author: GUITTARD, Chief Justice.

text:
    Dr. Harold H. VARON, Appellant, v. RICHARDSON PROFESSIONAL PROPERTIES, INC., Appellee.
    No. 19967.
    Court of Civil Appeals of Texas, Dallas.
    June 14, 1979.

      Tom Mills, Dallas, for appellant.
    Richard W. Luerssen, Steinberg & Luers-sen, Dallas, for appellee.
    Before GUITTARD, C. J., and STOREY and CARVER, JJ.
   GUITTARD, Chief Justice.

In this suit for rent due under a commercial lease, the trial court rendered summary judgment for lessor. Defendant appeals on the ground that his affidavit filed in opposition to the motion for summary judgment raises a fact issue as to whether he signed the lease as the representative of a corporation rather than as an individual. We hold that this affidavit is insufficient to raise a fact issue because defendant’s statement of his belief concerning the lessor’s intention is not competent summary-judgment proof. Accordingly, we affirm.

The lease as originally executed named defendant Harold H. Varón as lessee in the opening paragraph and, at the end, was signed by Harold H. Varón as lessee. Later a line was drawn through Varon’s name in the opening paragraph and “Richardson Clinical Laboratory" was written above it. The word “Inc.” does not appear, nor is there any other indication that the lessee was a corporation. Immediately beside these words appear the initials of the persons who signed the lease and also a date more than two months later than the other date in the document. No change was made with respect to the signature of “Harold H. Varón” at the end of the document.

The lessor brought the suit against “Dr. Harold H. Varón d/b/a Richardson Clinical Laboratory.” Varon’s answer denied liability in the capacity in which he was sued and denied that he was doing business in an assumed name. In response to the lessor’s motion for summary judgment, Varón filed the following affidavit:

The attached copy of a Certificate of Incorporation refers to the corporate entity, Richard Clinical Laboratory Inc. This is. the business entity which was intended by me and by all parties to the Contract and Lease Agreement to be legally entering into and bound by a Contract and Lease Agreement. It was the intention of me, and it is my belief that it was the intention of the representative of Richardson Professional Properties, Inc. that the Lease Agreement referred to and obligate [sic] only Richardson Clinical Laboratory, Inc.

On this appeal Varón contends that since the body of the lease names “Richardson Clinical Laboratory” as lessee, but bears his individual signature at the end, the lease is ambiguous with respect to the person obligated as lessee and that this ambiguity is properly explained by his affidavit to the effect that he signed as a representative of the corporation rather than as an individual. On the other hand, the lessor contends that this affidavit is insufficient to raise a fact issue concerning Varon’s personal liability on the lease because the affidavit does not state that the lessor agreed to accept Varon’s signature on the lease as representing a corporation and neither does it show that Varón communicated to the lessor his intention to sign in a representative capacity.

In support of this contention, the lessor cites Seale v. Nichols, 505 S.W.2d 251, 254 (Tex.1974), in which a note was signed in an assumed name, with the individual defendant’s signature below it, and the defendant sought to defeat summary judgment by an affidavit stating that he signed it in his capacity as an officer of a corporation and not in his personal capacity. The Supreme Court held that this affidavit did not raise the fact issue of representative capacity because the affidavit did not show that both parties understood that the defendant was signing in that capacity, nor did it show that the defendant’s intention to sign in that capacity was communicated to the payee of the note.

Varón asserts that his affidavit in this case supplies the element held to be fatally missing in Seale, namely, the understanding or agreement of the other party to Varon’s execution of the lease as a representative of the corporation, since he states in his affidavit that he believes that this was the intention of the representative of the lessor as well as of himself.

We conclude that the affidavit is not sufficient. It does not state that the parties so agreed, or that Varón communicated to the lessor his own intentions in that respect. It states only his belief concerning the parties’ intent, but defendant was not qualified to testify concerning the intent of the lessor’s representative, since he could not have direct knowledge of another person’s state of mind. Graves v. Campbell, 74 Tex. 576, 12 S.W. 238, 239-40 (1889); Medina v. Sherrod, 391 S.W.2d 66, 69 (Tex.Civ.App.—San Antonio 1965, no writ); 2 C. McCormick and R. Ray, Texas Law of Evidence § 1428 (2d ed. 1956). The summary-judgment rule, Tex.R.Civ.P. 166-A(e), requires that opposing affidavits “shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall set forth affirmatively that the affiant is competent to testify to the matters stated therein.” By this standard, Varon’s affidavit is insufficient to show the lessor’s intent.

Varón further contends that the summary judgment is erroneous because the affidavit of the lessor’s representative, filed in support of the motion, is objectionable as a legal conclusion. This affidavit states:

Defendant, Harold H. Varón, signed and entered into said Lease Agreement personally and individually, as evidenced by his signature on page 14 of said Lease Agreement.

Although we agree that this statement is a legal conclusion, we do not think it is essential to the lessor’s summary-judgment proof. Since Varon’s signature on the lease does not appear from the document itself to have been made in a representative capacity, the assertion that he signed as a representative of a corporation does not attempt to negate a necessary element of the lessor’s cause of action, but is a matter of avoidance which is made an affirmative defense by Rule 94 of the Texas Rules of Civil Procedure. Seale v. Nichols, 505 S.W.2d 251, 254 (Tex.1974). On a motion for summary judgment filed by the plaintiff, the defendant has the burden to raise a fact issue on the affirmative defense. Gulf, C. & S. F. Ry. v. McBride, 159 Tex. 442, 322 S.W.2d 492, 500 (1958); Leone v. Valiant Ins. Co., 461 S.W.2d 426, 427-28 (Tex.Civ. App.—El Paso 1970, no writ); City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427, 431 (Tex.Civ.App.—Houston [1st Dist.] 1967, writ ref’d n. r. e.). For reasons already stated, we hold that Varon’s affidavit is insufficient to raise a fact issue with respect to this affirmative defense.

Affirmed.


source: Caselaw Access Project

author: STOREY, Justice.

license: Public Domain

text:
    Billy L. HOWARD, Appellant, v. Alfred WEISBERG and Eric Weisberg, Appellees.
    No. 19809.
    Court of Civil Appeals of Texas, Dallas.
    June 14, 1979.
    Dwain Blakley, Wilson F. Walters & Associates, Denison, for appellant.
    Wayne Shirley, Weisberg, Shirley, Bam-burg & Weisberg, Denison, for appellees.
    Before GUITTARD, C. J., and STOREY and HUMPHREYS, JJ.
   STOREY, Justice.

In this suit for attorneys’ fees, the trial court granted plaintiffs’ motion for summary judgment on the ground that defendant failed to file an answer in the form required by Tex.R.Civ.P. 185. Appellant contends that his answer was not required to comply with Rule 185 because plaintiffs’ petition did not set out a systematic record of charges and payments as required by the rule. We agree with appellant’s contention and reverse and remand.

Rule 185 provides in pertinent part: When any action or defense is founded upon an open account or other claim for goods, wares and merchandise or is for personal service rendered . on which a systematic record has been kept, and is supported by the affidavit of the party, his agent or attorney taken before some officer authorized to administer oaths, to the effect that such claim is, within the knowledge of affiant, just and true, that it is due, and that all just and lawful offsets, payments and credits have been allowed, the same shall be taken as prima facie evidence thereof unless the party resisting such claim shall file a written denial, under oath, stating that each and every item is not just or true, or that some specified item or items are not just and true. .

This suit being one for personal services rendered, plaintiffs were required to make affidavit to a systematic record of all charges and payments, entered in regular sequence, before they would be entitled to the benefits of the rule. A statement or invoice must be set forth in the pleadings or incorporated by an attached exhibit which clearly identifies the nature of the item constituting the sworn account. Juarez v. Dunn, 567 S.W.2d 223 (Tex.Civ.App.—El Paso 1978, writ ref’d n. r. e.). Moreover, general statements contained in an affidavit without description of specific items is insufficient to comply with the rule. Hassler v. Texas Gypsum Co., 525 S.W.2d 53, 55 (Tex.Civ.App.—Dallas 1975, no writ), Biscamp v. Zeno Carpet Co., 473 S.W.2d 218 (Tex.Civ.App.—Beaumont 1971, no writ).

Plaintiffs’ suit is for recovery of $3,700.00 for legal services rendered to defendant. The affidavit attached to the petition avers an express contract for legal services for a fee of $6,000.00. Plaintiffs were not content, however, with a simple suit on the express contract. Instead, they elected to file their petition in the form of a verified account, alleging the “particulars” to be set forth in Exhibit A, which is adopted by reference. Alternatively, plaintiffs pleaded in quantum meruit for services of a reasonable value of $20,000.00, and refer to the same Exhibit A for a description of services rendered; but they do not rely on the quantum meruit plea in support of the summary judgment.

Exhibit A is the affidavit of plaintiff Alfred Weisberg. In narrative form, the affidavit recites an agreement by defendant to pay a fee of $6,000.00 plus costs for representation in a federal court suit against the city of Pottsboro to set aside an annexation ordinance. It also contains recitations concerning settlement efforts, the filing and dismissal of a quo warranto proceeding and other related services. The affidavit concludes that plaintiffs have spent more than four hundred hours prosecuting defendant’s claim for which they have been paid $2,300.00. Plaintiffs moved for summary judgment alleging that their suit was predicated on a sworn account as shown by an itemized account attached, and that defendant’s answer was defective and insufficient in law to constitute a defense. The trial court rendered summary judgment for the balance of $3,700.00.

The first question to be considered is the sufficiency of itemization in plaintiffs’ affidavit. In Juarez v. Dunn, 567 S.W.2d 223 (Tex.Civ.App.—El Paso 1978, writ ref’d n. r. e.), the court held that in a suit on an express written contract for architectural services, merely attaching the contract to the petition is insufficient to comply with Rule 185. Rather, a statement or invoice must be set forth in the pleadings or by an attached and incorporated exhibit which clearly identifies the nature of the items constituting the sworn account. 567 S.W.2d at 226. We agree with the conclusion in Juarez, but the case left unanswered the question of specificity of itemization required in a suit on an express contract for personal services. Moreover, as Juarez indicated, Rule 185 is not clear on this point. 567 S.W.2d at 226. We believe a proper interpretation of Rule 185, insofar as express personal service contracts are concerned, is that the itemization must show a systematic record of the services performed in a form sufficiently specific to show plaintiff’s performance of the contract, or, at least, substantial performance, in order to cast the burden on defendant to specifically deny one or more items or to deny the existence of the entire contract. This reasoning is in accordance with the general rule that Rule 185 be strictly construed. Hassler v. Texas Gypsum Co., 525 S.W.2d at 55; Wallis v. McGuffey, 392 S.W.2d 802, 803 (Tex.Civ.App.—Dallas 1965, no writ). See also Tomasic and Kieval, Sworn Accounts and Summary Judgment Proceedings in Texas: A Proposed Change, 17 S.Tex.L.J. 147, 157-8 (1976).

We recognize that a plaintiff may recover the agreed compensation on an express contract for personal services without alleging the details of his performance and without apportioning the consideration among any of the particular services performed. Nevertheless, if he seeks to invoke Rule 185, he must comply with the provisions of that rule concerning a systematic record of the services performed and an affidavit verifying the details of the services so recorded.

In the instant case, the petition fails to show that a systematic record has been kept of plaintiffs’ services rendered under their contract of employment. Moreover, the petition and affidavit fail to itemize credits related to those particular services. The petition alleges that defendant paid plaintiffs the sum of $2,300.00. Attached to defendant’s first amended answer, however, are photocopies of checks issued by defendant to plaintiffs in amounts exceeding $2,600.00. Rule 185 requires that plaintiffs’ petition and accompanying affidavit show not only a systematic record of the services rendered in performance of the express contract, but also itemization of credits related to that contract. To hold otherwise would be to undercut the strict requirements of the rule.

We hold that because plaintiffs’ suit was not filed in the form required by Rule 185, defendant’s answer was not required to conform to the rule. Wilson v. Brickstone Products Corp., 465 S.W.2d 183, 184 (Tex.Civ.App.—San Antonio 1971, writ ref’d n. r. e.). Defendant’s general denial, therefore, put in issue all matters not required to be specially pleaded, including plaintiffs’ right to recover. Biscamp v. Zeno Carpet Co., 473 S.W.2d at 220; Copeland v. Hunt, 434 S.W.2d 156, 158 (Tex.Civ.App.—Corpus Christi 1968, writ ref’d n. r. e.). Under the circumstances, the granting of summary judgment was improper.

Reversed and remanded.


text:
    Garrett SHERMAN et al., Appellants, v. Van K. DAVIS, Appellee.
    No. 19950.
    Court of Civil Appeals of Texas, Dallas.
    June 14, 1979.
    Rehearing Denied July 11, 1979.

      Robert M. Thornton, Kilgore & Kilgore, Dallas, for appellants.
    W. Mike Baggett, Winstead, McGuire, Se-chrest & Trimble, Dallas, for appellee.
    Before GUITTARD, C. J., and CARVER and STOREY, JJ.
   GUITTARD, Chief Justice.

In this suit by two joint venturers against their coventurers, the trial court granted defendant’s motion for summary judgment on the sole ground that the petition states a claim for fraud, which is barred by the two-year statute of limitation, Tex.Rev.Civ. Stat.Ann. Art. 5526 (Vernon 1958). Plaintiffs appeal on the ground that the claim alleged in the petition is not governed by the two-year statute because it is based on breaches of contractual and fiduciary duties arising out of a written contract, which is not governed by the two-year statute. We agree. Consequently, we reverse and remand.

The petition alleges the terms of the joint venture agreement, which is attached as an exhibit. The agreement authorizes defendant Van K. Davis to acquire certain land for the benefit of the venture and hold it in his name as trustee until the venturers direct otherwise. It names defendant manager of the venture property and authorizes him to do all things necessary and proper to carry out the terms of the venture, subject to reservation of control by the venturers as determined by a vote of seventy percent in interest of the venturers. The petition alleges that defendant acquired title to the land in question for the venture and that the venturers authorized its sale on certain terms, but that defendant, in his capacity as agent and trustee, breached his fiduciary duty to plaintiffs and the other venturers in various respects, including sale of the property on terms not authorized by seventy percent in interest of the venturers, selling the property for an insufficient consideration, failing to disclose to the venturers the terms of the sale before its consummation, misrepresenting to the venturers the terms of the sale after its consummation, and obtaining benefits to himself and others to the detriment of other members of the venture.

By way of damages, the petition alleges that as a result of the acts complained of, plaintiffs lost their entire interest in the venture, except for a small share of the cash payment at the time of closing the sale, and further alleges that defendant’s conduct in making fraudulent representations, concealments and breaches of trust was malicioüs, willful, and fraudulent, and, consequently, that plaintiffs should be required to pay punitive damages in twice the amount of the actual damages.

Defendant answered and filed a motion for summary judgment stating that the transaction in question, as alleged in plaintiffs’ pleading, occurred December 4, 1973, and plaintiffs were furnished information of it on December 9, 1973; that the pleadings allege that defendant was liable because of fraudulent acts, but that the suit was barred by the two-year statute of limitation because it was not filed until January 29, 1976, more than two years after the alleged unlawful actions took place. No supporting summary-judgment proof was attached or referred to. The trial court sustained the motion and rendered judgment that plaintiffs take nothing.

We conclude that the two-year statute of limitation is not applicable because the petition alleges a cause of action for breach of a written contract, breach of trust, and breach of fiduciary duties, rather than one for fraudulent representations. Although misrepresentations and conceal-ments are alleged, as well as fraudulent conduct justifying punitive damages, the petition as a whole charges primarily breaches of duties imposed on defendant by the written contract between the parties. To be founded on a contract in writing, a suit need not be based on breach of an express duty imposed by the contract, but may be based on a written contract that acknowledges a state of facts from which, by fair implication, the obligation or liability arises. International Printing Pressmen and Assistants’ Union v. Smith, 145 Tex. 399, 198 S.W.2d 729, 736 (1946). This petition alleges breaches of fiduciary duties imposed on defendant by virtue of his position of agent and manager of the venture, as defined by the written agreement. Moreover, the petition specifically alleges that defendant acted in violation of the provisions of the venture prohibiting any action with respect to the property of the venture without, a vote of seventy percent in interest of the venturers. Even the allegations of misrepresentation and concealment, which do not appear essential to the claim alleged, may reasonably be considered breaches of duties imposed on defendant as a result of the written agreement and, therefore, as breaches of contract as well as torts. Consequently, we hold that the two-year statute has no application.

Defendant contends further that the summary judgment must be affirmed because plaintiffs failed to file any answer or other response to defendant’s motion, as required by the 1978 amendment to Rule 166-A(c) of the Texas Rules of Civil Procedure. We overrule this contention on the grounds stated in our opinion delivered this date in Combs v. Fantastic Homes, Inc., 584 S.W.2d 340 (Tex.Civ.App.—Dallas 1979). In that case we held that under the amended rule, the party opposing a motion for summary judgment need not file a written answer or other response in order to raise for appellate consideration the insufficiency of the summary-judgment proof to support the specific grounds stated in the motion. Consequently, we hold that plaintiffs may raise here the question of whether the allegations of the petition — the sole summary-judgment proof relied on to support the motion — establish that plaintiffs’ claim is barred by the two-year statute, the ground expressly stated in the motion.

Defendants argue further that even if our interpretation in Combs is correct, summary judgment is proper here because plaintiffs are urging on appeal that their claim is governed by the four-year statute of limitation, Tex.Rev.Civ.Stat.Ann. Arts. 5527 and 5529 (Vernon 1958), and this plea is one of confession and avoidance of defendant’s plea of the two-year statute. Such a plea, defendant insists, is required by the amended rule to be presented by written answer or response in the trial court. We do not agree. The question, or “issue,” presented by defendant’s motion in the trial court was whether plaintiffs’ claim is barred because it arose more than two years before the suit was filed. Plaintiffs had no burden to plead the four-year statute in order to avoid application of the two-year statute. Since the transaction admittedly took place less than four years before the suit was filed, no question is raised here concerning application of the four-year statute, except as that statute and the decisions construing it limit application of the two-year statute. Thus plaintiffs’ contention with respect to the four-year statute is only a denial of the application of the two-year statute, the ground expressly raised in defendant’s motion. Consequently, we hold that we have properly before us for consideration plaintiffs’ contention that their petition does not show on its face that their claim is barred by limitation.

Reversed and remanded.


author: CARVER, Justice.

text:
    William F. CALLEJO, Trustee, Appellant, v. The CITY OF GARLAND, Texas, Appellee.
    No. 19803.
    Court of Civil Appeals of Texas, Dallas.
    June 18, 1979.
    Rehearing Denied July 18, 1979.

      David K. Meyercord, Strasburger & Price, Dallas, for appellant.
    Richard P. Johnson, Asst. City Atty., Garland, for appellee.
    Before AKIN, ROBERTSON and CARVER, JJ.
   CARVER, Justice.

Callejo appeals from a summary judgment denying relief against the City of Garland for installing a surface electrical transmission facilities pursuant to an easement. Callejo urged that the grant of the easement was intended to be limited to underground water facilities and was ambiguous as written. We affirm on the ground that the easement is clear and unambiguous and is not limited to underground facilities.

The sole question is the construction to be given to the language contained within an express grant of an easement between the parties. The pertinent part of the easement reads:

UTILITY EASEMENT
That William F. Callejo, Trustee of Dallas County, Texas, for and in consideration of the sum of $2,305.00 cash in hand paid to me by the City of Garland, Texas, receipt of which is hereby acknowledged and other good and valuable consideration, one of said considerations being the benefits to be derived by grantor on account of the construction, reconstruction and maintenance by the City of Garland of said utilities in and through those certain premises owned by the grantor and which hereinafter described, do hereby give and grant to the City of Garland, a municipal corporation of Dallas County, Texas, the right to construct, reconstruct and perpetually maintain facilities upon and across the following described property.
The City of Garland shall also have the right to assign to the North Texas Municipal Water District any of the right and privileges herein granted to the City of Garland; and specifically the right to construct and maintain major water supply lines upon and over the easement herein conveyed.
The City of Garland will also allow the grantor a temporary delay of one year in the transfer of any water service connection from the NTMWD water transmission line to any City distribution main which may be installed along this property. The pro-rata charge will likewise be delayed until the service is actually tied into the City main.
Said easement consisting of land described as follows:
(Metes and bounds description deleted)
To Have and To Hold the same perpetually to the City of Garland, and its successors, together with the right and privilege at any and all times to enter said premises, or any part thereof, for the purpose of construction, reconstruction and maintenance of said utility facilities, and for making connections therewith; all upon the conditions that the City of Garland will at all times, after doing any work in connection with the construction, reconstruction or repair of said utility or facilities, restore said premises to the condition in which the same were found before such work was undertaken, and that the use of said rights and privileges herein granted the City of Garland will not create a nuisance or do any act that will be detrimental to said premises. [Emphasis added.]

Neither the pleadings nor summary judgment record raise issues of fraud, accident, mistake, or reformation. Callejo contends that the grant is ambiguous and a fact issue exists as to the true intent of the parties necessitating a trial on the merits. In essence, Callejo urges that the terms of the grant are too general to support any “use,” that the parties clearly intended some “use,” that the some “use” was intended to be only an underground water pipe and nothing else. The “only” and “nothing else” is to be supplied on the merit trial to cure the “ambiguity" urged.

The express grant of Callejo to the City of Garland is admittedly certain in its boundaries and in its consideration, but, Callejo urges, lacks legal certainty as to “use” granted. In support of his view, Cal-lejo points out that in the granting clause “the right to construct, reconstruct and perpetually maintain facilities” fails to describe a granted use in that the term “facilities” does not have a commonly accepted usage or meaning determined by the record in this cause nor a meaning of art in the law. Callejo further contends that the phrases employed in the habendum clause, “said utility facilities” and “said utility or facilities,” are words of reference only to the granting clause by the use of the prefix “said” and add nothing to the original use of the term “facilities.” We cannot agree that the easement given by Callejo is ambiguous.

Ordinarily the construction and interpretation of express grants of easement are governed by the same rules of construction applicable generally to deeds. Kothe v. Harris County Flood Control District, 306 S.W.2d 390 (Tex.Civ.App.—Houston 1957, no writ). However, as was stated in Magnolia Petroleum Co. v. Thompson, 106 F.2d 217, 224 (8th Cir. 1939) certiorari denied, 308 U.S. 613, 60 S.Ct. 180, 84 L.Ed. 513 (1939): “Words, therefore, which, if used in a deed granting a fee, may be regarded as surplusage, if used in a deed granting an easement, may constitute the essential description of the thing intended to be conveyed.” [Emphasis added.] If there is an irreconcilable conflict between the granting clause of a deed and the habendum, the granting clause will prevail, but if the two can be construed so as to stand together, by limiting the estate without contradicting the grant, the court will give that construction in order to give effect to both. Moore v. City of Waco, 85 Tex. 206, 20 S.W. 61 (1892).

Applying the foregoing principles to the express grant of Callejo to the City of Garland, we must conclude that Callejo intended the legal consequences of employing within his instrument the words “facilities,” “said utility facilities,” and “said utility or facilities.” We find the “consequences” by examining Peterson v. Barron, 401 S.W.2d 680 (Tex.Civ.App.—Dallas 1966, no writ). In Peterson an express easement granting the City of Irving “the right to construct, reconstruct and perpetually maintain drainage and utility facilities,” with similar words repeated four other occasions in the same instrument, was attacked as being ambiguous and thus permitting parol testimony to explain the intent of the parties in the use of such language. In rejecting this contention, the court stated:

At the very top of the deed we find the title, “drainage and utility facilities” noting the plural and not the singular. The term “drainage and utility easement” appears repeatedly throughout the instrument indicating multi-purpose rather than singular purpose use intended by the grantor. We know of no prohibition in law granting an easement for more than one purpose. The cited cases have clearly indicated construction of such instruments to indicate multiple uses of easement. Lone Star Gas Co. v. Childress, Tex.Civ.App., 187 S.W.2d 936; Knox v. Pioneer Natural Gas Co., Tex.Civ.App., 321 S.W.2d 596. The words “drainage” and “utility” facilities are of common and easily understandable meaning and usage, especially when used in connection with the rights of cities and other municipal corporations. Utility facilities cover many services such ,as light, gas, telephone, and sewerage lines. [Emphasis added.] 401 S.W.2d at 686.

For like reasons, we hold that the granting clause gave the City of Garland the right to employ the described easement for utility facilities inclusive of the electrical power lines and poles about which Callejo complains. Since the grant is unambiguous, the trial court was correct in denying all relief to Callejo.

Affirmed.


author: SHANNON, Justice. O’QUINN, Justice,

text:
    TEACHER RETIREMENT SYSTEM OF TEXAS, Appellant, v. Bert COTTRELL, Appellee.
    No. 12848.
    Court of Civil Appeals of Texas, Austin.
    June 20, 1979.
    Rehearing Denied July 11, 1979.

      John L. Hill, Atty. Gen., Harry C. Green, Asst. Atty. Gen., Austin, for appellant.
    John W. Alvis, Alvis & Carssow, Austin, for appellee.
   SHANNON, Justice.

This is an appeal from a judgment of the district court of Travis County that set aside an order entered by the Board of Trustees of the Teacher Retirement System of Texas. The Board’s order denied Bert Cottrell’s application for purchase of credit for out of state teaching service pursuant to Tex.Educ.Code Ann. § 3.26(a) (1972). We will affirm the judgment of the district court.

At the time Cottrell applied to the Board to purchase credit for his out of state teaching, § 3.26(a) provided as follows:

“Any member of the retirement system who has been employed as a teacher or as an auxiliary employee in any public school system maintained in whole or in part by any state or territory of the United States or by the United States for children of United States citizens may purchase equivalent membership service credits under this retirement system for such service.” Tex.Laws 1975, ch. 19, § 3.26(a), at 37.

The facts are not in dispute. From June, 1950, until June, 1953, Cottrell was an instructor of chemistry in the Department of Physics and Chemistry at the United States Military Academy at West Point. The United States Military Academy is a fully accredited institution granting academic degrees at the undergraduate level. During Cottrell’s tenure as instructor at West Point, he was a commissioned officer in the United States Air Force assigned to West Point where he taught cadets on a full-time basis.

Following the termination of his duties as instructor at West Point and his separation from the Air Force, Cottrell became a member of the Teacher Retirement System of Texas. In January, 1977, Cottrell completed ten years of service in Texas as a member of the Retirement System, and became eligible to purchase membership service credits to which he was entitled under the Retirement System. Prior to his application for out of state teaching service credit, Cottrell purchased five years of creditable service for active military duty as authorized by Tex.Educ.Code Ann. § 3.23(c). Those five years of credit covered time other than that spent in teaching at West Point. Cott-rell, pursuant to § 3.26(a), applied to the Board for the right to purchase membership service credits for his three years of out of state teaching at West Point. The administrative agency applied the law to the undisputed facts and determined to deny Cott-rell’s application.

The district court entered judgment reciting “ . . . the order made by the Board of Trustees of the Teacher Retirement System of Texas denying [Cottrell’s] application for purchase of credit for out of state teaching pursuant to Education Code Section 3.26, is in violation of the said statute . . .” The judgment of the district court overturned the order of the Board and ordered the Board to approve Cottrell’s application for purchase of credits for out of state service.

The Retirement System attacks the judgment by one point of error: “The trial court erred in holding that the order of the [Retirement System] denying [Cottrell’s] application for purchase of credit for out of state teaching pursuant to § 3.26 of the Texas Education Code was in violation of said statute.”

It should be noticed initially that the Board’s decision, upon undisputed facts, that Cottrell was not entitled to purchase credit pursuant to § 3.26(a) is a conclusion of law. Unlike a determination of disputed fact, an administrative determination of a question of law is not entitled to a presumption of validity. Neither the district court nor this Court is bound by the Board’s construction of § 3.26(a). Social Security Board v. Nierotko, 327 U.S. 358, 66 S.Ct. 637, 90 L.Ed. 718 (1945); Board of Adjustment v. Underwood, 332 S.W.2d 583 (Tex.Civ.App.1960, writ ref’d n. r. e.); Commissioner of Insurance v. Allstate Insurance Company, 579 S.W.2d 553 (Tex.Civ.App. Austin 1979) (writ pending).

Under its point of error the Retirement System argues primarily that Cottrell was not entitled to purchase credit for out of state teaching service pursuant to § 3.26(a) because he was not a teacher and because the Military Academy is not part of any public school system.

Cottrell qualifies under the plain wording of § 3.26(a), as it read at the time of his application, as (1) a teacher (2) employed in a public school system maintained by the United States (3) for children of United States citizens.

From 1950 to 1953 Cottrell taught chemistry in the Department of Physics and Chemistry at the Military Academy. That Cottrell was an officer does not mean that he was not a teacher any more than the fact that he was a teacher means that he was not an officer. When Cottrell taught at West Point, he was both a teacher and an officer. Cottrell’s responsibilities as an instructor in chemistry at West Point were no different from the responsibilities of such a position in any college or university in the country except, as noted by counsel, “ . . . his students were, perhaps, brighter than most and undoubtedly sat up straighter in their seats.” At the time of Cottrell’s application to the Retirement System, nothing in § 3.26(a) excluded from eligibility for purchase of credits a member of the military forces of the United States who taught at a public school and was compensated by the United States Government.

The Military Academy is part of a “public school system.” The United States Government, of course, does not maintain the comprehensive type of school system that each of the states does. The Government, nevertheless, does maintain “systems” of schools. Considering only the Department of Defense, there are, in addition to the Military Academy, the Naval Academy, the Coast Guard Academy, and the Air Force Academy. In addition, the Department of Defense maintains schools overseas for the general education of military dependents. The Military Academy functions as a public college. It is, of course, supported by the United States Government. That the Academy’s primary responsibility is to train persons to become officers in the United States Army does not make it any less a public educational institution. Students at the Academy attend without charge for room, board, tuition, and medical care. Admission is open to all those who meet the qualification!, one of which is United States citizenship.

It is of interest that effective June, 1977, § 3.26(a) was amended to exclude from out of state service credit, “ . . . service [performed by one] while a member of the Armed Forces rendered at any public school, for which service the member was compensated by the United States.” Under the terms of the amended statute, Cottrell would not be eligible to purchase credit for his teaching stint at the Military Academy.

The Supreme Court has recognized the presumption that the legislature in adopting an amendment intends to make some change in the existing law. American Surety Co. of New York v. Axtell Co., 120 Tex. 166, 36 S.W.2d 715 (1931). Applying that presumption to this case, the amendment of § 3.26(a) is support for our view that the statute, as it existed prior to amendment, allowed credit for teaching at a public school by one who was in the military service and was compensated by the United States Government.

The Retirement System also argues under its point of error that the provisions of § 3.26(a) are not applicable to teaching time performed by one on active duty for the reason that purchase of credit for active military duty is allowed pursuant to the provisions of § 3.23(c). Section 3.23(c) permitted persons who performed military duty prior to becoming members of the Retirement System to purchase credit for up to five years of time spent in military service. As noticed previously, Cottrell purchased five years of creditable service for his military duty pursuant to § 3.23(c). The five years of credit purchased covered time other than that spent by Cottrell in teaching at the Military Academy.

No language in § 3.26(a), prior to amendment, indicated a legislative intent to bar a person otherwise qualified for credit pursuant to § 3.26(a) because he also could qualify under § 3.23(c). Section 3.23(c) probably reflected the intent of the legislature to recognize in this context the value to society of service in the military. On the other hand, § 3.26(a) was most probably an expression of legislative purpose to encourage experienced teachers to come to Texas and remain here. In Cottrell’s case, both legislative purposes were served. We know of no reason in law to bar him from purchase of credit under § 3.26(a).

The judgment is affirmed.

O’QUINN, Justice,

dissenting.

Because I am in complete disagreement with the results reached by the majority, I file this dissent and set out my reasons for disagreeing.

From two administrative determinations, in April of 1977, Cottrell appealed by way of petition to the executive secretary of the Teacher Retirement System requesting that the two earlier decisions be overruled. In August of 1977 the executive secretary in effect affirmed the earlier administrative actions in his decision which in pertinent part stated:

“1. The USMA is not a public school maintained in whole or in part for ‘children of United States citizens’ .
“2. The USMA is not a public school system maintained in whole or in part by any other state or territory of the United States. It is a military school maintained to educate and train future military officers .
“3. * * * [Under Attorney General Opinion H — 945 and Section 3.23] the Board of Trustees has not by ‘rule or regulation’ found that a member who has taught at a United States military service academy is eligible to purchase out-of-state teaching service credits under section 3.26 of the Texas Education Code.
“4. The Petitioner was not a teacher or auxiliary employee in a public school system as defined in section 3.02(3) [3.02(a)(3)] while an Air Force officer assigned to the USMA. He was primarily an Air Force officer subject to assignment by the Air Force.
“Decision. Petitioner is not eligible to purchase creditable service toward retirement with the Teacher Retirement System of Texas for service rendered at the U.S. Military Academy under Section 3.26, Texas Education Code. The service would be eligible as military duty and creditable under Section 3.23(c), Texas Education Code subject to five years limitation on such military duty.”

From decision of the executive secretary, Cottrell appealed to the Board of Trustees of the Teacher Retirement System. The Board in September of 1977 adopted the decision of the executive secretary and stated, “Petitioner’s request to purchase out-of-state credit service for the period in which he, as a military officer, was assigned to service as an instructor at the United States Military Academy is denied.”

Cottrell on appeal argues (1) that under an opinion of the attorney general, filed in 1977, his application to purchase additional credit under Section 3.26 would be proper, and (2) that an Act passed by the Legislature a few months after Cottrell filed his application, which would not affect Cott-rell’s rights, amended the law to prevent future grants of the type of credit sought in this suit.

The Legislature amended Section 3.26(a) effective June 1, 1977, by adding: “Specifically excluded from out-of-state service credit is service while a member of the Armed Forces rendered at a public school, for which service the member was compensated by the United States.”

For reasons more fully developed below, I am persuaded that the opinion, which Cott-rell urges is controlling, fails to give the relief sought in this case. The attorney general’s opinion relied on began with the condition: “If a person has been determined to be eligible under both sections 3.23 and 3.26. . . . ” The opinion thereafter recognized that “Certainly, there are numerous types of fact situations which are encompassed in your questions, and the determination of whether a particular situation falls within the statute involves a determination of fact. The Legislature, in this case, has specifically delegated the authority to make such fact determinations to the State Board of Trustees of the Teacher Retirement System in section 3.23. . .” The opinion is not controlling in the instant case because the Board here has merely exercised its delegated authority to determine that Cottrell is not entitled to purchase credits under Section 3.26(a).

Cottrell’s second argument springs from amendment of the statute specifically to exclude the purchase of the type of credits sought here for out of state service.

As will be demonstrated in greater detail, I believe there are other principles of statutory construction applicable to this case which operated to justify the Board’s exclusion of the purchase of such credits even prior to the specific exclusion of these credits under terms of the amendment.

The first reason the Retirement System should prevail in this cause is that the initial determination of eligibility to purchase retirement credits is properly a question to be resolved by the System. As mentioned above, the attorney general’s opinion Cott-rell relies on stated, “The Legislature . has specifically delegated the authority to make such fact determinations [of whether a particular situation falls within the statute] to the State Board of Trustees of the Teacher Retirement System. . . .”

The opinion then continued: “In view of the foregoing, we cannot say as a matter of law that a member of the military employed as a teacher in a United States Armed Forces service academy . . . is or is not eligible under section 3.26 to purchase membership service credits.” It is also observed that Section 3.02(b) declares “In case of doubt the State Board of Trustees of the retirement system shall determine whether a person is an employee within the contemplation of this chapter.” Education Code, Section 3.02(b) (Supp.1979).

The Administrative Procedure and Texas Register Act provides that “Where the law authorizes review under the substantial evidence rule, or where the law does not define the scope of judicial review, the court may not substitute its judgment for that of the agency as to the weight of the evidence on questions committed to agency discretion . .” Article 6252-13a, § 19(e) (Supp. 1979).

Prior to the Procedure Act, “If . the meaning of the provision be doubtful or ambiguous, the construction placed upon a statutory provision by the agency charged with its administration is entitled to weight. . . .’’ Ex parte Roloff, 510 S.W.2d 913, 915 (Tex.1974); Calvert v. Kadane, 427 S.W.2d 605, 608 (Tex.1968); Lloyd A. Fry Roofing Co. v. State, 541 S.W.2d 639, 644 (Tex.Civ.App.Dallas 1976, writ ref’d n. r. e.); Heard v. City of Dallas, 456 S.W.2d 440, 443-444 (Tex.Civ.App.Dallas 1970, writ ref’d n. r. e.).

One court stated, “ . . . whether the meaning of the provisions of an act is unclear the interpretation given them by the administrative agency charged with its implementation is entitled to great weight. . Beekendorff, et al. v. Harris-Galveston Coastal Subsidence District, 558 S.W.2d 75, 82 (Tex.Civ.App.Houston (14th Dist.) 1977, writ ref’d n. r. e., opinion approved, 563 S.W.2d 239); see also, Tarry Moving & Storage Co. v. Railroad Commission, 359 S.W.2d 62, 67 (Tex.Civ.App.Austin 1962, aff’d, 367 S.W.2d 322). (Emphasis added in Beekendorff).

I believe that the Board of Trustees of the Teacher Retirement System in denying Cottrell’s application merely exercised the-authority delegated to the Board to determine whether the applicant was covered by the respective sections of the statute. Cott-rell was permitted to purchase five years of credit under Section 3.23, but was denied the right to purchase an additional three years under Section 3.26(a). In this respect the Board has determined that Cottrell’s application for the additional credits was not within the contemplation of the legislature because (1) the military academy— West Point — is not a public school, and (2) an officer teaching at the military academy is rendering military service under assignment by the military, rather than primarily performing teaching duties as contemplated under the Act.

On the public school question, the Retirement System’s view was expressly conveyed to Cottrell by letter in this language:

“Both the Texas Legislature and the United States Congress normally use the term ‘public school’ according to its generally accepted meaning: public tax-supported elementary and secondary schools and state universities. . . . That
Congress does not contemplate the Academy as a ‘public school’ or element of public education is shown by the fact that Title 20 (Education) covers teachers, students, and elementary and secondary education without mention of the Academy which is covered by Title 10 (Armed Forces). Teaching at USMA is not service in a ‘public school’ as contemplated by Section 3.26(a).”

To those authorities and definitions, the System might have added the generally recognized authority of Webster: “public school ... In the United States . an elementary or secondary school, now usually free, maintained by the local governmental authority.” Webster’s New International Dictionary of the English Language, 2nd ed., unabridged.

The letter from the System to Cottrell also stated that the System construed teaching at the United States Military Academy, while on active duty in the service, to be military duty rather than out of state teaching service. Each of the determinations by the Board was well within the authority of the Board, as recognized in the attorney general’s opinion, and as delegated to the Board under Sections 3.02(b) and 3.23(a).

Returning to the amendment of the statute, I examine the effect to be found in it upon the facts of this case. Cottrell urges that the amendment added in 1977 must be recognized as an intended change in the law, coming too late to bar approval of his application.

Statutory amendments are not necessarily and in all instances intended changes in the law. Some amendments may be construed as legislative interpretation of the former or existing law. And, in case of an inconsistency between a general rule and a particular rule, the particular rule may be construed properly as an exception to the general rule.

Although Texas Jurisprudence recognizes a general rule, relating to construction of amendments to a statute, that “In enacting an amendment, the legislature is presumed to have intended to change the law, and a construction should be adopted that gives effect to the intended change, rather than one that renders the amendment useless,” yet recognition is also accorded the rule that, “ . . .an amendment may constitute a legislative interpretation of the law, that is entitled to much weight.” (Emphasis added). 53 Tex.Jur.2d Statutes, Secs. 187, 178 (1964).

The Commission of Appeals in 1926 stated, “While this amendment ... [to an existing statute] cannot affect the litigation in the present controversy, yet it is a legislative interpretation of the act amended . . .” Creager v. Hidalgo County Water Improvement District No. 4, 283 S.W. 151, 153 (Tex.Comm’n App.1926, opinion adopted). This Court in 1961 wrote, “We believe that it is proper for this Court to use an Amendatory Act to arrive at the intention of the Legislature in a previous Act.” Calvert v. Audio Center, Inc., 346 S.W .2d 420, 423 (Tex.Civ.App.Austin 1961, writ ref’d n. r. e.).

If this rule of construction be followed, we should give effect to the amendment as a legislative means of clarifying and making more specific terms of the Act being amended. Giving effect to what we consider the manifest purpose of the law making body, I contend the amendment merely made explicit what the Legislature had intended to be part of the original Act. Wright v. State, 71 S.W.2d 352 (Tex.Civ.App.Austin 1934, no writ).

An additional rule of construction, which favors the position of the Retirement System, has been stated in this language: “ . . . where one section of an act prescribes a general rule which, without qualification, would embrace an entire class of subjects, and another section prescribes a different rule for individual subjects of the same class, the latter will be construed as an exception to the general rule.” 53 Tex. Jur.2d Statutes, sec. 143 (1964). The rule has been followed, for example, by this Court in Trinity Universal Insurance Company v. McLaughlin, 373 S.W.2d 66, 69 (Tex.Civ.App.Austin 1963, rehearing denied, 373 S.W.2d 350, no writ). See also Town of Highland Park v. Marshall, 235 S.W.2d 658, 663 (Tex.Civ.App.Dallas 1950, writ ref’d n. r. e.).

The Supreme Court explained the rule in this language in Lufkin v. City of Galveston, 63 Tex. 437, 439 (1885):

“It is a cardinal rule in the construction of constitutions and statutes that the whole instrument must be taken together — and the whole scheme had in view by the law-making power must be understood and carried out; and where there are apparent conflicts or inconsistencies between different parts of the instrument, that construction must be adopted which will give effect to every part, rather that that which will render any portion nugatory and of no avail.
“As a natural result of this principle, it follows that where in one section a general rule is prescribed, which without qualification would embrace an entire class of subjects, and in another section a different rule is prescribed for individual subjects of the same class, the latter must be construed as exceptions to the general rule, and be governed by the section which is applicable to them alone.”

Under this analysis, Section 3.26 of the Education Code must be read as stating the general rule. Prior to the amendment in 1977, Section 3.26(a) read as follows:

“(a) Any member of the retirement system who has been employed as a teacher or as an auxiliary employee in any public school system maintained in whole or in part by any other state or territory of the United States or by the United States for children of United States citizens may purchase equivalent membership service credits under this retirement system for such service.” (Acts 1975, 64th Leg., p. 37, ch. 19, § 2, effective March 20, 1975).

Pursuing the same analysis, Section 3.23(c) would be read as the inconsistent particular rule which should be construed as an exception to the general rule found in Section 3.26. As it applied in April of 1975, Section 3.23(c) read as follows:

“Any member who perform[s] one or more years of military duty prior to becoming a member of the retirement system shall be permitted to deposit to his individual account in the member savings account for each year of such military duty, but not to exceed five years, an amount equal to his deposits made with the retirement system during the first full year of service as a teacher or auxiliary employee after becoming a member of the retirement system. He shall then be entitled to one year of membership service credit for each year of military duty.” (Emphasis added). (Acts 1975, 64th Leg., p. 122, ch. 57, § 2, effective April 18, 1975).

The denial of Cottrell’s application was grounded in part upon application of this principle, as evidenced by the following excerpt from the letter by which the director of member benefits explained to Cottrell the reasons for disallowing purchase of credit for three years of teaching at the military academy, in addition to the maximum five years previously allowed for military service:

“Since the essential characteristic of instruction at the service academies is military duty, its crediting under TRS should be governed exclusively by Sec. 3.23 of the Texas Education Code. The legislature has made ample provision for crediting military duty. The provisions of Sec. 3.26 are intended to deal with persons who are essentially career teachers but who have not rendered all their service in the Texas public schools. This does not accurately describe the instructors at the service academies who are members of the Armed Forces.”

It is my conclusion that, for the several reasons already stated, the Teacher Retirement System, acting through its administrative processes in considering the application of Cottrell, correctly exercised the discretion delegated to the System in denying the application, and that the order of the Board of Trustees should be sustained. It appears to me that the result reached by the majority simply permits Cottrell to obtain eight years of credit for his military service instead of the maximum of five years plainly fixed by the Legislature.


author: J. CURTISS BROWN, Chief Justice.

text:
    Rudolph C. VARA et al., Appellants, v. CITY OF HOUSTON et al., Appellees.
    No. B2007.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    June 20, 1979.
    Rehearing Denied July 11, 1979.

      Thomas W. Leonard, Leonard, Koehn, Rose, Webb & Hurt, Bellaire, for appellants.
    Robert M. Collie, Jr., City Atty., Charles M. Williams, Asst. City Atty., Houston, for appellees.
    Before J. CURTISS BROWN, C. J., and COULSON and CIRE, JJ.
   J. CURTISS BROWN, Chief Justice.

Rudolph C. Vara and seven other named plaintiffs (appellants) brought this class action on behalf of approximately 55,000 residents of the City of Houston (the City), all of whom had signed a petition to initiate a city ordinance to disannex a portion of the City referred to as the Clear Lake City area. Appellants sought a writ of mandamus to compel the City, its mayor, city council, and secretary (appellees) to either pass the disannexation ordinance without alteration or to submit the proposal to the electorate. The trial court, after a hearing, denied the writ.

The charter of the City provides that “[t]he people of Houston . . . shall have the power of direct legislation by the initiative and referendum.” Charter, Houston, art. Vllb § 3. With regard to the use of the initiative, the charter reads as follows:

The initiative shall be exercised in the following manner:
(a) Petition. A petition signed and verified in the manner and form required for recall petition in Article Via* by qualified electors equal to 15 per cent of the total vote cast at the democratic primary for the nomination of mayor and commissioners, next preceding the filing of said petition, accompanied by the proposed legislation or measure in the form of a proposed ordinance or resolution, and requesting that such ordinance or resolution be submitted to a vote of the people, if not passed by the council, shall be filed with the secretary.
(b) Secretary’s certificate. Within five days after the filing of such petition the secretary shall certify the number of votes cast at the democratic primary for nomination of mayor and commissioners, next preceding the filing of said petition, and the number of signers of such petition, and shall present said certificate, petition and proposed ordinance or resolution to the council.
(c) Action by the council upon petition. If such petition be signed, as in the Charter provided, by qualified electors equal to 15 per cent of the total vote cast at the democratic primary for the nomination of mayor and commissioners next preceding the filing of such petition, the council, within ten days after the receipt thereof, except as otherwise provided in this Charter, shall either pass such ordinance or resolution without alteration, or submit it to the popular vote at a special election, which must be held within thirty days after the date of the ordering thereof; provided, however, that if any other municipal election is to be held within sixty days after the filing of the petition said proposed ordinance or resolution shall be submitted without alteration to be voted upon at such election.

The parties have stipulated that appellants have complied with all procedural requirements for exercise of the initiative process under the charter. The parties also stipulated that the appellees refused, and continue to refuse, to pass the ordinance or to order an election.

The Texas Supreme Court has outlined the standard of review to be applied in determining whether mandamus should issue to compel a city to take action on an initiative petition. In Glass v. Smith, 150 Tex. 632, 244 S.W.2d 645 (1951), the respondents, signers on an initiative petition, were seeking a writ of mandamus to compel petitioners, the city council, the city manager, and the city clerk of the City of Austin, to hold an election on a proposed ordinance classifying policemen and firemen. The court held that

to entitle respondents to a writ of mandamus on the ground that they have a legal right to have the election called and held and that petitioners are under a legal duty to hold it, it is not enough that the subject matter of the proposed ordinance be legislative in character but it must also appear that the subject matter of the ordinance has not been withdrawn from the field in which the initiatory process is operative.

Id. at 648 (emphasis added). In determining whether the subject matter of the proposed ordinance in Glass had been withdrawn from the scope of the initiatory process, the supreme court posed this question: “Has the subject matter of the proposed ordinance been withdrawn, expressly or by necessary implication, by either the general law or the City Charter from the field in which the initiatory process is operative?” Id. at 650 (emphasis added). Neither the appellants nor the appellees in the case at bar contend that any provision of the City Charter either expressly or by necessary implication withdraws the subject matter of the proposed ordinance from the scope of the initiatory process. Thus the issue is narrowed to whether some provision or provisions of the general laws removes from the initiatory process the proposed ordinance to disannex the Clear Lake City area.

Article 1175, Tex.Rev.Civ.Stat.Ann. (1963), sets forth the enumerated powers of a home rule city, such as the City of Houston, and provides in relevant part as follows:

Cities adopting the charter or amendment hereunder shall have full power of local self-government, and among the other powers that may be exercised by any such city the following are hereby enumerated for greater certainty .
2. The power to provide for the disannexation of territory within such city . . according to such rules as may be provided by said charter not inconsistent with the procedural rules prescribed by the Municipal Annexation Act.

Tex.Rev.Civ.Stat.Ann. art. 1175(2) (1963) (emphasis added). Pursuant to article 1175(2) the city would be empowered to provide in its charter for disannexation of territory within the procedural limitations of the Municipal Annexation Act. However, the Houston City Charter, which contains no rules pertaining specifically to dis-annexation, provides as follows:

The city shall have all powers that are or hereafter may be granted to municipalities by the Constitution or laws of Texas; and all such powers, whether expressed or implied, shall be exercised and enforced in the manner prescribed by this Charter, or when not prescribed herein, in such manner as shall be provided by ordinance or resolution of the counsel.
In addition to all the powers enumerated in this Charter, implied thereby or appropriate to the exercise thereof, the city shall have and may exercise, in the manner hereinbefore provided, all other powers which, under the Constitution and laws of this State, it would have been competent for this Charter specifically to enumerate.

Charter, Houston, art. II § 2(b) (emphasis added). Appellants contend that the broad reservation of power in the above section is a sufficient “rule” for the purposes of article 1175(2). Gn the basis of Golston v. City of Tyler, 262 S.W.2d 518 (Tex.Civ.App.—Texarkana 1953, writ ref’d), we agree. Nevertheless, the further restriction in article 1175(2) that the “rules” must be consistent with the procedures in the Municipal Annexation Act must be given effect.

The Municipal Annexation Act is embodied in article 970a, Tex.Rev.Civ.Stat.Ann. (1963). Specifically as to disannexation, the act provides the following procedural requirements. If the annexing city fails to discharge its obligation to provide equivalent city services to the annexed area within three years of the date of annexation, a majority of the qualified voters residing in the annexed area and the owners of fifty percent of the land in the area may petition for disannexation. The statute requires notice of the petition to be posted for ten days in three public places in the annexed area and publication in a generally circulated newspaper serving the area prior to distribution of the petition for signatures. If the city fails to disannex within ninety days after receipt of a valid petition, any one or more of the petitioners may file in the district court for disannexation. If the district court then determines that the petition is valid, “it shall enter an order disannexing such particular annexed area.” Tex.Rev. Civ.Stat.Ann. art. 970a § 10 A and B (1963).

The relationship between article 1175(2) and article 970a § 10 was the subject of City of Hitchcock v. Longmire, 572 S.W.2d 122 (Tex.Civ.App.—Houston [1st Dist.] 1978, writ ref’d n.r.e.). In that case the issue as expressed by the court was “whether citizens of a home rule city can repeal an annexation ordinance by referendum.” The court reasoned that repeal of an annexation ordinance is substantially the same as disannexation of territory and held that “the governing body of the city does not have the right to repeal an annexation ordinance or to adopt a disannexation ordinance without following the specific procedural requirements established in article 970a.” Id. at 127. We conclude that articles 1175 and 970a § 10 have withdrawn the subject matter of this ordinance, disannexation, from the field in which the initiatory process is operative.

Alternatively, appellants contend that at least a portion of the territory was subject to “discontinuance” through the initiative process pursuant to article 1266, Tex.Rev.Civ.Stat.Ann. (1963). That article provides for disannexation of territory by city ordinance if the territory is unimproved, of a minimum acreage, and is “contiguous and adjoining the lines of [the] city.” In this case the parties stipulated that the Clear Lake City area was composed of both improved and unimproved property. There was no such stipulation as to the size of the unimproved area or as to the adjacency of the tract to the city lines. Nor did appellants present any evidence on those issues so as to bring any portion of the territory within the requirements of article 1266.

Having found that disannexation, generally, has been withdrawn from the initiatory process, and having found appellants failed to comply with either article 970a or article 1266, we overrule appellants’ first point of error. This renders it unnecessary for us to consider appellants’ second point of error which complains that the trial court erroneously ruled that the boundary description of the area to be disannexed in the proposed ordinance fails to close.

The judgment of the trial court denying the writ of mandamus is affirmed.

Affirmed.

CIRE, J., not participating.


author: McDONALD, Chief Justice.

text:
    Charlie TURNER, Appellant, v. JOSHUA INDEPENDENT SCHOOL DISTRICT, Appellee.
    No. 6032.
    Court of Civil Appeals of Texas, Waco.
    June 21, 1979.
    Rehearing Denied July 19, 1979.

      Charles 0. Dobbs, Nickelson, Michael & Dobbs, Fort Worth, for appellant.
    David B. Owen, Morgan, Gambill & Owen, Fort Worth, for appellee.
   OPINION

McDONALD, Chief Justice.

This is an appeal by appellant Charlie Turner from judgment declaring he had “no contract and no right to continued employment” with appellee Joshua Independent School District, after June 30, 1978.

Appellee School District filed this case on Mav 22.1978 seeking declaratory judgment under Article 2524-1 VATS. The School District alleged it had a written contract with appellant whereby he was employed as a school principal for the period August 1, 1977 thru June 30, 1978; that the School Board at its meeting on March 6, 1978 passed a motion “to hire Charlie Turner for one year” by a 4 to 3 vote; that thereafter the Board at its meeting on March 14, 1978 passed a motion “to reverse the intent of the decision made March 6, 1978 and not extend the contract of Charlie Turner” by a vote of 5 to 2; that a justiciable controversy exists between the parties; that Turner contends his employment was extended for one year; that the School contends Turner had no right for continued employment after June 30, 1978. The School District sought judgment declaring the rights, status and legal relations between the parties.

Turner filed a plea in abatement alleging he had filed a case against the School District in the United States District Court in Fort Worth on June 30.1978 embodying the cause of action filed by the School District, as well as asking for lost wages.

The trial court overruled such plea in abatement, tried the case without a jury, and rendered judgment declaring appellant had no contract and no right to continued employment with the School District after June 30, 1978.

The trial court filed Findings and Conclusions pertinent of which are summarized as follows:

Findings of Fact
1) On May 30, 1977 plaintiff employed defendant as a school principal from August 1, 1977 thru June 30, 1978. Such employment was evidenced by a written contract between the parties.
2) Defendant had no right of renewal, either expressly under the contract, or implied by any custom, policy or action of the parties.
3) The School District has not adopted the continuing contract law of Texas.
4) Defendant did not have any reasonable non-subjective expectation of continued employment after June 30, 1978.
5) The School District followed its usual customary procedure in evaluating whether to continue defendant’s employment for another year. Defendant was not treated differently from others similarly situated.
6) On March 6, 1978 the School Board passed a resolution to extend the employment of defendant for one year.
7) The School Board did not direct that its action of March 6,1978 be communicated to defendant, but defendant was told of such action shortly thereafter by the Superintendent.
8) The School Board did not authorize the Superintendent or any other school official to make or communicate any offer of continued employment to Turner.
9) On March 14, 1978 the School Board passed a resolution to rescind its action of March 6, 1978, and resolved not to extend defendant’s contract of employment.
10) Defendant was advised of this action of the School Board shortly thereafter.
11) There was no discussion of the terms of employment between the School Board and defendant at the meetings of March 6 and March 14, 1978.
12) No written contract of employment was entered into between plaintiff and defendant.
13) The Board’s action in voting not to continue defendant’s employment after June 30, 1978 was not based on any constitutionally impermissible reason.
Conclusions of Law
1) Defendant did not have any de jure tenure.
2) Defendant did not have any de facto tenure.
3) Defendant did not have any property right in continued employment.
4) No contract was made between plaintiff and defendant to extend defendant’s contract for one year.
5) Defendant had no contract of employment with plaintiff after June 30, 1978.
6) Plaintiff did not infringe any liberty interest of defendant protected by the U.S. Constitution.
7) Defendant was not denied equal protection of the laws.
8) Defendant was not rendered any legal obligation to provide defendant a hearing before the School Board.

Appellant appeals on 69 points presenting 4 main contentions.

Contention 1 asserts the trial court erred in not granting appellant’s plea in abatement. Such plea sought abatement of this case because of the pendency of an action filed by appellant in the U.S. District Court in Fort Worth which embodied the cause of action plead in this case, contended appellant had a contract for the 1978 — 1979 school year, and sought damages for breach of such asserted contract. As noted this case was filed in the District Court of Johnson County on May 22. 1978; and the case in Federal Court was later filed on June 30. 1978.

The jurisdiction of the District Court of Johnson County having attached on filing of the suit cannot be taken away or arrested by subsequent proceedings in another court. Cleveland v. Ward, 116 Tex. 1, 285 S.W. 1063; Mayo v. Hall, (Waco, Tex.Civ.App.) NWH, 571 S.W.2d 213. The trial court correctly and properly overruled the plea in abatement.

Contention 2 asserts the trial court erred in finding appellant had no de facto tenure for the 1978-79 school year.

The School District had not adopted the Texas Continuing Contract Law (Sec. 13.-101 et seq., Texas Education Code). Appellant was employed under a contract which ended by its own terms. Appellant was not fired. He had no de facto tenure, and has not served at the School District since June 30, 1978. The trial court correctly held appellant had no de facto tenure for the 1978-79 school year. See: Hix v. Tuloso-Midway Independent School District, (Corpus Christi, Tex.Civ.App.) NRE, 489 S.W.2d 706.

Contention 3 asserts he was denied due process because the School Board did not give him a hearing. Appellant was not rehired by the School District. He had no property right in continued employment; the non renewal was not based on some constitutionally impermissible reason as revenge or asserted misconduct. In such circumstances the Board had no legal obligation to provide appellant a hearing before the Board. Hix v. Tuloso-Midway Independent School District, supra; Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570.

Contention 4 asserts the trial court erred in concluding defendant had no contract of employment with plaintiff after June 30, 1978; and that findings to the contrary are against the great weight and preponderance of the evidence.

Appellant’s old contract ended June 30, 1978. The real question here is whether any new contract rights arose on the basis of the March 6,1978 Board meeting. Turner’s hiring was controversial. The Board voted at such meeting “to hire Charlie Turner for one year” by a 4 to 3 vote. At the same time another meeting was scheduled for March 14, and the Superintendent was instructed to ask Turner to be present at the March meeting. Neither the Superintendent nor anyone else was authorized to communicate any offer of employment or discuss any possible terms of a contract with appellant. The Board’s action on March 6 could not result in a contract without an authorized communication of the action to appellant and some clear unequivocal action on appellant’s part. When the Superintendent told appellant he had been reelected (on about March 8) appellant did not ask the Superintendent to notify the Board he accepted; and appellant’s casual conversation with board-member Russell did not result in the making of a contract. The Board on March 14 rescinded its action of March 6, which it had a right to do. South Taylor County Ind. Sch. Dist. v. Winters Ind. Sch. Dist., 151 Tex. 330, 249 S.W.2d 1010. The trial court’s conclusion and necessary findings that no contract existed are correct.

All appellant’s points have been considered and are overruled.

AFFIRMED.


author: MOORE, Justice.

text:
    Joseph A. TAMBURINE et ux., Appellants, v. CENTER SAVINGS ASSOCIATION et al., Appellees.
    No. 1197.
    Court of Civil Appeals of Texas, Tyler.
    June 22, 1979.
    Rehearing Denied July 19, 1979.

      Robert M. Moore, Martin M. Hokanson, Moore & Laurence, Houston, for appellants.
    John Eckel, Mills, Shirley, McMicken & Eckel, Galveston, for appellees.
   MOORE, Justice.

Plaintiffs, Joseph A. Tamburine and wife, Edna Tamburine, instituted this declaratory judgment action against Center Savings Association (Center), Affiliated Capital Corporation, and Omega Development Corporation, seeking a judgment declaring that they were vested with equitable title to lots 9 through 18, section 13, Tiki Island, situated in Galveston County, Texas. As grounds for a cause of action, plaintiffs alleged that they were the equitable owners of the land by virtue of a contract entered into between them and their grantee at the time they sold the land in 1964. They alleged that their equitable title was superior to the title claimed by the defendants because at the time the defendants acquired title they each had actual or constructive notice of their equitable claim. They further alleged that the defendants were charged with notice of their claim because prior to the time the defendants acquired title, defendant, Center, employed Stewart Title Company as its agent for the purpose of investigating title and issuing a title policy; that in examining title Stewart was put on notice of plaintiffs’ claim and as a result the notice or knowledge of the agent is imputed to Center and its successor in title. Defendants answered with a general denial, a plea of not guilty, and affirmatively alleged that they were bona fide purchasers without knowledge of the plaintiffs’ claim. After a trial before the court, without a jury, the trial court rendered a take-nothing judgment against the plaintiffs from which they perfected this appeal.

We affirm.

Before discussing the points of error a brief summary of the facts giving rise to the controversy will be helpful. In September 1964, plaintiffs executed a warranty deed to the land in question to William W. Sherrill, Trustee for Jamaica Corporation which ultimately became Timewealth Corporation. As a part of the transaction the plaintiffs and Timewealth entered into a contract under the terms of which it was provided that if Timewealth completed a subdivision on any part of the land in question for residential purposes within 10 years, Timewealth would convey 10 residential lots to the plaintiffs. In 1968, the plaintiffs brought suit against Timewealth Corporation to determine their rights under the above mentioned contract and duly filed a Lis Pendens Notice. The suit was settled and dismissed in 1969 upon Timewealth’s written agreement to convey the plaintiffs 10 residential lots. During the same month, the plaintiffs caused a broad form of Release of Lis Pendens to be filed in the Galveston County Deed Records. Neither the Memorandum of Agreement nor the judgment of dismissal was filed in the Deed Records so that on February 17, 1971, the only instruments appearing in the Deed Records of Galveston County showing that plaintiffs might have some interest in the land in controversy were the Lis Pendens Notice and the Release of Lis Pendens filed in connection with plaintiffs’ suit against Timewealth. On February 17, 1971, Ti-mewealth obtained a loan from Center and as security for the loan executed a Deed of Trust to Center covering the land without plaintiffs’ knowledge or consent. Prior to the closing of the loan Stewart Title Guaranty Company issued Center a Mortgagee’s Title Insurance Policy. Sometime later when Timewealth became unable to meet the payments on the loan, defendant, Affiliated Capital Corporation, Center’s trustee, foreclosed and conveyed the land to Center by a trustee’s deed. On February 7, 1976, Center conveyed the land in question to defendant, Omega Development Corporation.

At the request of the plaintiffs, the trial court filed findings of fact and conclusions of law. The findings of fact material to this appeal, as numbered by the court, are as follows:

“11. Prior to making its loan to the Timewealth Corporation, Center Savings Association directed Stewart Title Company by form letter to provide it with a mortgagee’s information letter and legal description for its preparation of the deed of trust between Timewealth Corporation and Affiliated Capital Corporation; and it also requested that Stewart Title Company see that Center obtain a mortgagee’s title policy showing a good and valid first lien on the lots claimed by the Plaintiffs; in following the directions and from these requests of Center Savings Association, Stewart Title Company and Stewart Title Guaranty Company had access to, and should have examined the pleadings in Cause No. 106,169, and for that reason should have had actual notice of the Plaintiffs’ equitable lien on the land which was then known to Stewart Title Company and Stewart Title Guaranty Company as Lots # 9 through # 18, Section 13, Tiki Island, Galveston County, Texas.
“12. Neither Stewart Title Company nor Stewart Title Guaranty Company were the agent of Center Savings Association or Affiliated Capital Corporation for the purpose of furnishing title information or examining title, but acted in their own interests for the purpose of issuing a title policy.”

The court further found that at the time the deed of trust was executed by Timew-ealth, neither Center nor Affiliated Capital knew of the plaintiffs’ claim and that the policy contained no exception to the claim of the plaintiffs.

Under the conclusions of law, the trial court concluded that: (3) the Defendants, Center and Affiliated Capital, did not have actual or constructive notice of the plaintiffs’ equitable claim at the time the deed of trust was executed on February 17,1971; (5) that both Stewart Title and Stewart Title Guaranty Company had actual notice of the plaintiffs’ equitable claim to the lots in question prior to the time the deed of trust was executed by Timewealth Corporation; (6) that the actual notice of the plaintiffs’ equitable claim to the ten (10) lots in controversy which Stewart Title Company had, was not imputed to the defendants, Center and Affiliated Capital, because Stewart Title Company at no time acted as the agent for Center; (12) Center, by and through its trustee, Affiliated Capital, was a bona fide purchaser for valuable consideration under the deed of trust of February 17,1971; (13) that both Stewart Title Company and Stewart Title Guaranty Company acted in their own interests in preparing an examiner’s report and issuing a mortgagee’s information letter; and (14) that the plaintiffs should therefore not recover because, their claim being of an equitable nature was cut off by the rights of defendants, being those of a bona fide purchaser for valuable consideration.

Plaintiffs seek a reversal of the judgment through three points of error. In the second and third points, plaintiffs contend that the court erred in finding and concluding in finding of fact number 12 that Stewart Title Company was not acting as the agent of Center in furnishing title information or examining title to the land in question, but was acting in its own interest in determining the insurability of title before issuing a title policy. Plaintiffs take the position that this finding is erroneous because an agency relationship was conclusively established as a matter of law, and alternatively, that such finding is against the greater weight and preponderance of the evidence. By the first point plaintiffs asserted that the court erred in its conclusions of law numbers 6 and 12 in finding that Stewart Title Company was not, as a matter of law, the agent of Center and therefore Stewart’s notice of plaintiffs’ equitable claim to the land could not be imputed to Center.

The proof relied on by the plaintiffs to establish the agency relationship consists, in part, of a form letter from Center to Stewart Title requesting that the title company issue a title policy on the land in question. The letter relied on is quoted in the margin and will hereinafter be referred to as “plaintiffs’ exhibit 22.” Plaintiffs take the position that this letter requesting that Center be furnished with: (1) the legal description of the land; (2) a mortgagee’s information letter showing any restrictions thereon; and (3) requesting Stewart perform various activities in closing the loan transaction, amounted to a request on the part of Center for Stewart to act as its agent. Plaintiffs say that this request when taken together with the proof showing that Stewart actually furnished the title information and various other services constitutes conclusive proof that a principal and agent relationship was created under the holding in Woodward v. Ortiz, 150 Tex. 75, 237 S.W.2d 286 (1951). We are not in accord with this proposition.

In Woodward, Hidalgo County employed a Mr. Tinkler, the owner of the Hidalgo County — Star County Abstract Company to furnish the county with title information necessary for the filing of tax suits. Mr. Tinkler in turn employed Hubert G. Ferguson, an attorney, to do the actual running of the index cards in the abstract office and securing the information to be furnished to the attorneys representing the county. The court held that Tinkler and Ferguson were agents of the county because they were charged with the duty of furnishing the county with full information of all outstanding interests in the land referred to them for title investigation, and that Hidal-go County, as their principal, was charged with notice received by them in conducting a title examination even though the information gained by them was not in fact communicated to the county. The case is distinguishable in that the agency relationship created there was conclusively supported by the employment contract, whereas in the present case the question of whether the title company was employed for the purpose of making a title search and reporting its findings to Center is the issue in dispute. Further, the contract in that case was between Hidalgo County and an abstractor who engaged in the business of supplying title information, whereas in this case the contract was between an insurer and its insured.

There is a vast difference in a situation where a party employs an abstract company to make a title investigation and a situation where a party contracts a title insurance company for a title policy insuring title. The difference between abstract companies and title insurance companies is well defined. It has been said that:

“The former are concerned primarily with the compilation of data, affecting the title to particular tracts of land, to enable an examiner skilled in land law to evaluate the title; while the latter have evolved as corporate insurance companies to guarantee (with specified exceptions) the status of such title and to insure against existing defects which may beset it.” Texas Practice Guide, Yol. 1, The State Bar of Texas, 1971, sec. 380 pp. 78-9.

Title insurance is a contract of indemnity. Southern Title Guaranty Co., Inc. v. Prendergast, 494 S.W.2d 154 (Tex. 1973). In the absence of some special circumstances, the relationship between the parties is limited to that of indemnitor and indemnitee.

The duties and obligations of a title insurance company are reflected in the Court of Civil Appeals opinion in Stone v. Lawyers Title Insurance Corporation, 537 S.W.2d 55 (Tex.Civ.App.—Corpus Christi 1976, reversed in part and cause remanded to the District Court and otherwise affirmed at 554 S.W.2d 183). The purchaser of a tract of land sued the title insurer, the title insurance agency, its president and the real estate agent to recover damages arising from gas pipeline easements which, although listed as exceptions in the title report, were not listed as exceptions in the owner’s policy. The purchaser claimed that the agency and its president by failing to inform the purchaser of the contents of the title report were both negligent and fraudulent. The appellate court held that a title insurance company is not a title abstractor and owes no duty with regard to the examination of title, thus precluding any recovery for negligence. (The Supreme Court dealt with the additional issue of fraud, and did not speak to this issue.) The Corpus Christi court stated at pp. 64-5:

“In Wolff v. Commercial Standard Ins. Co., 345 S.W.2d 565 (Tex.Civ.App.—Houston 1961, writ ref’d n.r.e.), it was held that a title insurance company owes no duty to its insured to point out any outstanding encumbrances, and that the only duty a title insurance company has to its insured is to indemnify him against loss suffered by defects in title. In ruling on an almost identical point, it was held in Prendergast v. Southern Title Guaranty Co., 454 S.W.2d 803 (Tex.Civ.App.—Houston [14th Dist.] 1970, writ ref’d n.r.e.), that a title insurance company was not a title abstractor employed to examine title, and the title company assumed no duty to the insured with reference to an examination of title. No cause of action for negligence exists against a title company for failure to discover defects in title prior to the issuance of the title policy. The very nature of the relationship between the parties precludes any recovery for negligence.”

The court, in Stone, went on to state at p. 73:

“The title opinion which was written by the Agency’s attorney to the Agency was personal to the Agency and was prepared for its exclusive use and benefit. It did not inure to the benefit of Stone, a complete stranger to that transaction.”

It is the position of the plaintiffs that the present case is not controlled by the holding in Stone and the cases cited therein, because they say that in the present case Center Savings & Loan went further than merely requesting a policy of title insurance. They maintain that in the form letter referred to as Plaintiff’s Exhibit 22, Center requested Stewart Title Company to search its records and determine if the title to the property was good and also requested the title company to perform various other acts. Thus, they contend that the title company became Center’s agent and as a result the notice it acquired of plaintiffs’ claim must be imputed to Center. For the reasons hereinafter explained we cannot agree with this contention.

The record reveals that after Center made the request for title insurance, a salaried employee of Stewart Title Company made a title investigation. Following the title investigation, a salaried attorney employed by Stewart Title Company issued a title opinion. Based on the information contained in the title opinion, Stewart Title Guaranty Company sent Center a mortgagee’s information letter containing a legal description of the land and also showing the exceptions which the policy would contain. After Center’s attorney had furnished the title company with all the necessary legal instruments to transfer the title and to meet the exceptions and requirements of the mortgagee’s information letter, C. M. Wagner, a salaried employee of the title company, handled the closing of the title insurance contract. Before issuing the title policy, Wagner supervised the execution of the various instruments required to accomplish the transfer of title or interest that the insurance company had agreed to insure in its mortgagee’s information letter. None of the legal instruments were prepared by the insurance company or the title company. After determining that the title had been properly transferred and that the other requirements had been satisfied, the mortgagee’s title policy was issued. In response to Center’s request, Wagner also acted as escrow agent in closing the entire transaction and furnished Center with the nine instruments requested by it in the form letter described in Plaintiff’s Exhibit 22.

An agent is one who is authorized by.another to transact business or manage some affair for him, and to render to him an accounting of such transaction. It denotes a consensual relationship between two parties by virtue of which one of them is to act for and on behalf of the other, being subject to the other’s control. 2 Tex.Jur.2d, Agency, Sec. 1, p. 437, citing cases.

Contrary to appellant’s contention we do not believe the request made by Center in its fprm letter can be construed as authorizing the title company to make a search of its records to determine whether Timew-ealth had a good title, nor do we believe Center intended to request the title company to act as its agent in furnishing information with regard to the status of the title. In our view, the end product requested by Center was the issuance of a mortgagees’s title policy. Even if Center intended to request title information, we find no evidence indicating that the title company accepted such duty and undertook to furnish information concerning the validity of the title.

As we understand the title insurance business, the company, before issuing a policy of title insurance, must necessarily take steps to inform itself of the status of the title to be insured. In the search for information upon which must depend the decision to either issue or decline to commit itself to issue a policy, the insurance company obviously investigates the title for its own use and benefit to determine whether it will undertake the risk. The title information on which the company bases its decision relates to the condition of the title held by the grantor and is not made for the prospective grantee or lienholder to whom the policy will finally issue. In performing these activities, the company does not act in behalf of the party to be insured, but acts exclusively for itself. Therefore, up to the point where the insurance company commits itself to issue a policy upon certain conditions, the unilateral conduct of the insurance company or its agents in investigating the title does not create an agency relationship.

Further, before closing the title policy contract,- the company must satisfy itself that the title to the property is transferred in such a manner that the title or interest in the property is transferred in accordance with its commitment in the mortgagee’s information letter. In performing this activity, it is necessary for the title company or its agents to supervise the transfer. In so doing, the company merely satisfies itself that the instruments tendered by the attorney are sufficient to accomplish the transfer of title. It does not undertake to act on behalf of the insured to see that a flawless title is transferred, but only that such title is transferred that the company will insure despite any flaws. Thus, the title company does not act as the agent of the insured in supervising the transfer, but acts exclusively for its own benefit and protection. In summary, it may be said that any and all activities performed by the insurance company or its agents, which are indispensable to the determination of insurability constitutes acts in its own behalf and not on behalf of the prospective grantee or lienholder to whom the policy will finally issue.

Consequently, in the instant case, even though the company acquired notice of the plaintiffs’ claim while making its own investigation of title, such notice was acquired by it, not as Center’s agent, but while the insurance company was engaged in activities which were indispensable to its determination of insurability. Since notice of the plaintiffs’ claim was not acquired by it while acting as Center’s agent, it follows that such notice is not imputable to Center so as to defeat its status as a bona fide purchaser.

This brings us to the question of whether the notice of the plaintiffs’ claim acquired by the title company prior to the time it undertook to act as Center’s escrow agent in closing the loan, will be imputed to Center because of such agency relationship. We have concluded that it may not.

An agent’s notice of matters which is outside the scope of the agency or not related to its purposes is not imputed to the principal. 3 C.J.S. Agency § 436, p. 301. Before notice or knowledge of an agent is imputed to his principal it must first be shown that the authority of such agent extended to the very matter about which and concerning which such knowledge or notice was acquired. Qualline v. Champion Paper & Fibre Co., 206 S.W.2d 267 (Tex.Civ.App.—Beaumont 1947, writ ref’d n.r.e.); 2 Tex.Jur.2d, Agency, sec. 189, p. 637.

As escrow agent, the authority of the title company did not extend to the investigation of title. In this regard, the course and scope of the title company’s authority was limited to the closing of the loan. Since the title company acquired no knowledge of the plaintiffs’ claim while acting in the scope of its duties as escrow agent, no question arises with regard to imputed notice.

In this connection, we have not overlooked the line of cases holding that under certain circumstances notice or knowledge of an agent acquired before the principal-agent relationship arose will be imputed to the principal. Wellington Oil Company of Delaware v. Maffi, 136 Tex. 201, 150 S.W.2d 60 (1941); Fireman’s Fund Indem. Co. v. Boyle General Tire Co., 392 S.W.2d 352 (Tex.1965). This rule does not apply, however, where the prior notice or knowledge is acquired confidentially. Fireman’s Fund Indem. Co. v. Boyle General Tire Co., supra; Restatement of the Law of Agency, sec. 276. In our view all matters relating to the status of title amounted to a confidential matter between Stewart Title Guaranty Company and its agent, Stewart Title Company, who made the title investigation. The title opinion as well as other title information gathered by the title company was personal to it and the insurance company because it was for the insurance company’s exclusive use and benefit. Had the title company turned the title information over to Center, it would have subjected itself to the penalties prescribed for the unauthorized practice of law. Hexter Title & Abstract Co. v. Grievance Committee, Etc., 142 Tex. 506, 179 S.W.2d 946 (Tex.1944). Thus, even though the title company had notice of enough facts so as to put it on notice of the plaintiffs’ claim before becoming Center’s escrow agent, such prior-acquired notice is not imputed to its principal, Center, because of its confidentiality.

After an examination of the record as a whole, we have concluded that the findings in which the court found that neither Stewart Title nor Stewart Title Guaranty Company acted as Center’s agent are not subject to the complaint that the same are against the greater weight and preponderance of the evidence.

Accordingly, the judgment of the trial court is affirmed.

      . Stewart Title Guaranty is a title insurance company. It owns Stewart Title Company which operates an abstract plant and acts as the agent of the Guaranty Company in furnishing title information and selling title policies.

      . “TO: STEWART TITLE COMPANY HOUSTON, TEXAS ATTENTION: Mr. Wagner GENTLEMEN: We have agreed to make a Construction Loan on the above case at the following terms and conditions: AMOUNTS $1,350,-000.00 INTEREST RATE 12% monthly as it accrues TERM: Payable on demand and if no demand is made then on or before 5 years Note purchase agreement from University Savings Association for 24 mo. 1 day from the date of note Trustee is to be Affiliated Capital Corporation, a Texas Corporation. A copy of these instructions is being sent to Billy B. Goldberg, Attorney, 539 Capital National Bank Bldg., Houston, Texas 77002. You are to furnish them with mortgagee’s information letter, including full legal description, together with copy of restrictions. Also, send us copy of mortgagee’s information letter and restrictions. Mr. Goldberg will draw the necessary papers and return same to you for execution at closing. All costs in connection with the loan, including Title Policy, Attorney Fees, Recording Fees, Survey, etc., are to be collected at time of closing, without cost to us. Cost of Construction Loan papers to be deducted from first draw. Please complete the closing of this loan and we will disburse to the builder according to the terms of the Construction Loan Agreement in our files, subject to your furnishing the following; 1. Original Note, showing total amount to be due 5 yrs from date of closing. 2. Certified copy of Deed of Trust. The recorded Deed of Trust is to be returned to us. 3. Copies of other instruments executed by interest parties, if any. 4. Mortgagee’s Title Policy showing a first and valid lien to the Association with taxes paid up to 1971. Violation of restrictions, easements, etc. or other exceptions of unusual nature, such as encroachments, full mineral reservations, leases, etc., are to be brought to our attention before closing. Variations in legal descriptions and property addresses are to be cleared with us. 5. Loan Guaranty Agreement signed by Messrs: Welcome Wilson & Jack E. Wilson; Application signed: MAI Appraisal; current financial statements on Welcome Wilson, Jack E. Wilson and The Timew-ealth Corporation; Construction Cost Breakdown; Copy of Corporate Resolutions; Copy of minutes authorizing this loan with Center Savings Association; 6. Copy of Recorded Plat. 7. Letter from The Timewealth Corporation that there will be no secondary or subordinate liens placed on the property during the term of our loan. 8. Letter authorizing 60 day hold back of interest from final draw. 9. Loan Settlement and Payoff statement to be executed and returned to us.”