author: J. CURTISS BROWN, Chief Justice.

text:
    James Morgan SCOTT, Jr., Appellant, v. TEXAS WATER DEVELOPMENT BOARD et al., Appellees.
    No. B1953.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    April 18, 1979.
    Rehearing Denied May 9, 1979.

      James Morgan Scott, Jr., pro se.
    Sidney A. Fitzwater, Robert A. Fitzwa-ter, Vinson & Elkins, Houston, John L. Hill, Atty. Gen., David M. Kendall, Jr., First Asst. Atty. Gen., Troy C. Webb, Douglas G. Caroom, Richard W. Lowerre, Asst. Attys. Gen., Austin, for appellees.
    Before J. CURTISS BROWN, C. J., and COULSON and CIRE, JJ.
   J. CURTISS BROWN, Chief Justice.

James Scott and Jack Woods (appellants) appeal from the order of the District Court of Fort Bend County dismissing for lack of jurisdiction their attempted administrative appeal from an order of the Texas Water Development Board (Board) approving a reclamation project in Fort Bend County. The Board and the Fort Bend County Levee Improvement District No. 2 (District) are appellees.

On April 1, 1977, appellee, the Board, overruled the motion for rehearing filed by appellants who were contesting the order of the Board approving the “Plans for Reclamation Project” filed by the District. Appellants attempted to appeal from that order pursuant to section 57.094(a) of the Texas Water Code (1972). That section provides:

If the Board or any interested person is dissatisfied with the action of the Water Development Board in finally approving or disapproving any plan of reclamation for the district, the Board or the person may within fifteen days after the final action, file suit against the Water Development Board in the district court of the county in which the court of jurisdiction is located, (emphasis added).

If, as contended by the appellees, the Board’s order of April 1,1977, was an order “finally approving or disapproving any plan of reclamation,” and the appeal was brought within fifteen days after it was rendered, the District Court of Fort Bend County would have specific statutory authority to hear an appeal from that order. However, the trial court determined that on August 17, 1976, the final approval of the plan of reclamation was given and that appellants had not appealed from that order within the fifteen day statutory limit provided in section 57.094.

Appellees contend that pursuant to section 57.156(a) and (b) of the Texas Water Code, the district engineer’s report becomes the “plan of reclamation” and that Board approval of that report constitutes a final approval of a plan of reclamation for the purposes of section 57.094. Appellees further claim that the district engineer’s report was approved more than fifteen days before appellants filed their appeal in the district court of Fort Bend County. In appellees view, the order appellants attempted to appeal from constituted one step of an administrative approval procedure implemented as a supplement to the statutory “final” approval of the district engineer’s report.

The Water Code does not define or otherwise explain an “[order] finally approving or disapproving any plan of reclamation.” However, the Board, through its rules and regulations promulgated pursuant to statutory authority, has established a three-tier approval procedure. The first tier is Board approval of the district engineer’s report. The Water Code mandates a district engineer’s report in section 57.154 which provides:

The engineer shall make a survey of the land inside the boundaries of the district, and land surrounding the district, that will be improved or reclaimed by the system of levees and drainage to be adopted and shall prepare for the board a written report, with maps and profiles, of the results of his survey.

Section 57.156(b) continues:

When the engineer’s report is approved by the water development board and adopted by the board, it shall be known as “The Plan of Reclamation.”

Before construction begins, “the water development board must approve the plans for the levees or other improvements.” Texas Water Code, § 57.093 (1972). In its rules and regulations, the Board provides:

EFFECT OF APPROVAL: The approval by the Board of the district engineer's report is not an approval of a project within the meaning of Section 11.458, Section 57.093 or 57.102 of the Code and is not subject to disposition under the Rules of Practice and Procedure. Prior to the undertaking of any construction of a project by a district, however, approval of the Board must be obtained as provided in the Code and these Rules and is subject to the Rules of Practice and Procedure, (emphasis added).

Rules and Regulations of the Texas Water Development Board Relating to Levee Improvement Districts and Approval of Plans for Reclamation Projects 507 (1975). The Board, in promulgating rule 507, expressed the intent that more than approval of a district engineer’s report is required to meet the requisites of section 57.093 of the Water Code, yet now takes the contrary position that approval of the district engineer’s report constitutes final approval of a plan of reclamation within the scope of 57.094. The Board takes this anomalous stance despite the failure of either the Code or the rules to provide any public input into the approval of the district engineer’s report. Therefore, the court’s finding that the Board’s approval of the district engineer’s report of August 17, 1976, was an order finally approving or disapproving a reclamation plan was in error. However, our conclusion does not, of itself, require reversal of the District Court of Fort Bend County lacked jurisdiction for some other reason. Tex.R.Civ.P. 434.

Since the District Court of the county of jurisdiction acquires jurisdiction only of orders “finally approving or disapproving” a reclamation plan, we must determine whether the Board’s action in overruling appellant’s motion for rehearing on April 1, 1977, was such an order. The second tier of the Board’s approval procedure calls for the District to submit fairly detailed preliminary plans of the project after approval of the district engineer’s report. Rules and Regulations 601-607 (1975). Additionally, the Rules provide for public notice and a hearing before approval of the preliminary plans.

608. PUBLICATION OF NOTICE OF APPLICATION FOR APPROVAL OF PROJECT PLANS: When the Engineer has determined that the application is complete with respect to the matters required by Rules 601 through 607 inclusive of these Rules, he will notify the applicant that (1) his application has been placed upon the docket of the Board as a pending proceeding pursuant to Rule 118 of the Rules of Practice and Procedure and (2) that the applicant shall proceed to publish a Notice of Application For Approval of Project Plans as required in Rule 609 of these Rules.
609.PUBLICATION OF NOTICE: Upon being notified by the Engineer to publish a Notice Of Application For Approval of Project Plans, the applicant shall cause the same to be published in a newspaper of general circulation in the area wherein the project is to be located one time each week for at least two consecutive weeks. The notice shall include the following:
(a) The exact location of the project as nearly as the same can be described;
(b) The date on which the application was filed with the Board;
(c) The applicant’s anticipated construction and completion schedule;
(d) The applicant’s name and mailing address;
(e) A description of the project which will enable any interested party to be reasonably apprised of the specific nature and scope of the project;
(f) A statement that any party whose rights are to be affected by the proposed project may file a protest with the Board by mailing or delivering the same to the Engineer or to the Board at the offices of the Board in Austin, Texas; and
(g) A statement that any such protesting party is entitled to have his rights, if any, determined through an administrative hearing to be held by the Board.
The notice shall be published within a thirty day period beginning with the date that notice to publish is mailed to the applicant by the Engineer. The applicant shall file an affidavit by the publisher with the Engineer which shall certify the fact that the said notice was published and the dates on which publication was made. A sample form for the notice and certification affidavit appears in Rules 902 and 908 of these Rules.
610. OBJECTIONS RECEIVED BY THE APPLICANT: The applicant shall immediately forward to the Engineer any written objection or protest received by the applicant within forty-five days following his notification to publish the notice required by Rule 609 above.
611. DISPOSITION OF APPLICATION: All applications for approval of plans for projects are subject to the requirements of the Administrative Procedure and Texas Register Act, Chapter 61, Acts of the 64th Legislature, 1975 (Senate Bill 41) and shall receive disposition according to the General and Special Rules of Practice and Procedure of the Texas Water Development Board. Such applications if containing the requirements of Rules 601 through 607 of these Rules, shall constitute applications within the meaning of the said Rules of Practice and Procedure, and shall be placed on the docket as pending procedures pursuant to Rule 118 thereof. The applicant shall be notified as to the disposition of his application immediately upon the issuance of a final decision and order pursuant to the said Rules of Practice and Procedure.

Rules and Regulations 608-611 (1975). In describing the scope and purpose of the “preliminary” plans, the rules state that

[t]he purpose of the preliminary plans is primarily to allow the engineer to determine whether the project is safe and is compatible with existing hydraulic conditions in the area, according to the criteria set out in Rule 302 of these Rules. Preliminary plans should show clearly how the design was developed. Details of the structural integrity of the project are not required to be shown in the preliminary plans. It is the policy of the Board to evaluate the project from preliminary plans in order that the applicant may determine whether the project concept is to be approved prior to the incurring of large expenditures for a complete development of the final plans and specifications.

Rules and Regulations 602 (1975) (emphasis added). From the above statement of policy and from the extensive notice and hearing requirements, it appears that the “final” approval of a plan of reclamation occurs at the second tier of the Board’s approval procedure, to-wit: when the Board approves the preliminary plans.

This interpretation is reinforced when the third tier of the procedure is examined. No notice or hearing are required, nor is the entire Board involved in approving the “final” plans. Instead, following the approval by the Board of a proposed project, the rules require the applicant to submit final plans for the project for staff approval before construction begins. Rules and Regulations 801 (1975). Because section 57.094 is directed toward “Board” approval and because rule 801 requires only staff approval, approval of the “final” plans by the staff does not constitute an order by the Board “finally approving or disapproving any plan of reclamation.”

Having found the approval of the preliminary plans to be the “final” approval of a plan of reclamation, the remaining issue is whether appellants timely filed their appeal from the “final” approval within fifteen days of its issuance. Appellants, after having participated in the second tier hearings were dissatisfied with the Board’s approval and filed a motion for rehearing pursuant to rules 147 and 148 of the General and Special Rules of Practice and Procedure of the Texas Water Development Board (1975). Since the Board established the requirement of motions for rehearings, we determine that the fifteen day limit did not begin to run until after the motion for rehearing was overruled. The record reflects that appellants filed their appeal in the district court of Fort Bend County, the county of jurisdiction, within fifteen days from the overruling of the motion for rehearing, and that therefore appellants have complied with the jurisdictional requisites of 57.094 of the Texas Water Code. The judgment appealed from is reversed and remanded.

Reversed and remanded.

      . Hereinafter cited as Rules and Regulations.

      . Herein referred to as the Rules of Practice and Procedure.


source: Caselaw Access Project

license: Public Domain

text:
    Charles R. ZELLER et ux., Appellants, v. UNIVERSITY SAVINGS ASSOCIATION et al., Appellees.
    No. B2043.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    April 18, 1979.

      Newton B. Schwartz, Houston, for appellants.
    John Teed, Teed, Classman, Barrow & Serafín, Will G. Dickey, Little & Dickey, Houston, for appellees.
    Before J. CURTISS BROWN, C. J., and COULSON and GIRE, JJ.
   J. CURTISS BROWN, Chief Justice.

Summary judgment was rendered against plaintiffs in their suit to set aside the foreclosure sale of their residence.

The property in question was owned by Charles Zeller and wife (appellants) subject to a purchase money mortgage and lien. On July 22, 1976, appellants, to secure a loan for home improvements by University Savings Association (Association), executed three promissory notes and subjected the residence to a second-lien deed of trust. Appellants made payments on the notes for seventeen months during which time the Association accepted numerous payments that were from one week to a month late. In March 1978, when neither the February nor March 1978 payments had been paid, Henry Serafín, II (Serafín), as substitute trustee, was instructed by the Association to accelerate the notes and to institute foreclosure proceedings under the deed of trust. On March 27, 1978, appellants received notice by certified mail of foreclosure sale proceedings to be held on April 4, 1978. Appellants filed for a temporary injunction to halt the sale, but subsequently withdrew that suit and entered into the following agreement in open court:

With respect to a foreclosure duly posted for sale on property of Mr. Zeller, the plaintiff . . . has agreed to take a non-suit and withdraw . . . the petition for injunction . . . But in the event the sale is held today and University Savings becomes purchaser, that it will between now and the next date of sale under the statute . . . reconvey its interest . . . subject to the first lien. .

The substitute trustee held the sale as scheduled and the property was conveyed by Serafín to David Lawson (Lawson) subject to the first lien. Appellants then filed suit against the Association, Serafín, and Lawson to set aside the sale, alleging as grounds improper notice and posting; conspiracy among the defendants; that the Association had waived prompt payment by acceptance of late payments; and that labor and materials were furnished before the contracts for the improvements were executed. When the defendants’ motions for summary judgment were granted, appellants brought this appeal.

The standard to be applied in reviewing summary judgment cases is well established. The controlling question is whether appellees, as the parties moving for summary judgment, established that there were no genuine issues of material fact and that they were entitled to judgment as a matter of law. Pachter v. Woodman, 547 S.W.2d 954, 957 (Tex.1977); National Founders Corp. v. Central National Bank, 521 S.W.2d 92, 97 (Tex.Civ.App.—Houston [14th Dist.] 1975, writ ref’d n. r. e.). Further,

[a]ll conflicts in the evidence are disregarded, and the evidence which tends to support the position of the party opposing the motion is accepted as true. [Citations omitted.] Evidence which favors the movant’s position is not considered unless it is uncontradicted. If such uncontra-dicted evidence is from an interested witness, it cannot be considered as doing more than raising an issue of fact, unless it is clear, direct and positive and there are no circumstances in evidence tending to discredit or impeach such testimony.

E. g., Pachter, supra.

Appellants urge that there is a question of fact with respect to the timeliness of the mailing of the notice of sale. The applicable statute requires that

the holder of the debt to which the power is related shall at least 21 days preceding the date of sale serve written notice of the proposed sale by certified mail on each debtor obligated to pay such debt according to the records of such holder. Service of such notice shall be completed upon deposit of the notice, enclosed in a postpaid wrapper, properly addressed to such debtor at the most recent address as shown by the records of the holder of the debt, in a post office or official depository under the care and custody of the United States Postal Service. The affidavit of any person having knowledge of the facts to the effect that such service was completed shall be prima facie evidence of the fact of service.

Tex.Rev.Civ.Stat.Ann. art. 3810 (Supp.1978) (emphasis added). In his affidavit, Serafín, the substitute trustee, stated that “[n]otice of the sale was timely and properly sent to plaintiffs as reflected by the notice letter and certified mail receipt. . . .” The notice letter is dated March 13, 1978, which would be “at least twenty-one days preceding the date of sale . . . .” However, the certified mail receipt does not bear the date of deposit of the notice “in a post office or official depository” but does reflect the date of delivery and postmark to be March 27,1978, only nine days preceding the sale date. Neither the affidavit nor the incorporated notice letter and mail receipt complies with the statutory requirement of “knowledge of the facts to the effect that such service was completed . . . Further, the affidavit, notice letter, and certified mail receipt rebut the presumption contained in the trustee’s deed “that all prerequisites to said sale required either by law or by said Deeds of Trust have been dutifully and fully complied with . . . ” Pachter, supra, 547 S.W.2d at 957. See also, Gulf, Colorado & Sante Fe Railway Co. v. McBride, 159 Tex. 442, 322 S.W.2d 492 (1958). Therefore, under Pachter, there is a question of fact presented on this material issue. However, we agree with the appel-lees that, by agreeing to allow the sale to proceed at the option of the Association and obtaining the right to repurchase if the interest was acquired by the Association, appellants waived any defects in notice or posting and cannot rely on those grounds for setting aside the foreclosure sale. The appellants’ contention that the Association waived prompt payments by a continuous acceptance of late payments is likewise without merit since the notes expressly provided that acceptance of late payments would not give rise to waiver of promptness on subsequent payments.

Appellants also claim that appel-lees Lawson and the Association acted in collusion to deprive appellants of the right to repurchase as set out in the stipulation. Under the applicable summary judgment rules, it was the appellees’ burden to establish that no issues of material fact existed as to conspiracy or collusion. National Founders, supra, 521 S.W.2d at 97. In the case at bar the appellees assert by affidavits that there had been no contact between Lawson and the other appellees before the sale other than a telephone inquiry by Lawson concerning the amount owed. The ap-pellees further deny any conspiracy or collusion. The stipulation in open court did not obligate the Association to purchase the property or even bid on it. By agreeing to the stipulation, appellants accepted the risk that someone other than the Association might be that purchaser. Encouraging bidding at such a sale would not be illegal or improper. There is no suggestion that Lawson was acting as straw man for the Association or that he acted in its behalf to avoid the repurchase covenant. Nor is there any intimation that the activities of the Association or Lawson constituted a “combination by two or more persons to accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means,” as required to establish a civil conspiracy. Schlumberger Well Sur. Corp. v. Nortex Oil & G. Corp., 435 S.W.2d 854 (Tex.1968); St. Joseph Pro. Bldg. Corp. v. American Nat. Ins. Co., 511 S.W.2d 578, 582 (Tex.Civ.App.—Houston [14th Dist.] 1974, writ ref’d n. r. e.). The affidavits of appellees are sufficient to establish the non-existence of any genuine issues of material fact. McDonald, Texas Civil Practice, § 17.26.8(iv) (rev.1971). See, National Founders, supra, 521 S.W.2d at 97.

Appellants claim that the lien held by the Association was invalid since labor and materials were supplied to the homestead before a written contract covering such was executed. It is true that a mechanics and materialman’s lien is unenforceable against the homestead if a contract to cover the labor and materials is not executed before work is begun or materials delivered. Tex.Rev.Civ.Stat.Ann. art. 5460 (Supp.1978). Nevertheless, when appellants recited in the notes that in fact labor and materials had not been furnished before the execution of the contracts, they induced the Association, an innocent third party, to rely on the validity of such liens. It is well settled that in such instances the parties making the recitations are estopped to later argue the invalidity of the liens as a defense to foreclosure. Ackerson v. Farm & Home Savings & Loan Ass’n., 77 S.W.2d 559, 561 (Tex.Civ.App.—San Antonio 1934, writ ref’d); Farm & Home Savings & Loan Ass’n v. Muhl, 37 S.W.2d 316 (Tex.Civ.App.—Waco 1931, writ ref’d).

The contention is made on appeal that the interest rates required in the notes were in violation of the usury laws. We do not consider this point since it was not presented to the trial court by “written motion, answer or other response. . .” Tex.R.Civ.P. 166-A.

We conclude that appellees met their burden of showing the non-existence of any genuine issue of material fact and their entitlement to judgment as a matter of law. Appellants’ points of error are overruled and the summary judgment for the appel-lees is affirmed.

Affirmed.


author: COULSON, Justice.

text:
    J. D. HEDLEY et al., Appellants, v. Nicholas R. duPONT et al., Appellees.
    No. B1598.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    April 18, 1979.
    Rehearing Denied May 9, 1979.
    Sidney L. Farr, Farr & Fillion, Houston, for appellants.

      Joyce Cox, Joseph A. Kornfield, Cox, Pakenham & Roady, Houston, for appellees.
    Before J. CURTISS BROWN, C. J., and COULSON and GIRE, JJ.
   COULSON, Justice.

This suit was brought by J. D. Hedley and John B. Carter (plaintiffs) against Nicholas R. duPont, Eugene duPont III, Ridgely, Inc., Terra Resources, Inc., and CRA, Ltd. (defendants) to recover under agreements to convey interests in oil and gas properties. The trial court sustained certain of the defendants’ special exceptions to the plaintiffs’ third amended petition and, upon the plaintiffs’ refusal to amend or replead, found as a matter of law that the plaintiffs’ petition was not sufficient to support proof of a cause of action against defendants and ordered the plaintiffs’ suit dismissed with prejudice. Plaintiffs appealed the dismissal to this court and on that appeal the cause was reversed and remanded to the trial court. Hedley v. duPont, 558 S.W.2d 72 (Tex.Civ.App.-Houston [14th Dist.] 1977). Defendants sought writ of error in the Supreme Court of the State of Texas and, after granting the writ, that court reversed the decision of this court and remanded the case for further consideration. duPont v. Hedley, 570 S.W.2d 384 (Tex.1978).

Where the trial court has dismissed a plaintiff’s suit by reason of the alleged insufficiency of the pleadings the appellate court must assume the truth of the facts alleged and resolve every reasonable in-tendment in favor of the sufficiency of the petition. Sanderson v. Sanderson, 130 Tex. 264, 109 S.W.2d 744 (1937); Nichols v. Anderson, 164 S.W.2d 268 (Tex.Civ.App.-Amarillo 1942, writ ref’d w. o. m.). Plaintiffs’ petition here alleges in substance that plaintiff Hedley is an experienced geologist who, in 1959, entered into an agreement with defendants under which he, with one Leyendecker (now deceased and not a party to this suit), would locate suitable properties for oil and gas drilling. Hedley would then present these properties to defendants who, if they elected to proceed, would pay the costs of acquiring the property and the cost of drilling wells on that lease. Under the agreement defendants were to assign plaintiffs one-fourth of the defendants’ interest in the lease once the first well drilled thereon had reached “payout”, the point at which the cost of drilling and completing the well, as well as the costs of acquiring the lease, had been recovered by defendants. On each subsequent well drilled on such lease plaintiffs were to become entitled to share in production from that well once the costs of completing it had been recovered. Plaintiff Hedley devoted his full-time efforts toward providing his geological services to evaluate prospective properties for acquisition by defendants from the inception of this agreement in 1959. In 1961 plaintiff Carter became associated with Hedley and Leyendecker in carrying on this program in return for a share in the interest to be assigned to Hed-ley.

Plaintiffs’ petition further alleges that defendants in fact acquired and drilled wells on many of the properties recommended to them by Hedley and that plaintiffs believed payouts had been reached on at least some of these wells but the defendants have refused either to give plaintiffs an accounting on these properties or to assign them their one-fourth reversionary interest in those properties which have reached the payout point. Plaintiffs requested an accounting on all of the properties covered by the agreement and recovery of their one-fourth interest in those properties covered by the agreement which have reached payout.

The defendants filed special exceptions to the plaintiffs’ third amended petition. The trial court sustained several of these exceptions and, upon plaintiffs’ refusal to amend or replead, that court found that the petition was not a legally sufficient pleading to support a cause of action against the defendants and accordingly ordered that the action be dismissed with prejudice. The dismissal was apparently based on the theory that the plaintiffs had failed to allege that they were licensed pursuant to the Texas Real Estate License Act, Tex.Rev. Civ.Stat.Ann. art. 6573a (1967).

Among the theories of recovery pled by plaintiffs was that of the imposition of a constructive trust. Two paragraphs of the petition dealt with plaintiffs’ request that a constructive trust be imposed upon the South Roxie Field in Mississippi. This section of the petition was designated “Joint Venture count on South Roxie Field, Mississippi,” and alleged that plaintiffs and defendants had been engaged in a joint venture for the acquisition of oil and gas properties. Defendants filed a special exception to these paragraphs of the petition claiming that the plaintiffs thereby sought to impose a constructive trust arising out of an alleged joint venture but that the factual allegations in the petition were insufficient as a matter of law to constitute all the necessary elements of a joint venture. This special exception was sustained by the trial court and those paragraphs were accordingly stricken from plaintiffs’ petition.

Defendants’ contention, with which the trial court apparently agreed in dismissing the suit, appears to be that plaintiffs cannot establish a constructive trust unless they have alleged all of the elements necessary to establish a technical joint venture. We do not agree. Our supreme court in the case of Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256, 261-62 (1951), has discussed in great detail the policies which underlie the imposition of a constructive trust:

“While a confidential or fiduciary relationship does not in itself give rise to a constructive trust, an abuse of confidence rendering the acquisition or retention of property by one person unconscionable against another suffices generally to ground equitable relief in the form of the declaration and enforcement of a constructive trust, and the courts are careful not to limit the rule or the scope of its application by a narrow definition of fiduciary or confidential relationships protected by it. An abuse of confidence within the rule may be an abuse of either a technical fiduciary relationship or of an informal relationship where one person trusts in and relies upon another, whether the relation is a moral, social, domestic, or merely personal one.” Sec. 225, 54 Am. Jr., “Trusts”, p. 173. (Emphasis added)
“The abuse of a confidential relationship by acquiring property through the employment of knowledge or interest obtained in such relationship constitutes a sufficient basis for equitable relief in the form of the declaration and enforcement of a constructive trust in respect of such property and in favor of the person wronged. The relationships of trustee and cestui que trust, principal and agent, client and attorney, and employer and employee, are striking, but far from exclusive, examples of confidential relationships within the meaning of this rule. * * * ” Sec. 226, Idem, pp. 173-174. (Emphasis added)
“An unfair transaction between a confider and a confidant or fiduciary, at least where the confidence is induced by a fiduciary relationship between the parties, gives rise to a constructive trust in respect of any unjust enrichment of the confidant or fiduciary. Where such a transaction is attacked, the burden of proof is on the confidant or fiduciary to establish the fairness of the transaction, and to this end he must fully disclose the facts and circumstances, and affirmatively show his good faith and the absence of pressure or influence on his part in the matter. However, it is not every relationship to which the term ‘fiduciary’ or ‘confidential’ can be applied with reason or plausibility, so as to raise a presumption of unfair dealings between the parties to the relationship. It is a question of the actual relationship between the parties that must be inquired into, and not whether the terms ‘fiduciary’, ‘confidential,’ or ‘trust’ can, with some degree of reason, be applied to the relationship.” Sec. 227, Idem, pp. 174-175.
“The general rule is that a purchase, upon his own account or for his own benefit, by a fiduciary or confidant, of the property constituting the subject matter of the confidence or fiduciary relationship, in violation of the trust or confidence reposed in him, raises a constructive trust in favor of his principal or confider. The rule is not confined to a particular class of persons, such as guardians, trustee, or solicitors, but is a rule of universal application to all persons coming within its principle. The principle of the rule is that no party can be permitted to purchase an interest where he has a duty to perform which is inconsistent with the character of a purchaser. * * ” Sec. 228, Idem, p. 175. (Emphasis added)
See also Restatement, “Restitution”, p. 64, Sec. 160, et seq., where in discussing Constructive Trusts it is stated:
“Sec. 160. Constructive Trust.
“Where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it, a constructive trust arises.”
“A constructive trust, unlike an express trust, is not a fiduciary relation, although the circumstances which give rise to a constructive trust may or may not involve a fiduciary relation.” Idem, p. 641.

The Supreme Court further elaborated on the question of whether a technical joint venture is necessary to establish a constructive trust in the case of Gaines v. Hamman, 163 Tex. 618, 358 S.W.2d 557 (1962). In Gaines the plaintiff, an experienced geologist, and the defendant operated from 1954 through 1958 under an agreement whereby the plaintiff would work up geological information on land on which a lease was planned to be acquired. The defendant would underwrite all of the expenses of the transaction, generally take a lease in his name, and transfer the lease to third parties who wished to drill thereon, retaining an overriding royalty or other interest in his name. After the defendant had recouped his expenses the overriding royalty would be divided equally between the plaintiff and the defendant. The particular transaction involved in the litigation arose over a tract of land, on which the plaintiff had done geological work, which became available because of the expiration of a prior lease. Plaintiff apparently brought this tract to the attention of the defendant and discussed with him the advisability of securing a lease on that property. Both parties spoke to the owner of the tract and a lease was executed in the defendant’s name. Third parties subsequently paid for the lease and drilled thereon after being given a detailed geological report by the plaintiff. Defendant retained one-quarter of the % working interest in his name and the plaintiff sued to impose an equitable trust on one-half of the interest held by the defendant.

The Gaines court found upon the facts alleged by the plaintiff that the parties had for a number of years been engaged in acquiring oil and gas leases which they were to hold jointly to be transferred to third parties, with the plaintiff and defendant retaining and holding jointly some mineral interest, subject to the defendant’s right to recover his expenses. Under their arrangement the plaintiff would contribute the “geology” and the defendant would pay the expenses of procuring and reselling the lease for drilling. The court found that these facts were sufficient to establish a confidential relationship. The opinion states that the parties had just completed a successful transaction and defendant informed plaintiff that this transaction would be “the same deal . . .’’as the prior venture. The third parties decided to invest in the transaction largely on the basis of the plaintiff’s geological reports. The court concluded that if the defendant kept the entire retained one-quarter of the seven-eighths working interest after production had been obtained he would be the recipient of an unjust enrichment resulting from the breach of the confidential relationship. The court cited Fitz-Gerald v. Hull, supra; Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401 (1960); and Peckham v. Johnson, 98 S.W.2d 408 (Tex.Civ.App.-Fort Worth 1936) affirmed 132 Tex. 148, 120 S.W.2d 786 (1938). Gaines v. Hamman, supra, 358 S.W.2d at 560.

In the case before us plaintiff Hedley also furnished his geological services in evaluating properties and the defendant, presumably based upon that geological information, provided all of the expenses incident to acquiring the leases and drilling thereon. We do not find that the presence or absence of third parties make a significant distinction where specialized information obtained and provided by the plaintiffs in an alleged confidential relationship is used by the defendant to his advantage in acquiring, drilling, and obtaining production on oil and gas properties. This would also constitute unjust enrichment of the defendant resulting from the breach of a confidential relationship. We note that in the case before us, as in Gaines, the plaintiff alleged that several prior transactions had been consummated under the same agreement. Also as in Gaines the parties agreed that the defendant was to recoup all of his expenses prior to the plaintiff’s right to participate in his share of the proceeds resulting from the transaction. Here the transaction was structured so that assignment of their interests to the plaintiffs was not to occur until the defendants had recovered their expenses. At that point the plaintiffs were to get an undivided portion of the same interest acquired by the defendants, and they would then hold it jointly. It is unclear in Gaines how the transaction was structured, but it is clear that the plaintiff had no right to receive anything until the defendant had recovered his expenses.

The Gaines court further stated that the existence of the confidential relationship did not depend upon the technical existence of a joint venture: “The important circumstance from which the law will raise a constructive trust is the breach of a confidential relationship which may exist, although such relationship may not meet the technical requirements of a partnership or joint venture.” Gaines v. Hamman, supra, 163 Tex. 618, 358 S.W.2d at 560-561.

The plaintiffs here alleged that the basic agreement between the parties was entered into in 1959; that the plaintiff Hedley was to use his geological expertise to evaluate prospective oil and gas properties for acquisition by the defendants; that Hedley in fact devoted his full time towards such efforts from the inception of the agreement; that he presented many properties to the defendants, which they acquired. It was further alleged that the agreement was performed, and defendants assigned him his share of their interest in many of these properties, but that as to the properties now involved in litigation the defendants failed and refused to carry out the agreement by assigning him his interest after they had recovered their expenses. We believe that these allegations are sufficient to support proof of a confidential relationship as to all of the properties involved in litigation and a breach of that relationship. Therefore a constructive trust could be imposed to prevent the unjust enrichment of the defendants which would result from their being allowed to keep the total interest in those properties.

Under our findings plaintiffs’ petition was adequate to support proof of a cause of action based upon the imposition of the constructive trust. A plaintiff may establish and recover under a constructive trust whether or not he was acting as a dealer in real estate under the terms of the Real Estate Licensing Act. Cf. Consolidated Gas and Equipment Company of America v. Thompson, 405 S.W.2d 333 (Tex.Sup.1966); Breeding v. Anderson, 152 Tex. 92, 254 S.W.2d 377 (1953). It was therefore improper for the trial court to dismiss the plaintiffs’ entire action with prejudice because they had not pled that they were licensed dealers under the act.

[3] We note further that the plaintiffs’ petition includes a prayer for recovery of money due them from defendants’ leased property in Jefferson County, Texas. Attached to the petition is a copy of a formal, recorded conveyance by certain of the defendants of one-quarter of one-half of the working interest to Hedley, to become effective when the grantors have recovered their proportionate part of expenses in acquiring and drilling the first well on the property. If the well on the described leases has reached the payout point then Hed-ley is already the legal owner of this assigned interest, and he is entitled to an accounting thereon without the necessity of establishing that it is covered by a constructive trust. It was error to dismiss plaintiff Hedley’s cause of action for an accounting as to the Jefferson County property on which a legal interest has already been conveyed to him.

Defendants have urged us to reconsider their cross-points. We adhere to our prior opinion in this case in holding that a Texas court which has jurisdiction over the parties can compel them to execute a conveyance of lands beyond that court’s jurisdiction, and in holding that it is not necessary for plaintiffs to plead their case in trespass to try title. We refer to our prior opinion for our reasoning in support of these propositions.

We sustain plaintiffs’ third and fourth points of error and overrule defendants’ cross-points. Accordingly we reverse the decision of the trial court and remand the case to that court for trial.

Reversed and remanded.


text:
    CITY OF HOUSTON, Appellant, v. Arthur SIMON, Appellee.
    No. B1988.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    April 25, 1979.
    Robert M. Collie, Jr., City Atty., David Lee Crawford, Asst. City Atty., Houston, for appellant.
    Fred M. Bosse, Houston, for appellee.
    Before J. CURTISS BROWN, C. J., and COULSON and GIRE, JJ.
   COULSON, Justice.

Appellant, City of Houston, defendant below, appeals from an adverse judgment in a suit for damages based upon appellant’s negligence. Appellant contends that the occurrence of jury misconduct in the case requires reversal. We affirm.

This suit was brought by appellee Arthur Simon to recover personal injury and property damages resulting from a motorcycle accident. His claim was based upon the alleged negligence of the appellant in allowing mud and debris from an operation to repair an underground water pipe to remain on the public street after the work had been completed. Trial was to the jury which found that the deposit of mud was caused by the City of Houston, that such action by the City was negligence, and that such negligence was the proximate cause of the occurrence in question. Judgment was entered for appellee on the jury verdict in the amount of $1,035.00.

After the jury’s verdict had been received by the judge and the jury had been dismissed the bailiff of the court went to the jury deliberation room to gather the exhibits. He discovered that a copy of the court’s charge with several handwritten notations on it was present in the jury room. The bailiff brought this to the attention of the court and it was determined that the copy of the charge belonged to appellee’s attorney. He had made the notations thereon for the purpose of aiding him in his argument to the jury. Appellant made a “Motion for Declaration of Mistrial” based upon jury misconduct. After a hearing the trial court denied appellant’s motion and this appeal followed.

“ ‘Misconduct of the jury’ is a legal phrase meaning an unlawful or unauthorized act done by the jury or any of its members in connection with the trial. . It does not necessarily imply an evil or corrupt motive on the part of the jury or the prevailing party.” Sidran v. Western Textile Products Co., 258 S.W.2d 830, 832 (Tex.Civ.App.—Dallas) reversed on other grounds, 153 Tex. 21, 262 S.W.2d 942 (1954). The act said to constitute misconduct in this case is the presence in the jury room of appellee’s attorney’s copy of the charge with notations thereon, in violation of Rule 281, Tex.R.Civ.P. Rule 281 is designated “Papers Taken to Jury Room”, and provides:

The jury may take with them in their retirement the charges and instructions, general or special, which were given and read to them, and any written evidence, except the depositions of witnesses, but shall not take with them any special charges which have been refused. Where part only of a paper has been read in evidence, the jury shall not take the same with them, unless the part so read to them is detached from that which was excluded.

In fairness to the parties we note that there is no indication that there was any intentional wrongdoing on the part of anyone connected with this trial. Apparently the extra copy of the charge was inadvertently taken into the jury deliberation room along with the other exhibits. We would point out, however, that it is the responsibility of the attorneys for all parties, as well as of the judge and bailiff, to check the materials to be sent to the jury room. Had this practice been followed here, the occurrence which led to this appeal might well have been prevented, which would have saved time and expense for all parties involved.

Rule 327, Tex.R.Civ.P., sets out the standard for the granting of a new trial when jury misconduct is alleged as a basis therefor:

Where the ground of the motion is misconduct of the jury or of the officer in charge of them, or because of any communication made to the jury or that they received other testimony, or that a juror gave an erroneous or incorrect answer on voir dire examination, the court shall hear evidence thereof from the jury or others in open court, and may grant a new trial if such misconduct proved, or the testimony received, or the communication made, or the erroneous or incorrect answer on voir dire examination, be material, and if it reasonably appears from the evidence both on the hearing of the motion and the trial of the case and from the record as a whole that injury proba-

bly resulted to the complaining party. The rule places upon the party seeking new trial because of jury misconduct the burden of establishing, to the satisfaction of the court, that the misconduct occurred, that it was material, and that it reasonably appears from the record as a whole “that injury probably resulted” to him. St. Louis Southwestern Railway Company v. Gregory, 387 S.W.2d 27, 31 (Tex.Sup.1965). Appellant contends however that the act of misconduct here belongs in that class of jury misconduct which is “so highly prejudicial and inimical to fairness of trial that the burden of going forward with proof of harm is met, prima facie at least, by simply showing the improper act and nothing more,” citing Texas Employers’ Insurance Association v. McCaslin, 159 Tex. 273, 317 S.W.2d 916, 921 (1958). We do not agree. The misconduct in the McCaslin case consisted of the plaintiff’s visiting a juror at work during the trial, engaging that juror in conversation, and saying “Be sure and do all you can to help me,” or something of a similar nature. The supreme court found that the purpose of the plaintiff’s visit was to influence the action of a juror in the case. This in effect amounts to jury tampering and is clearly a type of misconduct “in which the burden of proving probable injury is discharged, prima facie, by mere proof of the overt act itself.” St. Louis Southwestern Railway Company v. Gregory, supra, at 31. We find that the mere presence in the jury room of a copy of the charge with one party’s attorney’s memo-randa upon it is not an act of misconduct within that class of acts so inherently prejudicial that harm to the complaining party may be presumed merely from the occurrence of the act itself. Having found that mere proof of the act of misconduct does not establish that the trial was materially unfair to appellant, we examine the record to determine whether appellant has discharged its burden of showing that probable injury to appellant resulted from the misconduct.

The copy of the charge in question contains notations on only some of the special issues. These notations are very brief and several are all but illegible. There are notations on five of the ten special issues which relate to liability and these notes refer only to portions of evidence in a very shorthand manner. There are figures written on each of the four issues relating to damages. With one exception the jury’s answers to the damages special issues differed significantly from the amounts written thereon by appellee’s attorney. For example, the jury did not award any damages for physical pain and mental anguish, although the notation on that page reads “1 M” or “1000”. The net effect of the jury’s answers to the special issues on damages was to award appellee $1150.00 rather than the $2800.00 which would have resulted from following the notations contained on the documents.

Appellant relies on the case of Sidran v. Western Textile Products Co., supra. In Sidran the jurors took with them into the deliberation room a carbon copy of the court’s charge belonging to the defendant’s attorney. The attorney had made notes on this copy for use in his argument. He had also filled in all the blanks where the jury was to answer with answers to the special issues as the defendant wanted them to be found. The jury discovered and examined this document during their deliberation, there was some discussion about it, it was determined that the document was not properly before them, and it was handed out to the bailiff. The court found that this instance of jury misconduct probably caused harm to the plaintiff, especially in combination with two other acts of jury misconduct which had also taken place. The court of civil appeals indicated that important considerations in determining whether or not injury probably resulted to the plaintiff included whether the document had been seen by more than one juror, or read by any of them, or whether it had been the subject of comment and consideration by the jurors.

The facts in Sidran are distinguishable from the present case. Here there were mere fragmentary notes on only some of the special issues and none of the answer blanks was filled in with an indication of how the jury was to answer. Furthermore the testimony of the one juror who testified at the hearing on appellant’s motion for declaratory of a mistrial indicates that she saw only some and not all of the pages which contained notations. She stated that the copy had been looked at by other jurors, but she did not say whether any of the other jurors had seen those pages which contained writing. There was apparently no discussion among the jurors as to the copy or the notes thereon. This juror was not a member of the majority in the ten-two verdict. There is no affirmative evidence that any member of the jury who voted with the majority actually saw any of the handwritten notations. In view of our discussion above, we do not find that appellant has sustained its burden of showing that it reasonably appears from the record that injury probably resulted to it from the act claimed to constitute jury misconduct. Accordingly we affirm the action of the trial court in refusing to grant a new trial.

      . Special issue number six inquired as to the reasonable cost to repair the motorcycle to its condition prior to the accident. The jury’s answer was ONE THOUSAND THREE HUNDRED TWENTY-EIGHT AND 28/100 and the notation upon the copy of that special issue was $1,328.65. The only testimony as to the cost of repairs was from the plaintiffs father, who owned and ran a motorcycle shop. His testimony was that the cost to repair would be $1,328.65. Thus the only testimony on this element of damages exactly matched the notation and was within several cents of the jury’s answer, and we cannot find that probable harm resulted. Furthermore the answer to this special issue did not enter into the court’s award which was based upon the before and after market value rather than on the cost of repair. See note 2, infra.

      . The award of damages was reduced by ten percent, to $1035.00, because the jury found in its answers to special issue fourteen that the plaintiff’s negligence was 10% of the total, although they had found the plaintiff not to be negligent in prior special issues. Appellee has not raised this error in a cross-point and that question is therefore not before us. The final award results from the difference between the jury’s finding of the market value of the motorcycle immediately before the accident, of $1900.00, and the value it found immediately after the accident of $750.00, minus the 10%.


author: MILLER, Justice.

text:
    LA MARQUE INDEPENDENT SCHOOL DISTRICT, Appellant, v. Willard THOMPSON, Appellee.
    No. A2004.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    April 25, 1979.

      I. A. Lerner, Carlton A. Getty, LaMarque, for appellant.
    John E. Sherman, Houston, for appellee.
    Before MILLER, PAUL PRESSLER and SALAZAR, JJ.
   MILLER, Justice.

This is an appeal from a suit for the breach of a contract of employment. The trial court rendered judgment in favor of the employee bus driver and the employer school district appeals.

In 1975, Willard Thompson, appellee, entered into a contract with the La Marque Independent School District to drive a school bus. The contract was to last for a term of nine school months beginning on August 20, 1975, and ending May 28, 1976. He had worked under similar contracts for the school district the preceding nine years with a new contract negotiated each school year. Two clauses in the contract, which are pertinent to this appeal, are as follows:

1. The driver agrees to abstain from the use of intoxicating liquors and drugs on days assigned for driving of school bus. .
2. It is further agreed that failure to abide by any of the provisions or regulations referred to in this contract may subject the driver to dismissal and termination of this contract by the contracting Board.

On March 4, 1976, appellee was informed by the appellant that he was not to drive a bus any longer due to his being under the influence of alcohol on March 3,1976, while operating a school bus. Appellee did not drive a school bus after this date. A formal hearing was held on March 16, 1976. He was notified by letter dated April 13, 1976, that he was terminated as a bus driver.

Appellee instituted suit on July 29, 1976, alleging that there was a valid employment contract; that he was discharged by the appellant on April 13, 1976, for allegedly driving a school bus while intoxicated; that appellee had performed all the terms of the contract; that appellant’s unreasonable actions constituted a breach of said contract; and that he was deprived of his remaining salary of $1,185.28. Appellant answered by admitting the contract; specifically alleging that plaintiff breached the contract by the use of intoxicating liquor on a day assigned for driving a school bus; and by a general denial of all other material allegations. Trial was to the court. The primary issue which was contested was whether the appellee used intoxicating liquor on a day he was assigned to drive a bus. A secondary issue was the amount of damages, if any.

After hearing the testimony and receiving evidence, the trial court awarded appel-lee damages for the breach of contract in the amount of $840.00 plus attorney’s fees. At appellee’s request, the trial judge filed findings of fact and conclusions of law.

In the first point of error appellant asserts that there was insufficient evidence to support the judgment. In reviewing an assignment of evidentiary insufficiency, we must look at all of the evidence, including that which is contrary to the verdict, to determine if it is factually sufficient to support the findings of vital facts. In re Kings’ Estate, 150 Tex. 662, 244 S.W.2d 660 (1951); Fisher Construction Company v. Riggs, 160 Tex. 23, 325 S.W.2d 126 (1959). The appellee had the burden of proving that he was not intoxicated on an assigned day in order to show wrongful discharge.

On this issue, appellee himself testified that he had nothing to drink that day. He introduced the testimony of other school district employees to the effect that he did not drink on the job nor did he act or smell as if he had been using alcoholic beverages on March 3, 1976. Appellant put on three school district employees who testified that they smelled alcohol on appellee at a bus driver’s in-service training program the evening of March 3, 1976, and one former co-worker who testified that she smelled alcohol on appellee while he was on duty that day.

Appellant further urges that there was insufficient evidence to prove damages. The primary evidence offered on the damages was appellee’s testimony that he made $145.00 to $150.00 every two weeks which included some voluntary out of town trips. Dr. M. Y. Johnson was examined on this point. He admitted to supervising the department which handles the payroll but was unable to testify as to when and how much appellee was last paid. In Gevinson v. Manhattan Construction Co. of Oklahoma, 449 S.W.2d 458 (Tex.1969), the Texas supreme court said:

“[Generally], evidence given by an interested witness, even though uncontradict-ed, presents an issue to be determined by the trier of fact. This rule is not without exception however, and conclusive effect may be given to the testimony of an interested witness provided the testimony is clear, direct and positive and there are no circumstances tending to discredit or impeach the same. There is an added reason for recognizing the exception when the opposite party had the means and opportunity of disproving the testimony, if it were not true and failed to do so.”

We think the evidence was sufficient to support the judgment. The first point of error is overruled.

In the second point of error appellant complains of the trial court’s failure to grant an offset of $80.00 which was earned by the appellee from employment obtained after the breach of contract. He relies on this court’s opinion in Cole v. City of Houston, 442 S.W.2d 445 (Tex.Civ.App.—Houston [14th Dist.] 1969, no writ) in which we said that an employee who has been wrongfully discharged before the termination of his contract of employment must endeavor to reduce the damages by seeking other employment. Although mitigation of damage was not pled, evidence was introduced to the effect that the appellee earned $80.00 during the contract period subsequent to the breach by working a few days as a stevedore. Appellee made no objection during the trial to the testimony and the trial court found as a fact that he had earned this money. The general rule is that under these circumstances an issue must be considered to have been tried by consent as if it had been raised in the pleadings; a failure to amend the pleadings to conform to the evidence does not affect the result of the trial on such issues. Tex.R.Civ.P. 67; McKenzie v. Carte, 385 S.W.2d 520 (Tex. Civ.App.—Corpus Christi 1964, writ ref’d n. r. e.). This rule applies to affirmative defenses as well as original claims. Whitley v. Whitley, 566 S.W.2d 660 (Tex.Civ.App.—Beaumont 1978, no writ). Consequently, the judgment in this cause should have allowed appellant credit for the $80.00. As the findings of fact and conclusions of law affirmatively show that the $80.00 offset was not included in the amount of judgment, we sustain this point of error and modify the damage award from $840.00 to $760.00.

In his third point of error appellant contends that the judgment is erroneous in that it does not conform to the pleadings as required by Tex.R.Civ.P. 301. The appel-lee’s petition alleged that he was terminated on April 13, 1976, while the judgment is based upon a termination date of March 4, 1976. Consequently, appellant argues that the trial court could only have awarded appellee lost wages for six weeks (April 13, 1976 to May 28, 1976) instead of 12 weeks (March 4, 1976 to May 28, 1976) as the latter time period is outside of the pleadings.

We cannot sustain appellant’s contention as it is based on an erroneous measure of recovery. A suit for breach of contract due to wrongful termination is a suit for damages, not wages. The measure of damages is the present cash value of the contract to appellee if it had not been breached, less any amounts which he should in the exercise of reasonable diligence be able to earn through other employment. Dixie Glass Co., Inc. of Houston v. Pollack, 341 S.W.2d 530 (Tex.Civ.App.—Houston [1st Dist.]) writ ref’d per curiam, 162 Tex. 440, 347 S.W.2d 596 (1961). (Emphasis ours.)

In appellee’s case, pleading that the contract was wrongfully terminated on April 13, 1976, did not preclude him from proving and recovering all damages he suffered from that breach. It was uncontro-verted that appellee was not allowed to work as a bus driver after March 4, 1976. The third point of error is overruled.

The judgment is modified to include an offset for $80.00 in earnings subsequent to the breach of contract and affirmed as modified.


text:
    Ex parte Roger Truett McCONNELL, Relator.
    No. B2113.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    April 25, 1979.

      Spm J. Meador, Houston, for relator.
    Carol S. Vance, Dist. Atty., R. H. Elder, Asst. Dist. Atty., Houston, for respondent.
    Before J. CURTISS BROWN, C. J., and COULSON and GIRE, JJ.
   COULSON, Justice.

This is a habeas corpus case. Robert Truett McConnell was adjudged in contempt of court for failing to comply with an order of child support entered in connection with his 1977 divorce. He was sentenced to three days in jail and for as long thereafter as he refused to pay the stated arrearage. Relator urges, inter alia, that he is being detained illegally by virtue of defects in the application and order for show cause hearing. We agree, and accordingly grant relator’s motion for writ of habeas corpus.

Both the application and order were on a printed form prepared by the Harris County District Attorney’s Office. The application included the following prayer:

Wherefore, Premises Considered, Relator [Assistant District Attorney of Harris County] prays this Honorable Court that Respondent be cited to personally appear before this Court and Show Cause why an order adjudging and decreeing that Respondent pay for the maintenance and support of his child(ren) should be entered, and that such writs and process issue as may be necessary in these proceedings and to require Respondent’s personal appearance at such proceedings (emphasis added).

The order read as follows:

ORDER FOR SHOW CAUSE HEARING
This the 6 day [sic] of Dec., 1978, after having considered the foregoing application, it is ORDERED that the Respondent, _, have issued to him, by the Clerk of this Court, a Notice to be and personally appear in the Courtroom of the 308 Judicial District Court of Harris County, Texas, in the Family Law Center Building, 1115 Congress, Houston, Texas at 1:30 P.M. on the 1st day of Feb., 1979, when he shall Show Cause, if any he has, why an Order of Support should not be entered (emphasis added).

In any constructive contempt case it is essential, to comply with due process, that the respondent be given proper notice of the proceeding to be had against him. This takes the form of an order to appear and show cause why an order of contempt should not be entered, such as is provided for in Tex.R.Civ.P. 308-A, Enforcement of Decrees in Child Support Orders. Ex Parte Gordon, 22 Tex.Sup.Ct.J. 295 (April 7, 1979); Ex Parte Davis, 161 Tex. 561, 344 S.W.2d 153 (1961).

It is apparent here that relator received no notice of the institution of a contempt proceeding against him. The application requests him to appear and show cause why a decree that he support his child should be entered. The order commands him to show cause why an order of support should not be entered. The district attorney’s office acknowledges a typographical error in the application, but contends that the wording of the order is correct. We disagree. This document notified relator only that a support order might be entered. Nowhere by its terms did it apprise him of the fact that a contempt hearing on a prior order was contemplated and that he was in danger of losing his liberty. In effect relator was brought into court under false pretenses.

The State argues that he had notice that he was in court on a child support matter, that he knew that he was in violation of a prior order, and that therefore he had sufficient notice of a contempt proceeding. This argument is without merit. The evidence put on by relator at the show cause hearing, that he is totally without funds, is consistent with an attempt on his part to show why an order of support should not be entered. This is the only issue joined by the pleadings.

The State further argues that in failing to object to the pleadings, relator waived any error therein. This is likewise without merit. The application and order contained no obvious defect. They contemplated only a show cause hearing for the entry of a support order. Relator was entitled to rely upon this, and waived nothing by failing to specially except.

When dealing with a subject as significant as a man’s liberty, it is reasonable to require that the pleadings conform to due process and to the procedure set out in the authorizing rule and that the respondent receive proper notice of the burden which he must meet and the sanctions which may be imposed upon him. Because the application and order for show cause hearing contained defects which resulted in improper notice, relator’s motion for writ of habeas corpus is granted and relator is ordered discharged.


author: WILHOIT, Judge.

text:
    Treva T. HOWELL and Jeff D. Howell, Appellants, v. Evelin C. BACH, Nancy B. Pillon, Mary F. Marshall, Josephine B. Porterfield, Steve C. Bach, Helen H. Watkins, Lena Mae Sergent, Blanche A. Adkins, John S. Hollan, and Falcon Coal Company, Inc., a Delaware Corporation, Appellees.
    Court of Appeals of Kentucky.
    Aug. 11, 1978.
    Rehearing Denied May 11, 1979.
    Edward F. Prichard, Jr., William L. Graham, Frankfort, for appellants.
    Ed Hays, Hays & Moss, Amos H. Eblen, Eblen, Howard & Milner, Lexington, Joseph W. Craft, Jr., Craft, Barret, Haynes & Ward, Hazard, for appellees.
    Before LESTER, VANCE and WIL-HOIT, JJ.
   WILHOIT, Judge.

This is an appeal from a judgment of the Breathitt Circuit Court granting a summary judgment to the individual appellees on their claim of entitlement to share in royalties paid to their cotenants, appellants Tre-va and Jeff Howell, under the terms of an agreement made by the Howells without the knowledge of these appellees. We affirm.

The Howells and the individual appellees are the joint owners of certain mineral rights which are presently leased from them by appellee Falcon Coal Company. In 1966 all of the then-co-owners of the mineral rights joined in a written lease of the rights to Breathitt Coal Company, predecessor of Falcon Coal Company. Under the terms of this lease, the owners were to receive a royalty payment of 20 cents per ton for the coal mined on the leasehold. Unknown to their cotenants, the Howells were not willing to sign the lease for the payment of 20 cents per ton and, without the knowledge of their cotenants, they negotiated a supplemental contract with the coal company providing for a payment to them of 5 cents per ton in addition to the 20 cents per ton provided for in the lease agreement. This action was brought by the cotenants claiming that they were entitled to share in the 5-cent royalty.

In granting summary judgment the trial court held that under Hollowell v. Hobby, 284 Ky. 142, 143 S.W.2d 1078 (1940), the cotenants were entitled as a matter of law to share in the 5-cent royalty negotiated by the Howells. The Howells contend that the holding in Hollowell, supra, has no application to the facts of this case.

The Hollowell case also involved a mineral lease entered into by cotenants. Under the terms of that lease they were to be paid a royalty of $2.25 per ton on spar mined and marketed. Without the knowledge of his cotenants, Hobby entered into a separate agreement with the lessee whereby he would be paid $1.75 per ton for hauling the spar from the mine. The amount to be paid him for hauling was greatly in excess of a reasonable hauling charge and the Court concluded that the excess was in reality extra royalties paid to Hobby to induce him to execute and to cause his cotenants to execute the lease for its stated royalty. In holding Hobby accountable to his cotenants for a share in his “extra royalty,” the Court said:

The relationship between joint tenants is not that of partner and co-partner and hence is not permeated throughout with the requirement that benefits derived by each must be shared by all; but it is of such a nature that in dealing with others, joint action is frequently necessary in order to obtain the best results, from which arises the requirement that at least on such occasions one may not profit at the expense of those with whom he is ostensibly acting in concert, and who, from their previous association with him, have the right, under an enlightened code of Ethics, to expect fair treatment.

Hollowell v. Hobby, supra, 143 S.W.2d at 1080.

Additionally, the parties cite Garr v. Boswell, 18 Ky.L.Rptr. 814, 38 S.W. 513 (1897), in which the Court held two tenants-in-common liable to their other cotenants for a secret profit they negotiated in the sale of jointly-owned land. In that case the Court stated:

We concede the right of one joint tenant to sell his interest in land without consulting his co-tenants, and at any time and price he may choose. But when, as in this case, the parties propose to sell together, and the act of one is dependent upon the act of the others, good conscience and fair dealing require that one should not undertake secretly to procure for himself more than it is understood and agreed each and all shall have.

Garr v. Boswell, supra, 38 S.W. at 515.

The Howells argue, quite correctly, that the mere existence of a cotenancy does not ipso facto create a fiduciary relationship between the cotenants in all dealings among them. They acknowledge, however, that in certain situations the law will impose such a relationship as, for example, when one cotenant acquires an outstanding interest against the jointly-owned property for his exclusive benefit. Givens v. Givens, Ky., 387 S.W.2d 851 (1965). We also note that the common law in this jurisdiction is that one is liable to his cotenants for any rents and profits he collects from the joint property. Larmon v. Larmon, 173 Ky. 477, 191 S.W. 110 (1917); Nelson’s Heirs v. Clay’s Heirs, 30 Ky. (7 J.J. Marsh.) 138 (1832).

The Howells, again correctly, argue that they had a perfect right to lease their interest in the subject mineral rights to whomever they chose and for whatever royalty they chose without consulting in any way with their cotenants. However, the precise question here is whether, where the Howells did not deal solely with the lessee but elected to join in a lease agreement with their cotenants, the law imposes any fidu-cial duty on them to disclose a secret profit or to account for such profit to their coten-ants.

The Howells answer that, under the cases cited above, such a duty is imposed only when the secret profiteer has in some way induced his cotenants to enter into the lease, or when there has been a previous confidential relationship between the cotenants so that each has a right to expect fair and open treatment from the other. Whether either of these elements was present in this case has not yet been factually determined, but we do not believe such determination is necessary. After examination of both the Garr and Hollowell cases, we are of the opinion that while the element of family relationship was present in Garr and a close business relationship and some inducement was present in Hollo-well, these elements were not considered by the respective Courts to be determinative. Rather, these cases seem to turn on the principle that “the law will not permit one co-tenant, where all must act in unison, to obtain a secret profit to the disadvantage of his co-tenants.” Hollowell v. Hobby, supra, 143 S.W.2d at 1080 (emphasis added). Such a principle is consistent with our common law rule requiring a cotenant to account for rents and profits. The secret profit he is able to obtain as a result of an agreement made by all of the cotenants acting together, in effect, gives him an extra profit from all of the interests in the property, not just from his own. But for the joint act of all he would have no secret profit. This profit is obtained to the detriment of his cotenants who are unaware that a lessee, purchaser, etc., is in fact willing to pay more for the interests he seeks. Such secret profits are not countenanced by our law.

The judgment of the trial court is affirmed.

All concur.


author: PARK, Judge.

text:
    OHIO RIVER PIPELINE CORPORATION, Appellant, v. C. Donald LANDRUM, Jean Schottenstein, Saul Schottenstein, Jerome Schottenstein, Alvin Schottenstein, Miller, Wihry & Lee, Inc., Skilton Construction Company, Appellees. SKILTON CONSTRUCTION COMPANY, Cross-Appellant, v. OHIO RIVER PIPELINE CORPORATION, Miller, Wihry & Lee, Inc., C. Donald Landrum, Jean Schottenstein, Saul Schottenstein, Jerome Schottenstein, Alvin Schottenstein, and Berlan Construction Company, Cross-Appellees. MILLER, WIHRY & LEE, INC., Cross-Appellant, v. C. Donald LANDRUM, Jean Schottenstein, Saul Schottenstein, Jerome Schottenstein, Alvin Schottenstein, and Berlan Construction Company Cross-Appellees. C. Donald LANDRUM, Jean Schottenstein, Saul Schottenstein, Jerome Schottenstein, Alvin Schottenstein, and Berlan Construction Company No. 2, Inc., Cross-Appellants, v. OHIO RIVER PIPELINE CORPORATION, Miller, Wihry & Lee, Inc., Skilton Construction Company, Cross-Appellees.
    Court of Appeals of Kentucky.
    Jan. 19, 1979.

    Rehearing Denied March 23, 1979.

      Thomas W. Speckman and Wilton R. Long, Jr., Speckman & Long, Louisville, for Ohio River Pipeline Corp.
    John A. McCrea, McCrea & Schottenstein, Louisville, for C. Donald Landrum, Berlan Construction, et al.
    Ben T. Cooper, Cooper, Kiel & Beale, Louisville, for Miller, Wihry & Lee, Inc.
    Harry K. Herren, Jr., David C. Browder, Woodward, Hobson & Fulton, Louisville, for Skilton Const. Co.
    Before COOPER, HAYES and PARK, JJ.

      The decision of the panel was made prior to dered until this date. January 1, 1979, but the opinion was not ren-

   PARK, Judge.

These consolidated appeals arise out of an action for wrongful interference with a 50 foot gas pipeline easement owned by the plaintiff-appellant, Ohio River Pipeline Corporation. The easement crossed a ten acre tract in the Hunting Creek Subdivision of eastern Jefferson County which was being developed for apartment dwellings. Ohio River Pipeline was required to expend approximately $25,000 to remove 18 feet of fill placed over its pipeline during the course of development. The defendants (appellees and cross-appellants) were the owners and developers of the tract (Land-rum and Associates), the architects for the development (Miller, Wihry & Lee, Inc.), and the contractor for the development (Skilton Construction Company). The Jefferson circuit court entered judgment for Ohio River Pipeline for $25,246.15 which was apportioned among the defendants according to the following percentages: Landrum and Associates, 45%; Miller, Wih-ry & Lee, 40%; and Skilton Construction, 15%.

On appeal, Ohio River Pipeline asserts that the trial court erred in holding the defendants liable only for “several damages” under KRS 454.040 rather than jointly liable for the entire amount of the judgment. In its cross-appeal, Skilton Construction claims that it has no liability or, in the alternative, that it should be entitled to indemnity from the owners and architect. In their cross-appeals, Miller, Wihry & Lee and Landrum and Associates each seeks indemnity from the other.

I

The decision of the trial court to enter judgment severally rather than jointly against the defendants was based solely upon the authority of KRS 454.040 which provides:

In actions of trespass the jury may assess joint or several damages against the defendants. When the jury finds several damages, the judgment shall be in favor of the plaintiff against each defendant for the several damages, without regard to the amount of damages claimed in the petition, and shall include a joint judgment for the cost, (emphasis added).

Ohio River Pipeline contends that the statute can have no application to this case because the case was tried by the court rather than a jury and because it did not involve an action for trespass.

Ohio River Pipeline asserts that “several damages” may be assessed under KRS 454.-040 only by a jury. Because the statute mentions the “jury” but makes no reference to a trial without a jury, Ohio River Pipeline claims that the trial court was without authority to award separate damages. No authority is cited for the proposition other than the language of the statute itself. Such a limited construction of the statute was suggested but not approved by Professor Germain in a recent article. K. Ger-main, Remedies: Contribution and Apportionment Among “Joint Tortfeasors,” 65 Ky.LJ. 285, 291-92 (1977). In support of this construction of the statute, Professor Germain refers only to the decision in Malone v. Wright, 364 F.2d 818, 820 (6th Cir. 1966), in which the court stated:

It is the rule in Kentucky that under K.R.S. § 454.040, separate damages may be assessed against each negligent tort-feasor, according to the degree of fault. See footnote 1 to Commonwealth, Dept. of Highways v. Ratliff, 392 S.W.2d 913, 914 (Ky.1965). It is also Kentucky’s rule that whether the damages shall be in gross or separate is left to the jury. Elpers v. Kimbel, 366 S.W.2d 157, 161 (1963); Murphy v. Taxicabs of Louisville, Inc., 330 S.W.2d 395, 398 (Ky.1959). In this case, the District Judge sitting without a jury committed no error in assessing the damages against the defendants jointly.

The court did not hold that the trial court sitting without a jury had no power to award separate damages. The court held only that the trial judge, as the trier of the facts, did not abuse his discretion under KRS 454.040 by awarding damages against the defendants jointly rather than severally-

We find no reason to construe KRS 454.040 to be limited to cases tried before a jury. As a general rule, a judge has the same leeway as a jury in a trial by the court without a jury. Rives v. Pettit, Ky., 513 S.W.2d 475, 486 (1974). Any of the parties had a right to demand that a jury, rather than the trial judge, determine whether damages should be awarded jointly or severally. However, there is no reason why that right could not be waived by all of the parties in favor of a court trial without a jury. Cf. Short v. Commonwealth, Ky., 519 S.W.2d 828 (1975); Parsley v. Madison, 302 Ky. 467, 194 S.W.2d 993 (1946). In many cases, a court trial will be speedier and less expensive than a jury trial. We should not discourage court trials by construing KRS 454.040 to be limited only to jury trials. Not having demanded a trial by jury, Ohio River Pipeline may not complain that the trial judge rather than a jury determined that several damages should be awarded. CR 38.04.

There is no merit to Ohio River Pipeline’s contention that its claim for damages was not an action for “trespass” within the scope of KRS 454.040. The statute has long been held to apply to a variety of torts without any reference to the necessity of pleading the elements of common law trespass. See Orr v. Coleman, Ky., 455 S.W.2d 59 (1970); Brown Hotel Co. v. Pittsburgh Fuel Co., 311 Ky. 396, 224 S.W.2d 165 (1949); and Central Passenger Ry. Co. v. Kuhn, 86 Ky. 578, 6 S.W. 441, 9 Ky.L.Rptr. 725, 9 Am.St.Rep. 309 (1888). In its complaint, Ohio River Pipeline alleged “willful, wanton and reckless interference” by the defendants with its gas pipeline easement. Ohio River Pipeline sought both compensatory and punitive damages. Even if, as Ohio River Pipeline argues, its complaint was based on equitable principles of restitution rather than common law trespass, KRS 454.040 was an appropriate tool for a chancellor to use in forming the proper remedy. Ninety years ago, the court described the statute as an “equitable statute” intended to punish the greater wrongdoer more severely. Central Passenger Ry. Co. v. Kuhn, supra, 86 Ky. at 594, 6 S.W. at 447. In any event, the defendant did commit trespass upon the Ohio River Pipeline’s easement. Conwell v. Brookhart, 43 Ky. (4 B.Mon.) 580, 41 Am.Dec. 244 (1844). The trial court did not err in holding that KRS 454.040 was applicable to Ohio River Pipeline’s action.

Ohio River Pipeline also raises several procedural challenges to the judgment of the trial court. This argument requires a chronological statement of a portion of the proceedings below:

March 21, 1975. The trial court entered a summary judgment for Ohio River Pipeline against Landrum and Associates; Miller, Wihry & Lee; and Skilton Construction in the sum of $25,246.15. The summary judgment constituted an interlocutory judgment because there was no recital that the judgment was final and no determination that there was no just reason for delay. CR 54.02(1).

July 3, 1975. An amended judgment was entered which included an award of interest on the original judgment. In addition, the amended judgment recited that Ohio River Pipeline’s remaining claims were dismissed on its own motion. The last paragraph of the amended judgment then stated:

The remaining issues raised by the third party complaint and cross-claims having been assigned for a two day trial on July 14, 1975 this judgment shall become final and enforceable for all purposes on July 16, 1975 after which date there is no just reason for delay and execution may issue hereon, (emphasis added).

July 14, 1975. The defendants filed a motion seeking an order amending the amended judgment of July 8 by deleting the last paragraph and further providing that the judgment of July 3 should not become final and appealable until such time as the trial court rendered findings of fact, conclusions of law and judgment on the issues litigated by the defendants at the trial commencing July 14,1975. Ohio River Pipeline filed an objection to the motion to amend the judgment. Although notice was given that the motion to amend would be heard on August 8, 1975, no order was ever entered ruling on the motion to amend.

December 12, 1975. The trial court entered “opinion, findings of fact and conclusions of law and judgment.” In this opinion, the trial court recited that the defendants’ motion of July 14 to amend the judgment of July 3 “had the effecting of tolling the time for filing an appeal.” In this opinion and judgment, the trial court fixed the liability of Skilton Construction at 15% of the judgment, the liability of Landrum and Associates at 45% of the judgment and the liability of Miller, Wihry & Lee at 40% of the judgment. The opinion and judgment of December 12 further recited that it was a final judgment and that there was no just cause for delay.

December 22, 1975. Miller, Wihry & Lee filed a motion for the court to enter a supplemental judgment. The supplemental judgment tendered with the motion was entered by the court on the same day. This supplemental judgment recited:

As a supplement to the Judgments of this court of July 3, 1975 and December 12, 1975, the court hereby adjudges that the joint and several provisions of the Judgment of July 3, 1975 are, in view of the court’s December 12, 1975 filings, eliminated and a Judgment against each defendant is hereby adjudged in the following percentages only:
Landrum and Associates 45%
Miller, Wihry & Lee 40%
Skilton Construction Company 15%

[©=8] Ohio River Pipeline argues that the trial court lost jurisdiction to amend the judgment of July 3 because the motion to amend that judgment was not filed until July 14, eleven days later. We agree that, as a general proposition, the court loses control of its judgment ten days after the date of entry unless an authorized motion is made or court action is taken within that time. W. Clay, Kentucky Practice, Civil Rule 59.04, comment 5 (3rd ed. 1974); see also CR 50.02, CR 52.02, CR 59.02, CR 59.04, and CR 59.05. The argument of Ohio River Pipeline would have merit but for the fact that the judgment of July 3 expressly provided that it “shall become final” on July 16 “after which date” there would be no just reason for delay. Even though the judgment in question was entered on July 3, it is apparent that the trial court did not intend the judgment to become final until after the two day trial scheduled for July 14 on all issues between the defendants. The defendants’ motion to amend the judgment was filed on July 14. The motion to amend was not untimely because it was filed two days before the judgment by its own terms would become final on July 16. Because the judgment would not become final until July 16, the judgment was necessarily interlocutory and subject to revision. When a judgment is entered prior to the effective date expressly set forth in the judgment, the judgment should not be deemed to have been entered until its effective date for the purpose of computing time under the civil rules of procedure. Otherwise, a litigant might be placed in the illogical position of appealing a judgment which had not yet become effective.

Last, Ohio River Pipeline asserts that the original judgment of July 3 imposing joint liability against the defendants was amended to award several damages without giving Ohio River Pipeline notice and an opportunity to be heard, thereby denying it due process of law. This argument has more merit. A joint judgment against multiple defendants will always be more valuable if there is any question respecting the solvency of one of the judgment debtors. If the judgment awards separate damages against the defendants, the plaintiff may be unable to collect the entire amount of his judgment. See Cox v. Cooper, Ky., 510 S.W.2d 530 (1974).

In its judgment of July 3, 1975, the trial court recited that the remaining issues raised by the cross-claims between the defendants had been assigned for a two-day trial commencing July 14, 1975. In the various cross-claims, Landrum and Associates, Miller, Wihry & Lee, and Skilton Construction had raised issues of indemnity and contribution. Therefore, Ohio River Pipeline was on notice that the relative fault of the various defendants remained an issue to be tried by the court. However, it does not follow that Ohio River Pipeline was on notice that the trial court contemplated apportioning liability under KRS 454.040.

The distinction between indemnity and contribution was well stated by the court in V. V. Cooke Chevrolet, Inc. v. Metropolitan Trust Co., Ky., 451 S.W.2d 428, 430 (1970):

Indemnity, in essence, is shifting the entire loss from one tort feasor who has been compelled to pay it to the shoulders of another who should bear it instead. Contribution, on the other hand, distributes the loss among the tort feasors by requiring each to pay a share of the injured party’s loss.

KRS 454.040 provides a means for distributing the loss among joint tort-feasors by requiring each to pay a specific portion of the injured party’s loss. Because indemnity involves shifting the entire loss from one tort-feasor to another, indemnity can never involve apportionment of liability under KRS 454.040.

The right of contribution between joint tort-feasors is created by KRS 412.030. Like apportionment of liability under KRS 454.040, contribution is concerned with the distribution of loss among joint tort-feasors. However, there are important differences. Under KRS 454.040, the trier of fact may apportion liability among the joint tort-feasors on the basis of the percentage of causation attributable to each. Apportionment is not required to be equal. S. W. Corum Hauling, Inc. v. Tilford, Ky., 511 S.W.2d 220, 221 (1974); Cox v. Cooper, supra, 510 S.W.2d at 536. Under the doctrine of contribution, the liability of each joint tort-feasor is equal and is not apportioned on the basis of causation. Nix v. Jordan, Ky., 532 S.W.2d 762 (1975); see also Lexington Country Club v. Stevenson, Ky., 390 S.W.2d 137, 143, fn. 4 (1965); Elpers v. Kimbel, Ky., 366 S.W.2d 157, 161 (1963). If the trier of fact chooses to apportion its award among the joint tort-feasors, the question of contribution becomes moot. Each joint tort-feasor is no longer liable for the entire judgment. Under KRS 454.040, each tort-feasor is liable only for the amount apportioned against it by the trier of fact. Cox v. Cooper, supra, 510 S.W.2d at 536-37; Lexington Country Club v. Stevenson, supra, 390 S.W.2d at 143. By reserving the issue of contribution in the judgment of July 3, the trial court did not expressly indicate that the question of apportionment was also reserved.

When the trial court apportioned liability among Landrum and Associates, Miller, Wihry & Lee, and Skilton Construction in its opinion and judgment of December 12, the trial court automatically amended the joint judgment of July 3. Under KRS 454.040, the liability of the defendants was no longer joint, but only several. Cox v. Cooper, supra. The amended judgment of December 22 did no more than make explicit what was only implicit in the opinion and judgment of December 12. As Professor Germain has pointed out, there are no guidelines for the application of KRS 454.040. Supra, 65 Ky.L.J. at 292-93. The trier of fact has complete discretion in determining whether the liability of joint tort-feasors is to be joint or is to be apportioned. Nevertheless, we cannot ignore the fact that Ohio River Pipeline was never given an opportunity to be heard on the applicability of the apportionment statute.

Due process dictates that a party be given notice and an opportunity to be heard, before the trial court on its own motion modifies the rights of the party under an existing judgment. Cf. CR 59.04; Hoppe v. St. Louis Public Service Co., 361 Mo. 402, 235 S.W.2d 347, 23 A.L.R.2d 846 (1950). Ohio River Pipeline should have the opportunity to argue that the trial court should not apportion liability under KRS 454.040. It should also have the opportunity to question the percentage of liability imposed on each defendant on the basis of the evidence before the trial court. At the very least, Ohio River Pipeline should have the right to make the same points to the trial judge as it could have made in a closing argument to a jury properly instructed on the issue.

Even though Ohio River Pipeline is entitled to be heard on the issue of apportionment, it does not follow that it is entitled to a new trial in order to introduce additional testimony on the question of the relative fault of the defendants. Ohio River Pipeline was aware that the issue of relative fault would be tried commencing July 14. Ohio River Pipeline choose not to participate in that trial. There is no suggestion that Ohio River Pipeline has any additional evidence to offer on the issue. In fact, Ohio River Pipeline has never requested a new trial; it seeks only to have the judgment of July 3, reinstated.

We conclude that the judgment of December 22, 1975, must be vacated so that the trial court may reconsider the applicability of KRS 454.040 on the basis of the existing record after granting all of the parties an opportunity to be heard.

Ill

Before turning to the merits of the cross-claim, we will examine the finding of facts made by the trial court. After finding from the evidence that all the defendants were aware of the easement, the trial court found:

Skilton was merely the contractor who did the actual moving in accordance with the engineers instructions and plans. Skilton had no authority to put more or less burden on the easement nor did he have any authority to relocate any roads, easements or buildings. However, he was aware of the easement, he knew of the position of the Indiana Gas Company, and, he had a choice of whether to abandon the contract or complete it knowing that he was violating the rights of the plaintiffs if he did complete it.
We do not believe Skilton bears the same degree of culpability in this case as do Landrum and Miller, Wihry & Lee. At the same time we do not believe that anyone can hide behind a contract which directs them to do a job in accordance with another’s instructions, which job encroaches on the rights of a third-party.
Because Skilton had absolutely no control over the amount of fill nor its location or the design of the undertaking itself we would fix his liability for the judgment at fifteen percent.
It appears to us that Landrum and Miller, Wihry & Lee took a calculated risk and lost. Both of them knew of the existence of the easement; both of them knew that the Plaintiff would not tolerate the extra burden on their easement without a compensating raise of the pipeline; both of them had been in the engineering profession or in the developing field long enough to have acquired sufficient experience and knowledge as to the rights of the holders of easements and yet they proceeded to execute their own designs. We, therefore, set the liability of Landrum at forty-five percent of the judgment and the liability of Miller, Wih-ry & Lee at forty percent of the judgment.

The trial court’s findings of fact are not clearly erroneous. CR 52.01. Therefore, with respect to the cross-claims, the only question is whether the trial court correctly applied the law to the facts.

On its cross-appeal, Skilton Construction asserts that it has no liability to Ohio River Pipeline or, in the alternative that it was entitled to indemnity from Landrum and Associates and Miller, Wihry & Lee. This argument is based solely upon the fact that its interference with the gas pipeline easement was the result of following the plans and specifications provided by the owners and architects and which governed its duties under the construction contract. The trial court was correct in holding that Skilton Construction could not hide behind its contract with Landrum and Associates as a defense to the wrong committed to Ohio River Pipeline. Skilton Construction Company is not relieved from liability because it acted in accordance with the plans and specifications and at the directions of the owner and architect. Restatement (Second) of Agency, § 343 (1958); Pool v. Adkisson, 31 Ky. (1 Dana) 110, 112-15 (1833). The trial court did not err in holding Skilton Construction liable to Ohio River Pipeline.

Skilton Construction can make a stronger case on the issue of indemnity. If a contractor is required to pay damages for a trespass committed in carrying out the plans and specifications provided by the owner, the contractor may be entitled to indemnity from the owner. The contractor generally may assume that performance of the plans and specifications will not constitute a trespass on the rights of third persons. However, if the contractor knows that his acts are wrongful, indemnity is denied because the contractor and owner are in pari delicto. Horrabin v. City of Des Moines, 198 Iowa 549, 199 N.W. 988, 38 A.L.R. 554 (1924); Restatement (Second) of Agency § 439, comment g. In this case, Skilton Construction was fully aware that it was covering the gas pipeline easement with an excessive amount of fill. The trial court did not err in dismissing Skilton’s Construction’s claim of indemnity.

On the cross-appeals of Landrum and Associates and Miller, Wihry & Lee, each asserts that it is entitled to indemnity from the other. Neither cross-appeal has merit. Both Landrum and Associates and Miller, Wihry & Lee proceeded with complete knowledge that the rights of Ohio River Pipeline were being violated. Under the circumstances, both defendants were in pari delicto. Their wrong does not consist of passive or secondary negligence such as the failure to discover the wrong of another. Their wrong was active and primary. All of the parties proceeded with actual knowledge that the rights of Ohio River Pipeline were being violated. See Brown Hotel Co. v. Pittsburgh Fuel Co., 311 Ky. 396, 224 S.W.2d 165 (1949). The trial court did not err in dismissing the indemnity claims of Landrum and Associates and Miller, Wihry & Lee.

IV

On the appeal of Ohio River Pipeline, the judgment of the circuit court is vacated, and the case remanded to the circuit court with directions to reconsider the application of KRS 454.040 on the basis of the present record after granting all parties an opportunity to be heard. On the cross-appeals of Skilton Construction, Landrum and Associate and Miller, Wihry & Lee, the judgment of the circuit court is affirmed.

All concur.