text:
    LANE et ux. v. CUNNINGHAM et ux.
    No. 1615—6027.
    Commission of Appeals of Texas, Section A.
    March 15, 1933.
    Baker & Baker and Critz & Woodward, all of Coleman, for plaintiffs in error.

      G. A. Walters and N. O. Walker, both of San Saba, for defendants in error.
   HARVEY, Presiding Judge.

In tbe year 1929, tbe defendant in error Robert Cunningham owned a tract of 98 acres of land in Callaban county, constituting tbe homestead of liimself and bis wife, Mamie E. Cunningham. Tbe land was incumbered with an outstanding debt. The plaintiff in error J. T. Uane held, under a lease from the owner, a certain hotel in San- Saba, and owned tbe furniture and fixtures located in tbe hotel. Tbe furniture and fixtures were incumbered with an outstanding debt for tbe purchase money thereof. Lane had been operating the hotel for some time. On October 14, 1929, Lane, on the one hand, and Cunningham and bis wife, on the other, entered into a contract in writing for the exchange of those respective properties. By the terms of the contract Cunningham and wife agreed to execute tó Lane, on November 1, 1929, a deed to the tract of 98 acres of land; and Lane agreed to execute a bill of sale to the hotel property. The Cunninghams agreed to assume tbe outstanding debt against tbe furniture and fixtures, and Lane agreed to assume the debt against the 98 acres of land. On October 24, 1929, Cunningham and his wife signed and duly acknowledged a deed to tbe tract of land; in which deed Lane was named as grantee. As to tbe fact of delivery of said deed, for tbe purpose of giving effect thereto, the testimony is sharply conflicting; and this, too, is tbe state of tbe testimony relative to the alleged false representations of Lane-hereinafter stated. With reference to the delivery of said deed, it appears in testimony that, in tbe trade, a part of tbe mineral rights in the 98-acre tract was to be reserved to the Cunninghams. The notary who drew the deed was uncertain whether the reservation mentioned should be expressed in the deed, and therefore did not include such a provision in the deed drawn by him. Cunningham and bis wife, however, signed and acknowledged the deed as drawn; but same, according to the testimony of Cunningham, was not delivered to Lane. Cunningham testified that he, accompanied by Lane, took the deed to an attorney in tbe town of Coleman, and submitted same to the attorney for bis advice as to whether the -reservation relative to the mineral rights should be expressed in the deed. The attorney advised that the reservation should be expressed in the deed. Whereupon Cunningham left the deed with the attorney with instructions to him to prepare a new deed for Cunningham and his wife to execute. The preparation of the new deed required the- procuring by the attorney of certain data from-the deed records of Callahan county, regarding the extent of mineral rights which the Cunninghams had previously conveyed to third persons. Pending the procuring of this data by the attorney, Lane, by some means unknown to Cunningham or his wife, obtained from the attorney the possession of the deed, and had same put of record in Callahan county. In the meantime, and pending the delay in finally closing the trade, the Cunninghams, with the consent of Lane, took possession of the hotel property. A short time later, Cunningham renounced the trade, and gave Lane notice to that effect. A new deed to the 98 acres was never executed by the Cunninghams. A short time after Cunningham renounced the trade, he and his wife brought this suit seeking to cancel the trade contract and the deed that had been placed of record. The grounds alleged were (1) that the deed had not been delivered, and (2) that the trade -was induced by fraud on the part of Lane. The fraud in the latter respect was alleged to consist of false representations by Lane, as follows: (1) That the rental for the hotel, up to November 1, 1929, had been paid to the owners of the hotel; (2) that a certain part of the hotel building, which was used and occupied by a tenant of Lane as a drug store, was producing rental at the rate of $110 per month; (S) that another part of the building, which was used and occupied by a tenant of Lane as a café, was producing rentals at the rate of $110 per month; (4) that certain rooms in the hotel were occupied by permanent lodgers who paid $30 and $35 per month apiece for the use of the rooms; (5) that the operation of the hotel since June, 1928, had produced a clear profit. There was testimony introduced to show that Lane made the above representations and that same were false, but there was neither pleading nor proof to show that there was any difference in v^lue between the exchanged properties.

In answer to a special issue on the subject, which was submitted to them, the jury found that the deed in question had never been delivered. In answer to other special issues submitted to them, the jury found that Lane made the several false representations stated above, and that same induced the trade. The trial court rendered judgment in favor of the Cunninghams awarding them the relief sought, and that judgment has been affirmed by the Court of Civil Appeals.

The question of controlling importance relates to the relief sought and obtained by the Cunninghams in respect to the false representations made by Lane. The established rule is that where the equitable relief of cancellation or rescission is sought, on account of fraud, a court of equity will not grant such relief unless the complaining; party has suffered pecuniary damage as a result of the fraud. Such damage is not regarded in equity as having arisen unless the rights or things parted with, by the complaining party, are of greater value than those which he received; or unless he was induced by the fraud “to incur legal liabilities or obligations different from that represented or contracted for.” Russell v. Industrial Transportation Co., 113 Tex. 441, 251 S. W. 1034, 258 S. W. 462, 51 A. L. R. 1; Bryant v. Vaughn (Tex. Sup.) 33 S.W.(2d) 729. The above rule of equity should not be confounded with the measure of damage in suits at law for the recovery of damages for fraud, as provided in article 4004 of the statutes. See Sibley v. Ins. Co. (Tex. Sup.) 36 S.W.(2d) 145. The Cunninghams, as already indicated, do not seek damages on account of the alleged false representations of Lane, but seek relief in equity by way of cancellation or rescission. They have failed to present, by either pleading or proof, a case calling for such relief. It is manifest from the ¡record that the case was tried and decided in the trial court on the erroneous theory that, regardless of the absence of a showing of resulting injury, the alleged false representations of Lane afforded ground for cancellation as sought by the Cunninghams. Lane, in various ways, duly preserved his right to complain of the rulings of the trial court involving the application of the erroneous theory upon which the case was tried and decided. The fact that there was testimony to show, and the jury found, that the deed in question was never delivered, and therefore never became effective, does not render harmless the errors committed by the trial court in the other respect.

We recommend that the judgment of the trial court, and that of the Court of Civil Appeals affirming same, be reversed and that the cause be remanded.

CURETON, Chief Justice.

The judgments of the district court and Court of Civil Appeals are both reversed, and cause remanded, as recommended by the Commission of Appeals.

We approve the holdings of the Commission of Appeals on the. questions discussed in its opinion.


source: Caselaw Access Project

author: CRITZ, Judge. CURETON, Chief Justice.

license: Public Domain

text:
    TEXAS MUT. LIFE INS. ASS’N et al. v. STATE.
    No. 1628—6311.
    Commission of Appeals of Texas, Section A.
    March 15, 1933.
    Richey & Sheehy, of Waco, and Cofer & Cofer, of Austin, for plaintiffs in error.
    James V. Allred, Abty. Gen., and Everett F. Looney and Sidney Benbow, Asst. Attys. Gen., for the State.
   CRITZ, Judge.

This is a quo warranto proceeding brought by the state, through its Attorney General, against the Texas Mutual Life Insurance Association, a Texas corporation, to forfeit its charter. Trial in the district court of Travis county, Tex., on an agreed statement of facts, before the count without the intervention of a jury, resulted in a judgment for the association. On appeal by the state the Court of Civil Appeals reversed this judgment, and remanded the- cause for a new trial. 51 S.W.(2d) 405. The association brings error.

The Court of Civil Appeals makes a very extended and comprehensive statement of the facts and issues of this ease, and in the interest of brevity we refer to such opinion for a full statement.

The state, by its petition in the district court, sought to forfeit the association’s charter on various grounds fully set out in the opinion of the Court of Civil Appeals. All of the grounds of forfeiture set out and pleaded in the state’s petition were overruled by the Court of Civil Appeals. We think such rulings are correct. Logan v. Texas Mutual Life Ins. Ass’n, 51 S.W.(2d) 288 (Tex. Com. App. opinion adopted); Id. (Tex. Com. App.) 53 S.W.(2d) 299. In the case cited, all the grounds of forfeiture urged by the. state in its petition in the district court are discussed, and decided in substantial harmony with the opinion of the Court of Civil Appeals in the case at bar.

The record in this case shows that the association was incorporated on June 20, 1905, under subdivision 46 of article 642, Revised Civil Statutes of Texas 1895, for the purpose of “insuring the lives of its members in this state, for the sole benefit of its members, and not for profit, and it shall have no capital stock.” The' record further shows that the association has complied with the laws of this state to entitle it to transact the business of insurance 'herein if it has not violated its charter by making a profit for itself or its officers. Neither the pleadings of the state, nor the evidence, show that the association has violated* its charter in the particular named.

Under the above record, the opinion-of the Court of Civil Appeals holds that the trial court committed error in entering a judgment for the association. This holding is based on the further holding that the burden was on the association to prove that it had not violated that part of its charter which provides that it is incorporated “not for profit.” We think this holding was error.

In connection with the above we hold that the association discharged its burden in the trial court when it produced its charter, and showed that it had complied with our laws to entitle it to do business thereunder; after this, before the state could demand a forfeiture of the association’s charter for the violation of its terms, the burden rested on it (the state) to plead and prove that the association had forfeited such charter by so violating its terms. 14a C. J. p. 1138, par. 8774; 7 R. C. L. p. 734, par. 743; 7 Thompson on Corporations (3d Ed.) p. 552, par. 5795.

The rule is thus stated in 14a O. J., supra: “The information or complaint must state with precision every fact which constitutes ■the abuse of the franchises on which the demand for a forfeiture is predicated, and the law or provision of charter which has been violated. The mere allegation that the corporation abuses its privileges or fails to perform its duties under its charter is not sufficient. Where the act or omission is not made by statute, a cause of forfeiture irrespective of its intent or character, the information must specifically allege intentional or voluntary misconduct or such negleot as to indicate indifference to the demands of public duty, and so material a disobedience of the public law as to warrant a judgment of dissolution. It must show not only that a cause of forfeiture has been incurred, but also that it continues to exist. Where the information bases a request for a dissolution upon the ground of. violation of a certain statute, a dissolution thereunder will not be decreed for violation of other statutes or of the common law. Where leave to sue or prosecute is necessary, the information must show that -the court authorized the bringing of the action.”

In 7 R. C. L., supra, the rule is thus stated: “It is well, recognized that a corporation may be required to produce its books and documents in evidence in civil proceedings to forfeit its corporate franchises for a misuse thereof. The burden of showing that a corporation has committed or omitted acts which are relied on as ground for the forfeiture of its charter is upon the party alleging the forfeiture. The admissibility of evidence in proceedings to declare a forfeiture, as well as the weight thereof, is governed by the rule applicable to. civil proceedings generally.”

In 7 Thompson on Corporations, supra, the rule is thus stated: “Where the proceeding is to forfeit for the misuse, nonuse or abuse of a franchise properly granted, the proceeding is in the nature of a public accusation of a public offense and if the state establishes the existence of the offense the judgment is highly penal. Proceedings of this character are analogous to criminal actions and the burden is upon the state in the first instance as in a criminal case. It follows that the attorney-general must set forth the accusations upon which the state demands the judgment with clearness and definiteness as to every essential matter. The specific ground of forfeiture must be set out in a direct and traversable form.”

It is true, as shown by the opinion of the Court of Civil Appeals, that there is evidence in the record sufficient in law to show that the association collects annually substantial sums for its expenses, but there is no showing in the record of what is done with this money. Furthermore, there is no showing as to what the association’s expenses amount to. Such a record would be utterly insufficient in law to convict .the association of violating its charter by making a profit.

There is a further reason why we think the Court of Civil Appeals erred in reversing the judgment of the trial court on the question of profits. The agreed statement of facts shows that according to the association’s charter, it was incorporated for the purpose of “insuring the lives of its members ⅜ ⅜ ⅝ an(j not ,for profit,” etc. The agreed statement of facts further shows that this association “has engaged in the business of insuring the lives of its members, as authorized by its charter, continuously since its issuance,” etc. Also the state offered m> other evidence as to profits. Clearly the word “as,” used in connection with the ensuing clause, “authorized by its character,” can have no other meaning than in accordance with. Certainly the association could not insure its members at a profit, and at the same time insure them in accordance with its charter. This is because the charter expressly required the association to insure its members only, and to insure them “not for profit.”

As demonstrated above, the district court entered the only judgment it could have entered under the record before it, and the Court of Civil Appeals was not authorized to reverse an errorless judgment.

We recommend that the judgment of the Court of Civil Appeals be reversed and the judgment of the trial court affirmed.

CURETON, Chief Justice.

Judgment of the Court of Civil Appeals reversed, and judgment of the district court is affirmed.

GREENWOOD, J., not sitting.


author: RYAN, Judge. CURETON, Chief Justice.

text:
    EXPORT INS. CO. OF NEW YORK v. AXE et al.
    No. 1385—5985.
    Commission of Appeals of Texas, Section B.
    March 15, 1933.
    Cox & Hayden, of Abilene, and Thompson, Knight, Baker & Harris and Will C. Thompson, all of Dallas, for plaintiff in error.
    Scarborough, Ely & King, of Abilene, for defendants in error.
   RYAN, Judge.

A brief statement of the case, made by the Court of Civil Appeals, is as follows: “The suit was upon a 'policy of fire insurance issued by appellant to appellees upon certain gin buildings and machinery. The different items of property were set out separately in the policy, and a specified amount of insurance provided as to each item. Four separate buildings were covered in amounts, respectively, of $2,000, $900, $500, and $100. The last two named buildings were not burned, and no recovery was sought or obtained therefor. Recovery was had for the first two named buildings and also for an engine insured for $4,250 and for machinery insured for $7,250. The case was submitted to a jury on three special issues, by its answers to which the following facts were determined: (1) The engine was a total loss as a result Of the fire; (2) the reasonable cash market value of the engine immediately before the fire was $6,500; and (3) the reasonable cash market value immediately before the fire of all of appellee’s machinery, other than the engine, was $7,200. Upon these findings judgment was rendered for ap-pellees for $14,400. This amount included the following items: $2,900 on the two houses destroyed; $7,250 on the machinery other than the engine, and $4,250 on the engine.”

The Court of Civil Appeals affirmed the judgment below. 36 S.W.(2d) 572, 573.

Plaintiff in error’s first assignment of error is to the effect that the answer of the jury to the first special issue is wholly without evidence in support thereof, and its second assignment is to the effect that the court is not bound by the jury’s answer to the first special issue because the evidence on said issue is so grossly preponderating in the company’s favor that reasonable minds would not differ on the question as to whether or not the engine was a total loss, and therefore the jury’s verdict is not supported by the evidence.

Special issue No. 1 (answered affirmatively) was submitted as follows: “Was plaintiffs’ engine a total loss as a result of the fire?”

As said by the Court of Civil Appeals: “It is not contended that the buildings or the machinery, other than the engine, were not a total loss. The controversy is limited to the question of whether the engine could have been restored by making certain repairs thereto.”

In this connection there is involved the question of whether the destroyed property should be classed as real estate. It is not claimed that the buildings were not 'part of the realty, but the insistence is that the engine and machinery were personalty.

If such engine and machinery were realty and were totally destroyed, then the policy became a liquidated demand against the company for the full amount thereof. Article 4925, Rev. Stat. 1925.

The evidence showed that the engine and machinery were attached to the building, were stationary, and intended to be permanent fixtures, the gin stands were attached to the sills set in concrete in the floor, and there was no part thereof that was not attached as part of the real estate. The engine was set in a concrete foundation and the machinery attached to concrete sieves, not removable without talcing apart the foundation.

Gin property may become part of the realty. Jones v. Bull, 85 Tex. 136, 19 S. W. 1031; Brown v. Roland, 92 Tex. 54, 45 S. W. 795; Citizens’ Nat. Bank v. Elk Mfg. Co. (Tex. Com. App.) 29 S.W.(2d) 1062.

We have concluded that the evidence was sufficient to identify the property as real estate. We have concluded also that the evidence was sufficient to sustain the jury’s finding that the engine was a total loss as a result of the fire.

While there was evidence that the engine could be repaired, it was also testified that such an engine subjected to a very hot fire, lasting some time, would be totally destroyed, so far as its usefulness is concerned, and that to repair it would cost more than its worth; that the engine was a total loss, it had gone through a white heat, parts of it melted, and other parts were warped beyond repair.

The jury believed the latter evidence, and its finding on the disputed question of that fact is conclusive.

It is contended by the company that the machinery must be classified as personal property because the policy contained this clause: “It is understood and agreed that each item or subject of insurance under this policy, other than the building or buildings, is, for the purpose of this contract of insurance, to be treated and considered as personal property.”

The property in question having been found to be real estate, recovery for its loss by fire must be measured by article 4929, Rev. Stat. 1925, which provides that a fire insurance policy, in case of a total loss by fire of property insured, shall be held to be a liquidated demand against the company for the full amount of the policy, and the purpose thereof was to make all such policies, in cases of total loss, valued policies without 'reference to stipulations contained in them, which would give them a different character but for the statute which becomes a part of every such contract. Queen Ins. Co. v. Jefferson Ice Co., 64 Tex. 578; Ginners’ Mutual Underwriters v. Wiley & House (Tex. Civ. App.) 147 S. W. 629; Phœnix Ins. Co. v. Levy, 12 Tex. Civ. App. 45, 33 S. W. 992; Commercial Union Assurance Co. v. Meyer, 9 Tex. Civ. App. 7, 29 S. W. 93.

It is complained that it was reversible error for the trial court to overrule and not sustain the company’s plea in abatement based upon the insured’s refusal to submit to an appraisal of the destroyed property in view of the provisions of the policy providing for same as a prerequisite to suit, and to submit to the jury any issue of the insured’s failure and refusal to submit the loss to such an appraisal.

If the loss be not total, then unquestionably the company is entitled to an appraisal and arbitration of the damages or loss, as provided for in the policy (American Central Ins. Co. v. Terry (Tex. Com. App.) 26 S.W.(2d) 162; Scottish Union & Nat. Insurance Co. v. Clancy, 71 Tex. 5, 8 S. W. 630; Id., 83 Tex. 113, 18 S. W. 439); but where the loss is total, compliance with a clause of the policy requiring an appraisement is not necessary. Ætna Ins. Co. v. Shacklett (Tex. Civ. App.) 57 S. W. 583; National Fire Ins. Co. v. House (Tex. Civ. App.) 197 S. W. 476; Liverpool, London & Globe Insurance Co. v. Colgin (Tex. Civ. App.) 34 S. W. 291. Nor, in case of total loss, is a proof of loss necessary. American Central Insurance Co. v. Terry (Tex. Com. App.) 26 S.W.(2d) 162; Queen Ins. Co. v. Jefferson Ice Co., 64 Tex. 582.

No charge on burden of proof as to issues Nos. 2 and 3 on value of property was required, nor was it necessary to find the value of such property in view of the fact that said property incurred a total loss.

We approve the holding of the Court of Civil Appeals on this subject, viz.: “It is not always necessary to give a charge on the burden of proof. The question involved was value, and on such issue no charge on burden of proof is required. Bernard’s, Inc., v. Austin (Tex. Civ. App.) 300 S. W. 256; Davis v. Hill (Tex. Civ. App.) 291 S. W. 681; T. & N. O. Ry. Co. v. Syfan (Tex. Civ. App.) 43 S. W. 551. Further, since the question of the value of the property was immaterial, the findings with regard thereto were likewise immaterial.”

It is our opinion that the case was correctly disposed of by the trial court and Court of Civil Appeals, and we therefore recommend affirmance of their judgments.

CURETON, Chief Justice.

Judgment of the Court of Civil Appeals is affirmed.


author: HARVEY, Presiding Judge. CURETON, Chief Justice.

text:
    WYATT C. HEDRICK, Inc., v. RATCLIFF.
    No. 1649—6092.
    Commission of Appeals of Texas, Section A.
    March 22, 1933.
    Charles Kassell, of Fort Worth, for appellant.
    E. H. Ratcliff and Hampden Spiller, both of Fort Worth, for appellee.
   HARVEY, Presiding Judge.

The Court of Civil Appeals for the Second district has submitted a certificate, in the above case, which, in effect, submits the whole case, involving the consideration of the whole record, to the Supreme Court for decision. It. is the settled rule that the Supreme Court will refuse to take jurisdiction in instances of that sort. We recommend that the certificate be dismissed.

CURETON, Chief Justice.

The certificate is dismissed, as recommended by the Commission of Appeals.


text:
    OCEAN ACCIDENT & GUARANTEE CORPORATION, Limited, v. PRUITT et al.
    No. 1648—6090.
    Commission of Appeals of Texas, Section A.
    March 22, 1933.

      Bibb & Bibb, of Marshall,, for plaintiff in error.
    Jones & Jones, of Marshall, for defendants in error.-
   CRITZ, Judge.

This is an appeal from a consolidated compensation suit. Wm. Pruitt et al. filed two suits in the district court of Marion county, Tex., against Ocean Accident &' Guarantee Corporation, Bimited, one being numbered 9687, a'nd the other 9716. The two suits were consolidated and tried as one. Also the plaintiffs amended and filed one petition for the two suits as consolidated. The trial court sustained pleas to the jurisdiction filed by the accident corporation and dismissed the consolidated suit. On appeal by Wm. Pruitt et al. to the Court of Civil Appeals that court affirmed this judgment as to matters involved ini cause No. 9687, but reversed and remanded such judgment as to matters involved in cause No. 9716, 40 S.W.(2d) 254. The accident corporation brings error.

It appears upon the face of the pleadings in the consolidated case and in both original cases that Flank Pruitt, deceased, was the father of William, Fred, Sam, Zephia, and Esther Pruitt, who are designated above as Wm. Pruitt et al. and will be so designated hereafter.

Wm. Pruitt et al. alleged in both cases and in the consolidated case that while, working for Marshall Compress Company, at Marshall in Harrison county, Texas, on August 29, 1928, Frank Pruitt received a heat stroke which rendered him very sick and incapacitated him from labor for a time. It is then alleged that on August 31, 1928, While he was working for Jefferson- Compress Company, in Jefferson, Marion county, Tex., Frank Pruitt suffered another heat stroke which rendered him unconscious for a time, and unable to work for several days. It is then alleged that on September 5,1928, Frank. Pruitt returned to work to the Jefferson Compress Company and worked that day. It is alleged that the next day he died. At this point we pause to say that the pleadings in both eases, and in the consolidated case, in legal effect, allege that death resulted from the combined effects of the two heat strokes detailed above. We shall refer to this matter later.

The pleadings disclose that both the above compress companies were independent corporations, one being located at Marshall in Harrison county, Tex., and the other at Jefferson in Marion county, Tex. Frank Pruitt’s employment was not joint, but each company paid him for the time he worked for it. The two companies gave him sufficient employment to take up practically his entire time. Both compress companies carried compensation insurance as provided by the laws of this state in the Ocean Accident & Guarantee Corporation, Bimited, but the insurance contracts were 'separate policies and independent of each other.

On September 15, 1928, Wm. Pruitt, for Wm. Pruitt et al., gave notice of the injury and death of Frank Pruitt .to the Accident Board, and made claim, for compensation based on such death against the above accident corporation. This notice and claim gave the cause of death as heat prostration, the employer as Marshall Compress Company, the county of injury as Harrison county, Tex., the date of injury as - August 29, 1028, and the datq of death as September 6, 1928. This notice and claim claimed compensation for Wm. Pruitt et al. from the accident corporation on account of the death of Frank Pruitt.

On November 14, 1928, after due notice, the Industrial Accident Board heard and considered the above claim, and in all things refused the same, and fully and finally acquitted and discharged the accident corporation from all liability on account of such claim. No notice of dissatisfaction with this order was filed with the board, nor was any appeal taken therefrom within the time and in the manner required by law.

It is shown that after the entry of the above order and the failure to give notice of dissatisfaction therewith or to appeal therefrom, these claimants made repeated efforts to have the board reopen the above award. Those efforts extended over several months, as is fully shown by the opinion of the Court of Civil Appeals.

On February 28, 1929, and again on March 26, 1929, the board made orders overruling motions theretofore filed by Wm. Pruitt et al. to reopen its original order or award of November 14, 1928, supra. Notice of dissatisfaction with each of these orders was given in due time, and on March 30, 1929, Wm. Pruitt et al. filed suit No. 9687 in the district court of Marion county, Tex. This is one of the-consolidated suits.

On March 28,. 1929, just two days before the filing of cause No. 9687, supra, Wm. Pruitt et al., through their attorneys, wrote a letter to the board headed “Frank Pruitt Deceased v. Marshall Compress Co.” This letter acknowledged the receipt of a letter from the board of March 27, 1929, declining to review its order of November 14, 1928, supra, and declining to make a further award in this case. The letter then informed the board that, “There is a phase of this matter that seems to have been overlooked by your Board.” The letter then reads as follows:

“That on or about January 22nd, 1929, and within six months after the death of Frank Pruitt, notice was given in the affidavits then filed, that Frank Pruitt was an employee of the Jefferson Compress Company, and probably received all his injuries as such employee at Jefferson, Marion County, Texas, but certainly received a part of them there. The Ocean Accident & Guarantee Corporation carried the insurance on the Jéfférson Compress Company, as well as on the Marshall Compress Company.
“None of the orders which the Board has made, take any cognizance of the fact that Frank Pruitt, was working for the Jefferson Compress Company when injured; and notwithstanding two of those orders have been made since the notice referred to in the affidavits, that he was an employee of the Jefferson Company when killed, was brought to the attention of this Board.
“As we view the matter, neither of the orders dispose of that claim, and therefore, we hand you a formal motion asking that you dispose of the claim against the Jefferson Compress Company, and the Ocean Accident & Guarantee Corporation so that if our client, Ester Pruitt shall be dissatisfied with same, that she may appeal therefrom.
“We trust that you will make an order covering this matter, and send to us a copy thereof.”

On the same day as date of the above letter the following instrument was filed with the board by the claimants:

“Before the Industrial Accident Board, Austin, Texas.
“Frank Pruitt (Deceased), Employee, vs. Marshall Compress Company, Employer.
“The Ocean Accident and Guarantee Corporation, Insurers.
“Now comes William Pruitt, guardian of the estate of Ester Pruitt, a minor, and shows that heretofore towit, on the 6th day of September, 1928, Frank Pruitt died as a result of injuries he received while in the employ of the Jefferson Compress Company at Jefferson, Marion County, Texas, and when the Ocean Accident & Guarantee Corporation Ltd., carried the Workmen’s Compensation Law, which was then in force and covered the employees of the Jefferson Compress Company. That thereafter, on the 22nd day of January, 1929, the said Ester Pruitt acting through her guardian in affidavits filed in this claim, pending as a claim against the Ocean Accident & Guarantee Corporation Ltd., covering insurance on the employees of the Marshall Compress Company at Marshall, Texas, brought to the notice of this Board through affidavits of Lula Barber, Jim Jackson, R. H. Wood, Doctor Felix Peebles and Jack Buchanan filed .therein, that the said Frank Pruitt was an employee of the. Jefferson Compress Company at the time he received the injuries that caused his death.
“The said Ester Pruitt through her guardian for herself, and for the benefit of the other. beneficiaries, Zepha Pruitt, Sam Pruitt, Fred Pruitt, and William Pruitt/ here presents this motion and asks that the Board dispose of said claim against the Jefferson Compress Company, and the Ocean Accident & Guarantee Corporation, growing out of the death of her father, Frank Pruitt, by an appropriate award to be entered by this Board.
“Wherefore, plaintiff prays for considera-ción and disposition of said claim, which said claim was brought to the attention of this Board by the said ■ Affidavits within six (6) months after the death of the said Frank Pruitt.”

Due notice was given of the filing of the above instrument, and on April 25, 1929, the hoard entered the following order:

“Frank Pruitt (Dec’d), Employee, vs. Marshall Compress Company, and/or Jefferson Compress Company, Employer. N-23908
“Ocean Accident and Guarantee Corporation, , Limited, Insurer.
“On this 25th day of April, A. D. 1929, after due notice to all' parties at interest, came on to he considered by the Industrial Accident Board application to review order made and entered herein under date of November 14th, 1928, and the Board now finds-and orders as follows:
“That the said Fred Pruitte, Sam Pruitte, Zepha Pruitte and Ester Pruitte have failed to establish to the satisfaction of the Board that fraud was practiced in the procurement of said award or that a change of conditions has been undergone with reference to claimants, nor has it been made to appear that any such mistake as contemplated by law was committed in the making and entering of said order which would afford warrant for the Board to now undertake the making of a change therein, but to the contrary the mistake which appears to be relied upon by said claimants to procure a change in said order is merely one of judgment on the part of the Board, and therefore review of said order ought to be and the same is hereby in all things denied and refused, and it is so ordered, adjudged and decreed by the said Board.”

After the entry of the order last above, Wm. Pruitt et al. again gave notice of their dissatisfaction therewith, and on May 1,1925, attempted to appeal from said order by filing their second suit in the district court of Marion county, Tex. This is cause No. 9716 of this consolidated suit.

As already shown, the trial court held that it was without jurisdiction in this consolidated suit, and dismissed the same. We presume the judgment of the district court was based upon the theory that the original award of November 14, 1928, entered by the Accident Board denying these claimants compensation for the death of Frank Pruitt, was a final adjudication of all matters involved in this consolidated suit. The Court of Civil Appeals holds that the judgment of the district court was correct as applied to the matters involved in cause No. 9687, but was error as applied to the matters involved in cause No. 9716.

It will be borne in mind that at the time the judgment of the district court was rendered, section 12d of article 8306, R. C. S.,. was in force as contained in the 1925 codification' (it has since been amended by Acts 42d Leg. [1931] p. 260, ch. 155 [Vernon’s Ann. Civ. St. art. 8306, § 12d]). As already shown, when the matter of compensation for Frank Pruitt’s death was presented to the board originally, the board absolutely refused compensation. No notice of dissatisfaction was given by Wm. Pruitt et. al., and no suit was filed appealing therefrom. It follows that such order became final, and the board had no power or jurisdiction to pass on the matter a second time.' It is evident from this that both the trial court and the Court of Civil Appeals were correct in their rulings in reference to the matters originally involved in cause No. 9687. Cooper v. U. S. F. & G. Co. (Tex. Com. App.) 29 S.W.(2d) 971; Id. (Tex. Com. App.) 33 S.W.(2d) 189.

The Court of Civil Appeals was in error in' reversing the judgment of the district court as applied to the matters originally involved in cause No. 9716. This is because the order or award of the Accident Board of November 14, 1928, was a final adjudication of all matters involved in this consolidated suit. Under our compensation statutes, when an employer of- labor subject thereto has complied therewith, and procured insurance under its terms, the insurer, and not the insured, is liable for all compensation occurring under its provisions. The accident corporation was the insurer of both the Marshall Compress Company and the Jefferson Compress Company. The right of these claimants to compensation, if they had any such right, was grounded on the death of Frank Pruitt. The Accident Board had jurisdiction, when it originally passed upon this matter, and refused compensation for such death, to consider both alleged causes of death, and these claimants then had the right to present all matters pertaining to such death and its causes to the board. Under the undisputed record, the award, regardless of which place death occurred, would have involved the same claimants, the same insurer, the same amount of compensation, and the accidental death of the same employee. Under such a record, claimants should have presented to the. board both alleged injuries. Nichols v. Dibrell, 61 Tex. 339.

lit is clear that had a district court; had original jurisdiction, like the board had, to hear and determine compensation in this case for the death of Frank Pruitt, regardless of which injury produced his death, the final judgment of such court, denying compensation where only one injury was urged, would have barred a recovery in a subsequent suit where another injury was urged. This is because the decision of a court of competent jurisdiction is conclusive, not only as J to the subject-matter determined, but as to ovary other matter which the parties might have litigated in the case, and which they might have had decided. In other words, the plea of res judicata applies not only to points upon which the court was actually required to pronounce judgment, but to every point which properly belonged to the subject of litigation, and which the parties, by exercising reasonable diligence, might have brought forward at the time. Nichols v. Dibrell, supra. It is clear that the board, as shown above, had potential jurisdiction of this entire matter, and had jurisdiction when it made its original order or award denying compensation to these claimants to have considered the cause of death and made an award based thoreon, regardless of which injury produced it. ' It is further the rule that the final award of the board unappealed is entitled to the same faith and credit as a judgment of a court. There is therefore no escape from the conclusion that the award of November 14, 1028, made by the Accident Board denying these claimants compensation from this insurer on account of the death of Frank Pruitt was and is res judicata of this entire suit.

The Court of Civil Appeals holds that the district court was in error in dismissing as to the matters originally involved in cause No. 9716 because that cause involved a different claim from the one passed on by the board ia its original order of November 14, 1928. This holding seems to be based upon the further holding by the Court of Civil Appeals that cause No. 9687, and the claim back of it, were based on the injury received by Frank Pruitt while employed by the Marshall Compress Company, while cause No. 9716, and the claim back of it, are based on an entirely different and later claim; which is the injury received by Frank Pruitt while employed by Jefferson Compress Company. We think that we have demonstrated above that the above holding was error. The claim was based on the death of Frank Pruitt.

There is another reason why we think that the Court of Civil Appeals was in error in holding that this cause should be reversed and remanded so as to allow these claimants to try a cause of action based on Frank Pruitt’s injury received while working for Jefferson Compress Company. An examination of the petition on which this consolidated suit was tried in the district court shows that Wm. Pruitt et al. did not bring a suit based on the contention that Frank Pruitt died as a result of an injury received by him while employed by Jefferson Compress Company alone; but, on the other hand, the petition minutely and in detail pleads both injuries or heat strokes above mentioned, and then in effect alleges that death resulted from the two injuries. We have carefully read the entire pleading and to our minds it is susceptible of no other ioustruetion. In this connection we note the following condition from the pleadings of Wm. Pruitt et al. in the consolidated suit:

In paragraph V it is alleged: “That the Marshall Compress Company, and the Jefferson Compress Company each respectively employed at the time of the injuries to Frank Pruitt which resulted in his death, more than three laborers, and were operating under ‘The Texas Workmen’s Compensation Law.’ That at the time he received the injuries which caused his death, Frank Pruitt, the father of the plaintiff, was an employee of the Marshall Compress Company, and an employee of the Jefferson Compress Company, and was covered by the Workmen’s Compensation insurance, covering said companies, which was carried in separate policies on each compress by the defendant.”

In paragraph VI it is alleged: “That on or about the 6th day of September, 1928, Frank Pruitt, father of the plaintiffs, died as a result of injuries which he received while working for the Jefferson Compress Company; and the Marshall Compress Company, and the Jefferson Compress Company through their agents, servants, and/or employees, procured and caused William Pruitt to make out and file with- the Industrial Accident Board, and with the defendant, a notice of fatal injury and death of Frank Pruitt, which notices were filed prior to the 14th day of November, 1928.”

In paragraph XX and XXI of the petition it is again alleged that Frank Pruitt was an employee of both compress companies named above and that his death was the result of the injuries received while employed by both such companies. We quote the following from paragraph XXI: “Plaintiffs show that on or about said 5th day of September, 1928, the deceased, Frank Pruitt, had not fully recovered from the injuries received by him on or about August 31, 1928, as described above, but that he continued to work during said day and returned to his boarding place that night. That early in the morning on or about September 6, 1928, the deceased, Frank Pruitt, attempted to clothe himself and return to .work, but as a result of the heat prostration and his having been overcome by heat as described above, he immediately died, as a result of the injuries received by him while an employee of the Jefferson Compress'Company and Marshall Compress Company as described above.”

Following the above allegation is paragraph XXII, which reads as follows: “Plaintiffs show that the deceased, Frank Pruitt, having been overcome by heat, as described above, never fully recovered, but to the contrary that his condition constantly grew worse until it terminated in his death, as above described. Further, Plaintiffs show that said ‘cleath of the deceased, Frank Pruitt, was directly due and attributable to the heat prostration suffered by him, as described above, at the bands of his employer, the Jefferson Compress Company and the Marshall Compress Company, and that said heat prostration was received by the deceased during the course of his employment as a laborer for said company.”

We think the portions of the pleadings in the consolidated cause above quoted clearly demonstrate that no portion of the pleadings in the consolidated suit can reasonably be treated as an action based on injuries received by Frank Pruitt while employed by Jefferson Compress Company alone. On the other hand, the pleadings throughout carefully and guardedly plead the two injuries, and their legal effect is to ground a cause of action on the theory that death resulted to Frank Pruitt from the combined effects of both injuries.

It is undisputed that these claimants made claim to the board against the accident corporation for compensation for the death of Frank Pruitt as a result of the injuries received while working for the Marshall Compress Company. It is undisputed that compensation was refused by the board on this claim. Finally, it is undisputed that no appeal was prosecuted by claimants as to such award and it became final. As above demonstrated, it is evident that no suit has ever been filed by claimants based on the death of Frank Pruitt, as the result of injuries received by him while working for Jefferson Compress Company alone, but merely a suit based on the two injuries combined. Certainly, if claimants had properly appealed from the order of the board refusing compensation in the first instance, and had lost the same by final judgment and decree of a court of competent jurisdiction, they would not now be permitted to recover in a new suit based in part on death resulting from the injury involved in the first suit and in part on death resulting from a later injury. In such a case it is clear that the original judgment would be res judicata of the second suit. We think the same rule applies to an award of the Accident Board which has become final.

Counsel for claimants contend that the amendment to section 12d of article 8306, supra, passed by the Forty-Second Legislature, page 2G0, chapter 155, operated to revive their right to review the final award of the board of November 14, 1028. This contention is overruled. The amended act became effective after the rights of the accident corporation had vested under the original act, and the amendment cannot be given application so as to destroy a vested right.

Section 4a of article 8307, R. C. S. 1925, in effect provides, among other things, that all claims for compensation for the death of an employee shall be made to the board within six months after such death. It is then provided that the board for good cause may, in meritorious cases, waive a strict compliance with such limitation. The statement we have made shows that even if we consider the claim filed with the board on March 28, 1929, as a different and independent claim from the one passed on by the board in its order of November 14, 1928, which we do not, still the claim of March 28, 1929, was filed more than six months after Frank Pruitt’s death. The Court of Civil Appeals holds that claimants were entitled to a trial in the district court on the question as to whether good cause existed excusing the filing of the claim, for compensation within six months as provided by the above statute. The pleadings of the claimants •in the district court are very long and complicated, comprising some sixteen pages of the transcript.- We have carefully read and considered such proceedings and are forced to the conclusion that they do not allege any “good cause” for not filing the claim of March 28,1929, at an earlier date. In fact, the claim itself, as filed, which claim is pleaded, states upon its face • that the very matter of the death of Frank Pruitt’ on account of the Jefferson accident had been brought to the attention of the board by affidavits filed by claimants on January 29,1929.

It is correct to say that the question as to whether good cause exists for not filing the claim within six months as provided in section 4a of article 8307, supra, is ordinarily a question of fact, but it is a question of pleading also, and no question of fact in regard to such matter is presented unless it is, first pleaded. Certainly if the pleadings show on their face that good' cause did not exist up to the making of the claim no issue in such regard is presented. We think the pleadings of the claimants show on their face that no good cause existed for not filing the claim sooner.

Finally, it is settled that a claimant for compensation who fails to file his claim with the board within the statutory period of six months must show good cause for such failure up to the time of filing the claim, and not merely good cause during the first six months. Holloway v. Texas Indemnity Co. (Tex. Com. App.) 40 S.W.(2d) 75. We find nothing in the claimants’ pleadings which meets this rule.

We recommend that the judgment of the Court of Civil Appeals be reversed and set aside, and that the judgment of the district court be in all things affirmed.

CURETON, Chief Justice.

Judgment of the Court of Civil Appeals is reversed, and the judgment of the district court affirmed.


author: CEITZ, Judge. CURETON, Chief Justice.

text:
    GULF, C. & S. F. RY. CO. et al. v. TEMPLE GRAIN & HAY CO.
    No. 1578—5938.
    Commission of Appeals of Texas, Section A.
    March 15, 1933.
    John F. McEae and Lee, Lomax & Wren, all of Fort Worth, and Terry, Cavin & Mills, of Galveston, for appellants.
    C. W. Goerte, of Fort Worth, for appellee.
   CEITZ, Judge.

This case is before the Supreme Court on a certified question from the Court of Civil Appeals at Fort Worth. The certificate fully states the case. It is as follows:

“W. H. Temple, as owner of the Temple •Grain & Hay Company, of For£ Worth, sued the Gulf, Colorado & Santa Fé Eailway Company and the Panhandle & Santa Fé Eail-way Company for discrimination and for failure to deliver to its connecting carrier, the Texas & Pacific Eailway Company, at Sweet-water, a certain car of ear com. Plaintiff sued for the penalty provided for in article 6475, Eev. Civ. Statutes of 1925, which provides a penalty for the doing of any act prohibited or declared to be unlawful, or omitting to do any act therein required to be done, and which provides a penalty for such violation of not less than $125 nor more than $500. Plaintiff pleaded that the Panhandle & Santa Fé Eailway Company received from him a loaded car of ear corn at Lajnesa, Dawson county, consigned to the owner of the Temple Grain & Hay Company, and that said railway company delivered a bill of lading filled out on a blank form of bill of lading and in general use by the railway company, with routing instructions thereon, routing said ear by way of the Panhandle & Santa Fé Eailway Company to Sweetwater, and by way of the Texas & Pacific Eailway Company to Dallas. That the defendant railway company agreed to haul, convey, and transport said ear of corn to Sweetwater over its line of railway, and to deliver said car to the Texas & Pacific Eailway Company at Sweetwater; that defendant did not deliver said car of corn to the Texas & Pacific Eail-way Company at Sweetwater, but did wrongfully, willfully, and negligently, and with discrimination, deliver said car of corn to the Gulf, Colorado & Santa Fé Eailway Company at Sweetwater, and that said latter company conveyed and transported said car to its destination at Farmersville, over its own line of railway, and delivered the same to the Louisiana Eailway & Navigation Company at Farmersville.
“The plaintiff did not allege any delay or damages by reason of the alleged discrimination, and the trial court instructed thé jury that if they found that the railway companies were guilty of the discrimination alleged, they should assess punishment at not less than $125 nor more than $500.
“On the original hearing, we concluded that the Gulf, Colorado & Santa Fé Eailway Company was not liable for the penalty, but that the evidence sustained the judgment against the Panhandle & Santa Fé Eailway Company. It was pleaded, and the evidence supports the pleading, that the misrouting from Sweetwa-ter over the Gulf, Colorado & Santa Fé Eail-way Company was caused by a mistake, unintentionally made, of a clerk in the railway company’s office at Lamesa, the place of, origin. It is especially urged in the motion for new trial that the trial court erred in giving a peremptory instruction, and that inasmuch as the undisputed testimony showed or tended to show that the mistake in the routing from Sweetwater over the Gulf, Colorado & Santa Fé Eailway Company was an innocent mistake of the clerk, that such defense was proven and that no judgment should have been entered against said Panhandle & Santa Fé Eailway Company.
“We have found no case directly in point, but we have fOund several cases on liquor dealers’ bonds, as McGuire v. Glass (Tex. App.) 15 S. W. 127; Cox v. Thompson, 32 Tex. Civ. App. 572, 75 S. W. 819; Minter v. State, 33 Tex. Civ. App. 182, 76 S. W. 312; and Gilbreath v. State (Tex. Civ. App.) 82 S. W. 807, to the effect that where the statute provides in the sale of liquor to a minor, that it is a good defense to plead and prove that the sale was made under an honest mistake of fact, as to whether the person to whom the sale was made was in fact a minor ; but where thé statute does not provide that such a defense shall be good for allowing the minor to come into the place where liquor is sold and remaining there, that it is immaterial whether or not he was,so allowed to enter and remain through a mistake of fact as to whether or not he was a minor.
“Inasmuch as this suit does not involve a sufficient amount to give the Supreme Court jurisdiction, and inasmuch as it is stated that there are some 23 cases that have been filed in the lower court against the same defendant for a like penalty, we have concluded that it is advisable to certify to your honors the one question:
“(a) Did the trial court err in not peremptorily instructing the jury to find for the defendants; (b) for not submitting to the jury the issue as to whether or not the mistake testified to by the clerk was in fact made innocently and with no intention of the clerk to violate shipping instructions?”

Opinion.

We content ourselves with an approval of Judge Buck’s discussion, in his original opinion, of the matters relating to the question as to whether both the railroad defendants were entitled to an instructed verdict. Clearly the initial carrier was not.

On the issue as to whether a mistake of fact is a defense to the cause of action here asserted, we think the very wording of the statute itself precludes such a defense where the cause of action is predicated on an allegation of discrimination under article 6475, R. O. S. of Texas 1925. Before further discussing this statute we shall quote it. It is as follows: “Art. 6475. If any railroad subject to' this title shall do, cause or permit to be done any matter [,] act or thing prohibited, or declared to be unlawful, or shall omit to do any act, matter or thing herein required to be done by it, such railroad shall be liable to -the person or persons, firm or corporation injured thereby for the damages sustained in consequence of such violation; and in case said railroad company shall be guilty of extortion or discrimination as by this chapter defined, then in addition to such damages such railroad shall pay to the person, firm or corporation’injured thereby a penalty of not less than one hundred and twenty-five nor more than five hundred dollars. Such road may plead and prove as a defense to the action for said penalty that such overcharge was unintentionally and innocently made through a mistake of fact. A recovery as herein provided shall in no manner affect a recovery by the State of a penalty- provided for such violations.”

It is the settled law of this state that the misrouting of freight in the manner shown in this instance is “unlawful discrimination” as defined and denounced by articles 6474 and 6475, R. O. S. Also it is the settled law that such discrimination subjects the offending railroad to liability for the penalties prescribed by article 6475, R. O. S. Thompson v. M., K. & T. R.. Co. of Texas, 103 Tex. 372, 126 S. W. 257, 12S S. W. 109.

A reading of article 6475, supra, discloses that it makes the railroad liable for a penalty of not less than $125 nor more than $500 for any act of commission or omission denounced by the statute. The act then expressly provides: “Such road may plead and prove as a defense to the action for said penalty that such overcharge was unintentionally and innocently made through a mistake of fact.” The very fact that the statute expressly fixes the penalty for any act of omission or commission prohibited or declared to be unlawful, and then provides for a defense of unintentional and innocent mistake as applied to cases involving overcharges only, conclusively demonstrates a legislative intent to deny such defense in all other instances. Any other holding would render the exception meaningless. Federal Crude Oil Co. v. Yount-Lee Oil Company (Tex. Sup.) 52 S.W.(2d) 56, 60. We quote the following from Judge Leddy’s opinion in the ease last above cited: “* * * It is a familiar rule of statutory interpretation that an ‘exception makes plain the intent that the statute should apply ⅛. all cases not excepted.’ Sutherland on Statutory Construction (2d Ed.) § 494, p. 923; 25 R. C. L. 983; First Texas State Ins. Co. v. Smalley, 111 Tex. 68, 228 S. W. 550.”

Our holding that the “exception makes plain the intent that the statute should apply in all cases not excepted” is further fortified by the fact that the statute does not contain the words “willfully” or “knowingly,” or any other word of like intent.

We therefore hold that an unintentional or innocent mistake of fact is not a defense on behalf of a railroad in a suit filed by the shipper for penalties under article 6475, supra, unless such penalties are sought to be recovered for overcharges. Of course, in all suits under such statute the railroad may prove a mistake of fact in mitigation of the amount of recovery. This is true because the statute prescribes no fixed penalty, but one ranging in amount anywhere from a minimum of $125 to a maximum of $500.

We recommend that the question certified, which is in fact two questions, be answered, “No.”

CURETON, Chief Justice.

The opinion of the Commission of Appeals answering the certified question is adopted and ordered certified.


text:
    L. E. WHITHAM & CO. v. BRIGGS’ ESTATE.
    No. 1645—6081.
    Commission of Appeals of Texas, Section A.
    March 22, 1933.
    Milburn E. Nutt and R. Wayne Frank, both of Wichita Falls, for plaintiff in error.
    Mathis & Caldwell, of Wichita Falls, for defendant in error.
   HARVEY, Presiding Judge.

This suit was brought by Mrs. Nora Briggs against B. E. Whitham & Co. to clear her title to two city lots of the cloud alleged to be cast by a paving lien claimed by the company. As ground for such relief she alleged that the two lots constituted her homestead, and she was actually residing there when the paving proceedings occurred and the paving lien was declared. The Whitham Company ■set up in its answer a cross-action in which it sought recovery on the paving certificate held by the company, with foreclosure of the paving lien on said lots. The trial court gave judgment for Mrs. Briggs, and the Court of Civil Appeals affirmed that judgment. 41 S. W.(2d) 150. The ease is here on writ of error sued out by the company.

The only question in the case has reference to the homestead claim asserted by Mrs. Briggs. The relevant facts are undisputed. They are substantially as follows:

The lots in question are situated in the city of Wichita Falls, and the paving of the street, and the proceedings in that respect, occurred in the year 1926. Mrs. Briggs resided on the lots at the time, and had resided there since the year 1918. In 1914, she contracted for the purchase of said lots on the installment plan. The lots were then unimproved, and she bought them for the purpose of improving and occupying them as a home. At that time, her family consisted of herself and a minor son, who was then some five or six months under 21 years old. She owned no other real estate, and has not owned any other since that time. She and her son lived in a rented house which was in no wise connected with the lots in question, and continued to reside there until the year 1918. In February of the last-mentioned year, she finished paying the purchase money for the lots, and received a deed therefor. In the meantime, she and her son lived at the other place, but she always definitely intended to improve the said lots for a home as soon as she became financially able to do so. Her son continued to live with her until some time in 1919*, when he married and moved away. However, during the World War he served as a soldier in the United States Army. At all times after the son became of age, he was able-bodied, and capable of supporting himself. Both he and his mother earned money, and each contributed to their common support. Mrs. Briggs was capable of supporting herself and did support herself. While her son was a soldier in the army, she sent him, at various times, sums of money which she had earned. Some time in the year 1918, after she received her deed to the lots, she, for the first time, began to improve the lots. She contracted with a building company to build a dwelling house on the lots, and she moved on them and lived in a tent until the dwelling house was completed, when she moved into the dwelling-house. Before she moved on the lots she planted some trees and shrubbery on them.

The controlling question in the case is whether or not Mrs. Briggs and her son, in the year 1918, constituted a “family” within the meaning of section 50 of article 16 of the state Constitution.

In order to constitute a “family,” within the meaning of the Constitution, there must be a “legal or moral obligation on the head to support the other members” and a “corresponding state of dependence on the * * * other members for this support.” Roco v. Green, 50 Tex. 483. Plainly the relation that existed between Mrs. Briggs and her son in 1918 does not meet this test. It would be unreasonable to hold that a mother is under any legal or moral obligation to support her adult son, who is able-bodied and capable of supporting himself. Nor can it reasonably be said that the mother, who is capable of supporting herself and does support herself, is dependent on her son for support.

The fact that Mrs. Briggs, while her son was a minor, conceived the purpose of making the lots their home, does not alter the case. Mere intention on the part of the head of 'a family to use property for the family home does not impress the property with the homestead character. After the son of Mrs. Briggs became an adult, there was no “family” ; therefore it necessarily follows that the lots could not then become the family homestead.

We therefore 'recommend that the judgment of the trial court, and that of the Court of Civil Appeals affirming same, be reversed, and that the cause be remanded, with instructions to the trial court to enter judgment for the plaintiffs in error in accordance with this opinion.

CURETON, Chief Justice.

Judgments of the Court of Civil Appeals and of the district' court are both reversed, and cause remanded to the district court, with instructions, as recommended by the Commission of Appeals.

We approve the holdings of the Commission of Appeals on the questions (jiscussed. in its opinion.


author: HARVEY, Presiding Judge. CURETON, Chief Jrfstice.

text:
    PERKINS v. NEVILL.
    No. 1637—6062.
    Commission of Appeals of Texas, Section A.
    March 15, 1933.
    B. M. McMahan and E. L. Bowman, Jr., both of Greenville, and Smithdeal, Shook, Spence & Bowyer, of Dallas, for plaintiff in error.
    Clark, Harrell & Clark, Neyland & Ney-land, H. L. Carpenter, and Carpenter & Harris, áll of Greenville, for defendant in error.
   HARVEY, Presiding Judge.

O. P. Neville, trustee of the estate of S. B. Brooks, bankrupt, brought this suit against the plaintiff in error, S. B. Perkins, in the district court of Hunt county. The object of the suit is to cancel certain deeds of trust executed by Brooks, and to cancel all the notes secured by said, instruments; the notes aggregating more than $100,000. The ease was tried to a jury on special issues, resulting in a judgment for Perkins. The Court of Civil Appeals [40 S.W.(2d) 861] reversed that judgment, and the case is here on writ of error sued out 'by Perkins. # '

The principal deed of trust in controversy bears date January 4, 1925, was filed for record December 2, 1927, and, according to its terms, was executed >by Brooks for the purpose of securing all past and future indebtedness of Brooks to Perkins, arising from advancements or loans of money to the former by the latter. All the notes in controversy were given for such advancements or loans of money, and, unless invalid as alleged by the trustee, áre covered by the above deed of trust. For this reason, the other two deeds of trust, of later date, need not foe noticed further in this opinion. The two last-mentioned instruments cover a part of the notes covered by the other, but embrace different land.

The notes in controversy were executed by Brooks to Perkins at various times during the years 1925, 1926, and 1927. The petition' in bankruptcy was filed against Brooks, in the bankruptcy court, on December 30, 1927, by creditors of Brooks, other than Perkins. Brooks was duly adjudged a bankrupt on January 28, 1928, and Neville was duly appointed trustee.

The grounds for cancellation set up in the plaintiff’s petition in the present suit, so far as need to .be mentioned, are (1) that the deed of trust bearing date January 4, 1925, was really executed within four months prior to the filing of the petition in bankruptcy against Brooks, while Brooks was insolvent, and therefore constituted a preference under the bankruptcy law; (2) that Perkins is es-topped to claim under the instrument, as against the other creditors of Brooks, for the reason that on January 4, 1925, and at all subsequent times, Brooks was insolvent, and Perkins, with knowledge of this fact, withheld said instrument from record, as he did, in order not to impair the credit of Brooks, and thus to enable the latter to contract debts to the various other creditors, which he could not have contracted if the deed of trust had been put of record; (3) cancellation of the deed of trust and all the notes in question because, so the trustee alleged, each of the notes was executed for money advanced or loaned to Brooks by Perkins for the purpose of being used by Brooks in illegal speculation in “futures,” either (a) in behalf of himself and Perkins, jointly, or (b) in his own behalf alone.

Relevant special issues were submitted to the jury, and, in answer thereto, the jury found: (a) That Brooks was not insolvent on January 4,1925; (b) that the deed of trust of that date was not withheld from record, by Perkins, in order not to impair the credit of Brooks; and (c) that the latter did not create any debts to others which would not or could not have 'been created if the deed of trust had been recorded. Included inthe special issues submitted by the trial court to the jury were No. 5 and No. 6, which, together with the accompanying instruction, read as follows:

“Question No. 5. Was the various sums of money advanced to S. B. Brooks by S. B. Perkins, referred to in the deed of trust of date January 4, 1925, used by Brooks for their joint benefit in illegal speculations, as that term is defined in paragraph 2 of this charge? Answer ‘yes’ or ‘no’ as you may find the fact to be.
“If you have answered the next preceding question ‘yes’ then you will answer the following question, but if you have answered it ‘no’ then you need not answer the following question. •
“Question No. 6. Did S. B. Perkins make the different advancements of money which the deed of trust dated January 4, 1925, intended to secure in order that S. B. Brooks might use the money in illegal speculations? Answer ‘yes’ or ‘no’ as you may find the fact to be.”

The jury answered “No” to special issue 5, and made no answer to special issue 6. The special issues which were submitted to the jury, other than those to which we have referred, have no material bearing on (Questions to be discussed.

With respect to matters which are incidental to the question of preference, under the Bankruptcy Law (11USCA), it is sufficient to say that these incidental matters have become immaterial for the following reasons: Even if the deed of trust of January 4, 1925, were executed within four months next prior to the filing of the petition in bankruptcy, the same would not, in any event, be of a preferential character, within the contemplation of the Bankruptcy Law, unless the fact were established that Brooks, at the time same was executed, was insolvent as defined in the Bankruptcy Law. The testimony raised a fact issue in this last-named respect, and no special issue calling for a jury finding as to the insolvency of Brooks, at any time except on January 4, 1925, was either submitted or requested. The issue of the insolvency' of Brooks, upon which depended the alleged preferential character of the deed of trust, was therefore waived, and such waiver rendered immaterial the other matters pertaining to that alleged ground for cancellation.

Regarding the issue of estoppel pleaded by the trustee, the jury disposed of that issue when it found, in effect, that the grounds relied on as creating the estoppel did not exist.

It is thus seen that what remains to he said has reference to matters pertaining to the ground for cancellation, alleged by the trustee, which involves the alleged use of the various sums of money in question, in illegal speculations. In this respect the testimony shows, without dispute, that most of the various sums of money were loaned to Brooks for the purpose of being used by him in transactions with brokers, involving purported purchases of stocks and bonds, and of cotton, grain, and the like. As to whether said purported purchases were actual purchases or were mere speculations in “futures,” a fact issue arose from the testimony in the case. No special issue calling directly for a jury finding on the fact issue thus raised was submitted to the jury, and none was requested. As to at least one of the notes in question, the testimony does not conclusively show that the money, for which said note was given, was used by Brooks in the alleged spec-illative transactions mentioned, or that same was loaned to him for that purpose. In fact, the testimony tends strongly to show that the money for which this note was given was loaned to Brooks for an unquestionably legitimate purpose, and was applied by him to that-purpose. At any rate, no special issue respecting the use of the money, for which this note was given, was submitted to the jury, and none was requested. These observations disclose the situation with respect to the questions relating to illegality of the various loans, which will now be discussed.

With regard to the instruction given the jury by the trial court, in connection with special issues' 5 and 6, as above set out, the trustee made the following objection: “Said charge errs in only requiring an answer to Issue No. 6 only in the event the jury answers No. 5 ‘yes.’ ” The trustee contends, in effect, that this objection was improperly overruled by the trial court, for the reason that special issue 6 related to a distinct issue, presented by pleading and proof, and upon which the trustee relied for recovery; namely, that the various loans from Perkins to Brooks were made for the purpose of aiding Brooks to violate the law 'by engaging in illegal speculations for the benefit of Brooks alone. In view of the circumstances of the case, it is extremely doubtful that the trustee would be entitled to have a jury finding on special issue 6 as worded. However this may be, the trial court did not err in overruling the objection which was made to the charge. It is settled that, in order for an objection to a charge or instruction, given in connection with special issues, to be of avail, the error sought to be complained of must be pointed out. Isbell v. Lennox, 116 Tex. 522, 295 S. W. 920. The objection presented by the trustee, as did the objection involved in the case cited, did nothing more than call attention to the particular charge against which the objection was directed. As a general rule, an instruction to the jury not to answer a given special issue in case another special issue be answered in a specified way is not improper. Exceptions to the rule depend on the existence of special conditions which render such an instruction improper in the particular case. The objection under consideration did not in anywise indicate what conditions rendered the charge erroneous in this instance. It did not point out the error which-would-be committed by the giving of the charge. The trial judge was left to speculate as to this. He was under no duty to assume that counsel had in mind the ground of error now urged.

The trustee also complains of the refusal of the following special issue requested by him, to wit: “Did S. B. Perkins make the different advancements of money to S. B. Brooks, as shown by the evidence, with the intention and expectation that said S. B. Brooks would repay said moneys by moneys earned from illegal speculations, as defined in paragraph 2 in the main charge?’’

Under the circumstances of the case, the refusal of this special issue raises simply the question of law as to whether a contract, arising from the loan of money, is rendered illegal by the bald fact that the lender expected or intended that the loan would be repaid with money illegally acquired by the borrower. The law question as thus raised does not embrace within its scope an unlawful use of the borrowed money by the borrower; or a common design in this respect, on the part of the borrower and the lender; or even that the borrower purposes to commit an unlawful act. It is therefore perfectly clear that the requested special issue was properly refused, unless it be the law that, as regards a loan of money, the mere mental operations of the lender, as to the means by which the borrower will acquire funds with which to repay the loan, will, in case the means thus pictured in the mind of the lender be unlawful, vitiate the loan contract. The law does not go to such an unreasonable extent. That mere mental operations of the lender in the respect mentioned cannot, in the remotest degree, operate to incite the 'borrower to commit an unlawful act, or in anywise contribute to bring about the commission of an unlawful act, is manifest. We have been cited to no authority, and have found none, which holds that a loan contract, so circumstanced, is illegal. It is fairly well recognized by our courts that even actual knowledge, on the part of the lender, that the borrower intends to put the borrowed money to an unlawful use, does not, of itself, invalidate the loan contract. Labbe v. Corbett, 69 Tex. 503, 6 S. W. 808; McKinney v. Andrews, 41 Tex. 363, 366; Bishop v. Honey, 34 Tex. 245, 252; Lewis v. Alexander, 51 Tex. 578; Bonnie & Co. v. Blankenship (Tex. Civ. App.) 208 S. W. 934; Anheuser-Busch Brewing Ass’n v. Houck (Tex. Civ. App.) 27 S. W. 692, 698; Cleveland v. Taylor, 49 Tex. Civ. App. 496, 108 S. W. 1037. There is as much or more reason for holding, as we do, that the loan contract will not be invalidated by the mere intention or expectation, on the part of the lender, that the loan will be repaid with money illegally acquired by the borrower.

We recommend that the judgment of the Court of Civil Appeals reversing the trial court’s judgment be reversed, and the judgment of the trial court be affirmed.

CURETON, Chief Jrfstice.

The judgment of the Court of Civil Appeals is reversed, and that of the district court is affirmed, as recommended by the Commission of Appeals.


text:
    INDEMNITY CO. OF AMERICA v. PITTS et al.
    No. 1617—6032.
    Commission of Appeals of Texas, Section A.
    March 15, 1933.
    See, also (Tex. Sup.) 47 S.W.(2d) 817.
    Burgess, Burgess, Chrestman & Brundidge and Touchstone, Wight, Gormley & Price, all of Dallas,- for plaintiff in error.
    E. G. Senter, M. II. Baughn, and R. J. Johnson, all of Dallas, and J. D. Cottrell, of Plano, for defendants in error.
   HARVEY, Presiding Judge.

This suit was brought by Florence Pitts against the Indemnity Company of America and Albert S. Kakisaki on an automobile insurance policy issued by said Indemnity Company, as insurer, to Kakisaki, who is denominated as the assured. The trial court rendered judgment for Florence Pitts, and both defendants appealed. The judgment of the trial court has been affirmed by the Court of Civil Appeals, and the Indemnity Company applied to the Supreme Court for the writ of error, which was granted.

The statement of the ease, as contained in the opinion of the Court of Civil Appeals, is adopted. For the sake of conyenience, we omit quotation marks except where same appear in the statement made by the Court of Civil Appeals. The statement follows:

In her petition Florence Pitts alleged that on February 9, 1929, she recovered a judgment in cause No. 70471, in a Dallas county district court against said Albert S. Kaki-saki for $9,374.35 on account of personal injury she received in an automobile collision which occurred in March, 1927; that in February, 1927, the indemnity company made and delivered to Kakisaki a policy (a copy of which was made a part of the petition) whereby it insured him for a year from that time “against (quoting) loss from death and personal injuries to third persons accidentally suffered by any person or persons (except employes of the assured) as the result of an accident occurring while said policy was in force and in an amount not exceeding the sum of $10,000”; that in March, 1927, “and while said policy was in full force and effect,” Kakisaki “negligently, carelessly and unlawfully ran intoi and against the automobile in which the said Florence Pitts was riding as an invited guest,” thereby overturning same and “permanently injuring her, for which said injuries said judgment was rendered” ; that the policy contained a stipulation as follows: “In the event a judgment against the assured, arising out of an accident covered under this policy, is returned unsatisfied, because of assured’s insolvency or bankruptcy, an action may then be maintained against the Company by the party in whose favor judgment was rendered, or in case of his death, by his personal representatives, for the amount of the judgment, not exceeding the limits of the policy, provided, however, that such party must secure the written consent of the assured, or in ease of the assured’s death, of assured’s personal representative.” That after said judgment became final Florence Pitts caused an execution issued thereon to be placed in the hands of the sheriff, who, because he was unable to find property belonging to said Kakisaki on which to levy the writ, returned same unsatisfied; that Kakisaki was wholly insolvent and had been since said judgment was rendered; that “by virtue of the provisions of said policy and of the facts above set out” Florence Pitts claimed “the right to resort to this suit for redress”; that the indemnity company “in accordance (quoting) with the provisions of its said policy took charge of the defense of said suit of plaintiff (Florence Pitts) against the defendant Ka-kisald, provided a lawyer and paid the expense of same and wholly controlled said action on behalf of defendant and it thereby recognized its liability under said policy and waived any defense it might have had as to any claim of the assured thereunder, and is now estopped from setting up any defense to said claim and is bound toy said 'judgment”; that “by virtue of the terms and provisions of the policy” set out above it became Kaki-saki’s duty “to either pay off said judgment obtained by plaintiff against him or, in the event of his inability to do so on account of insolvency, to deliver to plaintiff his consent in writing for her to sue defendant Indemnity Company of America upon its policy and to enforce the judgment obtained by her against him as aforesaid. That in order to evade his said duty and for the fraudulent purpose of defeating plaintiff’s right to proceed against the said Indemnity Company of America as provided for in said policy and under the judgment above referred to, the said Albert S. Kakisaki conspired and colluded with the said Indemnity Company of America to make a pretended cancellation of said policy and for a valuable consideration paid to him, the said Albert S. Kakisaki executed a pretended release of his claim against the said Indemnity Company of America arising out of the matters and things on account of which plaintiff recovered judgment; and that said pretended release and cancellation of said policy was obtained in fraud of plaintiff’s rights and for the purpose, participated in Iby both parties thereto, and because thereof said release and cancellation of said policy never became valid and binding against this plaintiff.”

The answer of the Indemnity Company consisted of general and special exceptions questioning the sufficiency of the petition, a general denial, and pleas setting up conditions specified in the policy, compliance with which, it alleged, were indispensable to the existence of any liability on its part to Florence Pitts, and which conditions, it asserted, were not complied with. The answer of Ka-kisaki consisted of a plea questioning the right of Florence Pitts to join him as a defendant in her suit against the Indemnity Company, a general demurrer questioning the sufficiency of the petition, and a general denial. The general exception and certain of the special exceptions, urged by the Indemnity Company were overruled, as was Kaki-saki’s said plea and general demurrer. After hearing the evidence adduced by the parties, the court below discharged the jury and, on the theory that it conclusively appeared that defendants in error were entitled to such relief, rendered judgment in their favor against the Indemnity Company for the amount ($5,-000) sued for, and against it and Kakisaki for the costs of the suit. The writ of error was sued out by both the Indemnity Company and Kakisaki. (Here ends the statement of the case as made by the Court of Civil Appeals.)

The Indemnity Company contends that the petition of the plaintiff Florence Pitts, in which her husband joins, is insufficient to show a cause of action, for the following reasons: First, that the petition shows that Kakisaki did not consent for this suit to be brought against the Indemnity Company, and further shows that, by the herein-above quoted policy provision upon which Florence Pitts bases her suit against the company, the consent of Kakisaki is required as a condition precedent to the suit. Secondly, that the petition shows that the policy in question has been canceled by agreement made between Kakisaki and the company. With reference to the first ground, it is sufficient to say that the consent of Kakisaki was a condition precedent to the bringing of a suit of this character against the company, but same, like any other condition precedent prescribed in the policy for the enforcement of the company’s liability, was capable of ■being waived by the parties to the contract. The company waived the provision requiring Kakisaki’s consent for the suit to be brought, when it caused Kakisaki to agree that he would not give such consent. This was tantamount to a rescission, by agreement, of the provision requiring such'consent as a condition precedent to suit by the beneficiary, With reference to the second ground of contention, there is also lack of merit. It appears from the petition that at the time the agreement for cancellation of the policy was made between Kakisaki and the Indemnity Company, the afccident in question had already occurred, and the liability which the Indemnity Company was bound to assume, subject to the terms and conditions of the policy, had already become attached. That Florence Pitts, without her consent, could not be deprived; of her rights against the company, by agreement between Kakisaki and the company after her rights had accrued, is perfectly plain. Her rights against the company, subject to the terms and conditions of the policy, afccrued the moment the, liability of Kakisaki for the personal injuries suffered by her arose. The subsisting obligation of the company, upon which her rights against the company depended, was, of course, originally due to Kakisaki; but even so, that obligation could not, in the absence of a policy provision to that effect, be rescinded, and her dependent rights destroyed, by the agreement to which she was not a party. The trial court properly overruled the general exception to the plaintiffs’ petition.

The Indemnity Company further contends that the trial court erred in sustaining the plaintiffs’ exception (denominated a special exception but which is nothing more than a general exception) to that portion of the company’s answer, in which the following defense is pleaded: The company, in its answer, pleaded that the following policy provision was violated by Kakisaki, namely: “The assured shall aid in any litigation or settlement of claims or suits but shall not assume any liability except to provide at the company’s expense such immediate surgical relief as is imperative at the time of the accident.” With reference to the violation of this clause of the policy, by Kakisaki, the company alleged, in substance and effect, the following facts: That after the accident occurred, Florence Pitts presented her claim for damages to Kakisaki, and the latter duly notified the Indemnity Company of said claim. That, in violation of the above provision of the policy, Kakisaki gave the attorneys for Florence Pitts a written statement in which he falsely stated, as facts, certain acts and conduct of his which would show that the injuries suffered by Florence Pitts were proximately caused by his negligence. That aft-erwards, to wit, on November 7, 1928, the company notified Kakisaki that, on account of the violation of said policy provision, as stated, the company was no longer liable under the policy, and that thereupon Kaki-saki agreed, for a valuable consideration, to. the cancellation of the policy, and to surrender his right “to give permission to said plaintiff in writing to institute suit against the said company upon said policy.” We have no doubt that the alleged false statement which was given by Kakisaki to the attorneys for Florence Pitts violated the above-quoted policy provision, and, if the company had remained standing on the breach of the insurance contract in the respect stated, as ground for rescission of the insurance' contract, the company could have escaped from all liability. But even should it he conceded that the trial court erred in sustaining the plaintiffs’ exception to this portion of the company’s answer, the error 'became harmless, as we shall proceed to demonstrate. One of the obligations of the company to Kakisaki, under the policy, is prescribed as follows: “The company will defend all suits against the assured in his name and in his behalf,” etc. At the trial of the present case the testimony showed, without dispute, that the former suit by Florence Pitts against Kakisaki -(cause No. 70471), for damages on account of the injuries suffered by her, was tried, and judgment rendered in her favor, on February 4, 1929; that the company, through its regularly employed attorneys, appeared and contested said suit in behalf of Kakisaki, and in his name. It thus appears that, notwithstanding the company, as early as November 7, 1928, had knowledge of the fact that Ka-kisaki had breached the insurance contract by giving the false statement to the attorneys for Florence Pitts, as alleged, the company went forward in the performance of its obligation to defend, in behalf of Kakisaki and in his name, the suit which Florence Pitts brought against him. In doing this the- company waived the breach that had occurred, as affording ground for rescinding the insurance contract, at least so far as the rights of Florence Pitts are concerned.

We recommend that the judgment of the trial court, and that of the Court of Civil Appeals affirming same.'ibe affirmed.

CURETON, Chief Justice.

The judgments of the district court and Court of Civil Appeals are both affirmed, as recommended by the Commission of Appeals.