employees” and thus excludes their coverage under the Act. It is the burden of a claimant to show his employee status. Industrial Indemnity Exchange v. Southard, 138 Tex. 531, 160 S.W.2d 905 (1942).

An employee is defined in the Worker’s Compensation Act as a “person in the service of another under any contract of hire, express or implied, oral or written.” Whether a workman is an employee or an independent contractor depends on whether the purported employer has the right to control the workman in the details of the work to be performed. Where the contract between the parties fails to establish the status of the workmen, an employee-employer relationship may be established circumstantially by evidence of actual exercise of control. Anchor Casualty Co. v. Hartsfield, 390 S.W.2d 469 (Tex.1965).

Important evidentiary facts to be considered in determining the status of a workman as being an employee or an independent contractor were innumerated in the case of Industrial Indemnity Exchange v. Southard, 138 Tex. 531, 160 S.W.2d 905 (1942), in these words:

“The general rule relating to independent contractors rests upon certain recognized tests; although such tests are not necessarily concurrent with each other, nor is each test in itself controlling. Such tests are: (1) the independent nature of his business; (2) his obligation to furnish necessary tools, supplies, and material to perform the job; (3) his right to control the progress of the work, except as to final results; (4) the time for which he is employed; and (5) the method of payment, whether by time or by the job.”

Mr. Bewley has a large investment in heavy equipment such as backhoes, tractors, trucks, ditching machines and trenchers. Mr. Bewley testified that since 1960 he has been essentially in business for himself. Mr. Gayle Jones, superintendent for Lambert Construction Company called him on the phone and asked him if he could do some backhoe work on the Lambert job. He testified that when someone called him to do work he usually asked them how much work they had and how long it would take so that he could plan his work. When he went on the job the superintendent or foreman on the job would tell him what to do and show him where it was to be done and “direct us in doing it”. While Bewley sometimes contracted work on a turn-key basis or charged by the lineal foot, he usually charged by the hour. Occasionally he would lease a machine, but ordinarily he furnished the operator and charged by the hour for the machine and operator. His son worked for him in the business and sometimes he hired other operators. When he had more than one job going he would operate a machine. His son would always “go first”. When he billed his customers he did not show separate charges for the machine and the operator. He paid his own social security tax and withholding tax.

When Mr. Jones called him to work for Lambert Construction Company on the Star Furniture job he did not know exactly what work was to be done. He was not furnished plans and specifications. He was paid on invoices for the number of hours worked at $17.50 per hour. He didn’t know how many hours he would work on any particular day. He did the work that the job superintendent told him to do. On this particular job he did excavation around the foundation, did some grading work, cut out for the sidewalks, loaded trash on the truck, moved some pipe, and moved some sand. He and his son worked on the job at different times. When he was doing excavation or grading work, the contour and grade lines were set by employees of Lambert Construction Company. These employees assisted with the fine grading by giving directions to the operator. This was usually done by hand signals signifying whether it was necessary to go deeper or to fill in. The final work was accomplished by Lambert employees using shovels. A machine operator is a member of a skilled trade. Lambert Construction Company employees did not undertake to tell the operator how to handle his machine. Mr. Bewley testified generally that he was doing whatever the job superintendent wanted him to do by the hour. He further testified that he had not been on anybody’s payroll since 1960.

When we consider the evidence bearing on the recognized tests set out in Industrial Indemnity Exchange v. Southard, supra, we find that Bewley did not furnish material, was not able to come or leave at his own discretion, was paid by the hour rather than by the job, was not furnished with the plans and specifications of the job to be done, that he did such jobs as were within the capability of the machine as were pointed out to him by the contractor. These facts point to his status as being that of an employee.

On the other hand Bewley was in the independent business of renting expensive equipment and furnishing skilled operators. He determined the compensation to be paid the operator and withheld his social security and income taxes. A special skill was required to operate the machines. At various times both Bewley and his son operated the equipment on that particular job. The hourly payment made by Lambert Construction Company included both the rental of the equipment and the compensation to the operator. The job superintendent did not tell the .operator how to operate his machine, and it seems reasonable to conclude that the job superintendent could not fire the operator without the consent of Bewley. These facts alone would lead to the conclusion that Bewley was an independent contractor.

The job superintendent determined when and where the machine was to be operated and had the right to control the end results to be obtained. There is no evidence that the superintendent attempted to tell the operator how to use the machine in order to obtain the expected results. The evidence would support an inference that the control which Lambert Construction Company exercised over the operator of the machinery was for the purpose of seeing that the work was properly and expeditiously done and proper results accomplished. This manner of general control over an independent contractor does not result in making him a servant. Dave Lehr, Inc. v. Brown, 127 Tex. 236, 91 S.W.2d 693 (1936).

It is settled that where there is no dispute about the controlling facts, and there is but one reasonable conclusion that can be inferred from such facts, the question of whether one is an employee or an independent contractor is one of law, and not of fact. Pitchfork Land and Cattle Company v. King, 162 Tex. 331, 346 S.W.2d 598 (1961).

Here there was no undertaking to do a specific piece of work. Bewley was to operate the machine to perform a task assigned by the job superintendent. It was contemplated that he was to work until a particular job was completed. The inference might be drawn that he was in service at the will of the parties. While Bewley occupied the position of a contractor in renting out the service of his machine and in undertaking to furnish a competent operator, at the time of the accident he was operating the machine and occupied much the position of a borrowed employee. Contradictory reasonable conclusions can be reached from the facts established by the testimony. In such a case there is a question for the jury. Industrial Indemnity Exchange v. Southard, supra. Since the facts are essentially without dispute and the decisive issue is the inferences that can be drawn from these facts, the jury’s finding that Bewley was an employee of Lambert Construction Company is supported by sufficient evidence. Texas Employers’ Ins. Ass’n v. Owen, 298 S.W. 542 (Tex.Comm’n App., Section B); Hilgenberg v. Elam, 145 Tex. 437, 198 S.W.2d 94 (1946); Southern Underwriters v. Samanie, 137 Tex. 531, 155 S.W.2d 359 (1941).

The Insurance Association contends that the answers made by the jury to Special Issue No. 11 and 12 are supported by no evidence or in the alternative by insufficient evidence. Special Issue No. 11 inquired whether Bewley had worked in the employment in which he was working on June 22, 1973, whether for the same employer or not, for at least 210 days of the year immediately preceding such date. The jury found that he had so worked.

Bewley testified that he knew for a fact that he had worked at least 210 days in the year preceding the date of the accident. He said that would mean that he worked about two out of every three days. On cross-examination he was asked if he kept records as to who operated a machine on any particular occasion and he stated that he did not. He testified that he could tell when he was working by the fact that the invoices would show more than one machine working on a particular date. When more than one machine was working, he would be operating one of the machines. He testified that he always sent his son out first. The evidence reflects that on some occasion he did jobs as an independent contractor and that on a few occasions he had rented his machine without an operator. He stated that if the invoice showed that a machine worked eight hours on one job and another machine worked eight hours on another job on the same day he would have been operating one of the machines. He further stated that he did not go back and break down his records to see how many days he had actually worked, and, although requested to do so, he failed to bring his records into court. He stated that he kept the records in a bay over the machinery at the shop and that some of them might have been destroyed by rats, water or something.

Bewley was injured on June 22, 1973. His income tax returns showed that he paid out labor costs in the sum of $10,143.50 in the year 1972, and the sum of $12,156.16 in the year 1973. He testified that he paid his son $8.00 per hour. His income tax return reflects that the business, Bewley Welding and Trenching, had gross receipts of $48,-519.59 in the year 1973 and $54,502.64 during the year 1972. Using these figures the appellant has demonstrated mathematically that Bewley’s employees worked 158½ days in 1972, 170½ days in 1973. The appellant then asserts that since Bewley testified that he did not work as an operator unless his son was also working; the evidence conclusively shows that appellee did not work as many as 210 days preceding his injury since his son did not work as many as 210 days in either 1972 or 1973. However, the evidence does not show how many days the son worked in any particular month. There is evidence that sometime during the years 1972-1976 the son lost time from work because of a broken leg. Neither the month nor the year when this occurred appears in the evidence. It is possible that there was a great deal of work during the months of January 1 to June 22, 1973 and during the months of June 22, 1972 to January 1, 1973 and that as a result Bewley worked as many as 210 days during that period of time. There is evidence to support the answer made by the jury to Special Issue No. 11.

In answer to Special Issue No. 12, the jury found that the average daily wage which Leonard Ray Bewley earned during the days that he actually worked during the year preceding his injury was $64.00. In answer to Special Issue No. 10, the jury found that the sum of $128.00 represented the reduction in Leonard Ray Bewley’s average weekly earning capacity during the period of his partial incapacity. It was instructed to find the difference between his average weekly wages before the injury and the average weekly earning capacity during such partial incapacity. Bewley testified that he had not been on anyone’s payroll during that year. The evidence shows that most of the work that he did as an operator was on an hourly rate. In effect he set his own pay since he billed his customers by the hour for both the use of the machine and the work of the operator. He testified that he had no weekly draw from his business but that all funds earned by the business were deposited in the bank and he drew checks for his expenses as needed. In the pleading on which he went to trial Bewley alleged that for at least 210 days of the 12 month period immediately preceding his injury he had been engaged in the same employment he was performing when injured and was receiving for the work an average weekly wage of $320.00 per week. He further alleged that by reason of his injury under the Worker’s Compensation Act and his employer’s compensation policy he was entitled to payment of 401 weeks of disability payments in an amount equal to 60% of the “aforesaid” average weekly wage rate of $320.00, not to exceed $49.00 per week. He alleged no alternative grounds for determining the average weekly wage.

Section 1(1), Article 8309, VACS reads:

“If the injured employee shall have worked in the employment in which he was working at the time of the injury, whether for the same employer or not, for at least two hundred ten (210) days of the year immediately preceding the injury, his average weekly wage shall consist of three hundred (300) times the average daily wage or salary which he shall have earned during the days he actually worked in such year, divided by fifty-two (52).”

Aetna Insurance Co. v. Giddens, 476 S.W.2d 664 (Tex.1972) the court stated:

“When a workmen’s compensation claim is made, the compensation rate cannot be computed until the workman establishes a weekly wage rate in accordance with the requirements of Article 8309. If he has worked at least 210 days in the same or similar employment in the same or neighboring place during the year immediately preceding his injury, his own wages are controlling. This is Subdivision (1) of the statute and is known as step 1. If the injured workman has not himself worked so much in this work and area, he must then take his proof to Subdivision (2) of the statute or step 2, and establish the average weekly wage rate of another employee of the same class who has worked similarly for at least 210 days in the prior year. Subdivision 3 or step 3 provides for a wage rate “just and fair” to both parties, but resort may not be had to the “just and fair” provisions until the workman has borne his burden of proving by competent evidence that his wages cannot be computed under Subdivision (1) or (2).”

In Texas Employers Ins. Ass’n v. Clack, 134 Tex. 151, 132 S.W.2d 399 (1939) it is stated:

“. . .In the first place, subsection 1 sets forth the method of arriving at the average annual wages alone. After this is done, if that section be applicable, resort must then be had to subsection 5 to determine the average weekly wages. It is obvious, however, that subsection 1 is not applicable except in case where the employee is working for a daily wage. It is not even contended that plaintiff in this case was working for a daily wage; therefore subsection 1 passes out of consideration. Likewise subsection 2 has no application, for it applies only when the employee is working for a daily wage. Under that section the average annual wage is the thing to be ascertained, and, if that section be applicable, resort must again be made to subsection 5 to determine the weekly wages.
It is further obvious that subsection 3 has application to those mentioned in subsections 1 and 2 whose annual wages cannot be computed under either of the first sections, or who for some reason have not received wages for as much as a year; in which case the board is authorized to fix the average weekly wages according to what is fair and just between the parties. As the thing left to be determined under that section is the average weekly wages, it appears to be certain that this section was intended to apply specifically when there was no annual salary or wages, or no practical method of ascertaining an annual salary. Therefore, under this section there is no occasion to resort to subsection 5.
It seems to us clear that the statute contemplates that in all cases where the annual earnings or salary can be ascertained with reasonable certainty, either by taking three hundred times the daily wages, or by taking the actual annual earnings or salary which the employee has received during the preceding year, when not employed upon a daily basis, but working for substantially the whole of the year upon a salary basis, said annual salary or earnings becomes the determining factor or basis .of compensation; and the weekly wages shall be one-fifty-second part of said annual earnings or salary.”

The Clack case was one where the plaintiff had been employed by Phillips Petroleum Company for a number of years, and had been working for that company alone for the year preceding his injuries. During the year preceding his injuries plaintiff had been paid for his services a salary of $122 per month, which was paid in monthly installments. During said year under the operation of the NRA Code, plaintiff was permitted to work only four days in one week and five days in the next week. As the result of such arrangements he worked a total of only 234 days during the year, although he was regarded as in the employment of said company during the whole of the year. “He had not received any daily wages. His monthly salary of $122 was in no manner affected by the fact that he worked four days in one week and five days the next week.” At that time an employee was required to work substantially 300 days during the preceding year to qualify under section 1. I

In Texas Employers Ins. Ass’n v. Reed, 150 S.W.2d 858 (Tex.Civ.App.-Amarillo 1941, writ dism’d, jdgmt cor.) the court said:

“. . . The claimant herein worked in the same employment for a daily wage and worked “substantially the whole of the year immediately preceding the injury”. Therefore his “average annual wages” would consist of 300 times his “average daily wage”, and his “average weekly wages” would amount to one-fifty-second part of his “average annual wages. . . . ”

The Supreme Court has held that the definition of average weekly wage before or at the time of the injury as contained in Section 1 of Article 8309, supra, clearly refers to money which the employee “shall have earned” or which another employee “shall have earned”. The court said:

“. . . Whether these issues are determined by stipulation or by jury verdicts, the fact remains that “average weekly wage” deals with earnings and “average weekly wage earning capacity” deals with capacity. . . . ” Employers Reinsurance Corporation, v. Holland, 162 Tex. 394, 347 S.W.2d 605 (1961).

In Traders & General Ins. Co. v. Turner, 149 S.W.2d 593 (Tex.Civ.App.-Fort Worth 1941, no writ), the plaintiff was in the employ of his employer at all times during the year preceding the date of his injury, however, the work was intermittent not continuous and he worked by the hour when there was work to be done. In this case the court assumed that the parties were making no contention on appeal that the worker’s wage rate could be fixed under either of Subsections 1 or 2 of Section 1, Article 8309, but the insured contended that it could have been fixed under Subsection 5 of Section 1. The court said that appellee had no annual, or even monthly or weekly wage, but worked by the hour. The court then said:

“. . . Clearly Subsection 5 could not be applied, but resort must be had to Subsection 3 which provides in effect, when the wage rate cannot be fixed under either Subsections 1 or 2, or for other good and sufficient reasons it is impracticable to compute the average weekly wages, it shall be computed by the Board (or court) in any manner which may seem just and fair to both parties . . . .”

There is no evidence from which the jury could compute the plaintiff’s average weekly wage under Section 1. A substantial portion of his gross income as shown by his income tax reports is derived from rental on the equipment. While there is evidence that he worked and earned money as an operator, there is no evidence that he was paid a particular sum as wages. There is no evidence that during the year immediately preceding the date of his injury he worked as many as eight hours in any particular day or as many as forty hours in any particular week. While there is evidence that at times he had rented his machinery without furnishing an operator, there is no evidence to show the charge made for his machinery. There is testimony which would establish the amount of the union wage, and that a union worker ordinarily worked eight hours per day and forty hours per week. There is also testimony that he paid his son the union scale. This evidence would support a finding under paragraph 3, section 1, Article 8309, supra, but it is not evidence which will support the finding of the daily wage which Bewley earned during the days he actually worked. The evidence is legally insufficient to support the answer made by the jury to Special Issue No. 12, in answer to which the jury found that Bew-ley earned an average daily wage of $64.00.

It was Bewley’s burden to prove “the difference between his average weekly wages before the injury and his average weekly wage earning capacity during the existence of such partial incapacity.” Art. 8306, § 11, Vernon’s Annotated Civil Statutes; Angelina Casualty Company v. Jones, 493 S.W.2d 247 (Tex.Civ.App.-Beaumont 1973, no writ). Since the evidence is legally insufficient to establish the plaintiff’s average daily wage, there is no evidence from which the jury could have found the plaintiff’s average weekly wage prior to his injury. The evidence therefore is legally insufficient to support the jury’s answer to Special Issue No. 10 by which it found that Leonard Ray Bewley’s average weekly earning capacity during the period of his partial incapacity was $128.00.

By submitting Special Issue No. 11, the plaintiff clearly elected to prove compensation under Section 1(1) of Art. 8309, supra. No special issues were tendered or submitted .which would establish his wage rate under Subsection 2 or 3. The trial court erred in entering a judgment based on the jury’s answers to Special Issue No. 10 and Special Issue No. 12. Aetna Insurance Company v. Giddens, 476 S.W.2d 664 (Tex.1972); Texas Employers’ Insurance Association v. Shannon, 462 S.W.2d 559 (Tex.1970); Employers Reinsurance Corporation v. Holland, 347 S.W.2d 605 (Tex.1961).

The Insurance Association has presented other points of error. Since the case must be reversed, an extended discussion of these points is not required. We have determined that they are without merit.

The judgment is reversed and the cause is remanded.


source: Caselaw Access Project

author: EVANS, Judge. PEDEN, Justice,

license: Public Domain

text:
    Billy SHERMAN, Individually and dba Sherman Industries, Appellant, v. PHILIPS INDUSTRIES, INC. and subsidiaries, Appellee.
    No. 16949.
    Court of Civil Appeals of Texas, Houston (First Dist.).
    Dec. 1, 1977.
    Rehearing Denied Jan. 5, 1978.

      Eugene M. McElyea, Crockett, for appellant.
    Lapin, Totz & Mayer, James N. Hull, Houston, for appellee.
   EVANS, Judge.

This is an appeal from a default judgment rendered in favor of the appellee on a sworn account.

In its first point of error appellant contends that the appellee’s petition was fundamentally defective in that it failed to clearly describe the subject matter of the sworn account. This point will be sustained.

In order to support a default judgment a sworn account must show with reasonable certainty the nature of each item, the date and the charge therefor. Rule 185, Tex.R.Civ.P.; Williamsburg Nursing Home, Inc. v. Paramedics, Inc., 460 S.W.2d 168 (Tex.Civ.App.-Houston [1st Dist.] 1970, no writ); Griswold v. Carlson, 151 Tex. 246, 249 S.W.2d 58 (1952).

In the case at bar the appellee alleged a sale to the appellant of “goods, wares, merchandise and/or services” shown by an exhibit to the pleadings. Attached to the appellee’s petition is an invoice addressed to the appellant, indicating a customer number and bearing date of 7-29-76. The columns under this heading show the following:

For these writings to constitute a valid sworn account it is necessary that the merchandise allegedly sold be identified with reasonable certainty on the face of the account. Bookstall, Inc. v. John Roberts, Inc., 517 S.W.2d 451 (Tex.Civ.App.-Austin 1974, no writ).

A similar writing was involved in Hassler v. Texas Gypsum Company, Inc., 525 S.W.2d 53 (Tex.Civ.App.-Dallas 1975, no writ). In that case the sworn account described the merchandise alleged to have been sold as follows:

The verified account was held to be insufficient to support a default judgment, the court stating:

“The phraseology “½ TEMPLE REG TE” has no meaning in the English language, and the account contains no explanation of the meaning of this description. It is possible that this language may have some meaning to members of the industry, but there is nothing in this record to indicate such a common understanding.
We hold that these invoices attached as part of plaintiffs sworn account failed to show with reasonable clarity the type of goods sold. Consequently, plaintiff failed to meet the requirements of Tex.R.Civ.P. 185. An account insufficient on its face as a verified account under rule 185 will not support a judgment by default as against a direct attack by writ of error. Bookstall, Inc. v. John Roberts, Inc., supra; Williamsburg Nursing Home, Inc. v. Paramedics, Inc., supra; Griswold v. Carlson, 151 Tex. 246, 249 S.W.2d 58 (1952).

Similar technical descriptions have been held insufficient as a sworn account under Rule 185, Tex.R.Civ.P. U. S. Insulation Sales Corp. v. Jones-Blair Co., 491 S.W.2d 226 (Tex.Civ.App.-Dallas 1973, no writ); Texas Man’s Shop, Inc. v. Nunn-Bush Shoe Co., 401 S.W.2d 716 (Tex.Civ.App.-Corpus Christi 1966, no writ).

In the present case the words “Universal Motorstock” are not necessarily descriptive of the particular merchandise allegedly sold to the appellant. The term “Universal Motorstock” could be a particular category of inventory out of which various items of merchandise are listed. The fact that particular part numbers are included tends to support this inference. There is no description in the sworn account which identifies the particular merchandise alleged to have been sold to the appellant. Thus, the writings do not show with reasonable certainty the nature of the items alleged to have been sold and will not support the default judgment against the appellant. Benthall v. Goodwin, 498 S.W.2d 510 (Tex. Civ.App.-El Paso 1973, no writ).

No statement of facts accompanies the transcript, and appellant has obtained a certificate from the official court reporter stating that no shorthand reporting of evidence occurred in connection with the rendition of judgment. The presumption that the evidence before the trial court was sufficient to support the judgment does not apply on direct review of a default judgment where no statement of facts is available. Morgan Express, Inc. v. Elizabeth-Perkins, Inc., 525 S.W.2d 312 (Tex.Civ.App.-Dallas 1975, writ ref’d); Dugie v. Dugie, 511 S.W.2d 623 (Tex.Civ.App.-San Antonio 1974, no writ). Neither does the judgment itself afford a basis for applying the presumption that evidence to support the judgment was heard, the recitals in the judgment being to the contrary. Trembath v. Davis, 538 S.W.2d 838 (Tex.Civ.App.-Austin 1976, no writ).

The disposition of the appellant’s first point of error renders it unnecessary to consider the appellant’s second point of error contending that the trial court erred in hearing evidence in support of appellee’s claim for attorney’s fees without making provision for a statement of facts.

The judgment of the trial court is reversed and the cause is remanded for further proceedings.

PEDEN, Justice,

dissenting.

I would affirm the trial court’s default judgment.

The defendant-appellant, who is in the sheet metal business in Crockett, Texas, argues that the items are unclear, obscure and undecipherable; he does not say they are not readily understood by him. It should be noted that the plaintiff’s exhibit shows the defendant’s order number and the date the merchandise was shipped. Surely he can readily identify the 24 articles comprising the single item in question. That item could be more clearly described to identify it to one who did not order it and is not in the sheet metal business, but one who is not in the industry and has little acquaintance with electric motors can figure out that “24 BLWR 6A ½ HP 230V” means 24 electric blower motors, 6 amperes, ½ horsepower, 230 volts. It should be easy for one who ordered them.

I cannot disagree with the trial judge’s presumed finding that the nature of the items was shown with reasonable certainty.

The appellant does not complain of the award of an attorney’s fee.


author: SHANNON, Justice.

text:
    SOUTHWESTERN BELL TELEPHONE COMPANY, Appellant, v. PUBLIC UTILITY COMMISSION of Texas et al., Appellees.
    No. 12656.
    Court of Civil Appeals of Texas, Austin.
    Dec. 7, 1977.
    Rehearing Denied Jan. 4, 1978.
    Thomas M. Phillips, Robert A. Webb, Baker & Botts, Houston, Ford W. Hall, Jon Dee Lawrence, Darrell L. Barger, Dallas, for Southwestern Bell Tel. Co.
    Robert J. Hearon, Jr., Graves, Dougherty, Hearon, Moody & Garwood, Austin, for appellant.
    John L. Hill, Atty. Gen., Joyce B. Carpenter, Joe N. Pratt, Asst. Atty. Gen., Austin, for Public Utility Comm.

      Otis H. King, City Atty., Harriet E. Hu-backer, Asst. City Atty., Houston, for appel-lee/intervenor City of.Houston.
    Don R. Butler, Sneed, Vine, Wilkerson, Selman & Perry, Austin, for intervenor Texas Municipal League, and City of Austin.
   SHANNON, Justice.

Southwestern Bell Telephone Company has appealed from the order of the district court of Travis County refusing to stay or suspend an order of the Public Utility Commission. The important issues concern (1) the character of judicial review accorded the administrative order under the Public Utility Regulatory Act, Tex.Rev.Civ.Stat. Ann. art. 1446c, and (2) the proper rate base to apply under the Act.

In September of 1976, the telephone company filed with the Commission its application and notice of intent to increase rates for the rendition of telephone services. After hearing and in December, 1976, the Commission entered its order fixing the rates to be charged by the telephone company. The rate allowed by the Commission represented a partial increase in rates, but not to the extent requested by the telephone company.

The telephone company then filed an appeal from the Commission’s order in the district court of Travis County. In its first amended original petition, the telephone company alleged that the rate set by the Commission was inadequate to provide a fair return on the adjusted value of its invested capital devoted to serving its Texas customers, and that, as a matter of law, that rate was confiscatory. The telephone company requested the issue of confiscation be determined by a preponderance of the evidence as provided by “ . . . Section 69 of the Public Utility Regulatory Act, and Section 19 of the Administrative Procedure and Texas Register Act.”

The telephone company pleaded further that since under Texas law “ . . . judicial review under the preponderance of the evidence standard can only be conducted in a trial de novo, Plaintiff [the telephone company] requests that this cause be tried as a full civil trial on the facts as well as the law.” In January, 1977, the telephone company made application to the district court for a “Stay or Suspension of Order of the Public Utility Commission.” The telephone company’s position was that by reason of § 19(b)(3) of the Administrative Procedure and Texas Register Act, Tex.Rev. Civ.Stat.Ann. art. 6252-13a, the filing of its petition in district court, as a matter of law, vacated the Commission’s order. This was so, pleaded the telephone company, because § 19(b)(3) provides the filing of a petition vacates an agency decision for which trial de novo is the manner of review authorized by law. The further position of the telephone company was that because the Com-. mission’s order was vacated, it was entitled to place its proposed rate into effect, such rate being under an appropriate bond.

The district court denied the telephone company’s application. In its order the district court concluded that the manner of review authorized by the Public Utility Regulatory Act was other than by trial de novo and that judicial review was limited to the record made before the Commission “ . . . with the issue of confiscation to be determined thereon by a preponderance of the evidence . . .” The district court was of the further opinion “ . that under the applicable statutes, and, as a matter of law, the filing of the Plaintiff’s Petition herein did not and does not vacate the Agency Decision . . . ”

In its trial petition and in its first amended application for stay or suspension of order of the Commission, the telephone company pleaded, alternatively, the failure of the Commission to fix rates which will produce a fair return on the adjusted value of its invested capital was “an enjoinable violation of constitutional guarantees,” and that the company was entitled to a temporary injunction upon the showing (1) that there was a reasonable probability that the company would succeed on final hearing; (2) that the loss to the company resulting from a refusal to grant the temporary injunction would be irreparable; and (3) that the telephone customers could be adequately protected by bond.

In March, 1977, the district court heard the telephone company’s first amended application for stay or suspension of the Commission’s order. Consistent with its de novo theory of judicial review of the Commission’s order, the telephone company tendered the testimony of three witnesses in an effort to show confiscation and its entitlement to a stay or suspension of the Commission’s order. Equally consistent with its theory of judicial review of the Commission’s order, the court refused to admit the testimony, but permitted the testimony to be taken by way of bill of exception. Considering only the record made before the Commission, the district court entered its order denying the telephone company’s application for a “stay or suspension or temporary injunction” of the Commission’s final order.

The refusal of the court to admit into evidence the testimony of the telephone company’s witnesses is the procedural basis for the initial question on appeal. Whether or not the court erred in refusing to admit the testimony, of course, depends upon the character of judicial view accorded the Commission’s order.

Section 69 of art. 1446c provides for judicial review of the Commission’s orders. Section 69 provides as follows:

“Any party to a proceeding before the commission is entitled to judicial review under the substantial evidence rule. The issue of confiscation shall be determined by a preponderance of the evidence.” (Emphasis added).

Section 69 contemplates two types of judicial review. The type of review to be employed in a given case depends upon the nature of the order appealed from. The district court is to determine the issue of confiscation by a preponderance of the evidence. Review of other orders and issues is to be conducted under the substantial evidence rule.

The question is, then, what character of judicial review is intended by the provision in § 69 providing that the issue of confiscation is to be determined “by a preponderance of the evidence.” The telephone company’s position is that § 69 assures it a trial de novo on the issue of confiscation because the only review possible by a preponderance of the evidence is a de novo one. The company’s further position is that because a de novo review is provided, the filing of its petition in district court nullified the Commission’s order, and its proposed rates were placed in effect immediately pending the completion of judicial review.

The State’s view, like that of the district court, is that judicial review is confined to the record made before the agency with the issue of confiscation to be determined thereon by a preponderance of the evidence. In support of its position, the State relies upon § 19 of the Administrative Procedure and Texas Register Act, Tex.Rev.Civ.Stat. Ann. art. 6252-13a (1976). This provision, argues the State, allows for only two forms of judicial review: (1) pure de novo review and (2) substantial evidence review limited to the record made before the agency. Any review that does not result in an automatic nullification of the agency order must, of necessity, be a substantial evidence review under § 19(d)(3). The argument then is that because there is no automatic nullification of the agency order in rate cases, the only possible review, even as to the issue of confiscation, is a substantial evidence review limited to the record made before the agency.

The State’s argument largely ignores the force of § 4 of the Public Utility Regulatory Act. Section 4. pro vides that the Administrative Procedure and Texas Register Act applies to all proceedings under the Public Utility Regulatory Act when the two acts are consistent. Review of an administrative order “by a preponderance of the evidence” is entirely inconsistent with a substantial evidence review, because a review under a preponderance of the evidence is a feature of de novo review. Southern Canal Co. v. State Board of Water Eng., 159 Tex. 227, 318 S.W.2d 619 (1958). Accordingly, § 19(d) of the Administrative Procedure and Texas Register Act does not apply to this appeal.

Prior to the enactment of the Public Utility Regulatory Act, rate cases always occupied a special category in the jurisprudence of this State. Southern Canal Co. v. State Board of Water Eng., supra. The courts of this state, historically, have required a trial de novo of rate orders claimed to be confiscatory. Lone Star Gas Co. v. State, 137 Tex. 279, 153 S.W.2d 681 (1941), see Southern Canal Co. v. State Board of Water Eng., supra. The de novo review accorded in those cases did not suspend or nullify the agency order. Instead, the court made its own independent findings of fact, but did not substitute its decision for the agency decision. Lone Star Gas Co. v. State, supra; Railroad Commission v. Oil Field Haulers Association, Inc., 373 S.W.2d 394 (Tex.Civ.App.1963, no writ).

The provision for judicial review involved in Lone Star Gas Co., Tex.Rev.Civ.Stat.Ann. art. 6059, is similar to the provision at bar. Article 6059 requires in an appeal to the district court of Travis County from an order of the Railroad Commission in a natural gas case, that the dissatisfied party must show “ . . .by clear and satisfactory evidence . . .” that rate complained of was unreasonable. The term, “by clear and satisfactory evidence,” is but another way of stating “by a preponderance of the evidence.” See Sanders v. Harder, 148 Tex. 593, 227 S.W.2d 206 (Tex.1950); Perry v. Long, 222 S.W.2d 460 (Tex.Civ.App.1949, writ ref’d).

The term, “by a preponderance of the evidence,” is not uncommon in our jurisprudence. “By a preponderance of the evidence” means by the greater weight and degree of credible evidence offered and submitted to the trier of fact. The district court concluded that the judicial review authorized by the Public Utility Regulatory Act “ . . . is confined to the record made before the Public Utility Commission with the issue of confiscation to be determined thereon by a preponderance of the evidence . . . ” It occurs to us that a reviewing court cannot ascertain the truth by a preponderance of the evidence without addressing itself to the credibility of the witnesses, and that the district court cannot make a proper analysis of credibility by viewing that which the Commission thought was credible. It appears that the district court’s view of a preponderance of the evidence review based upon the agency record renders the term “by a preponderance of the evidence” useless and unmeaning, a result we should not readily suppose the legislature intended. Chambers v. State, 25 Tex. 307 (1860).

A further reason that the issue of confiscation should be tried anew is that the issue of confiscation may arise only after the Commission has acted and confiscation can be determined only at such time as the Commission’s findings and the rates based thereon are known.

Earlier in the opinion some of the cases dealing with judicial review of agency orders setting rates were noticed. Those cases involved judicial review provisions similar to § 69. In those cases the courts required a trial de novo review. In such cases the filing of the appeal in district court did not suspend or nullify the agency order. The legislature is presumed to have noticed pre-existing law when it enacted § 69 of the Public Utility Regulatory Act. See Humble Pipe Line Co. v. State, 2 S.W.2d 1018 (Tex.Civ.App.1928, writ ref’d); Texas Air Control Board v. Travis County, 502 S.W.2d 213 (Tex.Civ.App.1973, no writ). That presumption, in turn, supports our opinion that the legislature, by providing for a determination of the issue of confiscation by a preponderance of the evidence, intended to provide the character of de novo review accorded by pre-existing law in rate appeal.

The telephone company argues that the district court should have stayed the Commission’s order and permitted its proposed rate increase pending a trial on the merits because the order was confiscatory. The argument of the company is grounded upon its belief that the Commission incorrectly calculated the rate base upon the basis of original cost less depreciation instead of the adjusted value of invested income. The district court concluded, by letter incorporated into its judgment, that the Commission did indeed calculate the rate base upon original cost less depreciation, but that such calculation was permitted by § 39 of the Public Utility Regulatory Act.

The sections in the Public Utility Regulatory Act that are concerned with the rate base are § 39, 40(a), and 41(a). Those sections are set out below:

“Sec. 39. In fixing the rates of a public utility the regulatory authority shall fix its overall revenues at a level which will permit such utility to'recover its operating expenses together with a reasonable return on its invested capital.
“Sec. 40. (a) The regulatory authority shall not prescribe any rate which will yield more than a fair return upon the adjusted value of the invested capital used and useful in rendering service to the public.
“Sec. 41. (a) Adjusted Value of Invested Capital. Utility rates shall be based upon the adjusted value of property used by and useful to the public utility in providing service including where necessary to the financial integrity of the utility construction work in progress at cost as recorded on the books of the utility. The adjusted value of such property shall be a reasonable balance between original cost less depreciation and current cost less an adjustment for both present age and condition. The regulatory authority shall have the discretion to determine a reasonable balance that reflects not less than 60% nor more than 75% original cost, that is, the actual money cost, or the actual money value of any consideration paid other than money, of the property at the time it shall have been dedicated to public use, whether by the utility which is the present owner or by a predecessor, less depreciation, and not less than 25% nor more than 40% current cost less an adjustment for both present age and condition. The regulatory authority may consider inflation, deflation, quality of service being provided, the growth rate of the service area, and the need for the public utility to attract new capital in determining a reasonable balance.”

The district court viewed §§ 39, 40(a), and 41(a) as establishing a dual system of valuation. The district court was of the opinion that § 39 outlined a minimum rate base that permitted a reasonable return on “invested capital” or the original cost, and that §§ 40(a) and 41(a) set the maximum rate base which allowed a return on the adjusted value of invested capital.

To the contrary, the telephone company’s position is that the Public Utility Regulatory Act authorizes only one rate base, that being adjusted value of invested capital as set out in §§ 40(a) and 41(a). The telephone company argues for reasons to be discussed infra, that the legislature never “intended” any difference between the term “invested capital” in § 39 and the term “adjusted value of invested capital” in § 41. We do not agree with that argument.

A utility company’s rates are set on the basis of earnings on its rate base. The required earnings are determined by multiplying the rate base by the percentage rate of return. Hopper, A Legislative History of the Texas Public Utility Regulatory Act of 1975, 28 Baylor L.Rev. 775, 799 (1976). The term “rate base” has been defined as that sum which represents the total quantum of invested capital or of property “values” on which the utility is entitled to a reasonable rate of compensation. Nichols and Fields, Rate Base Under PURA: How Firm is the Foundation, 28 Baylor L.Rev. 861, 862 (1976). There are three basic methods of valuation employed by different jurisdictions in this country. Rose, Confusion in Valuation for Public Utility Rate- Making, 47 Minn.L.Rev. 1 (1963). The first is the original cost method; i. e., the cost of the property at the time it was first dedicated to the public use less an adjustment for depreciation. The second method is the current cost, or reproduction cost method, which estimates the value of the utility as the estimated cost of constructing an identical plan at prices for labor and materials prevailing at the time of valuation. The third method is the “fair value” method exemplified in Smyth v. Ames, 169 U.S. 466, 18 S.Ct. 418, 42 L.Ed. 819 (1898).

In Railroad Commission v. Houston Natural Gas Corp., 155 Tex. 502, 289 S.W.2d 559, 572 (Tex.1956), the Supreme Court, in construing two statutes that required a “fair value” rate base, rejected the three methods of valuation listed above and announced a new method: “ . . . a reasonable balance between original cost less depreciation and replacement cost new less an adjustment for present age and condition.” All parties seem to agree that the “reasonable balance” approach, announced by the Court in Railroad Commission v. Houston Natural Gas Corp., supra, was codified in § 41(a) of the Public Utility Regulatory Act. We do not agree, however, with the telephone company that the apparent codification is determinative of the rate base issue. In Railroad Commission v. Houston Natural Gas Corp., supra, the Supreme Court cautioned that the method of valuation was not decisive on the issue of confiscation. In addition, the legislature in § 41(a) has substantially modified the “reasonable balance" approach by restricting, mathematically, the balance the Commission can employ in setting an adjusted value of invested capital rate base.

In an effort to determine legislative intent, the parties to this appeal have examined, for the benefit of this Court, the various amendments to the House and Senate bills that ultimately evolved as §§ 39, 40(a), and 41(a) of the Public Utility Regulatory Act. Not unexpectedly, the parties draw opposite conclusions.

After a study of the committee reports and those amendments, Dr. Jack Hopper has written in this connection that:

“ . . . the legislature did not completely accept fair value, nor did it completely accept original cost. It chose something in between, a hybrid.
******
“The Conference Committee was trying to avoid restricting the regulatory authority to a rigid rule when it determined the investment base. Although it is clear that the commission is given a good deal of flexibility in setting rate base it appears that two rules may be used to determine a utility’s investment: Section 39, its actual or book or invested capital; and Section 41(a), its adjusted value of invested capital, which will be a balance of sixty to seventy-five percent original cost, and twenty-five to forty percent of current cost.” 28 Baylor L.Rev. 777, 802 (1976).

It appears to us from our research that Hopper’s analysis is probably correct. The enactment of § 39, 40(a), and 41(a) probably represents a compromise between those in the 64th Legislature who insisted upon a rate base consisting solely of original cost and those who espoused the “reasonable balance” rate base.

The telephone company argues that § 41(a) is the only section which deals with the problem of how a utility’s property is to be valued. The telephone company explains § 39 as being merely a general introductory provision dealing with overall revenue policy. The telephone company then draws our attention to § 41(a) and suggests that § 41(a) fleshes out the skeletal reference in § 39 to rate base and operating expense.

In response to the telephone company’s argument, we observe that the drafting of § 39 could have been more choice and precise. The fact remains that the term, “invested capital,” was employed in § 39 while a different term, “adjusted value of invested capital,” was used in § 40(a) and 41(a). Although there is not much authority, the term, “invested capital,” means original cost. Pichotta v. City of Skagway, 78 F.Supp. 999 (D.C.Alaska 1948). In addition, the telephone company’s argument, that the legislature never intended any difference between “invested capital” and “adjusted value of invested capital,” cannot be reconciled with the proscription in § 40(a) against allowing a rate base greater than the adjusted value of invested capital. Surely, if only one rate base were contemplated by the Public Utility Regulatory Act, the caveat in § 40(a) would have been unnecessary. We are in agreement with the district court that the only construction that gives meaning to all of the provisions of §§ 39, 40(a), and 41(a) is one that allows for an application by the Commission of a dual rate base.

A third complaint of the telephone company concerns the exclusion from the rate base of land held by the company for future base. The district court concluded that the Commission’s blanket exclusion of land from the rate base held for future use was erroneous. Nevertheless, the district court concluded that the value of the land held by the company for future use was infinitesimal and its exclusion from the rate base could not amount to confiscation.

We agree with the district court that the Commission’s summary exclusion of all such land from consideration in the rate base was error. We cannot accept, however, the telephone company’s argument urged upon us as basis for a stay order from this Court that some or all of the land should necessarily be included in the rate base. The acceptance of that argument would require this Court to make determinations, not made by the trial court, of the present usefulness of each parcel of the land to the telephone company. Those determinations may be made in district court on remand after a consideration of the evidence with respect to each parcel.

In its brief and by separate motion, the telephone company makes application to this Court, as an original matter, under the authority of § 85 of the Public Utility Regulatory Act, to stay or suspend the order of the Commission. We will deny that application.

Because § 39 of the Public Utility Regulatory Act permits a rate base of original cost less depreciation, the district court did not err in refusing to stay or suspend the order of the Commission on that ground. The district court did err in refusing to admit the testimony tendered by the telephone company relating to possible confiscation. The judgment is reversed for that reason, and the cause is remanded to the district court. Should the telephone company renew its application for a stay or suspension of the Commission’s order upon the issue of confiscation, the review of the agency order on that issue will be conducted de novo in the manner accorded by preexisting law in rate appeals.

Reversed and Remanded’.

      . Section 85 provides for a stay or suspension of the Commission’s order according to the usages of equity during the pendency of an appeal. The enactment of § 85 is some further indication of a legislative intention to provide the character of de novo review accorded by pre-existing law in rate appeals.


author: MURRAY, Justice.

text:
    William A. WARD et al., Appellants, v. The CITY OF SAN ANTONIO, Appellee.
    No. 15900.
    Court of Civil Appeals of Texas, San Antonio.
    Dec. 7, 1977.
    Rehearing Denied Jan. 11, 1978.

      Jack Paul Leon, Mayo J. Galindo, San Antonio, for appellants.
    James M. Parker, City Atty., Crawford B. Reeder, Asst. City Atty., San Antonio, for appellee.
   MURRAY, Justice.

This is an appeal from that portion of a judgment of the trial court which construed the 1975 amendment to Tex.Rev.Civ.Stat. Ann., Sec. 26(b)(a) of Art. 1269m (Supp. 1977) prospectively, and which further held that the City of San Antonio could appropriately charge firemen’s sick leave taken against the last earned but unused sick leave. Art. 1269m became effective in San Antonio on January 1,1948, and is commonly known as the Firemen’s and Policemen’s Civil Service Act. The appellants in this suit are 37 former firemen of the City of San Antonio who retired after September 1, 1975, and each had considerably more than 90 days accumulated sick leave upon their retirement. The City paid them the cash equivalent of 90 days sick leave as of September 1, 1975 and such additional days as they had accrued from that date forward to their retirement based upon an annual accrual of 15 working days. It is the position of appellants that upon their retirement they were entitled to receive in lump sum cash payments the cash equivalent of all accumulated sick leave. It is the position of appellee that the payment of more than 90 days sick leave accrued prior to September 1,1975 would be in violation of Art. 3, § 53 of the Texas Constitution, which provides:

The Legislature shall have no power to grant, or to authorize any county or municipal authority to grant, any extra compensation, fee or allowance to a public officer, agent, servant or contractor, after service has been rendered, or a contract has been entered into, and performed in whole or in part; nor pay, nor authorize the payment of, any claim created against any county or municipality of the State, under any agreement or contract, made without authority of law.

To better understand the contention of the parties, we quote the pertinent part of Sec. 26 as it was originally passed and as it was amended in 1955, 1957, and 1975:

Permanent and temporary employees in the classified service shall be allowed a total of sick leave with full pay computed upon a basis of one full working day allowed for each full month employed in a calendar year, with an extra day added for each four (4) months, so as to total fifteen (15) working days to an employee’s credit each twelve (12) months.
Employees shall be allowed to accumulate fifteen (15) working days or sick leave with pay in one calendar year.
Sick leave with pay may be accumulated to a total not exceeding ninety (90) days, with the privilege of an extension of sick leave in case of exhaustion of time, providing that the said employee can conclusively prove that such illness was incurred while in performance of his duties.
In the event that an employee of the Fire or Police Department for any reason leaves the classified service he shall remain on the payroll until his accumulated sick leave is all used. (Acts 1947, 50th Leg., p. 550, ch. 325).

In 1955 Sec. 26 was amended as follows:

Sick leave with pay may be accumulated without limit .
In the event that an employee of the Fire or Police Department for any reason leaves the classified service he shall remain on the payroll for a period not exceeding ninety (90) days and only until his accumulated sick leave is all used. (Acts 1955, 54th Leg., p. 706, ch. 255).

In 1957 Sec. 26 was amended as follows:

Sick leave with pay may be accumulated without limit .
In the event that a Fireman or Policeman for any reason leaves the classified service, he shall receive, in lump sum payment, the full amount of his salary for the period of his accumulated sick leave, provided that such payment shall not be based upon more than ninety (90) working days of accumulated sick leave. (Acts 1957, 55th Leg., p. 1171, ch. 391).

Effective September 1, 1975, Sec. 26 was amended as follows:

In any city in this State having a population of six hundred and fifty thousand (650,000) or more inhabitants, according to the last preceding federal census, a fireman or policeman who leaves the classified service for any reason or the beneficiaries of any fireman or policeman who loses his life as a result of a line of duty injury or illness shall receive in a lump sum payment the full amount of his salary for the period of his accumulated sick leave. Sick leave shall be accumulated without limit. (Acts 1975, 64th Leg., p. 302, ch. 131).

Sec. 26 has at all times since it was originally enacted in 1947 provided for an accumulation of 15 workings days of sick leave with pay in a calendar year. Since January 1, 1948 the Firemen’s and Policemen’s Civil Service Act, with its amendments, became a part of the contract of employment between the firemen and the City of San Antonio. Byrd v. City of Dallas, 118 Tex. 28, 6 S.W.2d 738 (Tex.Com.App.1928); City of Orange v. Chance, 325 S.W.2d 838 (Tex.Civ.App.-Beaumont 1959, no writ). Until September 1, 1975, Sec. 26 of such statute provided for a maximum lump sum payment of 90 days sick leave upon an officers leaving the classified service and any accumulated sick leave above the 90 days was lost. The contract between the parties to this suit prior to September 1,1975, was for the payment of only 90 days of accumulated sick leave and an effort to apply the provision of the September 1, 1975 amendment to accumulated sick leave in excess of 90 days earned prior to September 1, 1975, would impair the obligation of the contract as it then existed. Dallas County Levee Improvement Dist. No. 6 v. Rugel, 20 S.W.2d 148 (Tex.Civ.App.-Dallas 1929), rev’d, 36 S.W.2d 188 (Tex.Com.App.1931, holding approved). The additional burden imposed upon the City by giving the 1975 amendment a retroactive interpretation is too plain to admit of any serious controversy. It is the Court’s duty to give the 1975 amendment a construction or interpretation that will render it valid, if it is reasonably possible to do so. Hamrick v. Simpler, 127 Tex. 428, 95 S.W.2d 357 (1936); 53 Tex.Jur.2d Statutes § 157 at 225. We hold that the trial court was correct in construing the 1975 amendment to Sec. 26(b)(a) of Art. 1269m prospectively. The payment of more than 90 days sick leave accruing prior to September 1, 1975, would be in violation of Art. 3, § 53 of the Texas Constitution.

Appellants also say that a prospective application of the statute still allows and authorizes a cash payment of full unused accumulated sick leave rather than the more narrow interpretation or construction placed upon the amendment by the trial court, because the 1975 amendment only changes the method or mode of payment and does not create any new benefits. We are unable to follow this argument. While it is true that the 1957 amendment to Sec. 26 changed the method or mode of payment from remaining on the payroll for a period of 90 days to a lump sum payment of 90 days, the interpretation of the 1975 amendment as urged by appellants would do much more. The contract between the City of San Antonio and the firemen prior to September 1, 1975 was for the payment of 90 days of accumulated sick leave upon the separation from the classified service and the payment of more than 90 days accumulated sick leave accumulated prior to September 1, 1975 would be extra compensation within the meaning and provision of the above constitutional amendment and not just a change in the method or mode of payment.

Appellant next contends that there was error for the trial court to hold as proper the charging of appellant’s sick leave taken against that last earned but unused sick leave. This practice had the effect of diminishing the additional days accrued sick leave earned after September 1, 1975 when a fireman actually took sick leave after September 1,1975. It is apparent that if his sick leave taken was charged against his first earned but unused sick leave upon his leaving the service, he would be paid, under our holding, for 90 days accumulated sick leave and such additional days as he had accrued after September 1, 1975. Sec. 26 of Art. 1269m, with all of its amendments, is silent as to which method should be used. The record shows that it has always been the practice of the City of San Antonio to charge appellant sick leave from the latest earned but unused sick leave and not from the first earned but unused sick leave. Evidence of custom is admissible to explain an ambiguous contract or to add to it an element not in contravention of its terms. Miller v. Gray, 136 Tex. 196, 149 S.W.2d 582 (1941). This custom does not conflict with any terms of the statute and we think should prevail.

For these reasons the judgment of the trial court is affirmed.


author: MOORE, Justice.

text:
    Daniel Leslie CORLISS, Appellant, v. Vivian Marie Corliss SMITH, Appellee.
    No. 1056.
    Court of Civil Appeals of Texas, Tyler.
    Dec. 8, 1977.

      William F. Neal, Law Offices of Fred E. Time, Dallas, for appellant.
    Charles S. Fuquay, Dallas, for appellee.
   MOORE, Justice.

This is a domestic relations case involving the application of the newly-enacted long-arm provision of the Texas Family Code Ann. sec. 11.051 (Supp.1976). Plaintiff, Daniel Corliss, a resident of Dallas County, Texas, filed suit in the Domestic Relations Court in Dallas County, seeking a modification of the court’s 1972 decree of divorce specifying visitation privileges “at reasonable times” with his two children, who have since resided with the defendant, Vivian Corliss Smith, their mother, in the State of Nebraska. Service of citation was perfected upon the defendant, Mrs. Smith, in the State of Nebraska by personal service pursuant to the provisions of sec. 11.051 of the Texas Family Code and Rule 108, Tex.R. Civ.P. Thereafter Mrs. Smith, as managing conservator of the children, filed a special appearance contesting the in personam jurisdiction as well as the subject matter jurisdiction of the Texas Court. After a hearing, the trial court ruled that Mrs. Smith was not amenable to suit in the State of Texas and accordingly granted her special appearance and dismissed the plaintiff’s suit for want of jurisdiction. Plaintiff duly perfected this appeal.

We affirm.

The cause was submitted to the trial court upon an agreed stipulation of facts, which reads as follows:

“I.
“DANIEL LESLIE CORLISS and VIVIAN MARIE CORLISS SMITH were legally married on June 23,1962, in Ayer, Massachusetts. They separated from one another on September 1,1972, and a petition for divorce was filed by VIVIAN MARIE CORLISS on September 5, 1972, in the Domestic Relations Court of Dallas County, Texas. Prior to the parties separation they had resided and lived in Dallas since July of 1965. During the marriage the parties had born to them the two children which are the subject of this suit:
Stephen Joseph Corliss, a male, born in Dallas, Texas, on November 7, 1966; Melanie Ann Corliss, a female, born in Dallas, Texas, on August 6, 1970.
Both of the children were conceived while the parties were residents of Dallas, Texas.
II.
“On November 27, 1972, trial was held before the Honorable Beth Wright, Judge of the Domestic Relations Court of Dallas County, Texas, on the divorce petition filed by Vivian Marie Corliss. Judgment of divorce was entered on November 29, 1972 and no appeal of that judgment was pursued. A true and correct copy of said Judgment is attached hereto as Exhibit ‘A’.
“On or about December 27, 1972, Vivian Marie Corliss married one William Smith, and is presently married to the same William Smith. Daniel Leslie Cor-liss married Sara Pern Riley on December 15, 1973, and is presently married to the same woman.
III.
“Vivian Marie Corliss Smith, and the children Stephen Joseph Corliss and Melanie Ann Corliss, left the State of Texas and moved to the State of Nebraska on or about November 27, 1972, where they established a permanent domicile. Neither Respondent or either of the children have visited, resided, lived in, or been physically present within the State of Texas since that date. As a result of disputes arising out of the November 27, 1972 divorce judgment, Vivian Marie Corliss Smith remained the record owner of certain real property located in Dallas County, Texas, until about August 19, 1975, when the 95th Judicial District Court entered a default judgment against Vivian Marie Cor-liss Smith, her husband William Smith, and Thomas S. Sligh, declaring Daniel Leslie Corliss to be the sole owner of that certain property in Dallas County, Texas. No appeal has ever been filed from that judgment. True and correct copies of Plaintiff’s Original Petition, Plaintiff’s First Amended Original Petition, and the Judgment in this cause are attached hereto as Exhibits “B”, “C” and “D” respectively.
IV.
“Daniel Leslie Corliss was ordered in the initial Divorce Judgment to pay child support in the sum of $75.00 per month per child. He made payments under the Decree in 1972, made no payments in calendar year 1973, and resumed payments in May, 1974, and has made payments every month thereafter, through the Dallas County Child Support Office, although such payments have been in the amount of $50.00, per month, per child, rather than the $75.00 per month, per child, as ordered.
“Daniel Leslie Corliss has neither visited, seen nor communicated orally or in writing with his children, except one time on April 12, 1974, since the children have resided in Nebraska. No other suit, other than the present case, has been filed or prosecuted in Texas concerning the children since the date of divorce.
V.
“By agreement of the parties, the Court has taken Judicial Notice of the Statutes and case law of the State of Nebraska . . .

In his petition filed on December 15,1976, the father sought visitation privileges and access to the children. He requested (1) possessory conservatorship for various periods of time on alternate major holidays such as Easter, Memorial Day, Thanksgiving and Christmas, (2) Father’s Day, (3) two months during the summer, (4) alternate weekends of each month; and (5) during the children’s spring vacation from school. In view of the extensive visitation privileges requested, we think the plaintiff’s pleadings amounted to a request for divided custody rather than a mere change in visitation privileges. See Huffman v. Huffman, 408 S.W.2d 248 (Tex.Civ.App.-Dallas 1966, no writ); Glasgow v. Hurley, 333 S.W.2d 658 (Tex.Civ.App.-Dallas 1960, no writ).

No contention is made that jurisdiction can be had pursuant to sec. 11.05 of the Family Code, which authorizes the court which once acquired jurisdiction of a suit affecting the parent-child relationship to retain continuing jurisdiction of all matters in connection with the child. Rather, it is both parties’ position that the only applicable jurisdictional statute involved is Tex. Fam. Code Ann. sec. 11.051 (Supp.1976), the newly-enacted parent-child long-arm statute. On this appeal the father contends that the trial court erred in dismissing the cause for want of jurisdiction, because jurisdiction may be had under the provisions of sec. 11.051, which provides:

“In a suit affecting the parent-child relationship, the court may exercise personal jurisdiction over a person on whom service of citation is required or over the person’s personal representative, although the person is not a resident or domiciliary of this state, if:
(1) the child was conceived in this state and the person on whom service is required is a parent or an alleged or probable father of the child;
(2) the child resides in this state, as defined by Section 11.04 of this code, as a result of the acts or directives or with the approval of the person on whom service is required;
(3) the person on whom service is required has resided with the child in this state; or
(4) notwithstanding Subdivisions (1), (2), or (3) above, there is any basis consistent with the constitutions of this state or the United States for the exercise of the personal jurisdiction.”

No state other than Texas has yet adopted a statute comparable to Section 11.051. Under the literal terms of this statute personal jurisdiction may now be exercised in this state over a non-resident in a parent-child suit when one of three specific fact situations mentioned in the statute has been established. In addition, under subsection 4 jurisdiction may also be exercised provided the state and federal constitutions are not offended.

The statute embraces cases involving child conservatorships as well as cases involving support. We have found no Texas case discussing the constitutional limitations of the statute in a child custody suit; however, we have found one Texas case holding that application of the statute did not offend due process and therefore conferred jurisdiction on a Texas court in a child support case. Zeisler v. Zeisler, 553 S.W.2d 927 (Tex.Civ.App.-Dallas 1977, writ dism’d). The court in that case, however, was careful to point out that its holding was confined to a situation involving child support and that different considerations would likely be involved in conserva-torship or custody cases. We agree with this observation.

The question presented is whether, under the stipulated facts, the non-resident mother who has been appointed managing conservator of the children by the 1972 Texas divorce decree is constitutionally amenable to Texas process served outside the State in a suit by the father seeking to change the terms of the decree relating to his possesso-ry conservatorship.

Subject to unconstitutionality on its face, Section 11.051, supra, clearly provides the statutory vehicle for jurisdiction over the defendant even though she has been a resident of the State of Nebraska since November 27, 1972. Amended Rule 108, Tex.R.Civ.P., similarly permits process to be served outside of Texas in cases such as this one. The factual basis for the plaintiff’s reliance on the long-arm statute is to be found in the Agreed Stipulation of Facts. It is undisputed that the situational requirements of subsections 1 and 3 of the statute have been fulfilled. Proof of such facts standing alone, however, is not dispositive. Left to be determined is whether such facts are constitutionally sufficient to satisfy traditional notions of fair play and substantial justice. Texas courts have refused to exercise jurisdiction pursuant to a long-arm statute when to do so would violate due process. See U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760 (Tex.1977). Neither do Texas courts automatically assume jurisdiction, though it may literally exist, when practical considerations warrant otherwise. Bevan v. Bevan, 283 S.W.2d 305 (Tex.Civ.App.-San Antonio 1955, writ ref’d n.r.e.).

It is well settled that due process requires that the non-resident defendant have certain minimum contacts with the forum state out of which the cause of action arose. Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958); McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957); Travelers Health Assoc. v. Virginia, 339 U.S. 643, 70 S.Ct. 927, 94 L.Ed. 1154 (1950); International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The foregoing cases have established four criteria in determining whether traditional notions of fair play and substantial justice have been met: (1) the extent of defendant’s contacts with the forum state; (2) the interest of the parties in having a particular forum settle their dispute; (3) the interest of the forum state in providing an effective means of redress for its residents; and (4) the convenience of the forum, including its access to witnesses and evidence. In discussing the various due process requirements, the court in O’Brien v. Lanpar Co., 399 S.W.2d 340 (Tex.1966), held:

“. . . the assumption of jurisdiction by the forum state must not offend traditional notions of fair play and substantial justice, consideration being given to the quality, nature, and extent of the activity in the forum state, the relative convenience of the parties, the benefits and protection of the laws of the forum state afforded the respective parties, and the basic equities of the situation.” 399 S.W.2d at 342.

In the case of Product Promotions, Inc. v. Cousteau, 495 F.2d 483 (5th Cir. 1974), the court observed that the decisions have established a dual test for determination whether a court may exercise its jurisdiction without depriving a non-resident defendant of due process of law. The court, at 494, said: “First, there must be some minimum contact with the state which results from an affirmative act of the defendant. Secondly, it must be fair and reasonable to require the deféndant to come into the state and defend the action.” This language in the Cousteau opinion was adopted by the Supreme Court of this state in U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760, 762 (Tex.1977). While the latter case involved the general Texas long-arm statute, Article 2031b, Tex.Rev.Civ. Stat.Ann., we think the same constitutional considerations are applicable here.

Within the foregoing guidelines, the concept of extraterritorial jurisdiction over the person has been pushed to greater limits in contract and tort cases than in domestic relations litigation. Zeisler v. Zeisler, supra. In a suit such as this, however, in which child custody alone is involved, a state cannot effectively extend its power to the full limits of the due process clause, for the full faith and credit clause, which would command enforcement of a tort or contract judgment, may not similarly protect a custody decree since it may be enforced only by a court of the state in which the child resides. See Bernard & Johnson, 54 Texas L.Rev. 1008, at 1024-5, supra, note 1. So, cases in tort or contract, although offering some guidelines, do not offer a panacea to the problem due to the fact that both the due process and the full faith and credit clauses effectively circumscribe a state’s jurisdictional power over child custody. Past decisions defining the extraterritorial jurisdiction of the courts in custody cases likewise offer little help in determining the limits of constitutional due process under the statute in question.

A brief examination of the statute indicates that, if applied literally in every instance, it would often offend due process as it would give Texas jurisdiction over many custodial disputes in which the state has little, if no, interest. For example, the statute has no internal statute of limitations. Since one of the grounds for jurisdiction provided in the statute is that the person over whom jurisdiction is sought has resided with the child in this state, a literal reading would indicate that a person who has at one time resided with a child in this state can be subjected to Texas jurisdiction in a custodial dispute even though he or she may have been gone from Texas for three, five or even fifteen years.

In determining whether due process requirements are met sufficient to confer jurisdiction, the factual context surrounding the entire situation is crucial. One important consideration in determining whether due process requirements are met is the interest of the forum state vis-a-vis the interest of the foreign state. While Texas, under the facts in the present case, has an interest in providing the father, its resident, with an effective means of redress, this interest must be balanced along with others. The paramount consideration in a case involving the custody of a child is what would be in the best interests and welfare of the child. When the child has acquired a domicile in a foreign jurisdiction, the domicile of the child will be considered along with other facts in determining whether Texas courts will or should exercise jurisdiction. Worden v. Worden, 148 Tex. 356, 224 S.W.2d 187, 190 (1949). “The jurisdiction of a state to regulate the custody of infants found within its territory does not depend upon the domicile of the parents. It has its origin in the protection that is due to the incompetent or helpless.” Finlay v. Finlay, 240 N.Y. 429, 148 N.E. 624, 625 (1925). In view of the fact that both the children and their mother, the managing conservator, have resided in the State of Nebraska for a period of over three years immediately prior to the filing of this suit, the interests of Nebraska in protecting the welfare of the children would seem to outweigh the interests of Texas in protecting the possessory conservatorship of the father.

Probably the most important factor to be considered in determining the question of jurisdiction is the ability of the forum state to reach a result which will conform to the children’s best interests. Ordinarily, the courts of the domiciliary state are in a better position to pass intelligently on the matter of the child’s welfare. Wicks v. Cox, 146 Tex. 489, 208 S.W.2d 876, 878 (1948). Since the case will ultimately be decided on the basis of the evidence, the question becomes one of determining in which court the evidence would most likely be better developed. Intertwined with this question is the issue of relative convenience of the parties and the witnesses. In the usual situation, the witnesses would include the parents, the children, domestic relation counselors (including, perhaps, professional court personnel who have met with the parents and children), the children’s teachers, doctors, ministers, neighbors and other persons sufficiently acquainted with the children to offer testimony as to what would be in the children’s best interests. The factual situation must be such that it would be fair and reasonable to require the defendant to come into the state and defend the action. U-Anchor Advertising, Inc. v. Burt, supra; Product Promotions, Inc. v. Cousteau, supra.

Upon applying the foregoing principles of law to the facts in the present case, we do not believe that , it would be either fair or reasonable to require the defendants to come into this state and defend the action. Both Mrs. Smith and the children have resided in Nebraska for a substantial period of time. Necessarily, the vast majority of the witnesses who could testify as to the welfare and best interests of the children are in that state. Therefore it would be inconvenient, if not impossible, to develop properly the issue of custody in the Texas court. While a trial in Texas would be convenient to the father, it would be extremely expensive and inconvenient to the mother, especially in view of the fact that the Texas court has no subpoena power to compel the attendance of the witnesses residing in Nebraska. For this reason, as well as our conclusion that the State of Nebraska would have a greater interest in the matter, we hold that the defendant would not be afforded due process of law if required to defend the plaintiff’s suit in Texas.

While the long-arm statute in question, sec. 11.051, literally allows for jurisdiction to be had no matter how long the parent and child had been absent from the state, we do not believe that the legislature intended the statute to confer jurisdiction after the parent and child had been absent for a substantial period of time. We take note that in an intrastate context sec. 11.06 of the Texas Family Code provides that the original court is required to transfer jurisdiction if the child has principally resided in another county of this state for six months or more. The legislature in enacting sec. 11.06 apparently realized that, after the absence of the child from the county for six months or more, the original court would probably no longer constitute a convenient and/or competent forum to adjudicate a claim affecting the parent-child relationship and that the interests of the new forum in protecting the welfare of the child would likely outweigh those of the original forum. We see no reason why the same considerations should not be applied in an interstate context involving sec. 11.051. Therefore, in determining whether to assert jurisdiction, when the undisputed proof shows that the child and the managing conservator have resided in a foreign state for six months or more before the suit was filed, we think a presumption arises that the Texas courts no longer constitute convenient and/or competent forums to adjudicate claims affecting the parent-child relationship and have lesser interests in protecting the welfare of the child than the foreign state, and are consequently unwarranted in asserting jurisdiction in the absence of sufficient proof to overcome the presumption. Upon applying this presumption to the facts in this case, we believe the trial court was correct in refusing to assume jurisdiction over the cause, as we find nothing in the stipulation of facts which would tend to rebut this presumption.

Aside from the foregoing considerations, we think the trial court’s judgment may also be sustained because any judgment rendered by the Texas court would not be accorded full faith and credit under Nebraska law. Due to the fact that the questions of due process and extraterritorial recognition of decrees are so closely related, the trial court had a right to measure its ability to exercise custody jurisdiction over non-residents not only by the due process criteria but also by the respect a Texas judgment will likely command in Nebraska. That is to say, the court may take into consideration the probability of its judgment’s being enforced in another jurisdiction. The court should not assume jurisdiction and render a judgment that will not be given full faith and credit. In this regard, the Supreme Court of Nebraska has held that when jurisdiction of a Nebraska court is invoked seeking enforcement of a child custody decision in another state, the child becomes a ward of the state and the issue of proof becomes “the welfare of the child.” Copple v. Copple, 186 Neb. 696, 185 N.W.2d 846 (1971). The effect of such a doctrine is that the filing of a habeas corpus action in Nebraska causes a relitigation of the suit. See Carner v. Anderson, 191 Neb. 341, 215 N.W.2d 82 (1974); Dallmann v. Mehrer, 192 Neb. 543, 222 N.W.2d 827 (1974). In view of the holdings of the Nebraska court, the assumption of jurisdiction and the rendition of a judgment by the Texas court would amount to nothing more than an exercise in futility. This fact was likely taken into account by the trial court, which took judicial notice of the statutes and case law of Nebraska. Therefore, for this additional reason, we think the trial court properly declined to assert jurisdiction of this cause.

Accordingly, the judgment of the trial court is affirmed.

      . This problem has been ably discussed in Sampson, Jurisdiction in Divorce & Conservatorship Suits, 8 Tex.Tech L.Rev. 159 (1976), and Bernard & Johnson, The Jurisdiction of Texas Courts in Interstate Child Custody Disputes: A Functional Approach, 54 Texas L.Rev. 1008 (1976). Both texts have been heavily relied upon in this decision.


text:
    SMITH PROTECTIVE SERVICES, INC., Appellant, v. Lorrance B. ROBERTSON, Appellee.
    No. 17015.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Dec. 8, 1977.

      Dana G. Kirk, Houston, Fulbright & Ja-worski, Houston, of counsel, for appellant.
    Weitinger, Steelhammer & Tucker, Don A. Weitinger, Houston, for appellee.
   COLEMAN, Chief Justice.

This is an appeal from an order denying an application for a temporary injunction. Smith Protective Services, Inc. (Smith) filed this suit against Lorrance B. Robertson (Robertson) seeking to enforce an agreement contained in an employment agreement between Smith and Robertson whereby Robertson agreed not to compete with Smith for a period of two years from date of any termination of his employment within the City of Houston or fifteen miles from the boundaries of such city. We affirm.

In August 1973, Robertson began working for Smith in its guard division. He had previously been employed in the police department of a Florida city. While so employed he completed a course of study in polygraph examination. The institute offering this course of study is not recognized by the State of Texas. In order to acquire a license as a polygraph operator in Texas Robertson was required to complete twelve months training through internship. In December 1973, he began this training under the supervision of Smith’s employees and as an employee of Smith, and on January 10, 1974, he was licensed by the State as a polygraph operator. He continued in his employment with Smith until he resigned on March 31, 1977. In April 1977, appellee was hired by Lanford Heard & Associates, Inc. as their sole polygraph examiner.

It is uncontroverted that Robertson understood and agreed to the provisions of his contract restricting his employment with a competing company for a period of two years' from the date of his termination of employment. It is also undisputed that Robertson has violated this provision of his employment contract.

An agreement on the part of an employee not to compete with his employer after a termination of the employment is in restraint of trade and will not be enforced in accordance with its terms unless the same are reasonable. Weatherford Oil Tool Co. v. Campbell, 161 Tex. 310, 340 S.W.2d 950 (1960). Where the public interest is not directly involved, the test usually stated for determining the validity of the covenant as written is whether it imposes upon the employee any greater restraint than is reasonably necessary to protect the business and good will of the employer. Weatherford Oil Tool Co. v. Campbell, supra.

A promise not to compete may be enforced by injunction only where the restrictions as to time and area are determined to be reasonable. The question of whether an area of the covenant is reasonable is one of law to be determined by the court. Lewis v. Krueger, Hutchinson & Overton Clinic, 153 Tex. 363, 269 S.W.2d 798 (1954); Eubanks v. Puritan Chemical Company, 353 S.W.2d 90 (Tex.Civ.App.-Houston 1962, writ ref’d n. r. e.).

A restraint of trade is unreasonable, in the absence of statutory authorization or dominant social or economic justification, if it is greater than is required for the protection of the person for whose benefit the restraint is imposed or imposes undue hardship upon the person restricted.

The granting or denial of an injunction, and especially a temporary injunction, and the scope of one which is granted, are largely within the discretion of the trial court, whose action will not be disturbed on appeal unless a clear abuse of discretion is shown. Texas Foundries v. International Moulders & F. Wkrs., 151 Tex. 239, 248 S.W.2d 460. Appeals from the issuance of a permanent injunction are accorded a different character of appellate review. In an appeal from a permanent injunction the trial court’s fact findings are subject to review only for legal or factual insufficiency of evidence, but the court’s construction of the restrictive covenant in its determination of the proper remedy for a breach of the covenant is a matter of law. The judgment entered by the trial court will be reviewed to determine whether or not it is correct as in any other appellate review. Electronic Data System Corporation v. Powell, 524 S.W.2d 393 (Tex.Civ.App.-Dallas 1975, writ ref’d n. r. e.).

In reviewing this order refusing to grant a temporary injunction, we must draw all legitimate inferences from the evidence in the light most favorable to the trial court’s judgment. The transcript does not contain findings of fact or conclusions of law. If a review of the evidence will support findings of fact that would, in turn, support the trial court’s judgment, such findings must be implied in support of the judgment. Rimes v. Club Corp. of America, 542 S.W.2d 909 (Tex.Civ.App.-Dallas 1976, writ ref’d n. r. e.); Erickson v. Rocco, 433 S.W.2d 746 (Tex.Civ.App.-Houston [14th Dist.] 1968, no writ history).

Mr. Smith, Vice President of Smith Protective Services, Inc., testified that during the period of time that Robertson was employed by his company he was taught everything that was necessary for him to know in order to perform the commercial aspects of polygraph examinations including employment polygraph interviews, periodic cheeks of the existing personnel where no specific loss issues are involved and commercial interrogation of specific loss issues. He testified that Robertson was thoroughly familiar with techniques that Smith uses and that he knew all of their major customers. He testified that Robertson knew the people within the various companies using the Smith polygraph services by talking to them over the telephone. He testified that he was seeking by this suit to protect the bond between his company and their customers, and that this bond could only be broken effectively by someone familiar with the Smith techniques and someone with whom the Smith customers are familiar and have confidence in because the company would not lose customers to an unknown polygraph firm, or an unknown polygraph examiner. He testified that three of his former accounts had already begun to do business with Lanford Heard & Associates, Inc., and that that company was advertising in the trade papers for polygraph examiners to come to work for their firm. He testified that six of Smith’s former employees had established competing businesses in Harris County and that they represented 70 or 80% of the polygraph business within the city. He testified that Don Cole established a competing business in 1973. While it was not apparent for a few months, Smith learned later that he was losing about four to five thousand dollars per month in business each month to that company. There is testimony which would have supported a finding that in all probability Smith Protective Services, Inc. would suffer irreparable loss by reason of Robertson’s breach of the protective covenant in his contract.

The trial court, however, did not make such a finding. There is evidence that Smith would suffer little, if any, damage which could be said to have resulted from Robertson’s breach. Robertson testified that there was only one account which he regularly handled and that no business had come to him from that account since he changed jobs. He testified that there were six examiners working for Smith and that each examiner would take the persons waiting for an examination in turn. The client that he personally tested depended upon who was available when he finished a polygraph examination. The only contact he had with the employers was that he phoned in the results of the examinations to someone at the company requesting the examination. This might be a secretary or a person in the personnel department. He testified that he worked as a technician and that he had no experience in sales while he was working for Smith. He did no sales work for Lanford Heard & Associates, Inc. and did not furnish them the names of any firms for which he had previously done examinations. He testified that the techniques used in conducting the examinations were generally the same as those he had been taught in school and that there were no secret techniques or questions involved in giving pre-employment examinations. He has no interest in the business and is being paid an annual salary. He left Smith because he did not like the working conditions and he wanted to make more money. He testified that it was not his intention to raid Mr. Smith’s clientele for the benefit of his present employers.

There is testimony that there are some twenty-five companies in the Houston area engaged in furnishing polygraph testing. At the time of the trial business was good and Smith was trying to hire additional operators. One of the owners of Lanford Heard & Associates testified that he solicited most of the business for the firm and that his solicitation was aimed primarily at people he knew who had need for the service. He testified that he hired Robertson because he felt he was a good polygraph operator and that he had two other applicants for the position at the time Robertson was hired. He testified that he had not discussed Smith’s clientele with Robertson and he had no intention of doing so. He testified further that he never mentioned to prospective clients the fact that Robertson was working for him or that his operator had formerly worked for Smith.

Robertson testified that so far as he knows no one has come to his present employer by reason of any previous contact with him. He testified that he suggested to Mr. Heard that he hide the fact that he, Robertson, had formerly worked for Smith Protective Services, Inc. because he did not think that this fact would add credibility to Lanford Heard & Associates, Inc.

It was not an abuse of discretion for the trial court to conclude, under this record, that Smith failed to prove an impending irreparable injury. The record shows a possibility that Robertson might assist Lanford Heard & Associates, Inc. in securing clients who had formerly been employed by Smith. Such a possibility is not a sufficient ground for finding an abuse of discretion in refusing to grant a temporary injunction.

The judgment is affirmed.