author: HENRY, Justice.

text:
    Janet H. OLSON, Petitioner, v. Bob J. MOLZEN, Respondent.
    Supreme Court of Tennessee.
    Nov. 21, 1977.
    Sidney W. Gilreath, Robert E. Pryor, Knoxville, for petitioner.
    P. Graham Bartlett, McCampbell, Young, Bartlett & Hollow, Knoxville, for respondent.
   OPINION

HENRY, Justice.

The sole question before the Court is whether a Doctor of Osteopathy may defend a negligence action on the basis of an exculpatory agreement executed by his patient prior to the rendition of services.

Plaintiff’s suit was dismissed pursuant to a Motion for Summary Judgment under Rule 56, Tenn.R.Civ.P. The action of the trial judge was affirmed by the Court of Appeals, which held that the agreement was valid in all respects, and not against public policy.

I.

On September 17, 1973, Janet H. Olson, a pregnant, twenty-three year old unmarried woman, contacted Bob J. Molzen, at the time a practicing osteopath in Knoxville, and engaged his services for the performance of an abortion. On September 21, 1973, when she returned to Molzen’s clinic, and prior to his performance of the abortion, she was required to execute a release, the pertinent portions of which read as follows:

I am aware of the minor risks and hazards, and realize that this type of surgical operation is no different than any other kind of surgical operation and has attending complications that may be beyond the control of the surgeon. I, therefore, release Doctor Molzen and his staff from responsibility associated with any complications that may come up, or be apparent, in the next twelve (12) months.
And, finally, I completely release Doctor Molzen and his staff from any present or future legal responsibility associated with performing an abortion on myself.

The abortion was then performed and two weeks later she returned to the Doctor’s office for a check-up. She testified that she told him she “had been experiencing this nausea and that I didn’t feel good.” He gave her a vaginal examination and told her “that everything was fine.”

About the middle of November she consulted a Knoxville gynecologist who advised her that she was pregnant and it was too late to perform an abortion. The child was born on April 9, 1974.

II.

The courts of Tennessee have long recognized that, subject to certain exceptions, parties may contract that one shall not be liable for his negligence to another. Moss v. Fortune, 207 Tenn. 426, 340 S.W.2d 902 (1960). In Moss the plaintiff rented a horse, equipped with bridle and saddle. After he had ridden a short distance the left stirrup strap broke, causing plaintiff to fall to the ground and inflicting serious injuries. In connection with the rental, plaintiff signed a release as follows:

I am hiring your horse to ride today and all future rides at my own risk. 207 Tenn. at 428, 340 S.W.2d at 903.

The Court held that “the plain intent of this agreement was that plaintiff assumed the risk incident to the hiring and riding of the horse, including the risk which caused the injuries sued for.” Id. The Court accordingly affirmed the demurrer entered by the plaintiff to defendant’s plea based upon the release.

Empress Health and Beauty Spa, Inc. v. Turner, 503 S.W.2d 188 (Tenn.1973), involved personal injuries sustained by a patron of Empress when a belt connected to a vibrator broke. The patron had executed a release which, among other things, provided for the assumption of the risk of injury and indemnification from “any and all liability attributable to the Spa. . . . ” Following Moss, supra, this Court upheld the release and, relying upon Trailmobile, Inc. v. Chazen, 51 Tenn.App. 576, 370 S.W.2d 840, 844 (1963), held that “the public policy of Tennessee favors freedom to contract against liability for negligence.” 503 S.W.2d at 190.

The last pertinent reported case in Tennessee is Dixon v. Manier, 545 S.W.2d 948 (Tenn.App.1976). There the Court, relying upon Moss and Ghazen, supra, upheld the validity of a release from liability for negligence in a suit wherein a customer at a cosmetology school sustained injuries during a hair straightening treatment.

III.

While these cases are relevant and make it clear that as a general rule a party may contract against his or her own negligence, they do not afford a satisfactory solution in a case involving a professional person operating in an area of public interest and pursuing a profession subject to licensure by the state. The rules that govern tradesmen in the market place are of little relevancy in dealing with professional persons who hold themselves out as experts and whose practice is regulated by the state.

That one’s status may affect his or her responsibility is recognized in Williston on Contracts § 1751 (3d ed. 1972), which states:

[S]ome relationships are such that once entered upon they involve a status requiring of one party greater responsibility than that required of the ordinary person, and, therefore, a provision avoiding liability is peculiarly obnoxious. (Emphasis supplied).

IV.

Moss points us in the direction of a controlling consideration, i. e. whether the exculpatory provision affects the public interest by recognizing the exceptions made for the benefit of the public. Generally our cases uphold exculpatory contracts between private contracting parties but, aside from those involving common carriers, no case has been decided wherein the public interest consideration has been discussed.

This was the primary factor that led the California Supreme Court in Tunkl v. Regents of University of California, 60 Cal.2d 92, 32 Cal.Rptr. 33, 383 P.2d 441 (1963), to hold that a release from future liability, as a condition of admission to a charitable hospital, was invalid. There the Court enumerated and discussed what it deemed to be the controlling characteristics of the transaction, as follows:

[a.] It concerns a business of a type generally thought suitable for public regulation.
[b.] The party seeking exculpation is engaged in performing a service of great importance to the public, which is often a matter of practical necessity for some members of the public.
[c.] The party holds himself out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards.
[d.] As a result of the essential nature of the service, in the economic setting of the transaction, the party invoking exculpation possesses a decisive advantage of bargaining strength against any member of the public who seeks his services.
[e.] In exercising a superior bargaining power the party confronts the public 'with a standardized adhesion contract of exculpation, and makes no provision whereby a purchaser may pay additional reasonable fees and obtain protection against negligence,
[f.] Finally, as a result of the transactidn, the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or his agents. 32 Cal.Rptr. at 37-38, 383 P.2d at 445-446.

We think these criteria are sound and we adopt them. It is not necessary that all be present in any given transaction, but generally a transaction that has some of these characteristics would be offensive. Here, we think all characteristics were present.

Applying the first criterion, we can hardly think of any area more suitable for public regulation than abortions. It took a decision of the Supreme Court of the United States to authorize them and define their limits. See Roe v. Wade, 410 U.S. 113, 93 S.Ct. 705, 35 L.Ed.2d 147 (1973).

In the aftermath of Roe v. Wade, the Tennessee General Assembly adopted Chapter 235 of the Acts of 1973, which was carried in the Official Code as Sec. 39-301, et seq., T.C.A. This enactment regulates abortions in Tennessee.

Dr. Molzen held himself out as being willing to perform abortions for the general public. This is obvious from the fact that he operated an abortion clinic. Janet Olson met the statutorily established standards. See Sec. 39-301, T.C.A.

Janet Olson wanted an abortion. Dr. Molzen performed abortions. It begs the question to say she could have gone to another doctor or that she elected to undergo a surgical procedure that was not mandatory. Perhaps so. However, there is no assurance that any other doctor would not have made a similar demand. The record does not show how many other physicians in the Knoxville area perform abortions, but we have no doubt but that the number is limited. Physicians are not required to perform abortions. See Sec. 39-304, T.C.A. She had a right to elect to have a legal surgical procedure performed even though there was no compelling medical necessity.

Prosser, Law of Torts § 68, at 442 (4th ed. 1971), recognizes this dilemma:

The courts have refused to uphold such agreements, however, where one party is at such obvious disadvantage in bargaining power that the effect of the contract is to put him at the mercy of the other’s negligence.

Another of the bases suggested in Willi-ston on Contracts, supra, for voiding exculpatory agreements is:

[A] relation often represents a situation in which the parties have not equal bargaining power; and one of them must either accept what is offered or be deprived of the advantages of the relation.

This is precisely the situation which Janet Olson faced.

The doctor not only exercised a superior bargaining power, but there is nothing to indicate tha.t he made any provision for the payment of additional compensation or fees to obtain insurance or protection against negligence.

As a direct consequence of this transaction, Janet Olson placed her person under the control of Dr. Molzen subject to the risk of negligence after he had demanded that she contract away any cause of action that might arise.

A professional person should not be permitted to hide behind the protective shield of an exculpatory contract and insist that he or she is not answerable for his or her own negligence. We do not approve the procurement of a license to commit negligence in professional practice.

Under the guidelines herein adopted, we hold that an exculpatory contract signed by a patient as a condition of receiving medical treatment is invalid as contrary to public policy and may not be pleaded as a bar to the patient’s suit for negligence.

Reversed.

COOPER, C. J., and FONES, BROCK and HARBISON, JJ., concur.

APPENDIX

DOCTORS MEDICAL-SURGICAL CENTER OUT-PATIENT ABORTION CLINIC 1104 MERCHANTS ROAD KNOXVILLE, TENNESSEE 37912

I, Janet H. Olson hereby request and authorize Dr. B. J. Molzen, and whomever he may designate as his assistants, to perform an abortion, (interruption of pregnancy) on myself. I authorize Doctor Molzen and his assistants to use whatever anesthetics he may deem necessary.

I am aware of all major and minor risks, hazards, and possible complications associated with this type of surgical operation, including the more common post-operative (after surgery) complications, such as:

(1) Retained products of conception, (placenta, or afterbirth) either in part or in whole, retained portions, either in part or in whole of an embryo, fetus, or any other tissue debris in the uterus in spite of standard surgical precautions.

(2) Bleeding and/or hemorrhage.

(3) General infection of the vagina, or uterus (womb) that could rarely occur during surgery, but would commonly occur if the patient does not follow post-operative instructions very specifically.

(4) Twin (double), tubal, or ectopic (abnormal) pregnancies, and bicornate uterus, (double uterus).

I am aware of the minor risks and hazards, and realize that this type of surgical operation is no different than any other kind of surgical operation and has attending complications that may be beyond the control of the surgeon. I, therefore, release Doctor Molzen and his staff from responsibility associated with any complications that may come up, or be apparent, in the next twelve (12) months.

I also understand that $200 covers only an ordinary case, with ordinary post-operative progress. If complications should at any time occur that require hospitalization, I agree to go to a hospital of Doctor Molzen’s choice and I agree to be responsible for any costs or bills associated with such hospitalization.

I certify that I have carefully read and will strictly follow the list of post-operative instructions titled, “What to Expect in the Next Few Days”, realizing any deviation from these could result in complications in my post-operative progress, for which Doctor Molzen would not be responsible.

I also certify that I an under twelve (12) weeks pregnant, that I am age 18, or over, and that no guarantees express or implied, have been given as to performance of surgery, or the ultimate or final results of surgery.

And finally, I completely release Doctor Molzen and his staff from any present or future legal responsibility associated with performing an abortion on myself.

      . The full text appears as an appendix.

      . The practice of osteopathic physicians is regulated by statute. See Sec. 63-901, et seq., T.C.A.

      . The California Court of Appeals in Belshaw v. Feinstein, 258 Cal.App.2d 711, 65 Cal.Rptr. 788 (1968), extended the Tunkl rule to physicians under the view that such contracts contravened public policy. In Meiman v. Rehabilitation Center, 444 S.W.2d 78 (Ky.1968), the Court held that an exculpatory contract signed by a patient undergoing therapeutic treatment at a rehabilitation center was invalid as against public policy.


source: Caselaw Access Project

author: BROCK, Justice.

license: Public Domain

text:
    Jayne Ann WOODS, Commissioner of Revenue, Appellant, v. GENERAL OILS, INC., Appellee.
    Supreme Court of Tennessee.
    Dec. 5, 1977.
    William J. Haynes, Jr., Asst. Atty. Gen., Nashville, for appellant; Brooks McLemore, Jr., Atty. Gen., Nashville, of counsel.
    Wayne E. Thomas, Stophel, Caldwell & Heggie, Chattanooga, for appellee.
   OPINION

BROCK, Justice.

This is an action by a taxpayer, General Oils, Inc., to recover sales and use taxes, paid under protest, which were assessed by the defendant Commissioner on the purchase of three large oil tanks and their appurtenances which are used by the taxpayer in its oil merchandising business located on the banks of the Tennessee River at Chattanooga. The trial court granted the plaintiff a recovery and the Commissioner appeals.

The issue presented is whether the tanks in question should be classified as “industrial machinery” within the meaning of T.C.A., § 67-3002(n), which is taxable at the rate of only 1%, whereas, the sale or use of ordinary non-favored property is taxable at the regular rate of 3J/2%.

The legislature in T.C.A., § 67-3002(n), has defined “industrial machinery” as:

“. . . machinery, including repair parts and any necessary repair or installation labor therefor, which is directly and primarily utilized in fabricating or processing tangible personal property for resale. . . . ”

Pursuant to statutory authority, the Commissioner of Revenue has adopted Rule No. 1320-5-1-1.06, which, in pertinent part, provides:

“ ‘Industrial machinery’ shall mean machines, including repair parts and any necessary repair or installation labor, and the appurtenances necessary to their working of the machines used directly and primarily in fabricating or processing tangible personal property for sale and use or consumption off the premises. . Machines and appurtenances used for material handling prior to the beginning of the first instance of such fabrication or processing or that are used for storage or distribution of the completed manufactured product, . . . are not used directly and primarily as stated above and shall be taxable at the rate of (SVi) per cent of cost price.” (Emphasis added.)

It is these standards which we must apply to the evidence.

The decree of the Chancellor comes to this Court with “a presumption of correctness . . . unless the evidence preponderates otherwise.” T.C.A., § 27-304. Thus, our task is to determine whether or not the evidence in the record preponderates against the finding of the Chancellor that the tanks and appurtenances in question were used “directly and primarily in fabricating or processing” the oil which the taxpayer sold to its customers.

General Oils, Inc., is in the business of buying, processing and selling industrial and heating oils at its plant in Chattanooga. It sells to customers located in Tennessee, Alabama, Georgia, North Carolina, Virginia and Kentucky. It receives shipments of oil by way of barges which tie up at its docks on the Tennessee River. The oil is pumped directly from the barges into its tanks located on the bank near the river. General Oils mixes or blends oils of different weights and sulphur contents to obtain oils that meet the specifications of its various customers. It delivers oil to its customers by means of tank trucks which are loaded at its loading platform. Oils of different weights and sulphur content are kept in thirteen separate tanks, e. g., #6 oil in one tank, # 2 oil in another tank, etc. Blending is achieved at the time of loading the delivery trucks by means of an “in-line pro-portioner” which draws oil from two or more of the tanks in such quantities that the resulting mixed oils constitute a blend that possesses the weight and sulphur content required by the customer. This blended oil is piped directly from the storage tanks through the proportioner and into the waiting delivery tank trucks.

The Commissioner conceded that the “inline proportioner” and its appurtenances were utilized directly and primarily in the processing of oil for resale, but denied that three large tanks at the taxpayer’s plant are so utilized. These tanks were purchased by General Oils and erected on its premises in the period from July 1, 1971, through June 30, 1974. It is the sales and use taxes on the purchase of these three tanks that is the subject of this litigation.

It is our conclusion that the evidence preponderates against the finding of the trial court that these tanks were utilized “directly and primarily” in the processing of the taxpayer’s oil; in our opinion, the preponderance of the evidence is that the tanks are primarily used for material handling, i. e., storage, of oil prior to the beginning of fabricating or processing of the oil for delivery.

The taxpayer called its Vice President and General Manager, Mr. E. Lee Rayburn, as its chief witness. His testimony is somewhat obscure and indefinite and leaves much to be desired. The experienced trial judge more than once remonstrated with this witness for his unsatisfactory answers which the judge described as “evasive.” This witness referred to the three tanks in question as “storage tanks.” Thus, he stated: “We bring heavy industrial oils in by barge to our terminal where we pump it into our storage tanks.” He stated that these particular tanks “. . . mostly hold # 6 oil.” And, again, he stated: “We don’t blend this oil and then put it in another tank to store it. Sir, it serves as a storage tank.” Finally, he testified:

“Q. Is there a difference between just a tank and a blending tank?
“A. No. Sir. We wouldn’t have a tank as such as a blending tank.”

Witness Rayburn also testified that the tanks in question also were involved in blending oils, in that, in receiving barge shipments, oil of one weight or sulphur content would be pumped directly from the barge into a tank which was partially filled with oil of a different weight and sulphur content, so that, the resulting mix would have still another weight and sulphur content. He stated that this occurred approximately once each two weeks. He also testified that on occasion oil would be pumped from one tank to another tank containing oil of a different weight and sulphur content, thus achieving oil of another weight and sulphur content. His testimony in this latter regard was greatly weakened, however, by the testimony of Mr. James Carter Zorn, an auditor of fifteen years experience for the Department of Revenue, who was called as a witness for the taxpayer. Mr. Zorn had made the audit which precipitated the additional assessment here at issue. He contradicted Rayburn’s contention that blending of oils occurred in the tanks by his testimony that during the auditing Rayburn never said that these tanks were used for blending, but, instead, at that time told him that they were used solely “to store No. 6 and No. 2 oils.” He testified:

“Q. And Mr. Rayburn did not go into the process that he has described today?
“A. No.
“Q. Did you ask him a specific question concerning the function?
“A. I asked him what they were doing and he said blending No. 2 and No. 6 oils.
“Q. Where did you think he was doing this?
“A. He was doing it, he explained to me, at the blender where they loaded it into the trucks for delivery.”

Mr. Zorn was of the firm opinion that the three tanks in issue, each with a capacity of three million gallons of oil, were primarily used for storage, not the blending of oil.

The only witness called by the Commissioner was Mr. Ray Lane Masemiller, a petroleum chemist with 29 years experience, who testified that the tanks in question were utilized as storage tanks and were not suitable for blending.

In evaluating the foregoing evidence, we must keep in mind that in a suit against the state by a taxpayer claiming an exemption from taxation the burden is on the taxpayer to establish his exemption; every presumption is against it and a well-founded doubt is fatal to the claim. Hamilton Nat’l Bank v. McCanless, 176 Tenn. 570, 144 S.W.2d 768 (1940); Farrington v. State of Tennessee, 95 U.S. 679, 24 L.Ed. 558 (1878).

In Phillips & Buttorff Mfg. Co. v. Carson, 188 Tenn. 132, 217 S.W.2d 1 (1949), this Court held that, as used in the sales and use tax statute, “directly” means “in direct contact with, and without the intervention of any person or thing.”

“Primarily” means “first of all; principally; or fundamentally.” Webster’s Third New International Dictionary (1961). It has also been held to mean “first in rank or importance, chief, principal, basic or fundamental,” Breen v. Ind. Accident Board, 150 Mont. 463, 436 P.2d 701 (1968); Twentieth Century Mfg. Co. v. U. S., 195 Ct.Cl. 295, 444 F.2d 1109 (1971).

In our opinion, the taxpayer has shown, at most, only a secondary and indirect use of these huge tanks for blending oil; the inescapable conclusion, from a preponderance of the evidence, is that the primary function of the tanks is storage of the oil from the time of its receipt off the barges until it is run through the “in-line propor-tioner” directly into the delivery trucks. See 68 Am.Jur.2d Sales and Use Taxes § 112 (1973) and cases there cited. We conclude, therefore, that the taxpayer has failed in its burden of establishing that it is entitled to the lower rate of tax or partial exemption. Accordingly, the decree of the trial court is reversed and the complaint is dismissed. Appellee will pay all costs.

COOPER, C. J., and FONES, HENRY and HARBISON, JJ., concur.

      . We do not consider the question whether or not the tanks were “machinery,” since the parties have not raised it at the trial or in this Court.


author: HARBISON, Justice.

text:
    Ulyses NESBIT, Individually and d/b/a Friendly Cab Company, Appellant, v. Jesse POWELL, Appellee.
    Supreme Court of Tennessee.
    Dec. 5, 1977.
    Jef Feibelman, Feuerstein, Feibelman & Kaminsky, Memphis, for appellant.
    Walter Buford, Memphis, for appellee.
   OPINION

HARBISON, Justice.

The only issue on the appeal of this workmen’s compensation case is whether a taxicab driver was,properly held to be an employee of the owner of the taxicab company, or whether he was an independent contractor. The trial court held that there was an employment relationship and awarded workmen’s compensation benefits. We find material evidence to support this conclusion and affirm.

The driver of the taxicab, appellee, suffered total permanent disability when his cab was struck by another automobile. In a third party claim, he recovered the liability insurance policy limits from the operator of the other vehicle. Credit for that recovery has been applied against the workmen’s compensation judgment pursuant to T.C.A. § 59-914. The taxicab driver was rendered quadriplegic as a result of spinal injuries suffered in the accident.

Appellant holds a franchise from the City of Memphis to operate a taxicab company, and he is the owner of a fleet of thirty-seven cabs. The name of the company and other information concerning the business are painted on the vehicles. All of the cabs are radio dispatched, and at the time of the accident in question appellee was driving his vehicle in response to a message from the dispatcher. While there is testimony in the record that the cab drivers are not required to answer calls from the dispatcher, such calls are an important source of passenger fares for most drivers. In addition, appellant holds contracts with certain firms in Memphis for the delivery of packages, and drivers of the various units usually make deliveries pursuant to calls from the dispatcher. All fares are prescribed by ordinances by the City of Memphis, and each driver collects his own fares and tips. He pays to appellant a fixed fee, or rental charge, for each shift and in addition usually purchases about three dollars worth of gasoline each day from pumps operated by appellant. These gasoline purchases are not mandatory but are customary. Appellant exercises some supervision over the operation of the cabs, and at one time he had a cab with the word “supervisor” painted on it. Appellant does not withhold income taxes or pay social security taxes on the drivers. He does supply oil for each vehicle, and his supervisors check cabs for cleanliness. It is the insistence of appellant that he is basically in the business or renting or leasing vehicles, and that the taxicab drivers are independent contractors.

While there have been no reported cases in this state on the subject, this insistence has been made in a number of other states with respect to the drivers of taxi cabs. The question has arisen in workmen’s compensation cases and in other contexts, such as unemployment insurance or social security claims. While divergent results have been reached, usually dependent upon the particular facts and circumstances of each case, most of the more recent decisions involving workmen’s compensation claims support the conclusion by the trial judge in the instant case that a relation of employer-employee exists between the holder of a taxicab franchise and the vehicle drivers. Some of the cases turn on factual aspects of the relationship, such as the right to control, right to terminate, etc., while others emphasize the fact that the holder of a taxicab franchise operates as a common carrier for hire and that the drivers are utilized by him in the conduct of a public franchise which may not be assigned or delegated.

In the recent case of Morgan Cab Co. v. Industrial Comm’n, 60 Ill.2d 92, 324 N.E.2d 425 (1975), the Supreme Court of Illinois affirmed a workmen’s compensation award in favor of a taxicab driver on facts very similar to those in the present case. There the owner operated a fleet of some thirty taxicabs which were painted alike with the name and telephone number of the company on the doors. Each driver paid a fixed rental for a twelve-hour shift and purchased two dollars worth of gas each day from the company. Each driver was required to pick up ten passengers daily on dispatcher’s call. The owner did not withhold taxes or pay social security on the drivers, but was required to carry workmen’s compensation insurance on them by the local Commissioner of Taxicabs. Although, as in the instant case, there were facts presented which were consistent with an independent contract relationship as well as with that of employer-employee, the Court affirmed the conclusion of the Industrial Commission that the cab driver was an employee, stating:

“Looking at all the evidence it is clear that Morgan was in the business of operating a fleet of cabs for public use; he was not in the business of simply leasing vehicles with no interest in their operation as taxis.” 324 N.E.2d at 430.

See also Golosh v. Cherokee Cab Co., 226 Ga. 636, 176 S.E.2d 925 (1970), holding the issue to be factual and finding sufficient evidence to sustain a compensation award; see also Hannigan v. Goldfarb, 53 N.J. Super. 190, 147 A.2d 56 (1958).

In the present case there was no written agreement between the parties, but in a number of cases even written instruments have not precluded a finding that an employment relationship existed. Thus, in White Top and Safeway Cab Co. v. Wright, 251 Miss. 830, 171 So.2d 510 (1965), there was a written franchise providing for a weekly rental to be paid by the cab driver to the owner. Nevertheless the Court affirmed a workmen’s compensation award in favor of an injured driver, and said:

“So far as carrying on the taxicab business was concerned, Wright’s participation therein was an integral part of the business.” 171 So.2d at 511.

In the case of Naseef v. Cord Inc., 90 N.J.Super. 135, 216 A.2d 413 (1966), there was a written agreement between the parties, including a provision that the state workmen’s compensation statutes had no application to their relationship. Citing local ordinances which placed responsibility for the franchised operation on the owner, the Court held that the written agreement was unenforceable and affirmed an award of workmen’s compensation to the driver of a cab.

A number of ordinances of the City of Memphis, regulating the taxicab business in that city, were filed in evidence in the present case. These ordinances forbid the operation of motor vehicles for the transportation of passengers for hire without a certificate of public convenience and necessity being held by the owner. In his application for such a certificate, the owner must give detailed information concerning his company, its location, the number of vehicles to be operated, etc. The certificate can only be issued to “the bona fide owner of the vehicle”, and the business of carrying passengers for compensation “shall be carried on by the person to whom the certificate is issued under this article.”

While the ordinances permit the holder of the certificate to enter into agreements with his drivers, fixing percentages of receipts or other specified sums to be paid to the certificate holder, the latter is responsible to third parties for negligence of the driver and for defects in the vehicle. The owner is required to carry liability insurance on the cabs, and his certificate may be revoked for violations of the various ordinances.

While there are some aspects of the relationship between appellant and his drivers which would be consistent with that of lessor and lessee, or owner and independent contractor, there is also evidence of a substantial right of control by appellant over the details of performance by each of the drivers. See Wooten Transports, Inc. v. Hunter, 535 S.W.2d 858 (Tenn.1976). In addition, appellant, not the drivers, is the holder and operator of the franchise, and the drivers are an indispensable part of that operation. Accordingly we find material evidence to support the conclusion of the trial court that an employment relationship existed, and its judgment is affirmed at the cost of appellant. The cause is remanded to the trial court for such further orders as may from time to time be necessary.

COOPER, C. J., and FONES, HENRY and BROCK, JJ., concur.

      . According to the testimony, the taxicab company was an individual proprietorship, owned by Ulyses Nesbit, operating under the business name of Friendly Cab Company. Joined as a defendant in the case was a purported corporation, Friendly Cab Company, Inc., and judgment was rendered against it as well as the proprietorship. There is no issue on appeal as to this apparent discrepancy in the record, and it can be corrected by the trial court on remand, if material.


author: PARROTT, Presiding Judge (E. S.).

text:
    WESTLAND DRIVE SERVICE COMPANY, INC., Appellant, v. CITIZENS & SOUTHERN REALTY INVESTORS et al., Appellees.
    Court of Appeals of Tennessee, Eastern Section.
    June 14, 1977.
    Certiorari Denied by Supreme Court Nov. 7, 1977.

      Robert G. McDowell of Baker, Worthing-ton, Crossley & Stansberry, Knoxville, for Westland Drive Service Co., Inc.
    Lamar Alexander of Dearborn & Ewing, Nashville, for Citizens and Southern Realty Investors, Commerce Union Bank, d/b/a Timbers West Apartments, and Harvey Freeman & Sons, Inc.
    W. W. Kennerly of Kennerly, Montgomery, Howard & Finley, Knoxville, for City of Knoxville and Knoxville Utilities Bd.
    Eugene W. Ward, Gen. Counsel, Tennessee Public Service Commission, Nashville, amicus curiae.
   OPINION

PARROTT, Presiding Judge (E. S.).

Westland Drive Service Company, Inc. has appealed from the chancellor’s dismissal of its suit seeking to require Timbers West Apartments to purchase water from West-land instead of Knoxville Utilities Board [KUB],

Timbers West, a 320 unit apartment complex, was constructed in 1972 and, by agreement, KUB began furnishing water to Timbers West on November 16, 1972. The apartment complex is immediately adjacent to and outside the Knoxville corporate limits, but receives water from KUB at a meter located within the city limits of Knoxville. KUB, organized under the charter provisions of the City of Knoxville, has exclusive rights to furnish water within the city limits of Knoxville. The lines from the KUB meter to the apartments were installed and are owned by Timbers West. It is undisputed that all of Timbers West is situated within the boundaries of Westland’s certificate of public convenience and necessity issued by Tennessee Public Service Commission authorizing Westland to do business as a private water utility.

On November 23, 1973, Westland filed a complaint with the Commission complaining of Timbers West’s being furnished water by KUB within Westland’s franchise area. After a hearing of that complaint, the Commission issued an order finding “that Westland Drive Service Company, Inc., has the exclusive franchise heretofore granted by this Commission to provide services throughout its certified area.” The Commission’s order denied the issuance of a show cause order to restrain Timbers West from using water other than that furnished by Westland. However, the last provision of the order directs Westland to immediately proceed in a court of equity to insure that its franchise area is not infringed upon by KUB, Timbers West, and other future customers. It was admitted during argument and in the Commission’s amicus curiae brief filed in this court that the Commission has no jurisdiction over KUB nor does it have any enforcement powers over Timbers West or other customers of Westland.

After the Commission’s order, on November 18,1975, Westland filed this suit and, as amended, seeks to enjoin KUB from furnishing water to Timbers West and asks Timbers West be enjoined from purchasing water from KUB. The suit also seeks money damages.

In this appeal Timbers West argues the chancellor erred in his scope of review of the order of the Commission in that West-land was required to show an ability to provide adequate water service, thus rendering the order of the Commission ineffective, such determination being within the exclusive jurisdiction of the Commission. We cannot agree with appellant’s contention.

This is not a review of a Commission order as provided by T.C.A. 4-523 or T.C.A. 65-220 wherein the review of the chancellor is limited for the purpose of determining whether the Commission has acted arbitrarily or in excess of its jurisdiction or otherwise unlawfully. City of Whitwell v. Fowler, 208 Tenn. 80, 343 S.W.2d 897 (1961). This is an independent action in which Timbers West and KUB are charged with a violation of Westland’s rights and obligations to provide water utility service within Westland’s franchise boundaries, and not an action to review or enforce a Commission order.

Therefore, the Commission’s order had no binding effect on the chancellor; neither was he required to give it full faith and credits as is insisted by the appellant. At the most, the Commission’s order was merely persuasive evidence.

Westland’s cause of action against KUB is primarily predicated on KUB’s alleged violation of T.C.A. 6-319, as amended. The amendment relied on by Westland became effective on April 5, 1974, almost two years after KUB began furnishing water to Timbers West, and provides in pertinent part:

Notwithstanding any other law, public or private, to the contrary no municipality may render utility water service to be consumed in any area outside its municipal boundaries when all of such area is included within the scope of a certificate or certificates of convenience and necessity or other similar orders of the Tennessee public service commission. .

Westland complains of the chancellor’s holding the 1974 amendment to be inapplicable and in effect, unconstitutional. However, we do not have to reach the constitutionality of the 1974 amendment because the amendment does not have a retrospective application but operates only prospectively.

It is generally accepted that an act of the legislature is given a prospective and not a retroactive force unless the retroactive force is plainly expressed and plainly implied by the act. Also it is the court’s duty to strictly construe a statute against retroactive operation and in favor of prospective operation. McEwen v. Den, 65 U.S. 242, 16 L.Ed. 672 (1860); State v. City of Columbia, 210 Tenn. 514, 360 S.W.2d 39 (1962). Prior to the above amendment it was not a violation of the Tennessee statutes for KUB to serve Timbers West. See T.C.A. 6-604, 6-1304, 6-1408. Having held that the 1974 amendment has no retrospective application, the amendment would have no effect on KUB and Timbers West’s valid 1972 agreement.

There remains for our consideration Westland’s assignment of error directed to the chancellor’s permitting a witness to testify from computer printouts of water pressure and flow tests, which he did not make, as to KUB’s ability to provide adequate fire service. We do not see this to be prejudicial error. The fact the witness did not make the tests would only go to the weight of his testimony. Even if the admission of this testimony was error, we find ourselves unable to say that it is prejudicial but would only be harmless. T.C.A. 27 — 117.

From examination of the record we do not find that the evidence preponderates against the chancellor’s finding that it would be inequitable and unjust to require Timbers West to disconnect from KUB’s service and hook on to Westland’s facilities. The proof shows that a change over would generate a cost to Timbers West of from $13,000.00 to $50,000.00. In addition to the change over cost, there would be an increase in cost of water used of $4300.00 per year. Certainly, these increased costs and expenditures would be a detriment to Timbers West and have the effect of devaluing the property.

For the foregoing reasons, let all assignments of error be overruled, and the costs of this cause taxed to appellant.

SANDERS, J., and WILLIAM I. DAVIS, Jr., Special Judge, concur.


author: MATHERNE, Judge.

text:
    Della NOLD, Appellant, v. SELMER BANK & TRUST CO., Cherokee National Life Insurance Co. and Joe T. Hutcherson, Appellees.
    Court of Appeals of Tennessee, Western Section.
    June 20, 1977.
    Certiorari Denied by Supreme Court Nov. 7, 1977.

      Arthur M. Fowler, Jr., Thomason, Crawford & Hendrix, Memphis, for appellant.
    Joe C. Hailey, Hailey & Whitlow, Selmer, for appellee bank.
    George C. Thomas, Jr., Thomas, Welles & Thomas, Dresden, for appellee insurance company.
   MATHERNE, Judge.

The plaintiff sues the defendant bank alleging breach of duty wherein the bank negligently or fraudulently failed to notify the plaintiff and her deceased husband that a policy of credit life insurance on the life of the deceased husband had lapsed prior to the death of the husband. The defendant life insurance company is sued for the alleged wrongful acts of its agent, Joe T. Hutcherson, vice-president of the defendant bank.

The lawsuit was tried on oral testimony before the chancellor without a jury. At the close of the plaintiff’s proof the chancellor granted the defendant’s motion for a “directed verdict.” Regardless of what the motion is called, we conclude that the motion was one for dismissal as allowed by Rule 41.02(2) Tennessee Rules of Civil Procedure. The plaintiff appeals from the ruling of the chancellor.

I.

The record reveals that the plaintiff Della Nold and her husband, Lester Nold, executed a note payable to the order of the defendant Selmer Bank & Trust Company in the amount of $7,293.70, dated December 16, 1971, due one year after date, and bearing interest at the rate of 7 per cent per annum from maturity. This note was executed to replace two existing notes and no money was paid to the makers.

On that date the defendant insurer, acting through its agent Joe T. Hutcherson, who was also the executive vice-president of the defendant bank, issued a certificate of credit life insurance on the life of Lester Nold in the amount of the above indebtedness. The premium on the certificate of insurance was $100.65, which covered a period of 12 months from date. This premium was paid and the amount was included as a part of the loan represented by the note.

The plaintiff, Della Nold, testified that she and her husband always dealt with Mr. McCaslin, the president of the defendant bank. She stated that they had previously lived for 20 years on a farm owned by McCaslin. She stated that she and her husband had only about an eighth grade education and they trusted McCaslin in business affairs. She stated that on the occasion that the note was signed she and her husband went to Mr. McCaslin and he referred them to Mr. Hutcherson with whom they closed the transaction. Mrs. Nold stated that she understood that the note would be renewed and that no one contemplated that it would be paid on the due date. She also stated that Mr. Hutcherson told them that the insurance would remain in force during the time the debt was owing. She understood that they would have to make annual payments of interest and insurance premium.

During the 12 month period of the note it was determined that Lester Nold was suffering from cancer. Lester Nold died on November 1, 1973. In the meantime Mrs. Nold had, on April 10, 1973, paid the bank $516.32. Mrs. Nold stated that it was her understanding that the amount paid covered interest and premium on the policy. This understanding by Mrs. Nold is buttressed by the testimony of her son, David Nold. That witness stated that he called Mr. McCaslin by telephone and was told by him that $516.32 would take care of the “interest and insurance” on the note. At the time of the conversation Lester Nold was in the hospital. David conveyed this information to his mother who then paid the amount to the bank. Mrs. Nold was not told that the amount paid covered only interest on the principal balance of $7,375.70 (arrived at by adding $82. house insurance premium to the note of $7,293.70). Based upon what Mr. McCaslin told her son, Mrs. Nold left the bank thinking that the interest and insurance premium were paid.

Della Nold testified that Mr. McCaslin visited the Nold’s after her husband became ill and at that time assured them that credit life insurance covered the debt owed the bank. Curtis Evans, son-in-law of Mrs. Nold testified that he was with Lester Nold in the Bank of Selmer when Lester said to Mr. McCaslin that he had to get his note and insurance straightened up before he went to the hospital and Mr. McCaslin said “(w)e will take care of that for you.” This conversation was only a week or two prior to the death of Lester Nold. This witness also testified that Lester Nold told him in June of 1973 that he (Nold) was glad he had credit life insurance on the bank loan because he did not think he would live long enough to pay it off. Billy Burnett testified that Lester Nold told him that he had credit life insurance on his home loan. This statement was made about one week before Lester Nold returned to the hospital where he died within three or four days after entry. The foregoing is a summary of the evidence pertinent to the disposition of this appeal.

II.

When a Rule 41.02(2) motion is made, the trial court is to consider and weigh all the evidence, find the facts, apply the law to the facts, and render a decision. This is the procedure followed in the federal courts under Federal Rule 41(b). See Moore’s Federal Practice, § 41.13. In a prior consideration of this lawsuit, this Court felt bound by the rule announced in Butts v. Birdwell (Tenn.App.1973) 503 S.W.2d 930, and remanded this lawsuit for a new trial. The ruling made in Butts is that on a Rule 41.02(2) motion the trial judge must view the evidence most favorable to the plaintiff and allow all reasonable inferences in the plaintiffs favor. On petition for certiorari the Supreme Court filed the following Order in this cause on March 14, 1977:

Upon due consideration of the petition for certiorari, the briefs and written arguments of the parties, the Court concluded that the petition should be granted, that the judgment of the Court of Appeals should be reversed, and that this cause should be remanded to that Court for further consideration, unfettered by the rule announced in Butts v. Birdwell, Tenn.App., 503 S.W.2d 930 (1973) for evaluating the evidence in a non jury case when determining a motion to dismiss as provided by T.R.C.P. Rule 41.-02(2).

With that mandate, we apply to the trial court the rule followed by the Federal system and as outlined in Moore, supra.

On review by this Court of a judgment based on Rule 41.02(2) motion, this Court is governed by T.C.A. § 27-303. That statute provides that in non-jury lawsuits a review in this Court of any issue of law or fact shall be de novo upon the record of the trial court, accompanied by a presumption of the correctness of the judgment or decree of the trial court, unless the preponderance of the evidence is otherwise.

III.

We affirm the chancellor in his dismissal of the lawsuit against the defendant insurer and defendant Joe T. Hutcherson as the agent of the insurer. The only statement attributed to Hutcherson as agent of the insurer is that, at the time the note was signed and the credit life certificate was issued, he told Mr. and Mrs. Nold that the insurance would remain in force for the life of the indebtedness. Mr. and Mrs. Nold were not misled to their detriment by that statement because Mrs. Nold testified that they understood that annual payments of premiums on the credit life policy would have to be made in order to keep the policy in force. There was no duty owed by Hutcherson, as agent of the insurer, to go to Mr. and Mrs. Nold and tell them the renewal premiums had not been paid. There is no proof that the insurer or its agent Hutcherson refused to issue a renewal certificate of credit life insurance on the life of Lester Nold. There is no proof that a renewal of that insurance was requested by Mr. and Mrs. Nold, nor by the bank.

There was no certificate in force at the time of the death of Lester Nold. It is therefore immaterial whether the insurer complied with certain regulations of the State Department of Insurance and Banking as insisted upon by the plaintiff.

IV.

A different picture is presented, however, on the position of Della Nold as against the defendant bank. From the proof as heretofore outlined, we find as a fact that: Lester Nold died believing he had credit life insurance covering the note owing to the bank; Mr. McCaslin did tell David Nold, son of the plaintiff, that a $516.32 payment would cover interest and insurance; Della Nold thought the $516.32 payment to the bank covered the premium on the credit life policy; Mr. McCaslin, president of the defendant bank did tell Lester Nold that “(w)e will take care of that for you” in answer to a statement by Nold that he wanted to straighten up the note and insurance prior his last entering the hospital; Mr. McCaslin also told Lester and Della Nold that they had credit life insurance on the note. With that proof in the record and unrefuted, we hold that the preponderance of the evidence is contrary to the ruling of the chancellor in relation to Della Nold’s cause of action against the bank.

We are mindful that a discovery deposition of Joe Hutcherson, taken by the plaintiff, marked filed by the clerk and master on November 24, 1975, the day of the trial, has been sent to this Court along with the record. No part of that deposition was read into the evidence. We cannot consider that deposition because this lawsuit was heard on oral testimony before the chancellor and the mere filing of a discovery deposition with the clerk and master does not make the deposition a part of the record on review. Compare Wilson v. Tranbarger (1965) 218 Tenn. 208, 402 S.W.2d 449. See also Rule 26.04, Tennessee Rules of Civil Procedure, on the use of discovery depositions. That rule clearly contemplates that if the discovery deposition is to be used as evidence, that part so used must be offered in evidence. If only a part of the deposition is “offered in evidence,” an adverse party may require the party to “introduce all of it which is relevant to the part introduced.”

We conclude the chancellor erred in dismissing the lawsuit as to the defendant bank. This lawsuit is remanded to the Chancery Court sitting in McNairy County, Tennessee for a new trial as between the plaintiff and the defendant bank.

The cost of this appeal is adjudged against the defendant bank. The cost in the trial court will be there adjudged.

NEARN, J., concurs.

CARNEY, P. J., not participating.

ON APPELLANT’S PETITION TO REHEAR

The plaintiff-appellant has filed a petition to rehear wherein she avers that this Court was in error when we stated in the original opinion that:

There is no proof that the insurer or its agent Hutcherson refused to issue a renewal certificate of credit life insurance on the life of Lester Nold. There is no proof that a renewal of that'insurance was requested by Mr. and Mrs. Nold, nor by the bank.

The plaintiff does not challenge the accuracy of the quoted statement, but insists that the answer of the insurer and the answer of the agént, Hutcherson, to the amended complaint filed by the appellant admits a refusal to renew the insurance coverage.

The amended complaint states that neither the plaintiff nor her deceased husband “were ever informed or notified by Joe T. Hutcherson from the inception of said note until the death of Lester Nold that the insurance policy was not in effect and no longer covered Lester Nold.” That allegation was countered by the defendant insurer and by Hutcherson in their answers to the amended complaint wherein they allege that they refused to issue or renew a certificate to Lester Nold.

A fact question was thus presented, but no proof was tendered on the issue. We adhere to the challenged quotation as set out in the original opinion.

The petition to rehear is denied at the cost of the petitioner.

NEARN, J., concurs.

CARNEY, P. J., not participating.


text:
    W. D. CHISHOLM, Appellee, v. Willard BOHANNON and Perry Cox, d/b/a B & C Sales and Service, Appellants.
    Court of Appeals of Tennessee, Western Section.
    June 20, 1977.
    Certiorari Denied by Supreme Court Oct. 17, 1977.

      J. Thomas Caldwell, Ripley, for appellants.
    Paul E. Dew, Ripley, for appellee.
   MATHERNE, Judge.

The issue is whether the plaintiff has made out a case, based upon circumstantial evidence, that the defendants are guilty of actionable negligence in the repair of the plaintiffs machine.

The trial judge, sitting without a jury, found for the plaintiff. The defendants appeal insisting that: (1) there is no competent evidence that the defendants were negligent; (2) the court’s decision is based upon speculation and conjecture; and (3) the plaintiff was guilty of proximate contributory negligence.

I.

In the month of July 1974, the plaintiff delivered his D955H Front-End Loader to the defendants for repairs. The defendants were to repair the final drive system of the machine. After repairs had been completed, the plaintiff took his machine to a sand pit and had loaded three loads of sand when the machine began to malfunction. The defendants were called to the scene and the defendant Bohannon removed the filters from the machine. It was then observed that what is called a “shop rag” was in the machine. This rag was rather chewed up and particles of it were in the filters. The defendant installed new filters. The plaintiff testified that the defendant Bohannon told him that he didn’t see how the rag got in there but that he, the defendant, must have left it in there when he had the cap off of the steering system compartment, which he had to take off to get to the final drive.

The plaintiff continued to operate the machine until December 1974, when it again malfunctioned. The plaintiff then had the machine hauled to Taylor Machinery Company at Memphis, Tennessee. Bob Roebig of that company testified that the trouble was in the transmission of the machine where he found pieces of a “shop rag.” This witness, who qualified as an expert on this type machinery, stated that if a shop rag were dropped into the steering system compartment it could be forced through the filters into the transmission. He stated that in his opinion the pieces of shop rag in the transmission is what caused the machine to stop performing. The repair bill at Taylor Machinery Company was $3,488.46.

II.

Any fact may be proved by direct evidence, circumstantial evidence, or a combination of direct and circumstantial evidence. Phillips v. Newport (1945) 28 Tenn. App. 187, 187 S.W.2d 965. There is no direct proof that the defendants left the shop rag in the machine. There is, however, no reasonable explanation given or advanced as to any other manner by which the object could have entered into the interior of the machine. The defendants argue that the plaintiff was in their shop helping with the repair of the machine. They also point out that the plaintiff furnished his own oil to refill the machine after the repairs were completed. The defendants infer that the plaintiff might in some manner have caused the shop rag to get into the machine. The plaintiff testified that he did assist the defendants with some heavy work with a sledge hammer in removing the pins which hold the track, and he helped remove some sprokets from the final drive. The plaintiff denied that he cleaned the oil pan or the oil cover. The plaintiff said that he pumped oil out of a 55 gallon drum directly into the machine to refill it.

Where the plaintiff is dependent upon circumstantial evidence, it is sufficient if he makes out the more probable hypothesis, and the evidence need not arise to that degree of certainty which will exclude every other reasonable conclusion. Bryan v. Aetna Life Ins. Co. (1939) 174 Tenn. 602, 130 S.W.2d 85. The plaintiff’s proof that the defendants repaired the machine; that they had the machine torn down in such manner that a shop rag could have been left in the interior of the machine; that the defendant stated that he didn’t see how the rag got in there but that he, defendant, must have left it in there when he had the cap off of the steering system compartment; that the expert Roebig said the particles of the shop rag could be forced through the filters into the transmission; and that there was no other opening of the interior of the machine by anyone after the repairs were made until the trouble developed, all establish circumstances which point to the guilt of the defendant. The attempt by the defendants to place the blame on the plaintiff because he was present when some of the repairs were made and furnished the oil to refill the machine simply does not, in the opinion of this Court, establish an inference of the guilt of the plaintiff in equal degree to that of the guilt of the defendants.

We hold the evidence does not preponderate against the finding of the trial judge that the defendant negligently permitted the shop rag to enter into and stay within the interior of the machine. That conclusion was not based upon speculation and conjecture; it was based upon the weight of the evidence.

The fact that the shop rag caused the damage to the machine is supported by an abundance of direct evidence. The trial judge gave judgment for only $2,500 because the plaintiff now has a new transmission in his machine whereas the one damaged had been used a few years.

Complaint is made that the trial judge erred in considering evidence of the failure of the defendant, after the shop rag was discovered, to warn the plaintiff that the shop rag might damage the transmission. The defendant argues that this theory of negligence was not stated in the complaint or in any amendment to the complaint. The record does not reveal that the defendant objected to the evidence. Under Rule 15.02, Tennessee Rules of Civil Procedure, when issues not raised by the pleadings are tried by the express or implied consent of the parties, those issues will be treated in all respects as if they had been raised in the pleadings.

All assignments of error are overruled, and the judgment of the trial court is affirmed. The cost in this Court is adjudged against the defendants-appellants.

NEARN, J., and MORRIS, Special Judge, concur.


text:
    PITTS & COMPANY, INC. and the Jordan Companies, Appellees, v. CITY OF MEMPHIS, Appellants.
    Court of Appeals of Tennessee, Western Section.
    July 21, 1977.
    Certiorari Denied by Supreme Court Dec. 5, 1977.

      Frierson M. Graves, Jr., Memphis, for appellants,
    Marion S. Boyd, Jr., Robert M. Johnson and Mary L. Wolff, Memphis, for appellees; Canada, Russell & Turner, Memphis, of counsel.
   MATHERNE, Judge.

The plaintiffs, subdivision developers* sue the City of Memphis to enforce the terms of an aid-in-construction contract they entered into with a water utility district, which utility district has been taken over by the city.

The issue is whether the city is bound by the terms of an acceleration of refund payments provision of the contract. The trial judge sustained the plaintiffs’ motion for summary judgment, held that the city was bound under the acceleration of refund payments clause and entered judgment against the city for the balance due the plaintiffs under the contract. The city appeals.

I.

The plaintiffs developed a residential subdivision in east Shelby County. The Southeast Memphis Suburban Utility District of Shelby County (District) supplied water to that area of the county. The plaintiffs entered into an aid-in-construction contract with the District whereby the plaintiffs deposited $88,456.90 with the District as the estimated cost of construction of the necessary water mains and other water supplying facilities to the subdivision. The District agreed to build the water supplying facilities, supply water to the subdivision and to refund the plaintiffs’ deposit by annual payments equal to 50% of the water revenues collected from its customers in the subdivision.

Paragraph 8 of the contract contains the following acceleration of payments provisions:

8. Acceleration of payments. In the event that the ownership or contract of SEMSUD (District) is sold to, acquired by or transferred to any other agency, corporation, utility company or division of any Municipal or County Government, then in that event, the balance of any and all refunds and/or credits due and contemplated in Paragraph seven, above, will be paid in full at that time to PAC-JC, (plaintiffs) regardless of any time remaining in the ten year schedule as set forth herein.

The contract is dated November 2, 1971, and provides that the refund would be paid annually for a period of ten years or until the total amount of the aid-in-construction deposit has been repaid.

On July 13, 1971, the city began its proceedings to annex territory in the District area. The territory was annexed effective December 31, 1971. The annexed territory did not include all of the area served by the District. Thereafter, the city, under the authority granted it by T.C.A. § 6-308, et seq., elected to provide water services to the entire area served by the District. The city also reached an agreement with the County of Shelby whereby the county would furnish fire protection services to that part of the territory served by the District but beyond the boundaries of the annexed area, As result, the City of Memphis, the County of Shelby and the District entered into a contract dated March 31, 1973, whereby the city was to take over the entire District and the District would be dissolved. The District was dissolved by Order of the County Court of Shelby County, Tennessee, dated July 9, 1973.

II.

The city argues that the District was not “sold to, acquired by or transferred to” it so as to activate the acceleration clause of the contract between the District and the plaintiffs. The city insists that it merely “stepped into the same shoes” of the District; was “substituted in lieu of” the District; or became the “successor such as successor trustee of” the District. The City argues that there was no transfer of the District to the city.

We disagree with the city’s argument. Paragraph 12 of the May 31, 1973 contract between the city, the county and the District provides in part as follows:

12(a) The District agrees to transfer to the Light, Gas and Water Division of the City of Memphis for the use and benefit of the City of Memphis all of the properties of the District, real and personal, together with titles and evidences of titles to the water system.

The city agreed to assume all obligations of the District as it was required to do by T.C.A. § 6-318, the statute which gave the city the authority to act in the present situation.

The May 13, 1973 contract acknowledges the existence of certain aid-in-construction contracts. An exhibit to the contract lists the plaintiffs’ contract in the amount of $88,456.90, and refers to the plaintiffs’ contract on the question of whether there was an acceleration of refund payments in the event of annexation. The city was fully advised of the contents of the plaintiffs’ contract when it agreed to take over the District and assume its obligations.

The city did attempt to absolve itself from the obligation of an acceleration of refund by inserting the following language in the May 31, 1973 contract:

On those extension (aid-in-construction) contracts that were to allow for total or partial refund of any remaining amount upon annexation, the City agrees only to refund at 50% of the regular water bills projected on present District rates less a monthly flat charge of $1.10.

We hold that the city cannot under T.C.A. § 6-318 accept some obligations under the contract between the District and the plaintiffs and reject other obligations thereunder. That statute requires an agreement that will fully preserve and protect the contract rights vested in holders of any outstanding revenue bonds of the District and “other obligations.” The plaintiffs’ contract is, admittedly, an “other obli-' gation” of the District.

III.

The city argues that by refusing to honor the acceleration of refund payments it is acting within the police power of the state, which permits it to abrogate certain portions of a contract in order to provide needed services for the residents of the District.

We do not find an overriding public purpose served by the action of the city in refusing to honor its obligations under the contract. Here the municipality, without police power justification, unilaterally altered the contract between the plaintiffs and the District for the city’s benefit. Compare, Daniel v. Oakland (1973) 124 N.J. Super. 69, 304 A.2d 757.

The city relies upon the fact that its officials met with the officials of the District prior to the time annexation proceedings were commenced and told the District officials that the city would not agree to assume any developer’s aid-in-construction contract which contained an acceleration of refund payments upon annexation. The city argues that this statement to the officials of the District bars the enforcement of the acceleration of refund payments contract subsequently entered into between the District and the plaintiffs. There is no claim that the District, in consideration of annexation, agreed not to enter into such a contract. Neither does the city claim that the plaintiff made such an agreement. The District had the legal right to enter into the aid-in-construction contract with the plaintiff. There is no showing that the city was misled to its detriment.

All assignments of error are overruled and the judgment of the trial court is affirmed. The cost in this Court is adjudged against the City of Memphis.

CARNEY, P. J., and NEARN, J., concur.


author: DAVIS, Commissioner. ODOM, Judge, DOUGLAS, Judge,

text:
    William Glenn EDWARDS, Appellant, v. The STATE of Texas, Appellee.
    No. 53168.
    Court of Criminal Appeals of Texas.
    Nov. 9, 1977.
    State’s Motion for Rehearing Denied Dec. 14, 1977.
    Melvyn Carson Bruder, Dallas, for appellant.
    Henry N. Wade, Dist. Atty., Edgar A. Mason and Fred Davis, Asst. Dist. Attys., Dallas, Jim D. Vollers, State’s Atty., Austin, for the State.
   OPINION

DAVIS, Commissioner.

Appeal is taken from a conviction for bookmaking. Punishment was assessed by the jury at five years, probated.

Appellant contends that the trial court erred by communicating orally with the jury after deliberations had begun, in violation of Art. 36.27, V.A.C.C.P.

During the punishment stage of the trial, the jury sent a note to ’the court stating, “We are hung.” Appellant promptly moved for a mistrial, which motion was overruled. The record reflects that the following then transpired:

“MR. MERRILL [defense counsel]: Comes now the Defendant, William Glenn Edwards, and after having previously made a motion for mistrial, at 3:15, before the jury is brought back in, respectfully objects to any oral instructions to the jury under the laws of this state and denies him the opportunity to prepare and file written exceptions to any instructions which may be given to the jury. The Defendant has not been given or told what any oral instructions might be. Defendant renews motion for mistrial.
“THE COURT: Anything further?
“MR. MERRILL: No, sir.
“THE COURT: Motion is overruled. Oral instructions will be given, taken down by the Reporter, a copy of such will be furnished to the attorney for the Defendant. Bring the jury in.
“(Whereupon, the jury was returned into open court and the following proceedings were held in the presence and hearing of the jury:)
“THE COURT: I have received a note from the foreman. Now, Mr. Foreman, there are some questions that I want to ask you and I want you to listen closely to the questions and answer the questions I ask and only those questions. I do not want you in your answers to say a designated number favors this, a designated number favors that. I’m not interested in that. I simply want to know what the break down is at this time. By break down, I mean whether there are a certain number, what the numbers are insofar as the difference is concerned. Now, do you understand exactly what I mean?
“THE JURY FOREMAN: All right. I understand.
“THE COURT: All right. What is the break down numberwise, Mr. Foreman? “THE JURY FOREMAN: 10 to 2.
“THE COURT: All right. Then, it’s the opinion of the Court that with that break down, that we have not used sufficient time in deliberation to return a verdict. Now, this case has to be settled by some twelve jurors. I regard all of you as honest and intelligent jurors. I do not know of any twelve jurors who can do better than you can. I think you can settle it and you ought to settle it and I want it to be settled. I have no desire to attempt to coerce you into a verdict. This is a matter for each of you to determine for himself or herself, but it is to the interest of society that you should consider your differences and, if you can, agree upon a verdict. You will please return to the jury room and if you can reconcile your differences and agree upon a verdict I hope you will please do so. You will now retire to the jury room.”

After the oral instructions were given and the jury was retired, appellant again moved for a mistrial, complaining, “the instructions were not in writing to the jury; . . the Defendant was not allowed to accept [sic] before they were given their instructions; . . . that the instructions put undue duress and pressure upon two jurors to change their votes.” The motion was denied.

Article 36.27, V.A.C.C.P., provides as follows:

“When the jury wishes to communicate with the court, it shall notify the sheriff, who shall inform the court thereof. Any communication relative to the cause must be written, prepared by the foreman and shall be submitted to the court through the bailiff. The court shall answer any such communication in writing, and before giving such answer to the jury shall use reasonable diligence to secure the presence of the defendant and his counsel, and shall first submit the question and also submit his answer to the same to the defendant or his counsel or objections and exceptions, in the same manner as any other written instructions are submitted to such counsel, before the court gives such answer to the jury, but if he is unable to secure the presence of the defendant and his counsel, then he shall proceed to answer the same as he deems proper. The written instruction or answer to the communication shall be read in open court unless expressly waived by the defendant.
“All such proceedings in felony cases, shall be a part of the record and recorded by the court reporter.”

The Legislature used the word “shall” in directing the court to answer any communication of the jury in writing. In Waythe v. State, 533 S.W.2d 802, 804, this Court quoted with approval from Brinkley v. State, 167 Tex.Cr.R. 472, 320 S.W.2d 855, where it was stated:

“ ‘Must’ and ‘shall’ are synonymous and are usually mandatory when used in statutes.”

This Court has held that oral instructions to the jury are not in compliance with Art. 36.27, supra, but has found that failure of the defendant to object results in waiver of the error. Calicult v. State, Tex. Cr.App., 503 S.W.2d 574; Verret v. State, Tex.Cr.App., 470 S.W.2d 883. In Smith v. State, 513 S.W.2d 823, this Court found that it was error for the trial court not to comply with the requirements of Art. 36.27, supra, but stated further:

“However, it is incumbent upon a defendant to bring the easily correctable error to the judge’s attention by objection or formal bill of exception or the acts of the trial court are presumed consistent with the statute. Smith v. State, 474 S.W.2d 486 (Tex.Cr.App.1972); Lipscomb v. State, 467 S.W.2d 417 (Tex.Cr.App.1971); Verret v. State, 470 S.W.2d 883 (Tex.Cr. App.1971); Rodriquez v. State, 500 S.W.2d 517 (Tex.Cr.App.1973); Hancock v. State, 120 Tex.Cr.R. 162, 47 S.W.2d 299 (1932); McClellan v. State, 118 Tex.Cr.R. 473, 40 S.W.2d 87 (1931).”

The statutory requirement that additional instructions to the jury be made in writing and submitted to the defendant before the same is read to the jury affords the defendant and his counsel an opportunity to examine same and urge objections, if any, to such instructions. Art. 36.27, supra; see concurring opinion in Calicult v. State, supra.

In the instant case appellant timely objected that the court’s action in giving oral instruction to the jury denied him the opportunity to prepare and file written exceptions to any instructions given to the jury.

We cannot agree with the State that it was necessary that appellant show harm before the error results in reversal where, as in the instant case, the statutory requirement is mandatory and the appellant timely objected to the court’s failure to follow the statute.

The judgment is reversed and the cause remanded.

Opinion approved by the Court.

ODOM, Judge,

concurring.

I join the majority opinion, and take this opportunity to distinguish the four primary cases relied on in the dissent: Brown v. State, Tex.Cr.App., 505 S.W.2d 850; Arrevalo v. State, Tex.Cr.App., 489 S.W.2d 569; Romero v. State, Tex.Cr.App., 458 S.W.2d 464; and Allaben v. State, Tex.Cr.App., 418 S.W.2d 517, 520.

First, the statutory provision here applicable (Art. 36.27, V.A.C.C.P.), provides in part: “Any communication [from the jury to the court] relative to the cause must be written . . .,” and, “The court shall answer any such communication in writing, . ” (Emphasis added.) Timely objection was raised to the court’s failure to follow this mandatory statute. As was pointed out and discussed in Allaben v. State, supra, the first case decided under Article 36.27 of the 1965 Code of Criminal Procedure, this new statutory provision changed the law from what it was under the 1925 Code of Criminal Procedure.

The cases of Brown and Romero, supra,, are not in point because the communications from the court there admonished the jurors about overnight accommodations, not to discuss the case, or to avoid news accounts of the case. Such matters are not within the scope of Art. 36.27, supra, because they are not “communication relative to the cause.” The communication here was relative to the cause and within the scope of the statute.

Arrevalo and Allaben, supra, are not in point because in those cases no objection was voiced to the failure to follow the statute and answer in writing. Allaben v. State, supra, the landmark case, specifically stated, “A careful compliance with Article 36.27, supra, would have required the answer in the case at bar to have been in writing.” (Emphasis added.) Although there follows in that opinion some statements that appear to be based on the 1925 Code provisions, the applicability of the new provision’s mandatory feature was expressly stated. In the case at bar, unlike Arre-valo and Allaben, timely objection was raised to the failure to follow that mandatory requirement of a written answer to the jury’s communication. The need for objection pointed out in Calicult v. State, Tex.Cr. App., 503 S.W.2d 574, was here satisfied.

PHILLIPS, J., joins this opinion.

DOUGLAS, Judge,

dissenting.

The majority erroneously holds that Article 36.27, V.A.C.C.P., mandates that all communications, of any kind whatsoever, between the court and jury, must be in writing. In fact, this Court has repeatedly held to the contrary and has limited application of Article 36.27 to those communications which constitute additional instructions to the jury. Requests that a jury make additional efforts to reach a verdict have never been considered as jury charges within the meaning of Article 36.27.

In Arrevalo v. State, 489 S.W.2d 569 (Tex.Cr.App.1973), the trial court orally requested a deadlocked jury to return to the jury room and continue its deliberations. We held that communications between the trial court and jury which are not in compliance with the statute, but which do not amount to additional instructions by the court, do not constitute reversible error.

The same rule has been applied in Brown v. State, 505 S.W.2d 850 (Tex.Cr.App.1974); Romero v. State, 458 S.W.2d 464 (Tex.Cr. App.1970); Allaben v. State, 418 S.W.2d 517 (Tex.Cr.App.1967). In each case, the jury was either referred to the court’s original charge and directed to continue deliberation or admonished not to discuss the case or listen to media accounts of the trial. Inasmuch as none of these communications constituted new or additional instructions to the jury, it was uniformly held that such oral directions were not reversible error.

In the present case, no additional instructions were orally communicated by the trial court to the jury. The jury was directed to resume deliberations and reach a verdict if possible. No new instructions were given as to the law applicable to the offense or the application of such law to the facts. In directing that the jury attempt to reach a unanimous verdict, the trial court did nothing more than restate instructions which it had already reduced to writing. Therefore, no reversible error is presented.

In his fourth ground of error, appellant complains of the trial court’s “blockbuster” charge in that it placed undue duress and pressure upon the jurors to reach a unanimous verdict. The majority does not reach the issue of harm, holding instead that Article 36.27 is mandatory and not subject to the harmless error rule. In light of our decision in Arrevalo, Article 36.27, supra, is not mandatory with regard to oral statements which do not amount to additional instructions, and the harmless error rule applies. In this case, the oral instructions of the trial court were not coercive and no harm is shown.

The record shows that on June 26,1975 at 1:38 p.m. appellant’s case was submitted to the jury on the issue of punishment. At 2:52 p.m. the jury sent a note to the court saying, “We are hung.” At 3:09 p.m. appellant moved for mistrial and at 3:15 p.m. appellant objected to the giving of any oral instructions. Immediately thereafter the trial court had the following oral exchange with the foreman of the jury:

“THE COURT: I have received a note from the foreman. Now, Mr. Foreman, there are some questions that I want to ask you and I want you to listen closely to the questions and answer the questions I ask and only those questions. I do not want you in your answers to say a designated number favors this, a designated number favors that. I’m not interested in that. I simply want to know what the break down is at this time. By break down, I mean whether there are a certain number, what the numbers are insofar as the difference is concerned. Now, do you understand exactly what I mean?
“THE JURY FOREMAN: I’m not right sure. You ask the question and then if I don’t understand it then I will—
“THE COURT: Well, let’s put it this way: I don’t want you to say there are so many jurors who favor doing this, there are so many who favor doing that. You just tell me what the break down is numberwise.
“THE JURY FOREMAN: Numberwise like 4 to 3 or 2 to 1?
“THE COURT: Yes, sir.
“THE JURY FOREMAN: All right. I understand.
“THE COURT: All right. What is the break down numberwise, Mr. Foreman?
“THE JURY FOREMAN: 10 to 2.
“THE COURT: All right. Then, it’s the opinion of the Court that with that break down, that we have not used sufficient time in deliberation to return a verdict. Now, this case has to be settled by some twelve jurors. I regard all of you as honest and intelligent jurors. I do not know of any twelve jurors who can do better than you can. I think you can settle it and you ought to settle it and I want it to be settled. I have no desire to attempt to coerce you into a verdict. This is a matter for each of you to determine for himself or herself, but it is to the interest of society that you should consider your differences and, if you can, agree upon a verdict. You will please return to the jury room and if you can reconcile your differences and agree upon a verdict I hope you will please do so. You will now retire to the jury room.”

The oral instructions of the trial court cannot be viewed in a vacuum. The record reflects that the jury had only deliberated for one hour and fourteen minutes, and had ten members in agreement, when it announced to the court that it was deadlocked. In this context, it was entirely reasonable for the trial court to believe that the jury was capable of reaching a unanimous verdict, and it was proper for the court to urge the jury to do so. The trial court’s request that the jury resume its deliberations and, if possible, reach a verdict was neither improper nor coercive.

The majority opinion infers that the statements made by the trial court were erroneous in light of United States v. Duke, 492 F.2d 693 (5th Cir. 1974). Holdings of the Fifth Circuit, however, are not binding upon this Court. While we have never reviewed language identical to that used by the trial court in the present case, we have examined similar charges and found them not to be coercive of a verdict. Stanton v. State, 535 S.W.2d 182 (Tex.Cr.App.1976); Arrevalo v. State, supra; Potter v. State, 481 S.W.2d 101 (Tex.Cr.App.1972); Gamblin v. State, 476 S.W.2d 18 (Tex.Cr.App.1972). The oral directions which were given in the present case are distinguishable from the kind of charge which was found to be erroneous in Smith v. State, 155 Tex.Cr.R. 190, 233 S.W.2d 138 (1950), wherein the court told a deadlocked jury: “I am not ready to discharge you at this time. The facts are too clear in this case for there to be any hung jury in this case. It costs too much to try these cases over.” 233 S.W.2d 138 at 139.

The statements of the trial court in this case were in no respect coercive, but only reflective of the court’s reasonable belief that the jury could agree with further deliberation. No harm having been shown to appellant, the conviction should be affirmed.

      . In light of our holding that it is unnecessary that a showing of harm be made where timely objection is made, we find it unnecessary to consider appellant’s contention that he was harmed by the court’s instructions in that they placed undue duress and pressure on the jury to reach a unanimous verdict. We do, however, call attention to United States v. Duke, 492 F.2d 693 (5th Cir. 1974) in light of the court’s statement to the jury, “I think you can settle it and you ought to settle it and I want it to be settled.” In Duke, the jury was admonished by the court, “ . . .a decision has to be reached by a jury. You are that jury.” As in the instant case, the instructions in Duke concluded with statements which tended to ameliorate the earlier statements. In spite of this fact, the 5th Circuit found that the trial court gave “an erroneous version of the ‘Allen ’ [Allen v. United States, 164 U.S. 492, 17 S.Ct. 154, 41 L.Ed. 528 (1896)] charge.”

      . The charge, in pertinent part, states:
      “After argument of counsel, you will retire and select one of your members as your foreman. It is the duty of your foreman to preside at your deliberations and to vote with you in arriving at a verdict. Your verdict must be unanimous, and after you have arrived at your verdict, you may use one of the forms attached hereto by having your foreman sign the particular form that conforms to your verdict.”