author: PEDEN, Justice.

text:
    RIO GRANDE OIL CO. et al., Appellants, v. The STATE of Texas, Appellee.
    No. 16699.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    July 1, 1976.
    Rehearing Denied July 29, 1976.

      Farris, Pain & Horne, George R. Pain, Houston, for appellants.
    John L. Hill, Atty. Gen. of Texas, Philip K. Maxwell, Chief Asst. Atty. Gen., William A. Marquis, III, Asst. Atty. Gen., Austin, for appellee.
   PEDEN, Justice.

Rio Grande Oil Co. and ten individual defendants associated with it appeal from an order granting a temporary injunction and appointing a temporary receiver for their assets in this action brought by the State of Texas under the Texas Securities Act, Article 581-1 et seq., V.C.S., and other Texas statutes. The State alleged that Rio Grande Oil Co., a Texas corporation, was offering and selling unregistered securities in the form of fractional interests in Texas oil and gas leases, that the company and the individual defendants associated with it were not properly registered with the State Securities Board, and that the defendants have engaged in fraudulent practices in offering and in making sales of these interests to investors. None of the investors or potential investors is a resident of Texas.

The defendants-appellants complain of the temporary injunction and temporary receivership in twelve points of error. We hold that the trial court did not abuse its discretion in issuing the temporary injunction, but we sustain the appellants’ points of error complaining of appointment of a temporary receiver for the assets of seven of the individual defendants.

In their sixth and seventh points of error the appellants contend that the trial court erred 6) “in finding that each defendant acted as a securities dealer in connection with the commission of fraudulent practices” and 7) “in finding that certain fraudulent practices were committed by each defendant when a substantial portion of said defendant’s business consisted of acting as a securities dealer.” These findings were recited in the trial judge’s order. The appellants say there is no evidence that seven of them, defendants Ham, Barbour, Nig-relle, Floyd, Gardner, Berner, and Barnes, acted as securities dealers in connection with their activities with Rio Grande Oil, so the court should not have appointed a receiver for their assets. Point of error number nine covers the same ground.

The receivership section of the Securities Act, Article 581-25-1, provides:

“A. Whenever it shall appear to the commissioner [of the State Securities Board] . . . that:
“(1) any person or company, a substantial portion of whose business consists of acting as a dealer (as defined in Subsection C of Section 4 of this Act), whether or not duly registered by the commissioner as in this Act provided, shall have engaged in any act, transaction, practice, or course of business declared by Section 32 of this Act to be a fraudulent practice;
“(2) such person or company shall have acted as a dealer in connection with such fraudulent practice ; and
“(3) the appointment of a receiver for such person or company, or the assets of such person or company, is necessary in order to conserve and protect the assets of such person or company for the benefit of customers, security holders, and other actual and potential claimants of such person or company the commissioner may request the attorney general to bring an action for the appointment of a receiver for such person or company or the assets of such person or company . . . ” (emphasis added)

Subdivision B of the article provides that under certain circumstances the attorney general may bring an action in a district court for appointment of a receiver for such person or company.

The definition of “dealer” in Subsection C of Article 581-4, is:

“The term ‘dealer’ shall include every person or company, other than a salesman, who engages in this state, either for all or part of his or its time, directly or through an agent, in selling, offering for sale or delivery or soliciting subscriptions to or orders for, or undertaking to dispose of, or to invite offers for, or rendering services as an investment adviser, or dealing in any other manner in any security or securities within this state . . . ”
“Salesman” is defined in Subsection D:
“The term ‘salesman’ shall include every person or company employed or appointed or authorized by a dealer to sell, offer for sale or delivery, or solicit subscriptions to or orders for, or deal in any other manner, in securities within this state, whether by direct act or through subagents; provided, that the officers of a corporation or partners of a partnership shall not be deemed salesmen, where such corporation or partnership is registered as a dealer hereunder.”

It is undisputed that Rio Grande Oil was not registered as a dealer under the Act. There is evidence that the individual defendants were instructed to, and did, identify themselves to prospective investors on the telephone as owners, partners, or presidents of an oil and gas company, not as salesmen, and that at least some of them engaged in a number of fraudulent practices, but the evidence shows that the seven who complain in points of error six, seven, and nine were acting as salesmen, so they could not have been acting as dealers as defined in Subsection C of Article 581-4. We think the receiver should not have been ordered to take possession of their property.

“It has been noted that receivership legislation is ‘born of a conviction that a courtroom is no place to run a business and that accordingly . . . is a remedy which should be used only as a last resort.’ The drafters of new section 25-1 appear to have been mindful of the drastic nature of the receivership remedy generally and, therefore, have provided adequate safeguards against abuse. In proper cases, however, the use of this additional remedy should aid the commissioner in preserving the assets of those acting as dealers.” Bateman and Dawson, The 1975 Amendments to the Texas Business Corporation Act and the Texas Securities Act, 6 Texas Tech.Law Review 951 (1975).

Rio Grande Oil and the other three individual defendants, Worthington, Machen, and Norton, do not contend that the evidence fails to support the findings in question as to them, so we do not disturb the appointment of a temporary receiver of their assets.

The appellants’ eighth point of error is that the trial court erred in finding that the appointment of a receiver for each defendant is necessary for the benefit of customers, security owners and other actual and potential claimants. We hold that there is ample evidence of the existence of actual and potential claimants arising from sales of unregistered securities by unregistered salesmen. See Articles 581-33, 1302-5.07 and 5.08, and the Texas Consumer Protection Act, Texas Bus. & Com.Code, §§ 17.46 and 17.47(c).

The appellants’ tenth point of error is that the trial court erred in finding that each defendant committed fraudulent practices in the sale of unregistered securities. They contend that “for there to be fraud in any civil type proceeding there must be a misrepresentation of a material fact and the allegedly defrauded party must be shown to have relied upon the alleged misrepresentation to his damage.” They say there is no evidence any of the complaining witnesses relied on any material representation (from any defendant) of a present fact to his damage.

Further, that whatever representations made by the defendants that turned out to be untrue were not material, not relied on, were made in good faith, and did no damage.

The trial court’s finding was that each of the defendants had “employed devices, schemes, artifices, practices and courses of business in the sale of the unregistered securities described hereinabove which are declared to be fraudulent practices by Article 581-32 ...”

Article 581-32 declares that these are “fraudulent practices”:

(1) To employ any device, scheme or artifice to defraud or to obtain money or property by means of any false pretense, representation, or promise
(2) To make or attempt to make in this state any fictitious or pretended purchases or sales of securities
(3) To engage in any practice or transaction or course of business relating to the purchase or sale of securities which is in violation of law or which is fraudulent or which has operated or which would operate as a fraud upon the purchaser.

Article 581—4 F states:

“The terms ‘fraud’ or ‘fraudulent practice’ shall include any misrepresentations, in any manner, of a relevant fact; any promise or representation or prediction as to the future not made honestly and in good faith, or an intentional failure to disclose a material fact; the gaining, directly or indirectly, through the sale of any security, of an underwriting or promotion fee or profit, selling or managing commission or profit, so gross or exorbitant as to be unconscionable; any scheme, device or other artifice to obtain such profit, fee or commission; provided, that nothing herein shall limit or diminish the full meaning of the terms ‘fraud,’ ‘fraudulent,’ and ‘fraudulent practice’ as applied or accepted in courts of law or equity.”

The trial court was entitled to find from the evidence that the defendants committed many of the fraudulent practices defined above.

We think it clear that Articles 581-4 F and 581-32 extend the definition of common law fraud to the practices enumerated in them and that reliance is not a necessary element of them. For example, it would be difficult to see how reliance on a misrepresentation could be a necessary element of this fraudulent practice listed among others in Section 4 F: “the gaining through the sale of any security, of an underwriting or promotion fee or profit, selling . . . commission or profit, so gross or exorbitant as to be unconscionable; .” The Texas Court of Criminal Appeals found, for a similar reason, that Article 581-29, a penal statute, does not impose reliance upon the fraudulent representation as a necessary element of the offense. Birchfield v. State, 401 S.W.2d 825 (Tex.Cr.App.1966).

There is, furthermore, evidence of reliance on the misrepresentations shown to have been made. Without listing those misrepresentations we merely state, contrary to the appellants’ contentions, that the trial judge was, beyond any question, justified in considering them to have been material, made in bad faith, and damaging.

The eleventh point of error is that “the trial court erred in finding that the State of Texas has suffered a probable injury in that the defendants have sold and offered to sell unregistered securities.” The appellants say that since there were no purchasers within Texas, there is no evidence that Texas could have suffered irreparable injury and no evidence of any irreparable damage “done to legitimate securities dealers.” Similarly, the twelfth point is that the court erred because the Texas Securities Act does not apply to sales made from Texas to residents of other states.

As we have noted, Rio Grande Oil is a Texas corporation, located in Houston, engaged in the selling of fractional interests in oil and gas leases located in Texas. Telephone calls by Rio Grande Oil sales personnel located in Houston were made to other states soliciting offers to buy such interests, and information provided by Rio Grande Oil was mailed from Texas to prospective out-of-state investors. Rio Grande Oil maintains its bank accounts in Houston and conducts portions of its business through them. On one occasion an investor and his wife came to Texas and visited the Rio Grande office. They were not offered any interests and their check was not solicited, but they were given glowing reports on the geology of some of the fields being developed and were told they should get in on them if possible.

We overrule these points. We believe a probable injury has been shown. A state is damaged if its citizens are permitted to engage in fraudulent practices even though those injured are outside its borders. Brown v. Market Development, Inc., 41 Ohio Misc. 57, 322 N.E.2d 367 (1974). However, Article 581-32 specifically provides for the granting of injunctions to halt certain threatened practices; the State needs only to meet the statutory provisions and is not required to otherwise show probable injury. Houston Compressed Steel Corp. v. State, 456 S.W.2d 768 at 775 (Tex.Civ.App.1970, no writ).

Further, we think it clear that the Texas Securities Act applies if any act in the selling process of securities covered by the Act occurs in Texas. Article 581-7 states that no dealer, agent or salesman shall sell or offer for sale any security that has not been registered and is not exempt. Article 581-12 provides that “no person, firm, corporation or dealer shall directly or through agents or salesmen, offer for sale, sell or make a sale of any securities in this state without first being registered as in this Act provided.”

The provisions of the Security Act are broad. The terms “sale”, “offer to sell”, and “sell” are defined in Article 581-4 E as including every disposition, or attempt to dispose of a security for value. In the words of the Act, the seller may be any link in the chain of the selling process. He is the one who performs “any act by which a sale is made.” Brown v. Cole, 155 Tex. 624, 291 S.W.2d 704 (1956).

In Shappley v. State, 520 S.W.2d 766 (Tex.Cr.App.1975) the defendant was charged with having sold securities without having registered as a dealer or salesman in Texas in violation of Article 581-29(A). He sold them by telephone from Arizona to a Texas customer, the reverse of the parties’ location in our case. The court held that since the term “sale” or “offer for sale” is defined in Article 581-4 E to include a solicitation of sale, an offer to sell, or an attempt to sell, the legislative intent clearly was to impose sanctions on almost any dealing in securities without a license, and the telephone negotiations at the very minimum amounted to an offer within the state.

In our case the defendants told their prospective purchasers to mail in their checks for the fractional interests. The “subscription of lease interest” form contained this provision: “It is understood that the sale to me (us) of the above interest(s) is subject to prior sale.” The defendants were making solicitations of sales or attempts to sell; the acceptances were intended to be made and were made in Texas, so the sales were Texas ones.

The defendants’ argument has been rejected by the Florida court in State v. Hayes, 305 So.2d 819 (Fla.App.1975), which held that the Florida Securities Act applies to Florida promoters who sell only to residents of other states.

In their first five points of error the appellants contend the trial court erred in admitting into evidence certain exhibits: 1) State’s Exhibit 2, copies of “1-G Reports” obtained from the U.S. Securities and Exchange Commission, 2) State’s Exhibit 3, a copy of a rule of the State Securities Board, 3) State’s Exhibits 6 and 7, cease and desist orders from other states, 4) State’s Exhibit 12, Rio Grande Oil’s articles of incorporation, and 5) State’s Exhibits 10 and 11, purportedly copies of the first shareholders’ and board of directors’ meetings of Rio Grande Oil.

State’s Exhibit 2, the “Form 1-G Reports”, was admitted during the testimony of Mr. Roy Mouer, Commissioner of the State Securities Board, who testified that he was the legal custodian of the Board’s records and that he filed the reports as records of the Board after he received them from the Securities and Exchange Commission. He identified the reports as copies of Form 1-G, sent in response to his request, made in the regular course of business, certified by the records officer of the U.S. Securities and Exchange Commission, and attested to by its secretary. He said they are certified copies of the Schedule D offering sheets prepared by Rio Grande Oil on four of its oil and gas leases, showing sales made in those leases. Use of the reports was restricted by the S.E.C. in that he was to seek a protective court order so that names and addresses of investors would not be released to the public. The reports were tendered in evidence with a motion that they be kept under protective order of the court and were admitted under such an order. The appellants contend the records are not admissible because they are hearsay, because it is provided in 17 Code of Federal Regulations, Section 230.216 that “These reports shall be kept confidential unless the Commission shall order otherwise,” and because there is no showing in the record that this federal regulation has been waived.

Article 3731a, Section 2, V.C.S., provides:

“Any written instrument which is permitted or required by law to be made, filed, kept or recorded . . . by an officer or clerk of the United States . or of any governmental subdivision of any of the foregoing, . shall, so far as relevant, be admitted in the courts of this State as evidence of the matter stated therein . . . ”

Article 581-30 states in part:

“Copies of all papers, instruments, or documents filed in the office of the Commissioner, certified by the Commissioner, shall be admitted to be read in evidence in all courts of law and elsewhere in this state in all cases where the original would be admitted in evidence; . . . ”

We hold that the exhibit was properly admitted. The trial court was entitled to conclude that the S.E.C. had released the reports to the Board under conditions which satisfied the confidentiality requirements of the regulation.

State’s Exhibit 3 was also admitted during the testimony of Commissioner Mouer. He identified it as a rule of the State Securities Board in effect since 1971 and formally adopted as a rule on October 27, 1975. It was certified by the Deputy Commissioner. Article 581-2 C states:

“The Commissioner, with the consent of the Board, may designate a Deputy Securities Commissioner who shall perform all the duties required by law to be performed by the Securities'Commissioner when the said Commissioner is absent or unable to act for any reason.”

The appellants’ objection was that the exhibit was hearsay. We hold that the trial court did not err in admitting it under Article 581-30, supra, and Article 3731a § 1, which provides:

“Any written instrument record . . made by an officer of this State . . . or by his deputy . in the performance of the functions of his office and employment, shall be, so far as relevant, admitted in the courts of this State as evidence of the matter stated therein . . . ”

Commissioner Mouer testified that State’s Exhibits Nos. 6 and 7 were records of the State Securities Board under his custody and control that had been obtained as a result of his request, in the course of his investigation, for certified copies of all cease and desist orders issued by state securities commissioners across the country. Exhibit No. 6 was certified by the Secretary of the Arizona Corporation Commission. Exhibit No. 7 was certified by the Missouri Commissioner of Securities. The objection was that they are hearsay. The exhibits were properly admitted under Article 3731a, § 2, and the appellants waived their objection by introducing evidence of the issuance of the orders in question.

Exhibits 10 and 11 purport to be copies of the minutes of a board of directors’ meeting and of the first meeting of shareholders of Rio Grande Oil. The objection was that the instruments have not been shown to be authentic, so they are hearsay. Mr. Lanier, supervising examiner of the State Security Board’s Houston office, testified that he had served an administrative subpoena on Rio Grande Oil calling for its books, records, corporate minutes of directors’ and shareholders’ meetings and that exhibits 10,11 and 12 were obtained in response to that subpoena. The court admitted the exhibits for the limited purpose of showing that in response to a subpoena these instruments were given by the persons named. The State contends that the exhibits were admissible because they were an admission against interest since the statements were inconsistent with the position taken by the defendants in their general denial. We consider the identification to have been sufficient, but hold that the error, if any, in admitting them for the limited purpose stated has not been shown to be harmful. Rule 434, Texas Rules of Civil Procedure.

The appellants also contend that no witness proved the authenticity or custody of State’s Exhibit 12, so it is hearsay. Exhibit 12 was certified by the Secretary of the State of Texas to be a true and correct copy of the articles of incorporation of Rio Grande Oil Co. on file in his office. The exhibit was admissible under Articles 3720 and 3722, V.C.S.

The order of the trial court is amended to delete the following names from the list of those whose “property, financial books and records, and assets of whatever nature and wherever located (within or without the State of Texas)” were ordered taken into possession by the Temporary Receiver: George Michael Ham, Jessie Collins Barbour, Jr., Kenneth E. Nigrelle, Ronnie Graham Floyd, Lawrence Edward Gardner, Milford C. Berner, and Douglas Barnes. As thus amended, the order of the trial court is affirmed.


source: Caselaw Access Project

author: PRESLAR, Chief Justice.

license: Public Domain

text:
    LIBERTY MUTUAL INSURANCE COMPANY, Appellant, v. Raymond E. CHESNUT, Appellee.
    No. 6481.
    Court of Civil Appeals of Texas, El Paso.
    July 7, 1976.
    Rehearing Denied Aug. 18, 1976.

      Rassman, Gunter & Boldrick, John E. Gunter, Midland, for appellant.
    Finley & Scogin, Robert Scogin, Kermit, for appellee.
   OPINION

PRESLAR, Chief Justice.

This is a workmen’s compensation case in which the claimant was severely injured in an automobile accident while going to work. Three co-workers who were occupants of the car were killed; their cases are companion cases to this one and the disposition of this case controls theirs. The four cases were consolidated for trial purposes only, and, based on a jury verdict, judgment was entered for the claimants and the insurer appeals. We affirm.

The principal question on appeal is whether the injuries were sustained in the course of employment within the meaning of Sections 1 and lb of Article 8309, Tex. Rev.Civ.Stat.Ann. Also present are questions of waiver of objections to the Court’s charge and admissibility of evidence over objection that it is hearsay.

The four cases result from an automobile collision which occurred on April 11, 1974, while a drilling crew of four was en route from Odessa, Texas, to work at a rig site in a remote area of Pecos County in the vicinity of Fort Stockton, Texas. The driller, Mr. Branum, was driving his personal automobile and was carrying his crew consisting of Messrs. Chesnut, Ramos, and Escarcega. All were killed except Mr. Chesnut who was severely injured. The distance from Odessa to the rig site was approximately 105 miles. The accident happened on a public highway about halfway between Odessa and the rig site. The employer, Johnn Drilling Company, under a written agreement with the driller, paid him 14$ per mile for use of his personal automobile. In response to two special issues, the jury found that both the driller and the crew members were in the course of their employment.

By its first seven points of error, Appellant complains of the failure of the trial Court to grant its motion for directed verdict, its motion for judgment notwithstanding the verdict, and the submission to the jury of the issues on course of employment. The determination of these points involves the question of the legal sufficiency of the evidence to sustain the jury’s findings on the issues of course of employment. In deciding these “no evidence” points, an Appellate Court must consider only the evidence and inferences tending to support the finding and disregard all evidence and inferences to the contrary. Garza v. Alviar, 395 S.W.2d 821 (Tex.1965).

As indicated, the first issue inquired whether the driller was injured in the course of employment, and the second issue inquired whether the crew members were injured in the course of employment. These issues were followed by instructions of the Court substantially in the wording of Sections 1 and lb of Article 8309. As material here, Section 1 provides:

“ * * * ‘injury sustained in the course of employment’ * * * shall include all other injuries of every kind and character having to do with and originating in the work, business, trade or profession of the employer received by an employee while engaged in or about the furtherance of the affairs or business of his employer whether upon the employer’s premises or elsewhere. * * * ”

Section lb of Article 8309 was added by the Legislature in 1957; it provides:

“Unless transportation is furnished as a part of the contract of employment or is paid for by the employer, or unless the means of such transportation are under the control of the employer, or unless the employee is directed in his employment to proceed from one place to another place, such transportation shall not be the basis for a claim that an injury occurring during the course of such transportation is sustained in the course of employment. * * ‡ )>

It is now well settled that the effect of the addition of Section lb to Article 8309 is to limit the instances when recovery will be allowed to those enumerated in Section lb. Reid v. North River Insurance Company, 508 S.W.2d 683 (Tex.Civ.App.—El Paso 1974, no writ).

The general rule is that injuries suffered by employees while traveling on public streets and highways in going to and returning from work are not compensable. American General Insurance Company v. Coleman, 157 Tex. 377, 303 S.W.2d 370 (1957). To have a compensable injury, then, for injuries received going to or from work, the employee must bring himself within the provisions of Section 1, that is, that the injuries were of a kind and character that had to do with and originated in the work, business, trade or profession of the employer, and were received while the employee was engaged in or about the furtherance of the affairs or business of the employer. Texas General Indemnity Company v. Bottom, 365 S.W.2d 350 (Tex.1963). Additionally, he is limited to and must bring himself within the provisions of one of the four instances enumerated in Section lb. As the Supreme Court said in Janak v. Texas Employers’ Insurance Association, 381 S.W.2d 176 (Tex.1964):

“Sec. lb, Article 8309, enacted in 1957, has two parts. The first part declares injuries during travel to be in the course of employment, and therefore compensa-ble, only when transportation is (1) furnished as a part of the contract of employment, or (2) is paid for by the employer, or (3) is under the control of the employer, or (4) when ‘the employee is directed in his employment to proceed from one place to another place.’ * * * »

In Agricultural Insurance Co. v. Dryden, 398 S.W.2d 745 (Tex.1965), the Court quoted the above from Janak and then said:

“It necessarily follows that an injury occurring during transportation cannot be the basis of a claim that such was sustained in the course of employment, as required by Section 1 of Article 8309, unless one of the prerequisites enumerated in the first sentence of Section lb is present. * * * ”

In our opinion, the crew members, Chesnut, Ramos, and Escarcega, qualify under (1) of Section lb as set out in Janak above, and the driller, Branum, falls under number (2) thereof as a prerequisite to his recovery; and, under the jury findings, they met their burden of bringing themselves within the “prerequisite,” proving their injuries were sustained in the course of employment within the meaning of Section 1 of Article 8309.

Under a written contract with its drillers, Johnn Drilling Company paid them 14$ a mile for travel to and from the job site. The driller and all of the crew members lived in Odessa, 105 miles from the job site. The driller drew 14$ a mile for each 210 mile round trip, seven days a week, for a total of some $784.00 per month for the use of his car. The Company president testified that this mileage was paid to compete in the labor market and because it was the driller’s responsibility to get the crew on the job; he testified that this was a benefit to the Company and “I guess you could say” it was part of the driller’s work contract. The inference is that the driller was performing a service for his employer in the transporting of the crew to the job site.

The drilling rig operated 24 hours a day non-stop, and there was a change of crews each 8 hours; a four man crew consisted of the driller, derrick man and two floor hands, each with a specific job to do. Each driller hires his own crew and it is his duty to have them at the well site; the crew was not required to ride with the driller, but they were told when they were hired that they would have this free transportation and they usually rode with the driller except when they needed their own car for some personal cause. A driller had the right to hire and fire, and he could fire a crew member who refused to ride with him. There was testimony from a driller that he would not work for anyone who did not pay transportation and, likewise, a crew would not work without such free transportation. Under the chain of command on a drilling rig, the drillers worked for the toolpusher, and a toolpusher testified that a driller who did not transport his crew to the job site “would not work for him” and that he “would not be a driller” if he did not have a crew out there on the job site. The importance to the employer of having a full crew at this remote job site is emphasized by the fact that this was a rush operation; the well was being drilled for Gulf Oil Corporation and they had an early expiration date on their lease; and, in that connection, they induced or authorized Johnn Drilling Company to pay $6.00 a day completion bonus. Both the driller and crew received this so-called “bottom hole” pay, an incentive to stay on the job to the completion of the well.

However, there is testimony that $4.00 of this $6.00 was for travel pay. The admissibility of this evidence is another point of error, but, assuming it is admissible, it places both the driller and the crew in a position of being paid during the time of going to and from the rig site. The drilling rig had been operating near Crane and when it was moved to this remote site in Pecos County, the $6.00 per day bonus was begun. Chesnut, the survivor of the collision, testified that it was his understanding from a conversation with a driller that they would be paid $4.00 per day “road time” and $2.00 “bottom hole” pay. This accident occurred about a week after work commenced at the Pecos site so there had been no pay period at that time. Those who completed the rig were paid this $6.00 per day and there is evidence from the employer’s records that one crew member who did not complete the well was paid $4.00 a day for the days that he did work. Our review of the facts indicates that there are benefits flowing to the employer from the services of the driller Branum in getting the crew to the rig. It was his duty to get the crew to the job site, he was paid to do that, and he was in the process of doing that when he was killed. We cannot say as a matter of law that his injuries did not occur in the course of employment as found by the jury.

Possibly the leading case construing Section lb of Article 8309 is Janak v. Texas Employers’ Insurance Association, supra. In Janak, the claimant was a member of the drilling crew and had participated in a car pool arrangement. At the time of the accident, Janak was a passenger in a car owned and operated by a fellow crew member, and that crew member had deviated from the usual route of travel to get ice to take to the job site. The Supreme Court held that, by procuring ice for the drinking water, the driver of the automobile was performing services in furtherance of the employer’s business. The Court reasoned that the drinking water was reasonably essential to the continuation of the drilling operations to such a point that a deviation to obtain it is impliedly directed by the employer. Also, the Court refused to recognize a distinction between the automobile owner-operator and the passenger, Janak, in allowing compensation, saying:

“ * * * If on a particular trip the automobile-operator member of the carpool must perform a service in furtherance of the employer’s business, the others must go also or abandon the carpool. To expect them to abandon the carpool if the deviation is not extreme is utterly unrealistic; and it is also unrealistic, therefore, to draw an imaginary line between the crew member who operates the automobile and the crew member who is but a passenger and say that the one is entitled to compensation benefits if injured but the other is not. * * * ” (Emphasis supplied).

That language covers the situation in the case before us, but we are reluctant to say that it controls our case. In applying the rules governing injuries sustained in travel, each case must be decided upon its particular facts. The facts of Janak differ from ours in that it was the obligation of all the crew members to get the ice and they rotated the deviation to get it. In our case, only the driller is paid and there is no deviation. However, we think that the facts of our case do bring it within the overall doctrine of the Janak case in that while only the driller was being paid, it was the “plan” or “arrangement” that was of benefit to the employer and it required the cooperation of the crew in riding with the driller. In other words, it was worth nothing to the employer to get the driller alone to the rig site; rather, his benefits flowed from the arrangement or plan of paying the driller and making it his duty to get the crew to the job site. The success of this plan and the participation of the crew in it placed them all on an equal footing of entitlement to compensation as in the Janak case.

A more recent Supreme Court decision involved a fact situation similar to Janak. Johnson v. Pacific Employers Indemnity Company, 439 S.W.2d 824 (Tex.1969). The Supreme Court held that the Court of Civil Appeals erred in finding as a matter of law that Johnson deviated from his regular route of travel solely for his personal benefit. It was held that Johnson’s injuries were compensable, as he was traveling an alternate route in the course of his employment at the direction of the employer. The Court said:

“ * * * We held in Janak v. Texas Employers’ Insurance Association, 381 S.W.2d 176 (Tex.Sup.1964), that the transporting of ice to a drilling rig is in furtherance of the employer’s business. We now hold that it is also in furtherance of the employer’s business that the transportation be under circumstances which will give assurance to the members of the drilling crew that the ice and water will be available at the beginning of the work day. * * * ”

In our case, the plan of getting the crew to the rig in the driller’s car was of benefit to the employer and gave assurance that a full crew would be available on time.

A case almost identical to the one before us on its fact situation is Texas Employers’ Ins. Ass’n v. Inge, 146 Tex. 347, 208 S.W.2d 867 (1948). Inge was a member of a drilling crew killed in a car accident on the highway while going to and from the drill site in a remote area of Pecos County. When employed, he was told that all the workmen went to and from the rig site in private cars and that the workman furnishing his car for the transportation of himself and his fellow workmen would receive 7$ per mile in addition to his regular pay. The Supreme Court noted that the fact that the fatal wreck occurred on the State Highway and not on the employer’s premises would not necessarily preclude recovery if, under the facts of the case, his injuries did originate in the work of the employer and were received while engaged in or about the furtherance of the employer’s affairs or business. The Court then wrote about an exception to the general rule that a workman going to and returning from work is not acting in the course of his employment as being one where the transportation is furnished by the employer as a part of the contract of employment. On the matter of originating in the work of the employer and in furtherance of the employer’s affairs or business, the Court used language which is applicable to the case before us saying:

“ * * * The location of the drilling site in an uninhabited area made it essential that Appelby furnish transportation to his employees in order to induce them to work on this job. The substance of the arrangement was that the members of the drilling crew were being transported to the well location free of cost to them; and this was an important part of their contract of employment. Those workmen riding in Inge’s automobile were given free transportation and the mileage fee paid to Inge presumably was sufficient to take care of his expenses in operating his own automobile. Due to wartime conditions then existing, the arrangement which was made was probably the only one which was practical under the circumstances. The employer’s affairs and business were being furthered by the transportation of the members of the crew to and from the well site in Inge’s automobile as effectively as if the employer himself owned the automobile which was being used.”

In our case, with jobs plentiful in the Odessa area where the crew lived, it was probably a necessity that the employer have the arrangement that he did to induce them to work at this remote site 105 miles away that required four hours per day of travel time; and, as noted earlier, it was of benefit to have them all arrive at the same time and to have the assurance that a full crew would be there for each shift change so that operations could be continuous.

Appellant urges that Inge no longer applies and cites Bales v. Liberty Mutual Insurance Co., 437 S.W.2d 575 (Tex.Civ.App.—Amarillo 1969, no writ). In Bales a statement was made that, since the case was tried before the addition by the Legislature of Section lb to Article 8309, the case no longer applies. The claimant Bales was attempting to bring himself within the “access” rule or some “special mission” exception and cited the Inge case in support of his position. The Court noted that the claimant had failed to bring himself within one of the four exceptions of Section lb, and then made the statement that Inge no longer applies. In that, the Court was correct because “special mission” and “access” were not one of the four exceptions brought forward in Section lb by the Legislature. However, the provision in Inge as to transportation furnished as a part of the contract of employment was brought forward in Section lb. In effect, Section lb had codified Inge in that regard. Our research indicates that Inge is still good law in that it has never been overruled, modified, or otherwise distinguished by subsequent decisions.

A case relevant to the one before us is Millers Mutual Fire Insurance Company of Texas v. Rawls, 500 S.W.2d 545 (Tex.Civ.App.—Beaumont 1973, writ ref’d n. r. e.). In that case, the deceased employee, an eight year old minor boy, was employed by a poultry company, along with other school age boys, to gather chickens at the company’s broiler house. The boys were picked up at their homes late in the evening, driven to the broiler house where they performed their work, and then returned to their homes later the same night. The deceased employee was returned home after work in a company pickup driven by a company employee, and he got out of the truck across the highway from his home and was struck and killed by a passing automobile as he attempted to cross the highway. In upholding an award of death benefits, the Court found that the deceased employee’s travel to and from home was closely related to the company’s business saying:

“ * * * In no other way could they have obtained the services of an eight year old boy in the night time and in a different county. It was a necessity and not an accommodation and the risks of his travel were as real and job related in crossing the highway as in riding in the truck. * * * ”

The facts of the case before us indicate a necessity to get employees to work at this remote site and not an accommodation in the furnishing of transportation. We cannot say as a matter of law that the injuries to the claimant Chesnut and the death of the other crew members, Ramos and Es-carcega, did not occur in the course of employment.

During the course of the trial, the Appellee Chesnut, the sole survivor of the accident, testified that it was his understanding of his contract of employment that he was being paid $4.00 per day riding time and $2.00 per day “bottom hole” time. This testimony came after the employer had offered testimony that the $6.00 per day was all “bottom hole” pay. Chesnut gave as the source of his information one Kelly, a driller who was deceased at the time of the trial. He was not permitted to testify as to what Kelly said, but only that it was his understanding from talking to Kelly the $6.00 per day was broken down as $4.00 riding time and $2.00 “bottom hole” pay. We think this evidence as to his understanding of the terms of the oral contract was admissible. At least one case has held that testimony of the understanding of a contract made through a broker was admissible to establish the terms of the contract. Rosebud Oil & Cotton Co. v. Merchants’ & Planters’ Oil Co., 248 S.W. 116 (Tex.Civ.App.—Austin 1922, no writ), the Court saying:

“ * * * We do not think the evidence was hearsay, as the testimony related to the contract as understood by Mr. Rice, and as gained from the statements made by Mr. Terrell, who was the broker, and who represented both parties in the transaction. As we understand this testimony, Mr. Rice did not undertake to testify what conversation passed between Mr. Terrell, the broker, and Mr. Roper, appellant’s manager, in the first telephone communication, but simply his understanding of the contract which he made through the broker.”

And in a later case, McDonald v. McDonald, 143 S.W.2d 142 (Tex.Civ.App.—Austin 1940, writ dism’d judgmt. cor.), it was held that where the statements by an agent within the scope of his authority were the operative facts of an oral contract, they were admissible, and not regarded as hearsay. Authority cited was 6 Wigmore, Evidence (3d ed. 1940, Section 1770). And in a more recent case, Irving Lumber Company v. Alltex Mortgage Company, Inc., 446 S.W.2d 64 (Tex.Civ.App.—Dallas 1969), aff’d, 468 S.W.2d 341 (Tex.1971), it was held where a contractor, to establish a mechanic’s and materialman’s lien, was required to prove that it had an oral contract with the developer that testimony of the contractor as to conversations with the president of the developer was not inadmissible hearsay as to the lender, the Court saying:

“ * * * It has also been held that out of court statements are not hearsay when tendered to show offer, or acceptance in suits on a contract. See Vol. 1, McCormick and Ray, “Texas Law of Evidence”, Section 795, and cases there cited; also see 31A C.J.S. Evidence §§ 260-261, p. 680-682.”

The case was affirmed by the Supreme Court on other points. There was no discussion of the evidence question. 468 S.W.2d 341 (Tex.1971).

We have concluded that under Rule 272, Tex.R.Civ.P., Appellant has waived its objections to the Court’s charge. The objections were dictated to the Court reporter in the presence of the Court and opposing counsel before the reading of the Court’s charge to the jury, and they appear in the statement of facts. The case was tried before the amendment of Rule 272, which was effective January 1, 1976; prior to the amendment, a further requirement of Rule 272 was that the Court’s ruling and official signature be endorsed on a transcribed copy of the objections as dictated. The cases are uniform in holding that the failure to comply with that portion of the Rule amounts to a waiver of the objections. T & L Lease Service, Inc. v. Biddle, 500 S.W.2d 186 (Tex.Civ.App.—Houston 1973, no writ); Town of Lindsay, Texas v. Cooke County Electric Cooperative Association, 497 S.W.2d 406 (Tex.Civ.App.—Fort Worth 1973), rev’d on other grounds, 502 S.W.2d 117 (Tex.), cert. denied, 416 U.S. 970, 94 S.Ct. 1993, 40 L.Ed.2d 559 (1974).

All points of error have been considered and all are overruled. The judgment of the trial Court is affirmed.


author: OSBORN, Justice.

text:
    CITY OF SAN ANTONIO, Appellant, v. INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS, LOCAL 624, SAN ANTONIO, Texas, Appellee.
    No. 6530.
    Court of Civil Appeals of Texas, El Paso.
    July 21, 1976.
    Rehearing Denied Aug. 18, 1976.

      Crawford B. Reeder, City Atty., Jake Talley, Jr., Asst. City Atty., San Antonio, for appellant.
    Gochman & Weir, Arthur Gochman, John Scarzafava, San Antonio, for appellee.
   OPINION

OSBORN, Justice.

This is a case of first impression involving the interpretation and application of Article 5154c-l, Tex.Rev.Civ.Stat.Ann., known as “The Fire and Police Employee Relations Act.” We affirm in part and reverse and render in part.

The City of San Antonio has elected to be covered by the above mentioned Act, which provides for collective bargaining between cities, towns and other political subdivisions within the State, and firefighters and policemen whom they employ. The International Association of Fire Fighters, Local 624, as the bargaining agent for the City of San Antonio firemen, requested a six percent pay increase effective at the beginning of the City’s fiscal year on August 1, 1975, with an additional two percent increase on February 1, 1976. The wage demand also sought the same percentage increase given other city employees, which might be over and above the total eight percent demands of the firemen. The Union also sought free parking for employees of the fire department who did not have such facilities provided at their place of employment. All other issues in dispute were settled by mediation, and after the City rejected arbitration, the pay and parking issues were tried in District Court as provided for in Section 16 of the Act. The parties stipulated that the only issue to be tried on wages would be with regard to the position of a “firefighter” and any wage increase ordered as to that position would be applicable to all other positions in the department.

Under Section 4 of the Act, political subdivisions of the State employing firefighters shall provide compensation and other conditions of employment that are substantially the same as prevail in comparable private sector employment. This section states “* * * therefore, compensation and other conditions of employment for those employees shall be based on prevailing private sector wages and working conditions in the labor market area in other jobs, or portions of other jobs, which require the same or similar skills, ability, and training, and which may be performed under the same or similar conditions.”

The Union offered evidence and the trial Court found that there is no private sector employment in the applicable labor market comparable to that of a San Antonio firefighter. Substantial evidence was offered to show all the many and varied duties of a firefighter, the physical and mental requirements for such employment, and the dangers arising out of such employment. Evidence was also offered to show the strenuous testing of applicants and the continual training which they receive once they are selected for a position of firefighter. Many skills are required, and their knowledge must cover numerous subjects in order for them to be effective employees.

In San Antonio, firefighters normally are on duty 24 hours and off 48 hours, working an average 56-hour week at a starting salary of $752.00 per month, which is increased to $853.00 after 6 months and to $952.00 after 18 months. In addition, such employees receive $200.00 a year as a clothing allowance, 15 days a year sick leave, 15 days vacation and 10 holidays per year. They also have civil service benefits, a pension plan to which they and the City contribute, and benefits to cover on-the-job injuries. A substantial number of the firefighters, in addition to their regular employment, are either part-time students or have part-time jobs.

Only one witness, George A. Benz, Associate Professor of Economics at Saint Mary’s University, testified as to prevailing private sector wages and working conditions in the labor market area in other jobs, or portions of other jobs, which require the same or similar skills, ability and training, and which may be performed under the same or similar conditions. He reviewed at length the task of other employees which he said are similar to a firefighter; he compared physical and mental requirements of firemen and other employees, and concluded that firefighters should be making $6.00 per hour, or $1,450.00 per month to be comparable to private sector employment. This would mean a fifty-three percent increase in current wages.

On August 28, 1975, the City of San Antonio, by ordinance, granted an across-the-board five percent pay increase to all its employees, including firefighters, effective November 8, 1975. Mr. Benz testified that if such increase was “right for November 8, 1975,” there was no reason for it not to be “right on August 1, 1975.”

The trial Court found:

“5. The evidence, considered independently of the Ordinance (referred to in Finding of Fact No. 6), is insufficient to establish that City of San Antonio is in violation of the requirements of Section 4 of Article 5154c-l.
“6. On August 28, 1975, City of San Antonio, by Ordinance, granted an across-the-board five percent pay increase effective November 8, 1975, to its employees, including Firefighters, while this cause was pending, without condition and without reference, in any respect, to this cause.
“7. The evidence, supported by such Ordinance, establishes that Firefighters are entitled to the five percent pay increase effective August 1, 1975.
“8. The attorney for the City of San Antonio conceded in oral argument that the undisputed fact personnel assigned to Fire Station No. 1 and to Fire Alarm and Emergency Medical Service Dispatching have no place to park without charge, while all other firefighter personnel did, amounted to illegal discrimination.
“9. It was stipulated and agreed that reasonable attorney’s fees for Petitioner in this cause is $5,000.00, if Petitioner is entitled to attorney’s fees.”

Based upon these findings of facts and the conclusions of law that the City had violated the provisions of Article 5154c-l, the final judgment granted the firefighters a 5 percent pay increase retroactive to August 1,1975, and ordered the City to include firefighters in any future across-the-board increase prior to the end of the fiscal year on July 31, 1976. The judgment ordered the City to provide parking for those employees who did not have it, and awarded the Union $5,000.00 in attorneys’ fees.

The City of San Antonio, as Appellant, contends in its first point of error that the trial Court erred in awarding a five percent increase in wages retroactive to August 1, 1975. As previously noted, the trial Court found that the evidence, independent of the ordinance, was insufficient to establish a violation of Section 4 of the Act. Thus, the trial Court determined that the evidence from the expert witness did not make out a prima facie case. While no attack is made upon this fact finding as such, Appellee urges in its Counterpoint Number One that the trial Court was correct in granting the pay increase effective on August 1, 1975.

The opinion evidence of the Economics Professor was only evidentiary and was not binding upon the trier of facts. Hood v. Texas Indemnity Ins. Co., 146 Tex. 522, 209 S.W.2d 345 (1948); Board of Firemen’s Relief & Retirement Fund Trustees of Houston v. Marks, 150 Tex. 433, 242 S.W.2d 181 (1951), and Luttes v. State, 159 Tex. 500, 324 S.W.2d 167 (1958). His opinion testimony does not establish facts as a matter of law. Gibbs v. General Motors Corporation, 450 S.W.2d 827 (Tex.1970). The trial Court having concluded that his testimony did not establish a violation of Section 4 of the Act, we cannot hold to the contrary, and certainly we cannot conclude that it was established as a matter of law.

Thus, the real issue becomes whether an ordinance giving a five percent pay increase to all City employees is some evidence of a violation of the Act, and that the evidence establishes the right to a five percent pay increase on August 1, 1975. There is no requirement that other City employees be compensated at substantially the same wages as prevail in comparable private sector employment. The record is void of any evidence that the City Council recognized or considered private sector employment, either for firemen or other City employees, in deciding on the pay increase which was to be effective November 8, 1975. Based upon the testimony of Mr. Benz that a fifty-three percent increase would be required to make the firefighters’ wages comparable to private sector employment compensation, it would seem that the City Council did not consider such a standard in the across-the-board pay increase for all employees, including firefighters. Therefore, we conclude that the ordinance did not establish a violation of Section 4 of the Act. If the ordinance was based upon standards set forth in the statute, we believe it was incumbent upon the Appellee, who had the burden of proof, and who relied upon the ordinance, to show that it was, in fact, based upon the standard which the trial Court was compelled to follow. That burden has not been met in this case. The Appellant’s Point of Error No. One is sustained.

The next point contends that the trial Court erred in ordering that firefighters shall be included on an equal percentage basis by the City in any other across-the-board increase during the fiscal year ending July 31, 1976. We find nothing in the Act which relates wages firefighters are to receive to those being received by other City employees. The Act specifically provides that the standard by which firemen’s wages are to be determined is by reference to private sector employment. Thus, it excludes the wages paid in public sector employment, including other City employees. To hold otherwise is to give the employees covered by the Act the best of both worlds. They would receive all pay raises that come to those City employees who have no collective bargaining rights, and whose wages are not based upon private sector employment, and in addition they would have the right to collective bargaining and such pay scale as may be related to private sector employment. There is nothing in the Act to suggest that the Legislature intended to grant such a double-barrelled privilege to the covered employees. Point of Error No. Two is sustained. This is not to say that the City cannot include firefighters in any across-the-board pay increase if they choose to do so, but only that the City is not required to do so under the Act.

The last point complains of the award of any attorney’s fees when the evidence has not shown a violation of the Act. Section 16 of the Act provides that in the event the Court finds the public employer in violation of Section 4, it shall, among other things, “ * * * award the employees’ association reasonable attorney’s fees.” Having concluded that a violation was not established as to wages, there could be no award of attorney’s fees as to this unresolved issue between the parties. As to the one other issue, that of parking, the City acknowledged an “illegal discrimination.” But no evidence was offered to show as to this condition of employment what condition might prevail in comparable private sector employment. The trial Court’s conclusion of law number four that there was a violation of Section 4 of the Act applied only to wages and not parking. And while the Court ordered parking for those employees who did not have it provided for them, it did so on the basis of the City’s acknowledgment of an “illegal discrimination” and not on the basis that there was a violation of Section 4 of the Act. Thus, we conclude that there being no sustainable showing of a violation of Section 4, there can be no recovery of attorney’s fees. Magids v. Dorman, 430 S.W.2d 910 (Tex.Civ.App., Houston [14th Dist.] 1968, writ ref’d n.r.e.). Point of Error No. Three is sustained.

The Appellee presents as its Cross-point Number One a contention that it is entitled to a reasonable attorney’s fee with respect to this appeal. This contention could not be sustained even if we affirmed the judgment of the trial Court. An Appel-lee that does not offer any evidence as to future attorney’s fees and does not procure a finding and judgment thereon, waives any such recovery. Loomis Construction Company v. Matijevich, 425 S.W.2d 39 (Tex.Civ.App., Houston [14th Dist.] 1968, no writ). Where the trial Court has not set a reasonable attorney’s fee for an appeal, the Court of Civil Appeals may not initiate such an award itself, since this would be the exercise of original rather than appellate jurisdiction. International Security Life Insurance Company v. Spray, 468 S.W.2d 347 (Tex.1971).

The Appellee also presents its “Point of Error No. One,” urging that the trial Court erred in not granting the firefighters’ requested pay increase of eight percent. The Union did except to the trial Court’s judgment and did file an appeal bond. We consider the point as though the contention were actually presented as a cross-point. See Jackson v. Ewton, 411 S.W.2d 715 (Tex.1967).

The trial Court having found against the Union as to its request for an eight percent increase in wages, we can reverse and render judgment as requested only if the evidence establishes as a matter of law that the firefighters were entitled to the increase of eight percent. We have reviewed the entire record and we conclude that such a showing has not been made. The point of error is overruled.

The judgment of the trial Court is affirmed as to providing adequate parking space and is reversed and judgment is rendered denying the firefighters the pay increase only insofar as being retroactive to August 1,1975, denying the right to require the City of San Antonio to include firefighters on an equal percentage basis in any across-the-board wage increase granted by the City to its employees prior to August 1, 1976, and denying recovery of attorneys’ fees.