author: COULSON, Justice.

text:
    LARCON PETROLEUM, INC., Appellant, v. AUTOTRONIC SYSTEMS, INC., Appellee.
    No. 1905.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    Jan. 17, 1979.
    Rehearing Denied Feb. 7, 1979.

      Donald R. Sallean, Pruitt & Monshaugen, Houston, for appellant.
    Hayden Burns, William A. Sherwood, Butler, Binion, Rice, Cook & Knapp, Houston, for appellee.
   COULSON, Justice.

Larcon Petroleum, Inc., (Larcon), defendant below, appeals from a summary judgment on a sworn account in favor of Auto-tronic Systems, Inc., (Autotronic), plaintiff below. We modify and affirm.

In July of 1975 Larcon and Autotronic entered into a contract under which Auto-tronic agreed to sell Larcon approximately 160,000 barrels of regular gasoline at a price of $0.3950 per gallon. During the month of August, 1975, Autotronic delivered 160,002 barrels of gasoline (6,720,084 gallons) to Larcon under four separate invoices. The total costs for these 160,002 barrels was $2,654,433.18, of which $2,620,-832.76 was paid, leaving a balance of $33,-600.42.

Autotronic brought suit on the amount owing in the form of a sworn account pursuant to Rule 185, Tex.R.Civ.P. Larcon answered with a general denial. The trial judge granted Autotronic’s subsequent motion for summary judgment. Autotronic was awarded the principal amount of $33,-600.42 plus interest at the rate of six (6%) percent per annum from January 1,1976, to date of judgment, and interest on the total amount of the final judgment at the rate of nine (9%) percent per annum. Larcon appeals from that judgment.

Larcon’s first point of error asserts that Autotronie’s suit was not properly brought under Rule 185 for several reasons. The primary contention seems to be that the contract between the parties cannot properly be the basis of a suit on a sworn account because it is a “special contract.” We do not agree. Rule 185 includes actions founded

. upon an open account or other claim for goods, wears and merchandise, including any claim for a liquidated money demand based upon a written contract . . . on which a systematic record has been kept . . . (emphasis added).

Larcon cites Meaders v. Biskamp, 159 Tex. 79, 316 S.W.2d 75 (1958), for the contention that a suit upon a “special contract” may not be brought as a sworn account under Rule 185. Meaders v. Biskamp does not govern the instant case. Meaders dealt not with a suit upon a sworn account but with the question of the recovery of attorney’s fees under Article 2226, Tex.Rev.Civ. Stat.Ann. (Supp.1978) stating that recovery was denied because a “special contract” was involved. The other cases cited by Larcon likewise deal with the recovery of attorney’s fees under Article 2226. Autotronic here waived its right to recover attorney’s fees, therefore that issue is not involved in this case. The contract here fits squarely within the Rule 185 definition of a liquidated money demand based upon a written contract for the sale of merchandise. Therefore action upon a sworn account pursuant to Rule 185 was entirely proper. See Guay v. Schneider, Bernet, & Hickman, Inc., 341 S.W.2d 461 (Tex.Civ.App.-Waco 1960) writ ref’d n. r. e., per curiam, 161 Tex. 560, 344 S.W.2d 429 (1961); Hollingsworth v. Northwestern National Ins. Co., 522 S.W.2d 242 (Tex.Civ.App.-Texarkana 1975, no writ).

Larcon contends that the account does not specify with reasonable certainty the items sold for which payment is due. The cases require that a sworn account show with reasonable certainty the nature of each item, the date, and the charge therefore. Williamsburg Nursing Home, Inc. v. Paramedics, Inc., 460 S.W.2d 168 (Tex.Civ.App.-Houston [1st Dist.] 1970, no writ). The account sued on by Autotronic consists of the following:

The account describes the products sold in terms of the number of barrels and of the number of gallons. Additionally, it refers to the Pipeline Ticket Number and references each invoice number to Larcon Product Purchase Order No. 5529, the sales contract upon which the transactions were based. The sales contract, which was attached to Autotronic’s petition along with the account, specifies the product sold as “Regular Gasoline”. We believe that the account therefore stated the nature of the items sold with sufficient clarity to inform Larcon of the claims against it and therefore conforms with the requirements of Rule 185.

Larcon’s third argument under its first point of error concerns the sufficiency of the affidavit of Autotronic’s Senior Vice President submitted in support of its motion for summary judgment. Larcon contends that the affidavit does not show that the affiant had personal knowledge of every statement in the summary judgment affidavit nor how the affiant learned of each fact as required by Greater Houston Bank v. Miller & Freeman Ford, Inc., 540 S.W.2d 390, 392 (Tex.Civ.App.-Corpus Christi 1976) reversed on other grounds, 544 S.W.2d 925 (Tex.Sup.1976). We do not agree. Frank Weatherly, Senior Vice President of Autotronic, was the affiant. In paragraph 1 of the affidavit he states. “I have personal knowledge that facts herein stated are true and correct.” In paragraph 3 he notes that the account is attached to his affidavit and states, “Said account is within my knowledge just and true; . . ” Larcon contends that the phrase “within my knowledge” is tantamount to the phrase “to the best of my knowledge and belief” and is therefore not sufficient to demonstrate that the affiant has personal knowledge of the facts stated as required for a summary judgment affidavit. Rule 185 provides that a sworn account is to be supported by an affidavit “to the effect that such claim is, within the knowledge of the affiant, just and true . . The language of Mr. Weatherly’s affidavit exactly follows the language of Rule 185 and is an affidavit made on personal knowledge as required by Rule 166-A(e) Tex.R.Civ.P. Thus his affidavit is proper summary judgment proof.

Even were the summary judgment affidavit defective, however, summary judgment would still have been proper based solely on the pleadings of Autotronic. Autotronic’s petition was verified in accord with the provisions of Rule 185 and copies of the sales contract and the account were attached to and duly incorporated into the pleading. This court has stated that summary judgment is proper in a Rule 185 suit on a sworn account solely on the plaintiff’s properly verified petition where the defendant does not file a proper sworn denial. Wilson v. Browning Arms Co., 501 S.W.2d 705 (Tex.Civ.App.-Houston [14th Dist.] 1973, writ ref’d).

In its second point of error Larcon alleges that summary judgment was improper because there was a genuine issue of material fact regarding the occurrence of special conditions precedent to Autotronic’s right to recover for the goods sold. Larcon claims that Autotronic failed to comply with Rule 54, Tex.R.Civ.P., in not pleading the performance of those special conditions and therefore its general denial was sufficient to put in issue the matter of whether they were, in fact, performed.

Rule 54 states:

In pleading the performance or occurrence of conditions precedent, it shall be sufficient to aver generally that all conditions precedent have been performed or have occurred. When such performances or occurrences have been so plead, the party so pleading same shall be required to prove only such of them as are specifically denied by the opposite party.

Autotronic’s petition alleged, “Plaintiff fully performed its obligations under the contract by delivering to Defendant upon the terms specified therein 160,000 barrels of gasoline.” (emphasis added). Under the general rule that the petition will be construed as favorably as possible for the pleader, we find that Autotronic’s allegation that it had delivered the gasoline upon the terms specified in the contract is sufficient to comply with Rule 54 in averring generally that all conditions precedent have been performed. Gulf, Colorado & Santa Fe Railway Co. v. Bliss, 368 S.W.2d 594, 599 (Tex.Sup.1963).

Furthermore, Larcon waived any objection to the form or substance of Auto-tronic’s pleadings under Rule 90, Tex.R.Civ. Pro., by failing to point out specifically such defects in writing in the trial court. Lar-con’s second point of error is overruled.

We find that Autotronic’s suit fully complied with the requirements of Rule 185, Tex.R.Civ.P. Rule 185 provides that a systematic account properly verified “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 [items] are not just and true.” Larcon relied solely on its general denial at the summary judgment hearing. Under Rule 185, when the party opposing the claim fails to file a sworn denial thereof, “he shall not be permitted to deny the claim or any item therein . . .” As a result of Larcon’s failure to file a sworn denial there was no issue of fact raised as to whether Larcon owed all or part of the account. Therefore, summary judgment was properly rendered in favor of Autotronic and we affirm the trial court’s action. Youngblood v. Central Soya Co., 522 S.W.2d 277 (Tex.Civ.App.-Fort Worth 1975, writ ref’d n. r. e.); Solar v. Petersson, 481 S.W.2d 212 (Tex.Civ.App.-Houston [14th Dist.] 1972, no writ).

Autotronic has filed a cross-point of error alleging that the trial court incorrectly assessed the prejudgment interest. The trial court awarded interest on the principal amount of $33,600.42 from January 1, 1976, through date of judgment at the annual rate of six percent. Autotronic first claims that interest should have been awarded from August 15, 1975 to date of judgment under article 5069-1.03, Tex.Rev. Civ.Stat.Ann. (1971). Article 5069-1.03 provides:

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

Apparently the trial judge awarded prejudgment interest from January 1, 1976, to date of judgment based on the provision of article 5069-1.03 relating to open accounts. However the suit here was not based upon an open account but upon an account pursuant to a written contract. Article 5069-1.-03 provides for the award of prejudgment interest “on all written contracts ascertaining the sum payable, from and after the time when the sum is payable and due;” The phrase “ascertaining the sum payable” has been interpreted in this manner

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

Stahl Petroleum Co. v. Phillips Petroleum Co., 550 S.W.2d 360, 366 (Tex.Civ.App.-Amarillo 1977), aff’d sub nom. Phillips Petroleum Co. v. Stahl Petroleum Co., 569 S.W.2d 480 (Tex.Sup.1978). The contract here clearly fixes a measure by which the sum can be ascertained. The price per gallon is specified as $0.3950. The number of gallons sold to Larcon, and therefore the total sum due from Larcon, is established by the uncontroverted sworn account. Therefore this is a proper case for the award of interest from the time such sum was due and payable.

Autotronic alleges that the date from which the interest should be awarded is August 15, 1975. The contract provides:

Payment to be made upon presentation of invoice, supported by an independent inspector’s certificate as to the quantity and quality of product and further supported by a certificate from the port of discharge reflecting quantity received from Buyer’s account.

The account sued upon shows that the final invoices were dated August 12,1975. There is no evidence, however, as to when the invoices were presented, supported by the required certificates. Payment would have become due on the date of such presentation, but there is no evidence of what that date was.

We do find that payment must have become due on or before August 31, 1975. The contract provided that the product was to be received in the month of August, 1975. Furthermore, it required that “security for payment will be made with a Letter of Credit in the amount of $2,620,800.00 to be valid the month of August, 1975.” The account shows on its face that partial payment for each of the four invoices was made by First City National Bank of Houston under the Letter of Credit. Therefore the sums paid must have become due prior to the expiration of the Letter of Credit on the last day of August, 1975. We find, therefore, that prejudgment interest should have been awarded from September 1,1975, to date of judgment.

Autotronic also contests the rate of prejudgment interest awarded by the trial court. The trial court awarded interest at the rate of six (6%) percent to date of judgment. Autotronic cites the recent case of Phillips Petroleum Co. v. Stahl Petroleum Co., 569 S.W.2d 480 (Tex.Sup.1978) for the proposition that prejudgment interest can be awarded not only pursuant to a statute but also under the equitable principle that one should be compensated for the unauthorized use of his money. Autotronic argues that under this equitable basis for the award of prejudgment interest the interest should be awarded at the rate of nine (9%) percent per annum, by analogy to the recently amended article 5069-1.05, Tex. Rev.Stat.Ann. (Supp.1978), which now provides interest at the rate of nine percent per annum “from and after the date of the judgment.” Autotronic contends that the legislature, in amending article 5069-1.05 to increase the rate of interest on judgments to nine percent, recognized a more realistic cost for the use of money in the current economy than the six percent per annum that formerly had been allowed. By analogy, Autotronic argues, this court should apply equitable principles to award prejudgment interest at that rate which more fairly compensates Autotronic for the wrongful detention of its money.

While Autotronie’s argument is not without merit, we find no error in the trial court’s award of prejudgment interest at the rate of six percent per annum. The account here falls squarely within the requisites of article 5069-1.03, Tex.Rev.Stat. Ann. (1971) which provides:

When no specified rate of interest is agreed upon by the parties, interest at the rate of six percent per annum shall be allowed on all written contracts ascertaining the sum payable, from and after the time when the sum is due and payable, and on all open accounts, from the first day of January after the same are made.

As noted above, Autotronic in its brief clearly acknowledges the fact that article 5069-1.03 applies to the account in question. As we read the Supreme Court’s opinion in Phillips Petroleum supra, it is permitted but not required to award prejudgment interest under the authority of a statute, such as article 5069-1.03, or under an equitable theory, or under both. We interpret this to indicate that it is discretionary with the trial court whether to utilize the equitable theory when a statute clearly applies to provide for prejudgment interest. We cannot find any abuse of that discretion in the trial court’s choice here of following the applicable statute and awarding interest at the rate of six percent per annum from the date the principle sum was due until the date of judgment. This is particularly true because the facts here are unlike those in Phillips where Phillips had held and used money belonging to Stahl for over ten years. Furthermore the Supreme Court in Phillips did not address itself to the question of the rate of interest to be awarded under the equitable theory. The cases cited in that opinion appear to have awarded such equitable interest at the “legal rate of interest.” This rate is established by article 5069-1.03, which is entitled “Legal Rate Applicable”, not by article 5069-1.05, which establishes the rate of interest on a judgment at nine percent from the date of such judgment. The problem presented here arises because the legislature has increased the rate of postjudgment interest to nine percent, effective September 1, 1975, without a corresponding increase in the legal interest rate as established by article 5069-1.03.

Appellant’s points of error are all overruled. The judgment of the trial court is reformed to award prejudgment interest from September 1, 1975 to date of judgment at the rate of six percent per annum, and interest on the total amount of the final judgment at the rate of nine percent per annum. As modified the judgment of the trial court is affirmed.

Modified and affirmed.


source: Caselaw Access Project

author: MASSEY, Chief Justice.

license: Public Domain

text:
    Harley O. MATTHEWS, Appellant, v. Barbara Matthews HOUTCHENS, Appellee.
    No. 18046.
    Court of Civil Appeals of Texas, Fort Worth.
    Jan. 18, 1979.

      Sparkman & Brian, and Roy T. Spark-man, Wichita Falls, for appellant.
    Clayton S. Kramer, Wichita Falls, for ap-pellee.
   OPINION

MASSEY, Chief Justice.

This is an appeal by a defendant against whom all the summary relief requested by plaintiff was granted. The case involves partition of retirement benefits of defendant military retiree, not considered at time of the parties’ divorce on December 6, 1965 by a certain divorce decree (in Cause No. 77,048-B in a different District Court of the same county). The divorce was granted at a time prior to that on which the retirement benefits began to be received though after approximately %ths of their total had accrued (in view of defendant’s later completion of twenty years military service).

The trial court rendered summary judgment in the form of in rem decree as applied to retirement benefits to accrue after date of March 3rd, 1978, date of the judgment. The trial court preserved the cause of action of plaintiff against defendant for the retirement benefits received prior to March 3rd, 1978, by severance of her cause of action therefor from her cause of action adjudicated upon rights to receive a portion of defendant’s benefits to accrue in the future. See Tex.R.Civ.P. 174, “Consolidation; Separate Trials”. That cause, as severed, pends for trial.

We affirm the judgment.

The parties, plaintiff and defendant, were formerly husband and wife, having married on February 6,1954, a time when defendant Harley 0. Matthews resided in Arizona and was in military service (from April 16, 1952). They were divorced, after eleven years, by decree dated December 6, 1965. Slightly less than seven years thereafter, on September 1, 1972, the defendant retired from military service. Service in the military by defendant was continuous, being slightly in excess of twenty years.

The parties resided in Arizona until 1959; from 1959 to 1963 defendant was stationed in Alaska; and from the latter part of July in 1963 to time of the 1965 divorce he was stationed in Texas. The parties’ separation took place the latter part of 1964; it was approximately one year thereafter they were divorced. A judgment of divorce was granted upon petition of the husband in a suit wherein the wife, though served with citation, wholly failed to appear. The divorce decree granted custody of the two children of the parties to the wife, with amounts for support of each child assessed against their father, the defendant in this action. The only mention made of property in the decree of divorce was the recitation of the final paragraph of the judgment, viz: “The parties hereto are not possessed of any community property subject to division of the Court.”

No part of the record displays the petition upon which the parties’ divorce was granted; nor is anything shown relative to the evidence adduced in support of the petition.

The form or action presented on appeal is not that of a case for bill of review. The action, simply stated, is to adjudicate that which should have been adjudicated as part of the divorce proceedings but was not considered and disposed of at that time. The recitations of plaintiff’s petition are in the form of those for partition of property rights in the defendant’s military retirement benefits under the claim of rights of co-tenancy. Pleading and trial on the motion for summary judgment were without regard for those rights possessed by a divorce court upon granting decree of divorce, i. e., the right and duty of a court trying a divorce case is to apportion the property of the parties under principles of equity, i. e., in a manner which would seem just and fair under all the circumstances. Our holding is that by the form of action from the judgment in which there has been the appeal none of the equitable matters mentioned could have been material in any event; that proper disposition was as of a case at law by co-tenants for partition.

We know from the evidence to be considered upon a hearing for summary judgment that at time of the parties’ divorce there existed community property in the form of defendant’s contingent and conditional expectancy of entitlement, eventually, to military retirement benefits; and we furthermore know from the judgment granting the defendant a divorce that the divorce court did not take such into consideration upon rendition of its decree. Therefore, such property rights persisted, for an in rem adjudication, upon plaintiff’s suit.

We consider the law settled that because the parties’ community interest in the retirement benefits were not in fact a part of the adjudication of the divorce court the matter of equitable apportionment ceased to be a matter of concern. Equitable considerations would not have thereafter mattered (save upon a re-entry into the same case as by proceedings in a bill of review case). What the apportionment might have been if made by the divorce court is of no importance. After divorce, if it develops that there was community property concealed or not adjudicated pursuant to the divorce proceedings, the former husband and wife become co-tenants or joint owners of the property just as if they had never been married; and they would own undivided interests in the property like unto the relation of tenants in common, subject to all the rules and regulations strangers bear to each other where they are in that relation. Taylor v. Catalon, 140 Tex. 38, 166 S.W.2d 102 (1942); Kirkwood v. Domnan, 80 Tex. 645, 16 S.W. 428 (1891); Novy v. Novy, 231 S.W.2d 780 (Tex.Civ.App.—Austin 1960, writ dism’d); Wade v. Wade, 295 S.W.2d 939 (Tex.Civ.App.—San Antonio 1956, no writ). This principle of law was recognized, without having been stated, in Herring v. Blakeley, 385 S.W.2d 843, 848 (Tex.1965) where there were directions to the trial court concerning the judgment it should render following remand of the cause.

In the case before us, where the summary judgment was granted to a mov-ant in position of plaintiff, there is no suggestion in the record that no part of the retirement benefits was community property. Consequently, the divorce decree having made no disposition of the property, the law did not vest any title thereto in either the husband or the wife. Rather did the failure to take into consideration the retirement benefits upon entry of the divorce decree convert the retirement benefits into property belonging to them in the capacity of co-tenants. Furthermore, because of that want of adjudication as part of the divorce judgment the subsequently instituted partition suit of the plaintiff was not subject to defendant’s plea of res judicata; there could not have been error by the trial court in overruling the defendant’s motion for summary judgment on the theory that the divorce judgment recitation, “[t]he parties hereto are not possessed of any community property subject to division of the Court”, constituted an erroneous adjudication (from which the divorced wife could have appealed) that the retirement benefits were the husband’s separate property.

By the recitation of the divorce judgment we hold there was express declaration by the divorce court that its power of disposition of community property of the parties divorced was not exercised because there was no such property, — clearly the statement of an erroneous legal conclusion — but in no sense even implying an adjudication or even a finding or conclusion upon the facts. Dessommes v. Dessommes, 461 S.W.2d 525 (Tex.Civ.App.—Waco 1970, no writ); Dessommes v. Dessommes, 505 S.W.2d 673, 676 (Tex.Civ.App.—Dallas 1973, writ ref’d n. r. e.).

If the trial of a divorce case might involve controversy between the parties upon any property it should be adjudicated; if such controversy is not made at the divorce trial the right to have it adjudicated as part of such proceedings is waived and lost. But, as applied to the interest of either party in property upon which there was no adjudication, though there might have been, neither party would be debarred of property rights in and to the property— sought to be established by suit thereafter brought. Whetstone v. Coffey, 48 Tex. 269 (1877); Gray v. Thomas, 83 Tex. 246, 18 S.W. 721 (1892); Busby v. Busby, 457 S.W.2d 551 (Tex.1970); Clendenin v. Krock, 527 S.W.2d 471 (Tex.Civ.App.—San Antonio 1975, no writ); Harkness v. McQueen, 207 S.W.2d 676 (Tex.Civ.App.—Galveston 1947, no writ); 3 Speer, Marital Rights in Texas (4th Ed.) (1961) p. 329, “Divorce” § 889, “Binding effect of decrees, generally”.

Furthermore, we deem the recitation of the divorce decree to support plaintiff and not the defendant, sufficing to support plaintiffs motion for summary judgment as proof that the retirement benefits were not adjudicated. Not having been countered by defendant the fact of no prior adjudication is deemed proved.

Discussed above, with holdings made, has been the matter of the trial court’s duty to treat the accumulated right to retirement benefits (as of the time of divorce) as community property; further, that as applied thereto the parties stood as tenants in common after the divorce. The question now considered relates to amounts, i. e., what was a correct percentage of the retirement benefits, as of the date of the divorce, to be apportioned — as partitioned — to the plaintiff. Texas is a community property state, but the parties were residents in Texas for only the last two years of those during the parties’ coverture, having resided in Arizona and Alaska before the last two years.

By this a question is created as result of residence in different states, during the entire period of which we must consider that the right of the defendant to military retirement benefits was accruing.

Was the trial court correct in dealing with the retirement benefits as though all rights thereto accumulated by the parties had been because they were Texas residents (whereby the entire amount as of the date of the divorce, should be treated as ruled by the laws of Texas), or, should the trial court have considered the amounts accrued while the parties resided in Arizona and Alaska (so that as severed periods the property be determined as whether separate or community, etc.)? In other words, in the event we should, for purposes of discussion, treat the situation as one where by the laws of both Arizona and Alaska the portions of accumulated retirement rights constituted separate and not community property, would the trial court have been correct to disregard that fact and treat retirement benefits accrued in those foreign states as immaterial?

By tests applied as appropriate to summary judgment cases, we find in the instant case a want of necessity to become concerned. Any question bearing thereupon may be disregarded because in this case neither party (at or prior to time of the trial of the case on summary judgment) moved that the trial court take judicial notice of the public statutes or court decisions of any state other than Texas. Tex.R. Civ.P. 184a, “Judicial Notice of Law of Other States, Etc.”

To have the laws and decisions of Arizona and/or Alaska judicially noticed could only have benefitted the defendant in this summary judgment case, where he was respondent to the motion for judgment. It was to the benefit of plaintiff movant that the trial court presume that Texas law applied. Under the duties incumbent on a plaintiff/movant in summary judgment proceedings he is obliged to prove that on at least one of his theories every element essential to his recovery is so clearly established that there is no substantial issue of fact as to the truth of his contentions, at least where the case involves no affirmative defense. 4 McDonald, Texas Civil Practice, 1971 Rev., p. 132, “Judgments”, § 17.26.2, “Summary Judgment, — B. When Proper. (I) On Whole Case.”

Nevertheless, under Texas law it is declared that where the provisions of Tex.R.Civ.P. 184a are not invoked, and where the law of the foreign state upon which there is reliance is not proved, it will be presumed that the law of the other state is the same as the law of Texas. 23 Tex. Jur.2d 152, “Evidence”, § 108, “Law of other state or foreign country.” We hold that it is the burden of a defendant respondent to a motion for summary judgment against him by the provisions of Tex.R.Civ.P. 166-A, “Summary Judgment”, to either invoke the provisions of Tex.R.Civ.P. 184a or to counter the proof of the plaintiff’s motion for summary judgment by his own summary judgment evidence proving to have been other than it is in Texas the law existent at any material time in the foreign state. Failing to do either he will become bound by the presumption that the applicable law is the same as that in Texas. In other words, a defendant respondent to a plaintiff’s motion for summary judgment may not complain on appeal of any want in sufficiency of such movant’s summary judgment evidence merely because he has not shown the inability of defendant respondent to make a fact issue through proof of the law appertaining to some foreign state. Considered as matter relating to summary judgment proof it would be respondent’s and not movant’s burden to show inapplicability of the Texas law.

In the partition of property in a divorce case to consider the retirement benefits as having constituted community property — in totality as accumulated to time of the trial — would furthermore be in the provisions of Tex.Family Code Ann. Title 1, Subtitle B, “Property Rights and Liabilities”, at § 5.02, “Presumption". Therein is provided that where the contrary is not otherwise shown it is the presumption of law that all property of either spouse during or on dissolution of their marriage is community property. At time of the parties’ divorce the same was provided by Tex. Rev.Civ.Stat.Ann. art. 4619, “Community Property”. By this provision the trial court, in the absence of anything to the contrary, would be bound to treat the retirement benefits exactly as would the divorce court have been bound to treat them had that property been presented for adjudication on the trial of the divorce case.

Furthermore, pertinent to this case, should notice be taken of the amendment of Tex.R.Civ.P. 166-A, § (c), effective January 1, 1978 and in full force at time of the hearing below. Thereby, as applied to summary judgment proceedings, is provided that “issues not expressly presented to the trial court by written motion, answer or other response shall not be considered on appeal as grounds for reversal”. By force of this rule a party to a summary judgment proceeding, who anticipates the possibility that there might be an appeal, must, in an abundance of precaution, either plead or prepare and present some instrument to the trial court by which he discloses all issues upon which the court is expected to act or rule; otherwise, save for that upon which the court does act or rule, he may not complain on appeal in reliance on existence or nonexistence of any issue not acted upon or ruled upon by the summary judgment. In the case before us there was no such written motion or answer appropriate to defendant respondent’s contentions. Only upon his claim of res judicata and his obvious resistance of the propriety of any summary judgment against him by those facts against his interest relied on by plaintiff movant would this appellate court have authority to reverse the judgment. The facts relied upon by plaintiff are such as are to be deemed proved in the absence of counter-affidavits, and on these defendant respondent has filed none. On the legal issue of applicability of the laws of any state other than Texas nothing at all was ever presented to the trial court.

The judgment is affirmed.


author: JAMES, Justice.

text:
    C. W. FISHER, Appellant, v. FIRST SECURITY STATE BANK OF CRANFILLS GAP, TEXAS, Appellee.
    No. 5956.
    Court of Civil Appeals of Texas, Waco.
    Jan. 18, 1979.
    John L. Bates, Waco, for appellant.
    John A. Hastings, Jr., Meridian, for ap-pellee.
   OPINION

JAMES, Justice.

This is an application for writ of error under the provisions of Article 2249a, Vernon’s Texas Civil Statutes. Neither Appellant nor his attorney was present at the trial, nor did either participate in any way. We reverse and remand.

Plaintiff-Appellee First Security State Bank of Cranfills Gap, Texas, brought this suit against Defendant-Appellant C. W. Fisher upon a note, seeking a judgment for. the alleged unpaid principal, interest, and for attorney’s fees.

Defendant-Appellant Fisher was served with citation, but filed no answer and made no appearance at the trial. It is undisputed that the court reporter was not present at the trial, and therefore the Appellant is unable to procure a question and answer statement of facts through no fault of his own, and after due diligence.

The trial court after hearing evidence on May 8, 1978, entered judgment in favor of the Bank against Fisher in the amount of $17,903.86 plus interest at the rate of 10% per annum from July 28, 1977, plus $5,371.58 attorney’s fees. It is from this judgment that Defendant Fisher prosecutes this application for writ of error.

Defendant-Appellant asserts four points of error, the first complaining of the trial court’s entry of judgment based upon no evidence having been taken by a court reporter, to the end that Appellant is unable to procure a statement of facts through no fault of his own and after the exercise of due diligence. By his second point, Appellant contends that the evidence is legally and factually insufficient to support the judgment. We sustain these contentions, and reverse and remand the cause to the trial court for retrial on the merits.

The appealing party is entitled to a complete statement of facts in question and answer form, and, if through no fault of his own, after the exercise of due diligence he is unable to procure such a statement of facts, his right to have the cause reviewed on appeal can be preserved to him in no other way than by a retrial of the case. Victory v. Hamilton (Comm.App.1936) 127 Tex. 203, 91 S.W.2d 697 at page 700, opinion adopted; Gibbs v. Crittenden (Tex.Civ.App., Waco CA 1953) 262 S.W.2d 804, no writ; Waller v. O’Rear (Tex.Civ.App., Waco CA 1971) 472 S.W.2d 789, 790, NRE.

In the case at bar, the transcript contains an instrument entitled, “Statement of Evidence,” which recites that it contains “all the facts given in evidence and all the evidence adduced,” and then sets out in narrative form what purports to be the evidence heard by the trial court. The instrument is signed by the counsel for Plaintiff and is shown to be approved by the trial court. This is insufficient.

We need a question and answer statement of facts as reproduced verbatim from the spoken word of both counsel and the witnesses, unblemished by human interpretation. Pacific Greyhound Lines v. Burgess (Tex.Civ.App., Amarillo CA 1938) 118 S.W.2d 1100, writ refused; Waller v. O’Rear (Tex.Civ.App., Waco CA 1971) 472 S.W.2d 789, NRE; Goodin v. Geller (Tex.Civ.App., Waco CA 1975) 521 S.W.2d 158, 160, NRE.

For the foregoing reasons, we reverse and remand the cause to the trial court for retrial on the merits.

REVERSED AND REMANDED.


author: McKAY, Justice.

text:
    LOCOMOTIVE ENGINEERS AND CONDUCTORS MUTUAL PROTECTIVE ASSOCIATION, Appellant, v. Freeman Leo BUSH, Appellee.
    No. 1182.
    Court of Civil Appeals of Texas, Tyler.
    Jan. 18, 1979.

      Grover Russell, Jr., Fairchild, Price & Russell, Center, for appellant.
    Ross Skolnick, Gamble, Skolnick & Foster, Robert M. Parker, Nichols & Parker, Longview, for appellee.
   McKAY, Justice.

This is a suit for benefits on an insurance contract. Appellee Bush brought suit against appellant claiming he was entitled to payments under an insurance contract which provided for per diem payments for loss of wages by being unemployed because of discharge or suspension as a penalty or disciplinary measure. Appellant answered that appellee was precluded from recovery because of the policy exceptions. Trial was to the court, and judgment was rendered for appellee in the amount of $4,770.00 and attorney’s fees of $1,750.00.

Appellee was employed by the Atchison, Topeka & Santa Fe Railway Company in 1957. He worked for Santa Fe until he was removed from his employment in December, 1975, because of alleged violation of the company rules numbers 14 and 16 of the General Rules for the Guidance of Employees.

Rule 14 reads as follows:

“Employees must obey instructions from the proper authorities in matters pertaining to their respective branches of the service. They must not withhold information or fail to give all the facts regarding irregularities, accidents, personal injuries or rule violations.”

Rule 16 reads as follows:

“Employees must not be careless of the safety of themselves or others. They must remain alert and attentive and plan their work to avoid injury. Employees must not be indifferent to duty, insubordinate, dishonest, immoral, quarrelsome or vicious. Employees must conduct themselves in a manner that will not bring discredit on their fellow employees or subject the company to criticism or loss of good will.”

The trial court made findings of fact and conclusions of law. The findings pertinent to this appeál are as follows: (8.) that the Plaintiff’s discharge on December 11, 1975, was occasioned as a penalty or method of discipline; (12.) that the Defendant’s sole basis of denying Plaintiff’s claim pursuant to Policy No. 160232 is pursuant to the policy exception relating to “knowingly disobeying orders, rules or instruction”; (14.) that the Plaintiff’s employer, Atchison, Topeka and Santa Fe Railway Company, had no basis on which to assign a cause which constituted an exception pursuant to the terms of Policy No. 160232; (17.) that the Plaintiff is entitled to judgment of and from the Defendant in the amount of $4,770.00, which judgment was entered on January 12, 1978.

The conclusions of law pertinent to this appeal are as follows: (1.) that the provisions of Policy No. 160232 which reads, “The cause assigned by the employer shall conclusively determine the liability of the Association,” is against the public policy of this state and is null and void and of no force and effect; and (2.) that the insurance contract forming the basis of Plaintiff’s claim in this case is governed by the laws of the State of Texas.

The insurance contract provided:

“This policy does not cover discharge or suspension resulting directly or indirectly, wholly or partly from any of the following causes: . . . knowingly disobeying orders, rules or instructions. . The cause assigned by the employer shall conclusively determine the liability of the Association.”

In its point one appellant contends that the trial court erred in rendering judgment for appellee because of the exception or exclusion above quoted, i. e., that appellee knowingly disobeyed rules 14 and 16; and in point two appellant says that the trial court’s finding that appellee did not knowingly disobey orders, rules or instructions “is so against the overwhelming weight and preponderance of the evidence as to be manifestly unjust and wrong.”

By point three appellant maintains that it was error for the trial court to find that the portion of the exception reading “The cause [for discharge or suspension] assigned by the employer shall conclusively determine the liability of the Association” is void and against public policy of this state.

Point four complains that the trial court erred by holding that the insurance contract is governed by the laws of Texas.

We shall address the fourth point first. Appellant contends that the law of the State of Michigan should apply rather than that of the State of Texas. We disagree with that contention for the reason that Article 21.42, Texas Insurance Code, provides:

“Any contract of insurance payable to any citizen or inhabitant of this State by any insurance company or corporation doing business within this State shall be held to be a contract made and entered into under and by virtue of the laws of this State relating to insurance, and governed thereby . . . .” [Emphasis added.]

While the appellant here is not shown to be a citizen or resident of Texas appellant was doing business in Texas, and the policy was solicited by appellant’s agent in Texas, was issued to a Texas resident, and was delivered to appellee in Texas.

Article 21.43, Insurance Code, provides in part:

“(a) The provisions of this Code are conditions upon which foreign insurance corporations shall be permitted to do business within this state, and any such foreign corporation engaged in issuing contracts or policies within this state shall be held to have assented thereto as a condition precedent to its right to engage in such business within this state.”

Point four is overruled. However, our ruling that Texas law applies does not necessarily dispose of this case. No constitutional or statutory provision or case law of this state concerning the point in controversy has been cited to us, nor have we found any. Therefore, any authority which we may find in any jurisdiction which is persuasive on the point in controversy may be followed.

The complaint of appellant in its point three is that the trial court erred in holding that the exception in the policy providing that the cause of discharge or suspension assigned by the employer conclusively determined the liability of the appellant is against public policy. Appellant argues that the above provision is not against public policy, and that both parties were free to contract that a third party could determine the cause for discharge or suspension and that such decision would be conclusive. Ap-pellee argues that to uphold the provision would preclude the courts of this state from construing and making fact-finding conclusions under the contract, and could lead to collusion between employers and an insurance company precluding policyholders like appellee from effectively having any coverage at all. Neither party cites any authority to support the argument made.

While there is no fixed rule or definition which applies to all cases, a contract against public policy is generally defined as a provision or stipulation which is illegal or which is inconsistent with or contrary to the best interest of the public. It is said to be “the principle which declares that no one can lawfully do that which has a tendency to be injurious to the public welfare.” 17 Am.Jur.2d Contracts, secs. 175 and 179. Expressions of public policy are found in a state’s constitution, statutes and judicial decisions. Dairyland County Mutual Ins. Co. v. Wallgren, 477 S.W.2d 341, 342 (Tex.Civ.App.-Fort Worth 1972, writ ref’d n. r. e.). In St. Regis Candies, Inc. v. Hovas, 117 Tex. 313, 3 S.W.2d 429, 433-4 (Comm’n App. 1928, opinion adopted), is found this language:

“An important requirement of policy is ‘that men of full age and competent understanding shall have the utmost liberty of contracting and that their contracts, when entered into freely and voluntarily, shall be held sacred and shall be enforced by courts of justice’ unless, perchance, contravention of public right or welfare very clear [sic] appears.”

In Hatch v. Turner, 145 Tex. 17, 193 S.W.2d 668, 669 (1946), it is said:

“Undoubtedly the parties to an insurance contract may make it in any legal form they desire and, in the absence of statutory prohibitions, insurers may limit their liability and impose whatever conditions they please upon their obligations not inconsistent with public policy.”

See 35 Words and Phrases, Public Policy, p. 480; 13 Tex.Jur.2d Contracts, sec. 171.

There is no contention the provision in the insurance contract in question violates the Constitution or statutes of Texas; nor is there any case cited to us (nor have we found one) which holds that it is against the public policy of this state or is otherwise illegal. Then the question remains: Does the provision do harm to the public? It is difficult to perceive harm to the general public for two parties to contract that the employer of one may give the reason for the discharge or suspension of his employee, and such reason shall be conclusive as to the employee’s benefits under an insurance contract.

Appellee argues that the provision in question here would or could lead to collusion between employers and insurance companies in discharging employees. There is nothing in the record to indicate that the employer knew that appellee had any policy of insurance. That there could be collusion between employers and insurers is not a sufficient ground to hold the provision to be against public policy.

The suit in United American Insurance Co. v. Selby, 161 Tex. 162, 338 S.W.2d 160, 163 (1960), upheld an exclusion providing no coverage for “any period during which the insured is not under the personal and regular attendance of a legally licensed doctor of medicine or osteopathy, other than Insured,” as being valid and reasonable and a condition precedent to the right of recovery of benefits and not against public policy. In so holding the court overruled several Court of Civil Appeals cases which had held that the provision was evidentiary in effect and would not operate to bar the claim of a person who was actually disabled and was against public policy. It would appear that if the reasoning in Selby is followed here appellee would have the burden of meeting the condition precedent that his employer had indicated a reason for discharge other than those listed in the exclusionary clause.

Here the employer railroad, with notice to appellee, held a formal hearing before D. E. Mader, Superintendent, Southern Division of Santa Fe. Appellee was present at the hearing, and he had as his representative R. L. Aguilar, District Chairman, Brotherhood of Railway Clerks. A complete record of that hearing was made and has been included in the record before this court. If there was any dissatisfaction with that hearing or the result thereof, there is no indication of an appeal or review if such was available. The record does not disclose whether appeal or review of the railroad hearing could have been had.

We have not found any Texas authority in point; however, the case which has a fact situation nearest to the one at bar seems to be the old Michigan case of Stitt v. Locomotive Engineers’ Mutual Protective Ass’n, 177 Mich. 207, 142 N.W. 1110 (1913). In Stitt the insured agreed in his application for insurance “that the cause assigned by my employer for suspension or discharge shall be the sole basis of determining the liability of the association.” The Supreme Court of Michigan held (142 N.W. p. 1113):

“The contract must govern, though it may be more harsh and unfavorable to plaintiff than defendant. Courts do not make contracts for parties; they can only construe and administer them.
“Defendant is of that class of mutual, indemnity, or insurance companies organized, apparently without capital, on the assessment plan to secure to its members a continuance of wages, when out of employment, for a certain length of time, under specified conditions. Those conditions seem to be conspicuously numerous and stringent in this instance; but a member of such an association is at the same time an insurer and an insured. In contemplation of law he is a party to imposing the conditions and restrictions in the policy issued to members.
“When he accepts such policy, his rights as an insured are determined by its terms, whatever they may be . .”

D. E. Mader testified that as Superintendent, Southern Division of the Santa Pe, he was the head operating officer of that division; that all employees are given a rule book under which they work and are instructed to acquaint themselves with the rules; that Rule two of the General Rules for the Guidance of Employees provides that “Employees must be conversant with and obey the company rules and special instructions. If an employee is in doubt and does not know the meaning of any rule or instruction, he should promptly ask his supervisor for an explanation. A copy of form 2626 [will] be furnished to each employee to be retained by him for his guidance.”

Mader further testified charges were brought against appellee Bush because of an incident reported by R. E. Raley, a relief operator, and that a formal investigation was set to determine whether there was any violation of the company rules by Bush; that such formal investigation was held at Longview on December 12, 1975, and the testimony and facts brought out in the investigation indicated Bush violated rules fourteen and sixteen of the General Rules for the Guidance of Employees, and as a result Bush was dismissed from the service of the Santa Fe.

When asked directly why Bush was removed from service with Santa Fe, Mader answered, “He was removed from service for violating the company rules, Rule Fourteen,-Sixteen of the General Rules [for] the Guidance of Employees,” and that Bush was removed from service for “knowingly and deliberately failing to give all the facts to Assistant Trainmaster D. H. Gill in regard to the incident of November 12,1975.” The record of the formal investigation reveals, “It is the decision that F. L. Bush be removed from service for violation of Rules 14 and 16 of General Rules for the Guidance of Employees, 1975.”

The record discloses that the decision by the Santa Fe to discharge appellee from service was based upon evidence heard at the formal hearing. Appellee makes no charge that the decision to discharge him was arbitrarily made. Considering the testimony of Raley and Tim Ford, hotel clerk at the Downtowner Motel at Longview, and the testimony of appellee Bush, it is apparent that it was not arbitrarily made. According to the record appellee Bush denied being at the Downtowner Motel. Raley and Ford both testified he was there, and Raley testified appellee attempted to go to his (Raley’s) room without his invitation or consent, and grabbed Raley’s luggage and went up in the elevator with Raley.

We are of the opinion that the provision in the insurance contract that the decision of the employer as to the reason for discharge is conclusive does not violate public policy; therefore, it being undisputed in the record that appellee was discharged for violating rules fourteen and sixteen, appellee is not entitled to recover. Point three is sustained. We do not reach points one and two.

Judgment of the trial court is reversed, and judgment is here rendered that appel-lee take nothing.

      . All references to articles are to Texas Revised Civil Statutes unless otherwise indicated.


author: SUMMERS, Chief Justice,

text:
    Carol KOLSTI et al., Appellants, v. Calvin R. GUEST et al., Appellees.
    No. 1233.
    Court of Civil Appeals of Texas, Tyler.
    Jan. 18, 1979.
    Randall B. Wood, Ray & Wood, Austin, for appellants.
    Shannon H. Ratliff, McGinnis, Lochridge & Kilore, Austin, for intervenor,
    R. C. Slagle, III, Sherman, for appellees.
   SUMMERS, Chief Justice,

This is an appeal from an order of dismissal by the trial court dismissing appellants’ petition (asking for a declaratory judgment and writ of injunction) for the reason that the court did not have jurisdiction.

Appellants, Carol Kolsti, Harold Hammett and Mary Jo Spradlin, filed their petition for declaratory judgment and to enjoin the State Democratic Executive Committee and its Chairman from including on the general primary election ballot of the Democratic Party a certain referendum issue. The referendum issue in question inquired whether the voter is for or against the 1979 Legislature enacting a law to permit parimutuel wagering on horse races by local-county option.

On March 13, 1978, the State Democratic Executive Committee held its statutory meeting to pass a resolution directing its Chairman to certify the candidate names and referenda to be placed on the general primary election ballot. The Committee was presented with petitions which ostensibly contained more than 76,065 signatures of voters of the Party requesting that the pari-mutuel wagering referendum appear on the ballot. The Committee adopted a resolution authorizing a ballot which included the referendum issue. The basis for this suit was that the petitions contained insufficient valid signatures to require the Committee to place the issue on the ballot pursuant to Article 13.33, Texas Election Code. The trial court entered a temporary restraining order but subsequently on March 31, 1978, dismissed the cause for lack of jurisdiction. In its order of dismissal the court concluded that it had no jurisdiction to hear the complaint lodged against the petitions and the action of the Committee in authorizing the referendum issue for the ballot because the actions of the Committee were of a political nature into which the court could not inquire. Thereafter, on April 3, 1978, appellants gave notice of appeal from the trial court’s dismissal order and filed a motion with the Austin Court of Civil Appeals for leave to file an original proceeding in that court to enjoin the State Democratic Executive Committee and its Chairman from including said referendum issue on the primary election ballot. As reported in 565 S.W.2d 556, the Court of Civil Appeals by its Per Curiam opinion on April 7,1978, denied the motion for leave to file the petition for injunction holding that it is beyond the powers of the courts to enjoin an election or any incident to it; that an election is essentially the exercise of political power, and during its progress, is not subject to judicial control.

Appellants have prosecuted this appeal from the trial court’s order of dismissal on one point of error in which they apparently complain that the trial court erred by failing to hear the complaint that the petition contained insufficient valid signatures to require the State Democratic Executive Committee to place the referendum on the ballot. Appellants in their brief concede that the Austin Court of Civil Appeals by its Per Curiam opinion, supra, effectively sustains the trial court insofar as the request for injunction is concerned. However, appellants contend that the trial court had jurisdiction to proceed to a declaratory judgment to accord appellants a construction of Article 13.33, Texas Election Code. We disagree.

A case becomes moot when it appears that one seeks to obtain a judgment upon some alleged controversy when in reality none exists, or when he seeks judgment upon some matter which, when rendered, for any reason, cannot have any practical legal effect upon a then existing controversy. McNeill v. Hubert, 119 Tex. 18, 23 S.W.2d 331, 333 (Comm. of App.1930, holding app’d); Swank v. Sharp, 358 S.W.2d 950, 951 (Tex.Civ.App.—Dallas 1962, no writ); Stephenson v. State, 515 S.W.2d 362, 363 (Tex.Civ.App.—Dallas 1974, writ dism’d); Greene v. Gregg, 520 S.W.2d 924, 926 (Tex.Civ.App.—Tyler 1975, no writ).

In the instant case the referendum issue on pari-mutuel betting was included on the general primary election ballot for the Democratic Party and lost in that election. There is no longer a justicia-ble controversy between the parties. No effective relief can be given to either party to the appeal. The events have occurred and the question of whether the trial court had jurisdiction to issue a writ of injunction or to render a decision on declaratory judgment are no longer live subjects of controversy. Since no actual controversy now exists between the parties, the case is now moot. It is the settled law of this State that its courts will not continue to litigate a controversy that has ceased to exist and that appellate courts will not review judgments if the controversy between the parties has terminated. Such cases are moot. State v. Society for Friendless Children, 130 Tex. 533, 111 S.W.2d 1075, 1076 (1938); City of West University Place v. Martin, 132 Tex. 354, 123 S.W.2d 638, 639 (1939); Isbell v. Rednick, 193 S.W.2d 736, 737 (Tex.Civ.App.—Waco 1946, no writ).

It has also been held that courts are created not for the purpose of deciding abstract questions of law or rendering advisory opinions, but for the judicial determination of presently existing disputes between parties in relation to facts out of which controverted questions arise. McNeill v. Hubert, supra; Swank v. Sharp, supra, and 1 Tex.Jur.2d Actions sec. 11, p. 516.

It is also well settled law that before a declaratory judgment will lie, there must be a justiciable controversy between the parties. California Products, Inc. v. Puretex Lemon Juice, Inc., 160 Tex. 586, 334 S.W.2d 780, 781 (1960) and authorities cited. The court said:

“ ‘The rule with respect to the necessity for a justiciable controversy may be stated in the vernacular in this wise: The Uniform Declaratory Judgments Act does not license litigants to fish in judicial ponds for legal advice.’ Anderson, Declaratory Judgments, 2d. Ed., Vol. 1, p. 47, quoting from Lide v. Mears, 231 N.C. 111, 56 S.E.2d 404.”

When a case becomes moot, the only proper judgment is one dismissing the cause. Sterling v. Ferguson, 122 Tex. 122, 53 S.W.2d 753, 763 (1932); Polk v. Davidson, 145 Tex. 200, 196 S.W.2d 632, 633 (1946); Shaw v. Miller, 394 S.W.2d 701, 703 (Tex.Civ.App.—Houston 1966, ref’d n. r. e.).

It follows from the above conclusions that this cause — having thus become moot — should be dismissed; it will be so ordered.

Appeal dismissed.


author: MOORE, Justice.

text:
    TEXAS CRUSHED STONE COMPANY, Appellant, v. Eddie BAKER, Appellee.
    No. 1235.
    Court of Civil Appeals of Texas, Tyler.
    Jan. 18, 1979.

      W. H. Connor, J. Parker McCollough, Georgetown, for appellant.
    Jimmy Stewart, Lynch, Jolink, Zimmerman & Young, Austin, for appellee.
   MOORE, Justice.

This is an appeal from a default judgment. Plaintiff, Eddie Baker, sued defendant, Texas Crushed Stone Company, for damages for breach of an employment contract alleging the company failed and refused to pay him his annual bonus. Citation was served on the defendant by serving E. B. Snead, president and registered agent for service of Texas Crushed Stone Company. No answer was filed by the defendant, and plaintiff moved for judgment by default. The cause was submitted to the court on January 20, 1978. After hearing the evidence as to the amount of damages, the trial court rendered judgment against the defendant for the sum of $763.90, including a $250.00 attorney’s fee. Defendant filed a motion for new trial on January 26, 1978, six days after the default judgment was rendered. After a hearing on the defendant’s motion, the court entered an order denying a new trial and the defendant perfected this appeal.

The evidence shows that citation was served upon Edwin B. Snead, president of Texas Crushed Stone Company on December 14, 1977. He delivered the petition to William B. Snead, chairman of the executive committee and secretary-treasurer of Texas Crushed Stone Company. William B. Snead took the petition to James Y. Isbell, office manager of Texas Crushed Stone Company, and a decision was made to refer the matter to Karl Moeller, Esq., an attorney in Austin, Texas, who has represented defendant in several other matters. Although Moeller was not on a retainer by the company, he had handled practically all of defendant’s legal business in the past year. Isbell called Moeller with regard to the citation and was instructed by Mr. Moeller to forward the petition to him in Austin and he would take care of it. Isbell thereupon mailed the petition in a properly addressed envelope to Mr. Moeller for the purpose of having him respond to the lawsuit. For some reason, not shown by the evidence, Moeller failed to file an answer.

Defendant did not become aware of the default judgment until it received notice thereof from the County Clerk on January 24,1978. Thereupon a motion for new trial was filed on January 26, 1978, which was accompanied by affidavits of two officials of the company.

The trial court filed findings of fact and conclusions of law, finding among other things, that: (a) no answer was filed by defendant; (b) plaintiff’s claim was for un-liquidated damages; (c) testimony was received by the court as to the amount of bonus due the plaintiff; and (d) no court reporter was present to transcribe any testimony or any other matters heard on plaintiff’s motion for default judgment. The court concluded that, as a matter of law, the failure to have a court reporter present to transcribe the testimony for unliquidated damages did not require the granting of a new trial.

Defendant seeks a reversal on the ground that the testimony on which the default judgment was' based was not recorded and consequently a new trial was required in order to preserve its right to have the cause properly reviewed on appeal. Plaintiff contends defendant waived its right to a statement of facts because on the motion for new trial at which a court reporter was present, defendant could have called the plaintiff as a witness and made a record of what his testimony was at the time the default judgment was taken. Plaintiff further contends that defendant’s failure to request the trial judge to prepare a statement of facts amounted to a waiver of its rights.

Our rules provide that where a claim is unliquidated, as here, the court must “hear evidence as to the damages.” Tex.R.Civ.P. 243; Southern S. S. Co. v. Schumacher, 154 S.W.2d 283, 284 (Tex.Civ.App.—Galveston 1941, writ ref. w. o. m.). The question to be determined in this case is whether defendant is entitled to a reversal because of the lack of a record of the evidence adduced at the hearing made the basis of the default judgment.

If a party exercises due diligence and through no fault of his own is unable to obtain a record of the evidence adduced at the hearing for a default judgment, a new trial may be required in order to preserve his right to appellate review. Robinson v. Robinson, 487 S.W.2d 713, 715 (Tex.1972); Rogers v. Rogers, 561 S.W.2d 172, 173-4 (Tex.1978); Morgan Express, Inc. v. Elizabeth-Perkins, Inc., 525 S.W.2d 312, 314 (Tex.Civ.App.—Dallas 1975, writ ref’d).

Where the appealing party, as here, was not present and was not represented by counsel when the testimony was taken, and later discovers that no record was made, the lack of a record cannot reasonably be deemed waived. Morgan Express, Inc. v. Elizabeth-Perkins, Inc., supra.

In the recent case of Rogers v. Rogers, supra, 561 S.W.2d at 173, the Supreme Court makes it clear that diligence in obtaining a statement of facts in a default judgment case does not require the appealing party to exhaust the provisions of Tex. R.Civ.P. 377(d). In this connection the court made this statement:

“An appellant is not required to undertake to agree with an adversary upon the facts adduced at the trial or to rely upon the unaided memory of the trial judge who decided the merits of the case in order to obtain a statement of facts.”

We cannot agree with the contention that since a court reporter was present and transcribed the proceeding on the motion for new trial, defendant could have subpoenaed the plaintiff and taken testimony as to what damages were proved on the default judgment hearing, and in this way could have a reviewable record before this court. Even if such effort were made, such record could not be effectively substituted as a statement of facts in the original hearing in the absence of an agreement on the part of the plaintiff.

Since the defendant in the present case was not obligated to attempt to agree with its adversary upon an agreed statement of facts and was not required to request the trial judge to prepare a statement of facts, there is no other way of having the matter reviewed on appeal other than upon a retrial of the cause. This conclusion is supported by the authorities heretofore cited as well as the following authorities. Smith v. Smith, 544 S.W.2d 121, 123 (Tex.1976); Tally Ho Motel v. Wilson, 568 S.W.2d 666 (Tex.Civ.App.—Corpus Christi 1978, no writ history); Wallace v. Snyder National Bank, 527 S.W.2d 485 (Tex.Civ.App.—Eastland 1975, writ ref’d n. r. e.); Dugie v. Dugie, 511 S.W.2d 623 (Tex.Civ.App.—San Antonio 1974, no writ history).

The judgment is reversed and the cause is remanded for new trial.


author: ROBINSON, Chief Justice.

text:
    M. W. CLINGAN, Appellant, v. EMPLOYERS CASUALTY COMPANY, Appellee.
    No. 8934.
    Court of Civil Appeals of Texas, Amarillo.
    Jan. 22, 1979.
    Rehearing Granted Jan. 22, 1979.

      Edwards & Associates (James R. Edwards), Lubbock, for appellant.
    Crenshaw, Dupree & Milam (Cecil Kuhne and William R. Moss), Lubbock, for appel-lee.
   ON MOTION FOR REHEARING

ROBINSON, Chief Justice.

Our judgment dismissing the appeal in this cause is vacated and our opinion released January 3, 1979, is withdrawn on motion for rehearing. The following opinion is substituted.

Plaintiff, M. W. Clingan, seeks to recover death benefits under the Workers’ Compensation Act for the fatal injuries received by his son, Michael Clingan. A jury answered special issues in favor of plaintiff. • The court rendered judgment notwithstanding the verdict for defendant Employers Casualty Company. Plaintiff appeals. Affirmed.

Michael Clingan was a graduate student working toward a master’s degree in physics at Texas Tech. University during the fall semester of 1971. During that time he was employed by the University as a teaching assistant. His primary duty as a teaching assistant was to teach two undergraduate introductory physics labs. At times student teaching assistants were required to assist a professor with a large class, taking roll or grading papers. Michael was appointed to the position by and was under the control of Dr. Henry Thomas, chairman of the Department of Physics. He was paid out of funds appropriated by the Texas State Legislature for teaching salaries and received a salary, paid to him in nine monthly checks. As a graduate student, Michael had chosen to do research for his thesis in an area of physics in which Dr. Glenn A. Mann was working. Under Dr. Mann’s tutelage, Michael had been conducting experiments and doing research in Dr. Mann’s laboratory. By custom, the custodial staff and professors would pick a mutually convenient day for a laboratory to be scrubbed and cleaned. The professors did not want the custodians moving the equipment and experiments, fearing damage to expensive equipment or to an experiment. It was common practice for a professor, with the help of graduate students, to move those items themselves. A few hours before Michael’s death on January 12,1972, he and Dr. Mann moved furniture, equipment and experiments on which they were working into the hall so that the custodial staff could thoroughly clean the lab. Dr. Mann and Michael were to meet at the lab around 9:00 p. m. to put the furniture, equipment and experiments back in as soon as the floor was finished. Shortly before 9:00 p. m. Michael was shot in the hall just outside the lab and killed.

The Industrial Accident Board awarded death benefits to M. W. Clingan, the father of Michael. Employers Casualty Company, alleging that it was the workers’ compensation carrier for Texas Tech University, filed a petition in district court appealing the award. The parties were realigned to show M. W. Clingan as plaintiff and Employers Casualty as defendant. By plea in abatement, plaintiff alleged that the trial court lacked jurisdiction because the petition appealing the award of the Industrial Accident Board was not brought in the name of Texas Technological College. Plaintiff contends that the trial court erred in overruling the plea in abatement. Plaintiff relies on section 11 of article 8309f, in effect at that time, which states: “If the final order of the Board is against the institution, then the institution shall bring suit to set aside said final ruling and decision of the Board . . . .” 1957 Tex. Gen. Laws, ch. 252, § 11, at 539. Under section 3 of article 8309f, Texas Tech University was authorized either to be self-insuring or to purchase workers’ compensation insurance for their employees from a company authorized to do business in Texas. Id. § 3, at 537. Plaintiff does not contend and has failed to offer evidence that Texas Tech University was self-insured or that Employers Casualty Company was not the insurance carrier. The final order of the Board stated that Employers Casualty Company was the insurance carrier for Texas Tech University, and directed the carrier to pay compensation benefits to M. W. Clingan. We, therefore, overrule plaintiff’s contention that the trial court erred in overruling the plea in abatement.

Plaintiff next contends that the trial court erred in failing to grant plaintiff’s motion for judgment on the verdict and in granting defendant’s motion for judgment notwithstanding the verdict. To sustain the action of the trial court in granting the motion for judgment notwithstanding the verdict, it must be determined that there is no evidence upon which the jury could have relied to make the findings. In acting upon the motion, all testimony must be considered in a light most favorable to the party against whom the motion is sought and every reasonable intendment deducible from the evidence is to be indulged in that party’s favor. Douglass v. Panama, Inc., 504 S.W.2d 776, 777 (Tex.1974).

Defendant contends that Michael Clingan was not in covered employment at the time of his fatal injuries. Plaintiff contends that Michael Clingan was working in the capacity of a janitor and was, therefore, entitled to compensation benefits as a worker. The statute then in effect defined worker as:

[E]very person in the service of Texas Technological College under any appointment or expressed contract of hire, oral or written, whose name appears upon the pay roll of Texas Technological College, except,
* * * * * *
(b) Teaching staff who are not required by their teaching or research duties to handle or work in close proximity to dangerous chemicals, materials, machinery or equipment.

1957 Tex. Gen. Laws, ch. 252, § 2, at 537.

It is undisputed that in teaching his introductory labs Michael was not in close proximity to any dangerous chemicals, materials, machinery or equipment. He was not on the custodial staff, was not on the payroll for that department and did not receive an hourly wage as did the custodians. The service he was rendering at the time of death was for his own benefit, to protect his research. Even if he was moving furniture and equipment solely because Dr. Mann had instructed him to do so, that fact alone would not enlarge his employment duties to include janitorial work, for Dr. Mann was not his employer. Michael received his employment instructions from the chairman of the department, Dr. Thomas. Dr. Mann was supervising Michael’s graduate research.

We conclude that as a matter of law Michael Clingan was not in the course of covered employment at the time of his death and that the trial court did not err in entering judgment for defendant notwithstanding the verdict.

The judgment of the trial court is affirmed.

DODSON, J., not participating.


author: PHILLIPS, Chief Justice. SHANNON, Justice,

text:
    RAILROAD COMMISSION of Texas et al., Appellants, v. CITY OF FORT WORTH, Appellee.
    No. 12869.
    Court of Civil Appeals of Texas, Austin.
    Jan. 24, 1979.
    Rehearing Denied Feb. 21, 1979.

      John L. Hill, Atty. Gen., Joyce Beasley, Asst. Atty. Gen., Austin, for Railroad Commission.
    Barry K. Bishop, Clark, Thomas, Winters & Shapiro, Austin, for Lone Star Gas Co.
    Arthur R. Petersen, City Atty., Fort Worth, for appellee.
   PHILLIPS, Chief Justice.

This is an appeal from an administrative order issued by the Railroad Commission in Gas Utilities Division Docket Number 683 which adjusted the base cost of gas used in calculating Lone Star Gas Company’s gate rate.

The trial court remanded the order to the Commission holding it was not supported by substantial evidence. We reverse the judgment of the trial court and render judgment upholding the order.

I.

The principal question before us is whether the trial court erred in holding that the Commission’s order in G.U.D. No. 683 was not supported by substantial evidence because it did not conduct a full gate rate proceeding to determine rate of return, rate base and operating expense.

In June, 1975, Lone Star Gas Company received a new gate rate in G.U.D. No. 588 after a full hearing in which all elements of Lone Star’s gate rate were examined. These elements included its rate base, rate of return and operating expenses. The gate rate is the rate charged by a transmission company to a distribution company. The 1975 hearing met all the requirements for a full Alvin hearing as set out in Railroad Commission v. Houston Natural Gas Corp., 155 Tex. 502, 289 S.W.2d 559 (1956).

Less than a year later, on March 26,1976, Lone Star filed an application with the Commission to increase the base cost of gas granted in G.U.D. No. 588. The application was made as a result of rapidly escalating gas prices. That application was docketed as G.U.D. No. 683 and the final decision in that docket is the subject of this appeal.

Thirty Texas cities intervened at the Commission level. Only the City of Fort Worth appealed the Commission’s order.

The gate rate fixed in G.U.D. No. 588 was $1.0399 per Mcf including a “spread” of $0.3170 per Mcf. The term “spread” is used for the amount in Lone Star’s gate rate which allowed Lone Star to recover its costs, including an 8% rate of return on the fair value rate base. An increase in the base cost of gas would result in an immediate increase in the gate rate and a change in the basic gas cost used in the Purchased Gas Adjustment (PGA) clause authorized in G.U.D. No. 588. The PGA clause provided that rates would be increased or decreased by 85% of the difference between the base cost of gas of $0.7229 and the monthly average weighted cost of gas.

Procedurally, the hearing examiner limited the issue in G.U.D. No. 683 to the proper cost of the new higher priced gas. The rate of return, however, was not reconsidered.

A hearing was conducted on June 14, 1977, to give all parties an opportunity to make their views known on the necessity of conducting a full rate proceeding or limiting the issue in G.U.D. No. 683 to the cost of gas. The City intervenors agreed to consider only the change in the base cost of gas. Although appellee maintains that it did not so agree, we can find no objection on its part to this limitation.

An evidentiary hearing on gas costs was conducted in November, 1976, and the final order issued July 5, 1977. In this final order the Commission changed the base gate rate for domestic, commercial, company used, and unaccounted for gas to be charged by Lone Star for its delivery of natural gas to all cities, towns, and villages served by Lone Star. This base gate rate, originally set in G.U.D. No. 588, was changed to $1.4883 per Mcf which represents a base cost of gas component of $1.1802 and a spread of $0.3081 pursuant to a voluntary reduction of the spread by Lone Star. This order also amended the purchased gas cost adjustment rule set out in G.U.D. No. 588 in certain respects, and also specified that these rates shall be effective from January 9, 1977. At that time the company was permitted to recover uncollected gas costs, less the $.0089 per Mcf spread reduction. Beginning in January, 1977, it was allowed to recover gas costs through a special five cents ($.05) per Mcf surcharge to be calculated as set out in the order.

Although there was never any serious contest with respect to the reasons for the increased costs of purchased gas, Lone Star introduced testimony relative thereto. As competition for the purchase of gas increased, differences in contract terms arose. Purchasers were required to enter into increased terms on “take-or-pay contracts,” price escalation clauses, and required “price redetermination” clauses, thereby involuntarily being required to increase the purchased gas cost. These new contract provisions were necessary to permit the purchaser to acquire large reserves under new gas purchase contracts. As a minimum requirement, any utility must replace production with new reserves each year if it is to maintain its supply base. Replacement rates of less than 100% result in reduced supply, often reduced availability of supplies at the wellhead, curtailment under sales contracts, and the inability to service expanding existing markets or new customers.

Appellants maintain that the Commission’s treatment of the change of gas costs in the gate rate had no impact on the rate of return authorized in G.U.D. No. 588. The 588 rate was expressly based upon the weighted average cost of gas purchased by Lone Star in February, 1975, which was 72.29 cents per Mcf. Accordingly, the gate rate established in Docket No. 588 produced a fair rate of return only as long as Lone Star’s weighted average cost remained approximately 72.29 cents per Mcf. The Commission recognized the potential problem from the rapidly increasing gas costs and made the following findings and conclusions in Docket No. 588:

“(8). The public interest requires the continuation of a gas cost adjustment rule due to the rapidly spiraling cost of gas and the effect of regulatory lag, since timely relief will benefit both Lone Star and the cities, towns, and villages it serves.
“(9). The city gate rate charge for domestic and commercial usage and unaccounted for gas, as authorized in this Order, should be increased or decreased by eighty-five percent (85%) of the amount by which the weighted average cost of purchased gas during the base period is more or less than 72.29 cents per Mcf, computed to the nearest one-hundredth of one cent (l/100th of 1$), as herein more fully set forth in Exhibit ‘A.’ ”

The effects are obvious from the provision for an “85% flow-through” of increased purchased gas costs above the “base rate of cost” established by the order in Docket No. 588. If the cost of purchased gas were to remain constant, the flow-through would have no effect. If, however, the cost of purchased gas were to increase significantly, Lone Star would incur an unrecovered expense in the amount of 15% of the difference between the base cost of the purchased gas at the time of the establishment of the gate rate (here, 72.29 cents per Mcf), and the existing weighted average of purchased gas. Assuming that other factors (the fair value rate base, the reasonable rate of return, and other expenses) remain relatively constant, then the utility’s rate of return is eroded or decreased by 15% of the increase in the cost of purchased gas. The cost of purchased gas can be determined easily, and, just as easily, segregated from other factors which are to be considered in the establishment of a reasonable rate. In fact, the cost of purchased gas was segregated as an expense component in Docket No. 588.

When the rate, as here, becomes obsolete and inadequate, the utility may seek to establish a new rate through a full gate rate proceeding. This was made clear to all the parties by the Commission as they were fully advised that any of them could request, and obtain, a full gate rate hearing at any time in the future.

On the other hand, if an inadequate rate factor can be identified through an easily segregated expense component, such as the cost of purchased gas, a more limited examination of the rate structure should be permitted in order to avoid the tremendous cost in time and money that the alternative proceeding would involve. Montana Consumer Counsel v. Public Service Commission, 168 Mont. 180, 541 P.2d 770 (1975) (per curiam).

Appellee seeks to require Lone Star to reestablish the rate of return that was determined in Docket No. 588. We do not believe this expense should be imposed on the ratepayers. Appellee has the option, however, as pointed out by the hearing examiner, of filing its own complaint with the Commission and insisting upon a separate hearing on the issue of rate of return or any other component of Lone Star’s rate.

Using the methodology of the Commission in Docket No. 588, Lone Star produced testimony before the Commission determining the amount of the increase in the base cost of purchased gas necessary to achieve the rate of return on the rate base established in Docket No. 588. Indeed, there was no evidence to the contrary. Consequently, we hold that the change in the rate allowed by the Commission’s order was supported by substantial evidence.

The effect of the Commission’s order was simply to avoid the erosion of the rate of return resulting from the loss of unrecov-ered gas costs in the amount of 15% of the difference between the base cost permitted in Docket No. 588 and the average cost at the time of these proceedings. An agency “is created to centralize expertise in a certain regulatory area and, thus, is to be given a large degree of latitude by the courts in the methods by which it accomplishes its regulatory function.” City of Corpus Christi v. Public Utility Commission, 572 S.W.2d 290, 297 (Tex.1978).

Appellee contends that all but one of the Commission’s seven findings of fact are unsupported by substantial evidence. Fort Worth challenges the findings that: the parties received notice; the Commission determined a gas rate for Lone Star in G.U.D. No. 588; the Commission separated gas costs from other components of the rate in G.U.D. No. 588 by means of a purchased gas adjustment clause; Lone Star agreed to a reduction in the spread; the current weighted average cost of gas was $1.1802 per Mcf; and there was agreement by the parties concerning treatment of out-of-period adjustments.

We hold that the Commission’s order, including the findings of fact relative thereto, is supported by substantial evidence. We also hold that the Commission’s procedure of adjusting the cost of gas at the gate without a full gate rate hearing was valid and in compliance with the authority vested in it.

II.

Appellee alleges a number of due process violations by the Commission. We overrule them all.

The final hearing in G.U.D. No. 683 was held on November 10, 1976, but the final order was not issued until July 5,1977. Appellee contends that the order was void because it violated Tex.Rev.Civ.Stat.Ann. art. 6252-13a, § 16(d) (Supp.1978), which provides:

“The final decision or order must be rendered within 60 days after the date the hearing is finally closed. . . .”

Section 16(d) was designed to promote the proper, orderly and prompt conduct of business by the agency and is, therefore, directory only. See Lampasas Federal Savings and Loan Association v. Lewis, 558 S.W.2d 913 (Tex.Civ.App.1977, no writ); cf. Lewis v. Jacksonville Building and Loan Association, 540 S.W.2d 307 (Tex.1976); Federal Crude Oil Co. v. Yount-Lee Oil Co., 122 Tex. 21, 52 S.W.2d 56 (1932).

The Commission’s order was entered July 5, 1977, but the rates were made effective January 9, 1977. The intent of the Commission was, as stated in its order, “to approximate as closely as possible the situation that would have resulted had this order been entered on January 9, 1977, and had both the spread reduction and the base cost of gas increase been in effect when January 20, 1977, billings commenced.”

Appellee contends that this constituted retroactive ratemaking and, thus, was proscribed by law. See Railroad Commission v. Houston Natural Gas Corp., 155 Tex. 502, 289 S.W.2d 559 (1956); Amarillo Gas Co. v. City of Amarillo, 208 S.W. 239 (Tex.Civ.App.1919, no writ). We disagree.

It has been held that “a public utility commission has the power to make its rate order retroactively effective as of any date after it has actually acquired jurisdiction of the cause . . ..” United Gas Public Service Co. v. State, 89 S.W.2d 1094, 1104 (Tex.Civ.App.1935, writ ref’d), aff’d, 303 U.S. 123, 58 S.Ct. 483, 82 L.Ed. 702 (1938). The strength of this rule was not diminished by the Supreme Court’s holding in Lower Colorado River Authority v. City of San Marcos, 523 S.W.2d 641 (Tex.1975). In that case rates set in a 1973 L.C.R.A. board meeting were not allowed to take effect as of the time of a 1972 meeting where the earlier meeting’s order was void for insuffi-eient notice. In the present case it is undisputed that the Railroad Commission had jurisdiction of the cause on January 9,1977.

Appellee presents a point concerning ex parte communications between agency officials and parties to the cause. The relevant statute provides:

“Unless required for the disposition of ex parte matters authorized by law, members or employees of an agency assigned to render a decision or to make findings of fact and conclusions of law in a contested case may not communicate, directly or indirectly, in connection with any issue of fact or law with any agency, person, party, or their representatives, except on notice and opportunity for all parties to participate. . . . ”

Tex.Rev.Civ.Stat.Ann. art. 6252-13a, § 17 (Supp.1978). We are unable to locate the communications in controversy in the record before this Court; however, there appears to be no dispute as to the contents of the challenged items.

The communications alleged to be improper were as follows: a letter from the director of the Gas Utilities Division (not the hearing examiner) to a representative of Lone Star concerning procedural rules; a request for continuance by Lone Star; a request for hearing date; a lost exhibit of which the examiner disclaimed consideration; and an amended application by Lone Star that indicated on its face that service was made.

We believe it is clear that the communications either did not concern any issue of fact or law or did not involve any agency member assigned to render a decision or make findings in G.U.D. No. 683. At any rate, no showing of harm has been made. Cf. Imperial American Resources Fund, Inc. v. Railroad Commission, 557 S.W.2d 280 (Tex.1977).

Appellee contends in his final point that by ordering interest paid on out-of-period adjustments the Commission has given Lone Star an opportunity to improperly manipulate its adjustments. As appellee concedes in its brief, there is no evidence that such will be done, and we believe the Commission’s action was supported by substantial evidence.

We reverse the judgment of the trial court and, herewith, render judgment reinstating the Commission’s order.

SHANNON, Justice,

concurring.

I concur in the reversal of the judgment of the district court.

The agency’s hearing officer was justified in limiting the issue to be determined at the hearing in the absence of objection by a party to the proceeding. Appellee City of Fort Worth, as a party to the hearing, had opportunity to voice its objection and to demand a full rate hearing. Fort Worth voiced no objection and made no demand. Had Fort Worth made objection to the limited inquiry and made demand for full hearing, the hearing officer would have conducted such a healing. By remaining silent, Fort Worth waived its right to require a full hearing before the agency and, of course, it should not be heard to complain of the limited inquiry in its administrative appeal to the district court of Travis County.

      . Appellee does not challenge finding of fact number one which provides:
      “Lone Star Gas Company’s transmission division delivers gas to its distribution systems for sale to domestic and commercial customers in various cities, towns, and villages in Texas.”