author: COLEMAN, Chief Justice.

text:
    TEXAS EASTERN TRANSMISSION CORPORATION, Appellant, v. SEALY INDEPENDENT SCHOOL DISTRICT et al., Appellees.
    No. 17129.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Feb. 1, 1979.
    Rehearing Denied March 22, 1979.

      Vinson & Elkins, David T. Hedges, Jr., Glen A. Rosenbaum, Houston, for appellant.
    Conner, Odom & Clover, C. E. Clover, Jr., Sealy, Elvin E. Tackett, Bedford, for appel-lees.
    Before COLEMAN, C. J., and PEDEN and EVANS, JJ.
   COLEMAN, Chief Justice.

This is a suit by appellant, Texas Eastern Transmission Corp., hereinafter referred to as “Texas Eastern”, against Sealy Independent School District, R. L. Dittert, individually and as Tax Assessor-Collector for Sealy Independent School District, Melvin Meier, Leroy Zapalac and Delmer Tipp, each individually and in their capacities as members of the Board of Equalization of the Sealy Independent School District, hereinafter referred to as “Sealy”. Texas Eastern sued for an injunction and a writ of mandamus to prevent Sealy from imposing and collecting ad valorem taxes for 1977 based on the valuations set by the Board of Equalization. The trial was to the court after which a judgment was rendered upholding the valuation of the Board of Equalization and denying all relief to Texas Eastern.

Texas Eastern owns 12.22 miles of 24-inch natural gas pipeline in the Sealy Independent School District. This segment of line was constructed in 1953 as part of a line running from Provident City, Texas to Castor, Louisiana. The Provident City-Castor line is an integral part of Texas Eastern’s Interstate natural gas transmission system that runs from Texas to the East Coast.

From 1953 through 1975, Sealy used the “Texas Schedule” to assess the value of the Texas Eastern Sealy line for ad valorem tax purposes. The Texas Schedule is an average life schedule which has been widely used in Texas for valuing pipelines. In 1977, Texas Eastern duly rendered the Sealy line at the value reflected on the Texas Schedule. After a hearing before the Sealy Independent School District Board of Equalization, this value was rejected by the Board, as was the net book value, (original) cost less depreciation of the line, $192,-764.00, which Texas Eastern urged was its true fair market value. The Board set the value of the line at $511,310.00, a figure corresponding to the valuation determined by use of a pipeline schedule prepared by Mr. B. E. Bledsoe of the Pritchard & Abbot appraisal firm, which had been hired by the Sealy Independent School District to appraise pipeline properties.

The trial court filed findings of fact and conclusions of law, including a finding that the fair market value of plaintiff’s pipeline located within the Sealy Independent School District is not less than $511,308.00.

Texas Eastern asserts that the judgment of the trial court should be reversed because (1) Federal Power Commission regulation of the Sealy line operates as a matter of law to limit its fair market value to the sum of $192,764.00; (2) the $511,310.00 value placed on the Sealy line by the Sealy Independent School District is grossly excessive and was determined in an arbitrary and fundamentally erroneous manner.

The Texas Constitution, Article VIII, requires property to be taxed in proportion to fair cash market value. Fair cash market value has been defined as the price which the property would bring when it is offered for sale by one who desires, but is not obligated to sell, and is bought by one who is under no necessity of buying. Tenneco, Inc. v. Polk County, 546 S.W.2d 63 (Tex.Civ.App. Beaumont-1970, rev’d on other grounds, Polk County v. Tenneco, Inc., 554 S.W.2d 918 (Tex.1977).

The controversy between the parties in this case is centered on the question of the market value of Texas Eastern’s pipelines. The resolution of this issue is complicated by the fact that segments of pipeline such as the ones in question are rarely sold and market value cannot be determined by comparing the prices brought by sale of similar properties.

The issue is further complicated by the fact that the pipelines are regulated by the Federal Power Commission, which must approve any sales made of pipelines used in the interstate transmission of natural gas. The commission also sets the maximum rate which can be charged consumers by Texas Eastern, a factor affecting the income approach to value which is commonly used by appraisers.

Two methods for appraising the value of interstate gas transmission lines have been approved by the Supreme Court of Texas. These two methods are the cost approach to value and the income approach to value. Polk County v. Tenneco, Inc., 554 S.W.2d 918 (Tex.1977).

“The cost approach to value assumes that an informed purchaser of the property would pay no more than the cost of constructing a like property with the same usefulness as the property to be valued. . In using this method, the appraiser first estimates the cost of reproducing or replacing the subject property; he then subtracts accumulated depreciation and adds estimated land value to arrive at his value estimate. The method is usually a secondary approach to valuation and tends to set the upper limit of true market value.” Polk County v. Tenneco, Inc., supra.

The Supreme Court then stated that the income approach to value proceeds on the premise that a buyer of income producing property is primarily interested in the income which it will generate. This approach involves estimating the future income of the property and applying a capitalization rate to that income to determine the market value. The capitalization rate is the rate of interest investors require as a return on their money before they would invest in the income producing property, taking into account all the risk involved in that particular enterprise. The Supreme Court stated: “[t]he income approach thus involves an estimate of two variables, future income and the capitalization rate, which are used to find the market value figure. The more precisely variables are estimated, the more accurate the market estimate will be.” Polk County v. Tenneco, Inc., supra.

The tax schedule prepared by Ed Bledsoe was devised by determining the replacement cost for pipeline constructed by six major Federal Power Commission regulated pipelines and by studying the income of these pipeline companies. The two approaches were then combined and an average cost per mile for pipeline of equivalent diameter was calculated. The Bledsoe schedule shows that the average value of a mile of 24 inch pipeline constructed as of January 1,1977, was $150,795.00. Since the pipeline in question was constructed in 1953 and the schedule allows 3% annual depreciation over the 24 year life span of pipeline, a value of $42,222.00 was placed on the pipeline on a per mile basis. This value was multiplied by 12.11 miles, the length of appellant’s pipeline in the Sealy district to arrive at a fair market value of $511,310.00.

Mr. Bledsoe testified at trial that in making his appraisal he considered the three accepted methods of appraisal, cost approach, income approach and market data approach. The market data approach was not used as he did not feel that there were enough sales on which to base an appraisal. Bledsoe testified at the trial that in making his appraisal using the cost approach he acquired data from the Oil and Gas Journal in order to obtain the cost figures of pipeline construction and based on his cost on a comparatively low grade of pipe in order to be conservative in his approach, he determined that the cost per mile of 24 inch outside diameter pipeline as of January 1, 1977, was $174,509.00. He then allowed depreciation on that figure at the rate of 3% per year, straight line depreciation, back to the date of construction. Since Texas Eastern’s line was constructed in 1953 and was 23 years old at the time of the appraisal, a total of 69% of the value of the line had been depreciated, resulting in a value per mile of $54,098.00. The 12.11 miles of line was estimated to have a total appraised value of $565,129.00.

In constructing his schedule, Mr. Bledsoe analyzed income data from six major Federal Power Commission regulated class-A natural gas transmission companies and arrived at a value figure based on income for each mile of 24 inch pipeline for those six companies. By then averaging the value of the pipeline properties of the six companies based on income, he determined one of the factors that he used in his overall appraisal.

In his testimony Bledsoe explained the procedure which he used in developing this factor. First he calculated the net utility plant as a percent of total fixed assets. He then determined the portion of capitalization attributable to the utility plant only. From the income statement of the six pipelines studied he calculated the percentage of cost of preferred stock, long term debt and equity. He then reduced all of the pipelines in each utility system to a common denominator of inch miles. The composite cost was then calculated by multiplying the percentage of preferred stock, long term debt and equity by the percentage of cost of each to determine the capitalization rate. The net income after taxes was then divided by the capitalization rate to determine value. The income value for each inch mile of pipeline was computed taking into consideration only the pipeline portion of the utility plant. This income value was adjusted for both future growth in equity and by the variance in 1975 between the Federal Power Commission rate of return on equity and the company’s actual rate of return. The inch mile value was then used to obtain a value for the average size of the line per mile. After Bledsoe obtained an average replacement cost figure for pipeline of the six representative companies and the average income value of these companies, he added the two average values together and divided by two thus arriving at the value figure giving equal weight to the replacement cost and income approaches to value. The value is expressed in his schedule in dollars per inch of outside diameter of pipe per mile of pipeline. Mr. Bledsoe testified that at the time he constructed his schedule and made the original appraisal he did not have the income data for Texas Eastern that he had for the six representative companies. During the course of this litigation this information was made available to him. By applying the income approach to this data he determined that the Sealy line had a value of $126,111.00 per mile and a total value of $1,527,204.00. Using the data supplied by Texas Eastern and following the same cost approach procedure as he had used in developing the schedule, Mr. Bledsoe found that the total value of the pipeline located in the school district would be $6,055,127.00. He testified that his appraisal of Texas Eastern pipeline located in the school district based solely on the data furnished by Texas Eastern resulted in a fair market value greater than that reflected by his appraisal based on the schedule. He testified that that schedule was designed to reach conservative values and in the Texas Eastern case resulted in a figure representing 67% of fair market value.

Texas Eastern relies on a statement made by the Supreme Court in Pope County v. Tenneco, supra, reading:

“If the average investor would be willing to accept a rate of return lower than the FPC-allowed rate of return then he would be willing to pay more for the pipeline than its net book value. If the investor required a greater rate of return then he would offer less than net book value for the property. Only if the capitalization rate were equal to the FPC-allowed rate of return would the income approach estimate of market value be equal to the net book value of the property. Since there was no such showing below, we cannot equate the two.”

Texas Eastern produced testimony which is summarized. The net book value of the pipeline is the rate base on which the Federal Power Commission calculates the rates that interstate natural gas pipeline companies, such as Texas Eastern, may charge for their gas and services. The FPC sets the rate of return permitted a regulated pipeline and the depreciation rate with respect to its properties. This rate of return applied to the rate base determines what the pipeline may earn. The FPC allowed Texas Eastern a 12% rate of return on common equity as of January 1, 1977. The purchaser of Texas Eastern’s Sealy line would inherit the Texas Eastern book value for rate purposes and thus would be permitted to earn on the same earnings base as Texas Eastern. A potential purchaser of the Sealy pipeline would demand a rate of return on his money that would be equal to or greater than the 12% rate of return allowed Texas Eastern by the FPC. Texas Eastern asserts that since the minimum return demanded by an investor would be 12%, which equals the FPC-allowed rate of return on the Sealy line, and since he could earn only on Texas Eastern’s rate base (net book value), the investor would pay no more than net book value.

Mr. Howard Shaw of the engineering department of Texas Eastern testified that Provident City-Castor line, of which the Sealy line is a part, is an integral part of the overall Texas Eastern Gas Transmission System and is one of the connecting lines between certain supply areas in the system and certain sales and exchange areas. Texas Eastern would need the permission of the Federal Power Commission to abandon any purchase or supply commitments that require the transmission of gas through the line. It will need to maintain the line in service to accomplish these services.

Texas Eastern asserts, therefore, that whether owned by Texas Eastern or a subsequent purchaser, the Sealy line will continue in use for interstate gas transmission purposes and will be subject to regulation by the Federal Power Commission. It asserts that the impact of such regulations must be taken into account in evaluating the line.

Mr. Robert O. Johnson is the supervisor of the ad valorem tax department for Texas Eastern within the State of Texas. He identified plaintiff’s exhibit number 6 as representing the status of the 24 inch Provident City-Castor line within the State of Texas. He testified that the figures on this exhibit were derived from the books and records of Texas Eastern and that these books and records reflect that Texas Eastern has 245.35 miles of pipeline in Texas. The exhibit reflects that the original investment on the Provident City-Castor line within the State of Texas as shown by the work order for the construction of the line was $15,000,000.00. The exhibit reflects that the present 100% value of the pipeline within the Sealy Independent School District is $192,764.00. He testified that this figure was developed by taking a pro-rata share of the pipeline investment in the State of Texas. From that pro-rated figure was deducted the applicable depreciation which was a pro-rata share of the sum of $618,510.00 depreciation allowed by Federal Power Commission.

Mr. O. D. Thigpen, as assistant controller for Texas Eastern, also testified with reference to plaintiff’s exhibit number 6. He testified that the investment figure was the original cost in 1953 of that portion of pipeline constructed within the State of Texas. He testified that depreciation was not recorded in the books as such and had to be calculated based on month end or year averages on the property in service using the FPC depreciation rate. He testified that the applicable depreciation was deducted from the original investment and the cost of property additions made subsequent to 1953 within the school district were added. The figure for additions was arrived at by taking 80% of the cost of the additions shown by the books and records to have been made within Austin County on the basis that 80% of the line within that County was in the school district. The company records are not kept by taxing jurisdictions and the value of the line within a particular taxing jurisdiction was a figure based on the appropriate percentage of the total value of the line. He testified that depreciation was figured on the rate permitted by the Federal Power Commission, which was 3.3% annually up to 1974 at which time the rate was increased to 4.3%. In September 1975, the depreciation rate was increased to 4.4%. He testified that unless there was a large infusion of investment into that portion of the line located within the school district the net book value of that portion of the line would reach zero in about four years. Mr. Thigpen testified that the total investment in the Provident City-Castor line as shown by its books on December 31, 1976, is approximately $17,000,000.00. The figure includes about $2,000,000.00 representing additions to the line which he did not feel were attributable to the property within the Sealy Independent School District.

Mr. Richard M. Hawkins, the manager of gas rates for Texas Eastern, qualified as an expert on the rules and regulations of the Federal Power Commission and the procedure established by that commission for rates applicable to interstate gas transmission lines. He testified that the portion of Texas Eastern’s gas line running through the Sealy School District is in interstate gas transmission service and is regulated by the Federal Power Commission. Approval is required before an interstate natural gas pipeline can be constructed or can be abandoned. He testified that using the figure of $192,764.00 as the value of the net gas plant, he determined that the company earned the sum of $18,139.00 on that section of the pipeline in the school district. By applying the commission allowed rate of return (9.41%) he then deducted the percentage of the earnings necessary to finance the long term debt and preferred stock and arrived at a figure of $8,964.00 as earnings to the holders of Texas Eastern common equity. This figure represents a return to equity of 12.5%. He testified that the rate of return prescribed by the Federal Power Commission is a maximum. If the company earns less than that figure its recourse is to request a higher rate. If it earns more than the allowed rate, the commission can require a new hearing. The rate set at the new hearing would be prospective and no refund would be required. He testified that a purchaser of all or a part of the transmission lines would be permitted to include in the rate base only the original cost to the person who first dedicated those facilities to natural gas service. His experience before the Federal Power Commission led him to the opinion that the commission would not permit a raise in rates to consumers based on the fact that a new purchaser of a transmission line paid an amount in excess of the net book value for the line.

Mr. Hawkins testified that the rate base included components other than the depreciated net book value of the property. Among other things the rate base includes the accumulated reserve for depreciation, which consists of the depreciation allowed on those facilities during the entire time they have been in service. Other components include working capital, operating materials and supplies, and advance payments for gas. In determining the return on equity which can be attributed to the gas line in the Sealy School District Mr. Hawkins considered only the original cost less the accumulated reserve for depreciation and did not include in the rate base any portion of the working capital or other components included in the rate base for the company as a whole since he did not consider that these components were applicable.

Mr. Hawkins testified that when that portion of the line located in the Sealy School District is depreciated down to zero there would be no earnings on that portion of the line. However, Texas Eastern would not attempt to dispose of that portion of the line because it is a necessary part of their system. He testified that the diminishing rate base was a matter of concern to him as an employee of Texas Eastern involved in rate making and that he was concerned as to what the Federal Power Commission is going to do with reference to the depreciated rate base. The research and development, advance payments and prepayments, operations materials and depreciation forming a part of the rate base are just as much an integral part of the system as is the 12.11 mile line in the Sealy District. He testified that he hoped that the commission would come up with a new formula for figuring the rate of return. During the years 1968 through 1972 Texas Eastern’s return to equity was in excess of 12.25%.

Paul C. Wright testified at the request of Texas Eastern and qualified as an expert witness. He is employed as a project manager with Pipeline Technologists. Previously he had been an independent consulting engineer. He has a Bachelor of Science degree in petroleum engineering from Texas A & M. He manages projects, and his duties include the design of pipelines, the cost estimates, estimates of capital cost, estimating the operating cost and the supervision of construction of pipelines. He testified that he was familiar with the Federal Power Commission’s regulatory scheme for interstate gas pipelines and that he had appeared before the Federal Power Commission as a witness on several occasions. He has engaged in technical conferences with the staff and had assisted attorneys in the presentation of applications to the commission. He has appraised natural gas transmission facilities.

Mr. Wright testified that the net book value of the segment of the Texas Eastern pipeline located in the Sealy Independent School District was $192,764.00, which was the original cost less depreciation and that this figure was a good starting point for an opinion of the market value of a regulated pipeline. The fair market value of the line is affected by the fact that it is regulated by the Federal Power Commission. The earnings which could be realized on a pipeline would be a very important factor for consideration by a purchaser. The rate base, the rate of return, and the depreciation allowed are all determined by the Federal Power Commission. He testified that the rate base goes with the property. The rate base consists of the gas plant in service less accumulated depreciation in this particular case. The other components of the rate base would not apply to this line.

Mr. Wright testified that if the property in question were purchased at the Pritchard & Abbot appraisal of $511,310.00, and if the same capital structure now in existence was continued by the purchaser, the earnings would be calculated on the net book value and the return would be 9.41%, as allowed by the Federal Power Commission. On that basis the earnings would be $18,139.00, which would not be sufficient to pay the pro-rated share of the interest on the long term debt. It was his opinion that no reasonable investor would pay $511,310.00 for that portion of Texas Eastern Line. He testified that in his opinion 12% would be the lowest return to equity an investor would accept. He testified that he knew of a recent instance where an investor wanted a 20% return on his equity. He did not know, however, what return an investor received on corporate bonds at this time. Mr. Wright also estimated the original cost of that line based on historical data found in the Oil and Gas Journal. He estimated the original cost to be $847,700.00, and, using a 30 year life for the pipeline, he depreciated it by the straight line method and found the depreciated value to be $170,-218.00. This figure was somewhat lower than Texas Eastern’s net book value so that in making his estimate of the fair market value he determined to use the Texas Eastern net book value figure. It was his opinion that an investor would be willing to pay substantially more for an unregulated line than for a line regulated by the Federal Power Commission. In determining the fair market value by the cost approach he depreciated the 1953 cost while Mr. Bledsoe in his evaluation on the cost approach method depreciated the 1977 cost. He does not consider the Bledsoe approach a valid way to reach the market value of a Federal Power Commission regulated pipeline. Mr. Wright testified that in determining what a fair market value would be he looked at the facts from the standpoint of what a willing purchaser would pay for the pipeline and the price a willing seller would demand. It was his opinion that Texas Eastern would not sell for less than the net book value and a willing buyer would not pay more than the net book value.

Mr. Wright testified that even though the property value of a section of pipeline might reach zero because of depreciation, it would be needed in the business and would have a value as an integral part of the entire system. In his income approach to the market value he took a proportionate part of the net income of the gross utility plant and then projected his depreciation schedule over about 13 years and came up with a number of dollars of income per year for those years. He then discounted the cash flow to arrive at the present value of that future income. He testified that he did not agree with the figures given by Mr. Thigpen on depreciation and that it was his opinion that the section of pipeline would reach economic obsolescence in about 13 years. He testified that the fair market value of the pipeline is not necessarily the net book value of the pipeline. He did not know whether the purchaser of a section of pipeline could also purchase the depreciation referable to that line. In determining the value of a section of pipeline it would be useful to consider the effect of that section of the line on the earnings of the total system.

Mr. Wright testified that his original estimate of the net book value of the pipeline in the school district was done on a cost basis. This was close enough to net book value for him to proceed on that basis. As he got more information he tested the results obtained on the cost basis by going to the income basis and other factors. These were merely tests to see if the market value was a fair market value. In that context he looked at the income of the company and arrived at a proportion of that income which might be attributed to the Sealy School District section. When the fair market value calculated on that basis turned out to be must less than fair market value calculated on the cost basis he “sort of dropped it”. While considering the income approach he projected a decline of earnings over the next 13 years. However, he used the income approach not as an appraisal tool, but as a tool to test the validity of his cost approach. One reason that he did not rely on the income approach is the fact that he predicted a decline in the gas reserves. He had no idea how fast the reserves were declining and it would take a lengthy detailed study to determine this factor. It was his opinion that based on present operations and his rate of decline, in about thirteen years there would be no more “business” in that pipeline, but there would be some very nominal value in the pipeline.

The burden rested on Texas Eastern to prove that the Board of Equalization adopted an illegal, arbitrary and fundamentally erroneous plan of valuation, or placed a grossly excessive valuation on Texas Eastern’s pipeline. Polk County v. Tenneco, Inc., supra ; State v. Whittenburg, 153 Tex. 205, 265 S.W.2d 569 (1954).

The controversy between the parties is centered on the question of the market value of Texas Eastern’s pipelines. The issue of fair market value is one of fact. Whether the Board adopted an arbitrary and fundamentally erroneous plan or scheme of valuation, and whether the value set by the board is grossly excessive, are questions of law. Polk County v. Tenneco, Inc., supra.

A question before this court is whether or not the valuation placed on the pipeline by the Board of Equalization is grossly excessive. Texas Eastern also contends that the Board of Equalization reached its valuation of the pipeline segment in an arbitrary and fundamentally erroneous manner. The Board determined the valuation to be placed on the property after hearing expert testimony. The valuation was primarily based on the testimony of Mr. Bledsoe, which in turn was based upon his schedule.

The fact that Mr. Bledsoe’s testimony was based upon the schedule as applied to this particular section of pipeline does not destroy its probative value. Since the Board of Equalization determined fair market value from testimony of expert witnesses based on recognized apprisal procedures, we cannot say that the valuation was determined in an arbitrary and fundamentally erroneous manner prohibited by law.

In Texas Electric Service Co. v. Wheeler, 551 S.W.2d 341 (Tex.1977), it was held that the testimony of an expert witness as to land values had probative value despite the lack of supportive market data.

In Polk County v. Tenneco, Inc., supra, the Supreme Court discussed the probative value of the testimony of Mr. Bledsoe based upon his schedule, and declined to hold that the opinions were based upon methodologies or figures so inaccurate as to render those opinions legally insufficient evidence of value.

The burden was on Texas Eastern to establish that the assessed value is so far above the fair cash market value as to shock a correct mind and thereby raise a presumption that the valuation was fraudulent or does not represent a fair and conscientious effort on the part of the board to arrive at the fair cash market value. There is a distinction between an excessive valuation and a grossly excessive valuation. City of Waco v. Conlee Seed Co., 449 S.W.2d 29 (Tex.1969).

We are unable to agree that as a matter of law the net book value of the Sealy pipeline as determined by Texas Eastern necessarily constitutes the fair cash market value of the line. In the willing seller-willing buyer test of market value it is frequently said that all factors should be considered which would reasonably be given weight in negotiations between a seller and a buyer. City of Austin v. Cannizzo, 153 Tex. 324, 267 S.W.2d 808 (1954). It has also been stated that to use one particular element as the sole standard by which to fix the value of real property is fundamentally wrong. Rowland v. City of Tyler, 5 S.W.2d 756 (Tex.Comm.App.1928).

Mr. Bledsoe testified that in constructing his schedule he gave weight to the fact that the line was regulated by the Federal Power Commission. He considered there was no law which prevented the line from being put to a non-regulated use by a purchaser. The evidence established that it is highly unlikely that the line could be removed from use as an interstate carrier of natural gas. Purely speculative uses to which a property might be adaptable but wholly unavailable should not be considered as factors which would reasonably be given weight in negotiations between a seller and a buyer. City of Austin v. Cannizzo, supra. Mr. Wright testified that in determining the fair market value by the cost approach he depreciated the 1953 cost rather than the cost of reproducing or replacing the subject property. His testimony reflects that while he used the income approach to check his opinions of the value of the property, on final analysis he based his valuation primarily on his opinion that a willing seller would not sell for less than the net book value and a willing buyer would not pay more than the net book value because the line was regulated by the Federal Power Commission.

Mr. Bledsoe testified that in the income approach to the value of the property he used the historical cost of credit to Texas Eastern averaging 10.83% as a proper capitalization rate rather than using the figure of 12% which Mr. Wright testified an investor would require as of January 1, 1977. Mr. Bledsoe’s opinion that the income to Texas Eastern would increase over the next five years is reflected in the figure for income which he capitalized to reach market value. It was Mr. Wright’s opinion that the income from the property would decrease over the next several years and his estimate of value based on the income approach was affected by that opinion. It was undisputed that the property would have a value after full depreciation for rate making purposes, but there was a dispute between the witnesses as to whether this value would significantly affect a prospective purchaser. It is undisputed that this section of pipeline would have little value except as a component of a pipeline system. It may well be that if this section of pipeline was needed to operate the system a purchaser might give it a greater value than would be justified by its ability to earn in a regulated industry.

The record reflects that the depreciation allowed by the Federal Power Commission will result in a zero basis prior to the expiration of the useful life of the pipeline. Since accumulated depreciation is factored into the rate base, a purchaser might require its inclusion in the sale resulting in a higher purchase price.

In Polk County v. Tenneco, Inc., supra, the Supreme Court recognized that the income approach involves an estimate of two variables, future income and the capitalization rate and that the more precisely the variables are estimated, the more accurate the market value estimate will be. A number of matters were developed in the testimony casting doubt on Bledsoe’s expertise and the weight to be given his opinion. His opinion as to fair market value was based in part on cost approach and in part on the income approach to value. The trial court was not bound to accept the exact values reached by either of the expert witnesses.

Mr. Bledsoe attached little significance to the fact that the income derived from the operation of a pipeline is regulated by the Federal Power Commission. He explained that a purchaser might devote the line to an unregulated use and that the rules and regulations of the Commission were subject to change so that the excess of the purchase price over the depreciated cost might be recovered by its inclusion in the rate base at a future time or by an increase in the rate of return. These matters are speculative. There is no evidence suggesting that the section of pipeline under consideration is likely to be more valuable for a different use in the future, or that the Federal Power Commission’s rules and regulations are likely to be revised. The evidence is to the contrary. A prospective purchaser undoubtedly would consider the limitations on income resulting from regulations by the Federal Power Commission in determining a reasonable price to pay for the line for use in interstate commerce. If the prospective purchaser desired to put the pipeline to another use, he would consider the necessity for permission of the Commission to abandon the line for transmission of natural gas in interstate commerce, and the uncertainty, delay and expense of securing such permission. These matters would enter into the decision as to price, but there is nothing to indicate that they were given significant consideration by Mr. Bledsoe or the trial court. Despite the fact that there was testimony that a capitalization rate of 12% was the minimum rate of return which a prospective purchaser would require and that 12% was the rate of return allowed by the Federal Power Commission, we do not agree that the net book value as testified to by the Texas Eastern witnesses equals fair market value. In Polk County v. Tenneco, Inc., supra, the net book value of the entire gas transmission system was established and “an allocation factor” applied to determine the percentage of the system located in the taxing unit and the value thereof.

Texas Eastern determined net book value by using the cost of the pipeline of which the segment in the taxing unit was a part plus replacement costs on the part within the unit minus depreciation at the rate allowed by the Federal Power Commission.

It is unlikely that the two methods would produce the same value. The evidence suggests that a prospective purchaser would be required to purchase the entire system. An expert witness could properly reason that a fair method of determining net book value would be the percentage approach.

Mr. Bledsoe’s testimony as to fair market value supports the finding made by the trial court. We consider Bledsoe’s income approach to be an erroneous method of valuation because of his failure to consider the impact of the Federal Power Commission’s Rules and Regulations on future income. If we disregard Mr. Bledsoe’s testimony based on the income approach to value, there is insufficient evidence to sustain the finding of fair market value made by the trial court.

A point of error complaining of the factual sufficiency of the evidence is also presented. If Mr. Bledsoe’s income approach testimony is not based on methodology so inaccurate as to render his opinion legally insufficient as evidence of value, the finding on fair market value would not be so contrary to the great weight and preponderance of the evidence as to be manifestly unjust.

In the absence of a determination of the fair market value of the property as a matter of law or by a finding of fact supported by sufficient evidence, we are unable to determine whether the valuation placed on the property by the Board of Equalization is grossly excessive. City of Waco v. Conlee Seed Company, 449 S.W.2d 29 (Tex.1969). Other points of error have been presented and, after careful consideration, are found not to present reversible error.

Reversed and remanded.

On Motion for Rehearing

In its motion for rehearing Texas Eastern has pointed out certain mistakes and clerical errors in the recitation of the facts of this case. The opinion is corrected to reflect that Mr. Bledsoe testified that the total value of the pipeline located in the School District was $655,127.00; that the Texas Eastern Provident City-Castor line within the State of Texas is 246.35 miles in length; and that the return on equity to the holders of the Texas Eastern common stock as of January 1, 1977 was 12.25 percent.

The motion for rehearing filed by Texas Eastern and the motion for rehearing filed by Sealy Independent School District are denied.


source: Caselaw Access Project

author: DODSON, Justice.

license: Public Domain

text:
    In the Matter of W. H. C., III, a child.
    No. 8963.
    Court of Civil Appeals of Texas, Amarillo.
    March 26, 1979.

      Whittenburg Law Firm, Gordon Goodman, Amarillo, for appellant.
    George Harwood, Asst. County Atty., Amarillo, for appellee.
   DODSON, Justice.

This is a juvenile case in which the State of Texas alleged that W. H. C., Ill, a thirteen year old minor, committed certain acts that made him a delinquent child. An adjudication hearing was held before a jury and the child was adjudged to have engaged in delinquent conduct. Following the subsequent disposition hearing, the court entered an order committing him to the custody of the Texas Youth Council for an indeterminate period of time, not to exceed his eighteenth birthday. W. H. C., Ill, appeals. We reverse and remand.

In his only point of error, the child contends that the state’s petition was fatally defective for failing to provide constitutionally adequate notice of the offense charged. He argues that the only paragraph in the petition detailing the gravamen of the alleged offense did not give him fair notice of the ultimate facts or specific issues that he had to defend against as required by due process under In re Gault, 387 U.S. 1, 87 S.Ct. 1428, 18 L.Ed.2d 527 (1967).

In paragraph III of the petition, the state attempts to charge the child with the commission of arson under section 28.02(a) of the Texas Penal Code. This paragraph of the petition states:

That on or about the 2nd day of February, 1978, in Potter County, Texas, the said child violated a penal law of this State punishable by imprisonment, to-wit: Sec. 28.02(a) of the Texas Penal Code in that he did then and there start a fire with the intent to damage and destroy a building without the effective consent of GLYNN DOYLE CARVER, principal of River Road High School, Amarillo, Potter County, Texas.

No other paragraphs in the petition deal with the gravamen of the offense.

Section 28.02(a) of the Texas Penal Code provides:

(a) A person commits an offense if he starts a fire or causes an explosion:
(1) without the effective consent of the owner and with intent to destroy or damage the owner’s building or habitation; or
(2) with intent to destroy or damage any building or habitation to collect insurance for the damage or destruction.

The petition makes no reference to the essential elements of section 28.02(a)(2). Therefore, we must surmise that the State is attempting to charge the child with the commission of arson under section 28.-02(a)(1). Under this subsection “a person commits an offense if he starts a fire . without the effective consent of the owner and with intent to destroy or damage the owner's building or habitation” (emphasis added).

The child maintains that the petition fails to state who owned the building and that the owner of the building failed to give consent to the fire. We agree. These matters are essential elements of the offense of arson as defined in section 28.02(a)(1). See Robinson v. State, 204 S.W.2d 981, 981-82 (Tex.Civ.App.—Austin 1947, no writ).

In Gault, the United States Supreme Court addressed due process requirements under the Fourteenth Amendment in connection with a state juvenile court adjudication of delinquency. The Court, specifically addressing notice requirements, stated:

Notice, to comply with due process requirements, must be given sufficiently in advance of scheduled court proceedings so that reasonable opportunity to prepare will be afforded, and it must ‘set forth the alleged misconduct with particularity’ (emphasis added).

In re Gault, 387 U.S. 1, 33, 87 S.Ct. 1428, 1446, 18 L.Ed.2d 527 (1967).

Gault details minimal due process requirements under the Constitution of the United States. It does not prohibit our State from prescribing statutory requirements calculated to afford the accused in a juvenile proceeding more than minimal constitutional protection. See In the Matter of H. S., Jr., 564 S.W.2d 446, 447 (Tex.Civ.App.—Amarillo 1978, no writ). In this connection, we point out that our Legislature has enacted section 53.04(d)(1) of the Texas Family Code, which is applicable to juvenile adjudication proceedings. This subsection provides: “The petition [for an adjudication of juvenile delinquency] must state with reasonable particularity thé time, place, and manner of the acts alleged and the penal law or standard of conduct allegedly violated by the acts ” (emphasis added). Section 53.04(d)(1) denotes mandatory statutory requirements, D.W.M., 21 Tex.Sup.Ct.J. 242, 243 (March 4, 1978), which the state must adhere to in juvenile proceedings. In the Matter of H. S., Jr., supra.

We conclude that the state’s petition fails to allege the owner of the building and that the owner failed to give his consent. These matters are essential elements of the offense of arson. Tex.Penal Code Ann. § 28.02(a)(1) (Vernon 1974). Absent these allegations, the petition fails to comply with the reasonable particularity requirements of Gault and section 53.04(d)(1) of the Family Code. For these reasons, the petition is fatally defective.

Notwithstanding this determination, the State contends that W. H. C., Ill, waived any constitutional right to proper notice because he failed to specially except to the alleged defects in the pleading as required by Rule 90 of the Texas Rules of Civil Procedure. We do not agree. Section 51.09 of the Family Code states that:

(a) Unless a contrary intent clearly appears elsewhere in this title, any right granted to a child by this title or by the constitution or laws of this state or the United States may be waived in proceedings under this title if:
(1) the waiver is made by the child and the attorney for the child;
(2) the child and the attorney waiving the right are informed of and understand the right and the possible consequences of waiving it;
(3) the waiver is voluntary; and
(4) the waiver is made in writing or in court proceedings that are recorded.

The record does not reflect, and the State does not contend, that these waiver requirements have been satisfied. Accordingly, the State’s contention is overruled.

In conclusion, we sustain W. H. C., Ill’s, point of error. Accordingly, the judgment of the trial court is reversed and the cause is remanded to the juvenile court.


author: REYNOLDS, Justice.

text:
    CACTUS DRILLING COMPANY, Appellant, v. A. E. McGINTY, Appellee.
    No. 8983.
    Court of Civil Appeals of Texas, Amarillo.
    March 26, 1979.
    Shafer, Gilliland, Davis, Bunton & McCol-lum, Inc., Lucius D. Bunton, Odessa, for appellant.
    Townes & Corbin, Vernon A. Townes, Denver City, for appellee.
   REYNOLDS, Justice.

The default judgment rendered is not vulnerable to the three-pronged test for a new trial, but the monetary awards decreed do not have the required evidential support. Reversed and remanded.

This appeal arose out of an action instituted by A. E. McGinty against Texaco, Inc., and Cactus Drilling Company. McGinty sought actual and exemplary damages from Texaco and Cactus for their alleged unreasonable and negligent usage of his land by malicious actions. Cactus was properly served with citation, but did not answer.

Thereafter and upon McGinty’s motion, Texaco was dismissed from the action. Hearing evidence on the cause against defaulting Cactus, the trial court rendered judgment, decreeing that McGinty recover from Cactus: $1,500 for damages to land; $8,000 for mental anguish; and $4,500 for exemplary damages.

Eighteen days after the judgment was signed, Cactus moved for a new trial and to set aside the judgment. The trial court heard and overruled the motion while it still retained control over its judgment. Cactus has appealed.

We perceive no error on the part of the trial court, as urged by Cactus, in failing to set aside the default judgment on the basis of the three-pronged test enunciated in Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 133 S.W.2d 124 (1939), the principal case upon which Cactus relies. One prong of the test is a showing that the failure to answer before judgment was not intentional or the result of conscious indifference, but was due to mistake or accident. There is evidence that Cactus’ authorized agent, after advising Cactus to do nothing about the citation until his further contact, did nothing in this regard before the judgment was rendered. This evidence justified the court in impliedly finding that Cactus’ failure to answer before judgment was the result of conscious indifference. In this light, Cactus failed the test. See, e. g., Clarkston v. Crouch, 533 S.W.2d 135, 139 (Tex.Civ.App.—Waco 1976, no writ).

In reply to Cactus’ attack on the evidential support for the award for damages to land, McGinty, with commendable candor, concedes that although the testimony shows his land was damaged, the record is devoid of proof of any monetary damages. Absent evidence in the record tending to show the amount of damages, a judgment for damages to land cannot stand. Houston & T. C. Ry. Co. v. Cluck, 31 Tex.Civ.App. 211, 72 S.W. 83, 87 (1903, writ ref’d).

Cactus also challenges, and McGinty defends, both the legal and the factual sufficiency of the evidence to support the awards for mental anguish and exemplary damages. The evidence may be fairly summarized as follows: Cactus, having a right to go upon McGinty’s land and to use the surface in developing the dominant mineral estate, could have used available roads to move its rig onto the land; instead, Cactus cut McGinty’s fence, threw the wires back and skidded its rig through the fence gap and across the land, making deep tracks in the pasture land and damaging some five acres of grass. McGinty’s cattle escaped through the fence gap and, after he rounded them up and repaired the fence, the fence was cut again and his gate was opened and thrown back, allowing his cattle to escape a second time. When McGinty attempted to determine the responsibility for this activity, he was telephonically cursed by Cactus’ tool pusher, who used pungent and picturesque language to comment on McGinty’s ancestry. The testimony respecting McGinty’s mental state is recorded thusly:

Q I will ask you if the actions taken by Cactus Drilling Company tended to worry you or cause you mental anguish?
A Yes, sir.
Q Did this cause you a good bit of anxiety or mental anguish trying to contact them, trying to get something done?
A Yes, sir.
Q —did that [telephone cussing] tend to upset you or are you in the habit of taking a cussing, either by phone, person or otherwise?
A I am not in the habit of taking a cussing no way without some rebuttal, in other words.

Given an injury to property which is actionable independently and separately from mental anguish, compensation for mental anguish which proximately results from the wrongful injury is one element of actual damages. Harned v. E-Z Finance Co., 151 Tex. 641, 254 S.W.2d 81, 85 (1953). Generally, however, mental anguish defini-tionally is something more than mere worry, anxiety, vexation or anger; it must consist of intense pain of body or mind, Western Union Telegraph Co. v. Chamberlain, 169 S.W. 370, 371 (Tex.Civ.App.—Austin 1914, no writ), or a high degree of mental suffering. Southwestern Bell Telephone Co. v. Cook, 30 S.W.2d 497, 499-500 (Tex.Civ.App.—Port Worth 1980, writ ref’d).

As we view the record, MeGinty failed to prove that character of mental anguish which authorizes a recovery of damages. The inquiries about his mental state were disjunctively framed. By his response to the third question copied above, MeGinty did not state that he was upset; and his affirmative answers to the two preceding inquiries leave unsettled and only speculative whether he was answering that he merely had an uneasiness of mind, which falls far short of mental anguish, or whether he actually suffered a high degree of mental suffering, which would constitute mental anguish. Hence, there is no competent evidence of sufficient certainty to show mental anguish compensable under the law; but, if it can be reasonably argued that the cited testimony is some evidence of mental anguish, then, in our view, the evidence is factually insufficient to support an award for mental anguish.

It is, of course, a settled proposition of law that in the absence of actual damages there can be no recovery for exemplary damages. Michels v. Boruta, 122 S.W.2d 216, 221 (Tex.Civ.App.—Eastland 1938, no writ). So, if a judgment for actual damages is unsupported, an award for exemplary damages cannot remain. Stafford v. Powell, 148 S.W.2d 965, 968 (Tex.Civ.App.— Eastland 1941, no writ).

For the reasons given, the judgment is reversed. Because it is evident that the facts have not been fully developed, the cause is remanded. Jackson v. Hall, 147 Tex. 245, 214 S.W.2d 458, 459 (1948).


text:
    STATE of Texas ex rel. Larry KELLY, Appellant, v. T. L. BAKER, Appellee.
    No. 8987.
    Court of Civil Appeals of Texas, Amarillo.
    March 26, 1979.

      Tom Curtis, Dist. Atty. (John B. Reese and Steve Schiwetz), Asst. Dist. Attys., Amarillo, for appellant.
    Miller and Miller (Dee Miller), Charles L. Rittenberry, Amarillo, Haynes & Fullen-weider, Houston, for appellee.
   REYNOLDS, Justice.

The State of Texas appeals from a take-nothing judgment rendered on a jury verdict in its suit to remove the Sheriff of Potter County from office for official misconduct. Because the amended petition upon which the State proceeded to trial was not verified, the district court acquired no jurisdiction of the alleged cause of action. Reversed and dismissed.

The State of Texas, acting through the District Attorney of the 47th Judicial District upon the relation of Larry Kelly, instituted this action under the authority granted by Tex.Rev.Civ.Stat.Ann. arts. 5970, et seq. (Vernon 1962), seeking to remove T. L. Baker from the office of Sheriff of Potter County for official misconduct. The petition, verified by the affidavit of Kelly, alleged three acts, two of which were alternatively pleaded, as constituting official misconduct on the part of Sheriff Baker.

Among other responses made to the petition, Sheriff Baker specially excepted to the allegations of official misconduct. The trial court sustained almost all of the special exceptions, and granted the State leave to amend.

The amended petition filed by the State pleaded the original allegations in greater detail, and set forth numerous other acts and omissions asserted to constitute gross ignorance or gross carelessness by Sheriff Baker in the discharge of his official duties. The amended petition, reciting that the suit was instituted on the relation of Larry Kelly, was not verified by the affidavit of Kelly or of any other person.

Sheriff Baker moved for dismissal of the cause on the ground that the amended petition was not sworn to as required by Article 5977 and, subject to the motion, specially excepted to the amended petition for that reason as well as for other reasons. After announcing that Kelly had indicated to an officer of the court that he had abandoned this suit, the trial judge signed orders denying the motion for judgment of dismissal, but sustaining the special exception to the petition for lack of verification, and granting the State leave to amend.

The State filed its second amended petition containing a modification of the allegations made in its first amended petition. The petition, although again reciting that the suit was instituted on the relation of Larry Kelly and incorporating an affidavit for his execution, was not sworn to by any person.

The court reversed its previous ruling that the petition was subject to a special exception for the lack of verification. The cause then proceeded to a jury trial on the State’s unverified, second amended petition and an unverified supplement thereto. Ten of the jurors answered “Not True” to each of the six alleged causes of official misconduct submitted to the jury.

Accepting the verdict, the court rendered judgment that the State of Texas take nothing. The State has appealed, utilizing nineteen points of error to complain of the court’s actions in the jury selection process, the conduct of the trial, its charge to the jury, and in the rendition of judgment.

At the outset and prior to reaching the State’s points of error, it is necessary to consider Sheriff Baker’s motion to dismiss the cause for want of jurisdiction. The thrust of the motion is that the State’s unverified, amended petition did not invoke the jurisdiction of the trial court over the cause and, therefore, this court is without jurisdiction to act upon the appeal except to dismiss the cause as provided by Tex.R. Civ.P. 405. The motion is well-taken.

Ouster actions of this character were constitutionally conceived, Tex.Const. art. Y, § 24, with the mode of trial and removal to be legislatively provided, Tex.Const. art. XV, § 7, and, conformably, the mode was provided. Article 5970, et seq. These actions differ from ordinary suits in that the statutory proceedings are intended for the benefit of society, rather than for the involved individuals: on the one hand, they protect the public from corrupt and incompetent public officials; and, on the other, they guard against petty political interference with the discharge of official duty and minimize harassment in public office. Johnson v. Mooney, 241 S.W. 308, 309 (Tex.Civ.App.—Beaumont, 1922, no writ). Harmoniously, various requirements of the ouster statutes have been subjected to the rule of strict construction, State ex rel. Hickman v. Alcorn, 78 Tex. 387, 14 S.W. 663, 665 (1890); State ex rel. Edwards v. Reyna, 160 Tex. 404, 333 S.W.2d 832, 835 (1960), which is required by the statutes themselves. Meyer v. Tunks, 360 S.W.2d 518, 520 (Tex.1962).

One of the statutes governing the mode of trial and removal is Article 5977 which, in part, reads:

the petition shall in every instance be sworn to at or before the filing of the same by at least one of the parties filing the same .

It has been uniformly held that the affidavit required by the article is an essential part of the proceedings, and without it the court acquires no jurisdiction of the cause. Huntress v. State, 88 S.W.2d 636, 641 (Tex.Civ.App.—San Antonio 1985, writ dism’d); Johnson v. Mooney, supra, at 309-10; Bland v. State, 36 S.W. 914 (Tex.Civ.App.1896, no writ).

Notwithstanding, the State argues that because its original petition, which was verified by the affidavit of Kelly, invoked the jurisdiction of the trial court, its amended petitions filed thereafter required no verification. To the contrary, the law has been declared to be otherwise in statutory removal proceedings.

Early in Texas jurisprudence, the contention argued by the State was presented to, and rejected by, the court in Bland v. State, supra. There, on appeal from a judgment removing a county treasurer from office, the court said at 914:

The petition upon which the case went to trial, which was an amended petition setting out new and different grounds of removal, was not sworn to, and was specially excepted to on that ground. This exception should have been sustained. The statute emphatically declares that the petition shall, “in every instance,” be verified by affidavit. It seems that the original petition had been thus verified, but when the amended petition was filed it took the place, under our system of pleading, of the original, which thence disappeared from the record. Where the statute requires a pleading to be sworn to, the amendment, which becomes a substitute for the original, comes clearly within the terms and meaning of such statute.

A similar view was expressed about the unsworn trial petition in Johnson v. Mooney, supra, at 310, in an appeal from a judgment removing a county judge from office. There, the trial court never acquired jurisdiction because of a defective verification of the original petition, but the court, in reversing the judgment of removal and dismissing the cause, commented on the live trial pleadings thusly:

[Rjelators filed an amended petition, which was not sworn to, upon which the case was tried. The statute, article 6042, supra, [now article 5977] emphatically declares that the petition shall “in every instance” be sworn to. When the amended petition was filed and substituted for the original, the original passed out of the case — disappeared from the record so to speak. Where the statute requires a pleading to be sworn to, an amendment which becomes a substitute for the original must also be sworn to. [Citations omitted.]
The affidavit required to be made and attached to the petition is a matter of substance — an essential part of the application — so much so that the court acquires no jurisdiction without it.

Correspondingly, where valid statutes authorized by the constitution prescribe a method of procedure for removal of county officers, the method is deemed exclusive and resort may not be had to methods not so prescribed. State ex rel. Downs v. Harney, 164 S.W.2d 55, 56 (Tex.Civ.App. —San Antonio 1942, writ dism’d w.o.m.). A fortiori, removal proceedings cannot be initiated upon a petition which lacks legal verification. Johnson v. Mooney, supra, at 309. Hence, Sheriff Baker’s motion for dismissal of the cause for lack of verification of the State’s trial pleadings should have been granted by the trial court.

Accordingly and without reaching the State’s points of error, Sheriff Baker’s motion to dismiss is granted. The take-nothing judgment of the trial court is reversed, and the cause is hereby dismissed. Tex.R. Civ.P. 434.

      . All articles cited are articles of the Texas Revised Civil Statutes.

      . Not reached for discussion is the State’s connecting argument that its unverified amended petition may contain allegations of grounds for removal additional to and distinct from those contained in its original verified petition; but, in the light of the rationale of the authorities cited in the main opinion, the argument would be wholly untenable.


author: CIRE, Justice.

text:
    Katie M. ELLISON, Appellant, v. TRAILITE, INC., et al., Appellees.
    No. B2041.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    March 28, 1979.
    Rehearing Denied April 18, 1979.

      Charles Morgan, Houston, for appellant.
    Barham Bratton, Clark, Thomas, Winters & Shapiro, Joseph V. Crawford, Wofford Denius, Stubbeman, McRae, Sealy, Laugh-lin & Browder, Austin, for appellees.
    Before J. CURTISS BROWN, C. J., and COULSON and CIRE, JJ.
   ON MOTION TO REFORM

CIRE, Justice.

Katie M. Ellison appeals from summary judgments rendered in favor of Trailite, Inc. and Janie S. Langston. The suit grew out of an alleged assault and battery by Janie S. Langston upon appellant after a disagreement between them on the premises of Trailite, Inc., and after appellant had resigned or was fired from her employment at Trailite. Appellant filed a personal injury action against Langston and against Trailite, Langston’s employer, based on the doctrine of respondeat superior.

Appellees moved for summary judgments on the ground that appellant had been injured in the course and scope of her employment and was covered by a policy of workmen’s compensation issued by Texas Employers’ Insurance Association. Separate summary judgments were rendered for each appellee that appellant take nothing. This appeal followed.

While there is some dispute as to the actual occurrence of the events alleged by appellant, there is no genuine dispute between the parties as to the time sequence of the alleged events, if they occurred. This sequence of events was as follows: a disagreement arose between appellant and ap-pellee Langston; appellant either resigned or was fired from her position; appellant remained on the premises of Trailite while her severance check was prepared; a further altercation ensued during the course of which appellant was struck by a thrown object and injured. Appellees argue that in remaining on the premises to pick up her check appellant was serving Trailite’s purposes and performing her last act as an employee. They urge that she was therefore injured in the scope of employment and has an exclusive remedy under the workmen’s compensation statute. Appellant argues that once she resigned or was fired she was no longer in the scope of employment and so was not covered by compensation.

This case presents a question apparently not heretofore faced by Texas courts. We hold that once employment is terminated by resignation or by the employee’s being fired, no injury thereafter incurred is received within the course of his employment, for purposes of workmen’s compensation law. This rule is limited to those cases where the resignation or firing occurs in a place of safety and the parties are not subject to the inherent hazards arising from the employment itself.

In the case before us, then, appellant, after resigning or having been fired, as a matter of law was not in the course of her employment as she stood in the office of Trailite waiting to receive her severance check.

Appellees contend that because appellant had not left the premises of Trailite, and because so little time had elapsed, her employment had not actually terminated at the time of the injury. Once appellant resigned or was fired, the relationship of employer-employee ceased to exist between appellee Trailite and appellant regardless of whether appellant physically remained on the premises. Further, the question of the time which elapsed between the time appellant resigned or was fired and when she picked up her check is immaterial. If appellant had returned to Trailite three days later to receive the check, there would be no question that her employment had terminated and that such act was not within its scope. Likewise the fact that an hour, or only a few minutes, had elapsed can have no bearing on this question.

Appellees rely on cases in which employees were injured after working hours or while on vacation and were found to be within the scope of employment. Texas General Indemnity Co. v. Luce, 491 S.W.2d 767 (Tex.Civ.App.-Beaumont 1973, writ ref’d n. r. e.); Royalty Indemnity Co. v. Madrigal, 14 S.W.2d 106 (Tex.Civ.App.-Beaumont 1929, no writ). These cases are not on point, since there the relationship of employer-employee still existed and the employee was injured while following the instructions of his employer. Further, the rule is that to be within the scope of employment the injury must have been “received during a period of time when the injured employee was required or authorized by the contract of employment to be actually engaged about or in furtherance of the employer’s work or business . . . .” Lesco Transportation Co. v. Campbell, 500 S.W.2d 238, 241 (Tex.Civ.App.-Texarkana 1973, no writ). It follows that when the contract of employment no longer exists, no act or injury can be within the course of employment for purposes of recovering under the Workmen’s Compensation Act.

Accordingly, since appellant was as a matter of law not within the scope of employment at the time of the alleged injury, it was error to grant summary judgment for appellees. We therefore reverse and remand to the trial court.

Reversed and remanded.


author: McKAY, Justice.

text:
    ZEMACO, INC., Appellant, v. Franklin R. NAVARRO, Appellee.
    No. 1204.
    Court of Civil Appeals of Texas, Tyler.
    March 29, 1979.
    Rehearing Denied May 10, 1979.

      Sharolyn P. Wood, David L. Cook, Jr., Ross, Banks, May, Cron & Cavin, Houston, for appellant.
    James Randall Austin, Houston, for ap-pellee.
   McKAY, Justice.

This is a suit on a sworn account. Appellant, an Ohio corporation which sells animal supplies, sued appellee, individually and d/b/a Navarro Farms, alleging that it sold and delivered to appellee various items of merchandise listed in two invoices attached as an exhibit to appellant’s petition, at a total price of $381.19, the same allegedly being the reasonable market value of the goods and the agreed price. It was alleged that appellee promised to pay for the goods and was requested to do so, but failed and refused to pay the amount due. Appellant further alleged demand for payment upon appellee more than 30 days prior to the filing of suit, thus entitling it to reasonable attorney’s fees which it alleged to be at least $127.00. Also attached to the petition was a verified affidavit by the president of appellant, stating that the account was just and true, that all just and lawful offsets, payments and credits had been allowed, and that the sum of $381.19 was due, owing and unpaid.

In response, appellee filed his answer, consisting of a general denial and specifically alleging that the account was “not due, just and true, and owing” by appellee. Further, with respect to the merchandise, appellee alleged that he had not ordered it, that if it were ordered such was done without appellee’s authority, that appellee had not promised to pay for it, that appellee had no personal knowledge that it was delivered to him, and that it had not been delivered to him. Appellee’s answer also contained an allegation that the attorney’s fees claimed by appellant were unreasonable and were not recoverable under Article 2226, Tex.Rev.Civ.Stat.Ann., by appellant. Appellee supplemented his answer with an allegation that the claim had been settled by appellant’s retention of appellee’s check for one-half of the alleged sale price (the amount allegedly agreed upon) for 24 days.

Appellant filed a motion for summary judgment which has not been made a part of the record before this court. Appellee filed an instrument denominated “Affidavit in Opposition to Plaintiff’s Motion for Summary Judgment,” wherein appellee alleged the settlement and appellant’s repudiation thereof; the unreasonableness and unrecov-erability of attorney’s fees prayed for by appellant; and that he never had an account with appellant, the goods were not sold or delivered to him, and he did not promise to pay for them. Appellee further stated, “each and every item [set forth in appellant’s invoices] is not just and true . .” Appellant’s motion for summary judgment was denied, the trial court stating that it considered the pleadings and admissions on file and found that they showed a genuine issue of material fact.

Trial was had without a jury, at the conclusion of which a judgment was rendered in favor of appellee that appellant take nothing. The judgment was denominated an “Agreed Judgment” but was approved, as evidenced by a signature thereon, only by appellee’s counsel. The trial court, upon request, made findings of fact that (1) appellee did not order the merchandise from appellant, (2) appellee did not authorize another to act on his behalf in ordering any merchandise from appellant, (3) the merchandise was never delivered to appellee nor to any agent, servant, or employee of appellee, and (4) appellee never ratified any dealing with appellant by any agent, servant or employee; conclusions of law were made that (1) there was no evidence to show that appellee ordered or received merchandise from appellant, and (2) there was insufficient evidence to show the same.

Appellant has duly perfected its appeal and brings 21 points of error to this court. The first point complains of error by the trial court in failing to render judgment for appellant for the reason that appellee’s answer failed to deny the sworn account in the language prescribed by Rule 185, T.R. C.P.

Rule 185 provides, in part:

“When any action ... is founded upon an open account or other claim for goods, wares and merchandise . on which a systematic record has been kept, and is supported by the affidavit of the party, his agent or attorney . to the effect that such claim is, within the knowledge of affiant, just and true, that it is due, and that all just and lawful offsets, payments and credits have been allowed, the same shall be taken as prima facie evidence thereof, unless the party resisting such claim shall, before an announcement of ready for trial in said cause, file a written denial, under oath, stating that each and every item is not just or true, or that some specified item or items are not just and true . When the opposite party fails to file such affidavit, he shall not be permitted to deny the claim, or any item therein, as the case may be.”

Following the general denial in appellee’s original answer appears this paragraph:

“Defendant further alleges that the Account made the basis of Plaintiffs [sic] Petition by reason of the matters set forth in the invoices attached to Plaintiffs [sic] Petition, is not due, just and true, and owing by this Defendant; of which judgment this Defendant prays judgment of this Court.”

The courts require strict adherence to the rules governing suits on sworn account. It is well settled that a denial of the verified account must be in the terminology of the rules, and the courts have been extremely exacting in the nature of the language used in so denying the account. Sigler v. Frost Brothers, Inc., 555 S.W.2d 813, 816 (Tex.Civ.App.—El Paso 1977, no writ); Jeffrey v. Larry Plotnick Co., Inc., 532 S.W.2d 99, 101 (Tex.Civ.App.—Dallas 1975, no writ); Oliver Bass Lumber Co., Inc. v. Kay and Herring Butane Gas Co., Inc., 524 S.W.2d 600, 602 (Tex.Civ.App.—Tyler 1975, no writ). In Solar v. Petersson, 481 S.W.2d 212, 215 (Tex.Civ.App.—Houston [14th Dist.] 1972, no writ), the statement in the defendant’s answer that “ ‘the account, which is the foundation of Plaintiff’s account is wholey [sic] not just and true’ ” was held to constitute, along with the remainder of the answer, nothing more than a general denial and clearly inadequate to deny the sworn account in accord-anee with the rules. In Duncan v. Butter-owe, Inc., 474 S.W.2d 619, 620-1 (Tex.Civ. App. — Houston [14th Dist.] 1971, no writ), the defendant's answer did not deny that each and every item in the plaintiff’s account was just or true, and was thus held to be inadequate to comply with the language required by Rule 185. Similarly, the language used in the answer in the instant case, to-wit: “the Account ... is not due, just and true, and owing,” does not conform to the exacting requirements of Rule 185, which requires that the denial state that “each and every item is not just or true,” and is therefore inadequate to deny the justness or truth of appellant’s sworn account. No other language contained within the answer approximates that required by Rule 185.

Appellee, however, does not contend here that the language of his answer complies with Rule 185. Rather, it is his contention that the necessary language need not be in the answer itself, but may be placed in a response to a motion for summary judgment, as it was here.

We are of the opinion that Rule 185 and Rule 93(k), T.R.C.P., must be construed together in determining the requirements of the pleadings in a suit on a sworn account. The latter rule provides:

“A pleading setting up any of the following matters, unless the truth of such matters appear of record, shall be verified by affidavit.
(k) That an account which is the foundation of the plaintiff’s action, and supported by the affidavit, is not just; and, in such case, the answer shall state that each and every item is not just or true, or that some specified item or items are not just and true.” [Emphasis added.]

It is clear that this rule requires that the necessary language appear in the answer itself. The language to be used in the denial as required by Rule 93(k) does not differ from that required by Rule 185, but the former is more specific in requiring that the denial be contained within the answer. The courts have consistently required that, in suits on sworn account, the provisions of both Rule 185 and Rule 93(k) be complied with. Duncan v. Butterowe, Inc., supra at 620; Solar v. Petersson, supra; Sarandos v. Dave Seline Roofing Co., 498 S.W.2d 393, 394 (Tex.Civ.App.—Houston [1st Dist.] 1973, no writ); Oliver Bass Lumber Co., Inc. v. Kay and Herring Butane Gas Co., Inc., supra; Jeffrey v. Larry Plotnick Co., Inc., supra; P. T. Poultry Growers, Inc. v. Darr Equipment Co., Inc., 537 S.W.2d 773, 775 (Tex.Civ.App.—Tyler 1976, writ ref’d n.r.e.); Rizk v. Financial Guardian Insurance Agency, Inc., 576 S.W.2d 110, 112 (Tex.Civ.App.—Houston [1st Dist.] 1978, writ granted).

Appellee cites in oral argument Basse Truck Line, Inc. v. Strickland Transportation Co., Inc., 359 S.W.2d 477 (Tex.Civ.App.—El Paso 1962, no writ), and Products Unlimited, Inc. v. American Radiator & Standard Sanitary Corp., Industrial Division, 397 S.W.2d 551 (Tex.Civ.App.—Tyler 1965, writ ref’d n.r.e.), as authority for allowing the denial of a defendant in a suit on a sworn account to be located in a filed instrument other than the answer. Both of these cases, however, were decided prior to the 1971 amendment to Rule 93(k). That rule, prior to said amendment, provided that a pleading alleging that a sworn account is not just must be verified, “and, in such case, the answer shall set forth the items and particulars which are unjust.” In 1971, the clause just quoted was changed to read as it does now, requiring that the answer, where the entire account is disputed, contain the language, “each and every item is not just or true.” The cases cited by appellee are not apposite here.

We hold that Rules 185 and 93(k), when applied together (as they must be) to suits on sworn account, require that the language necessary to effectively deny the justness and/or truth of the plaintiff’s sworn account, must appear in a pleading of equal dignity with the plaintiff’s petition, and therefore must appear in the defendant’s answer. The answer of the defendant consists only of those instruments listed in Rule 83, T.C.R.P. An affidavit filed in opposition to a motion for summary judgment does not comprise a part of the defendant’s answer to the plaintiff’s petition. The fact that such an affidavit in the instant case contained the language required by Rule 185, does not render it an effective denial of plaintiff’s account. Appellant’s account and verified affidavit, not being effectively denied, constituted prima facie evidence which entitles it to recover. Rule 185, supra; Duncan v. Butterowe, Inc., supra. Appellant’s first point of error is sustained.

By its third point, appellant complains of the trial court’s failure to award it reasonable attorney’s fees. In order to recover reasonable attorney’s fees under Article 2226, Tex.Rev.Civ.Stat.Ann., the plaintiff must plead and prove presentment of the claim and the defendant’s failure to pay within 30 days thereafter. Said article expressly applies to suits on sworn account. In the instant case, appellant has met its burden. A letter dated February 25, 1975, from appellant’s attorney to appellee demanding payment, was introduced into evidence; and the petition herein was filed on May 13, 1975, more than 30 days after said presentment. In view of its prima facie evidence, appellant was not required to present further proof of appellee’s failure to pay the debt. Appellee, in his answer, purported to state as a counterclaim that appellant’s claim for attorney’s fees was unreasonable. Said allegation is correctly viewed as solely a defensive matter and not as a counterclaim, inasmuch as appellee showed no right to affirmative relief therein. Although appellant alleged attorney’s fees in the amount of “at least $127,” appellant’s attorney, in testifying as to that issue, did not limit herself to that amount but testified that $600 would be a reasonable attorney’s fee in view of the time and effort expended. This testimony was uncon-tradicted but cannot be considered conclusive inasmuch as it came from an interested witness. Anchor Casualty Co. v. Bowers, 393 S.W.2d 168, 169 (Tex.1965); Shockey v. Page, 354 S.W.2d 698, 700 (Tex.Civ.App.—Eastland 1962, writ ref’d n.r.e.).

We find that appellant is entitled to reasonable attorney’s fees as a matter of law, and we sustain its third point of error, but we must remand to the trial court for a determination of what is a reasonable amount. Since the reasonableness of attorney’s fees is a question of fact, since the court below made no finding as to the reasonable value of the services of appellant’s attorney, and since said value is not established as a matter of law, this court cannot make such a finding. Chavez v. Aetna Finance Co., 553 S.W.2d 174, 178 (Tex.Civ.App.—San Antonio 1977, writ ref’d n.r.e., 561 S.W.2d 799 [Tex.1978]). The claim for attorney’s fees is a severable claim. We are authorized to sever the claim for attorney’s fees and reverse and remand the judgment as to it only. Cicero Smith Lumber Co. v. Gaston, 447 S.W.2d 736, 738 (Tex.Civ.App.— Amarillo 1969, writ ref’d n.r.e.).

Appellant contends that it is also entitled to prejudgment interest at six per cent per annum from January 1, 1975, until the date of judgment in its favor, in accordance with Article 5069-1.03, Tex.Rev. Civ.Stat.Ann. Appellant, however, has presented no point of error to that effect; therefore, its contention, which does not involve fundamental error, may not be properly passed upon by this court. Appellate courts may, in rare situations, consider an unassigned error, but only if the error can be properly classified as “fundamental error.” Texas Power & Light Co. v. Cole, 158 Tex. 495, 313 S.W.2d 524, 529 (1958); Wright v. Gernandt, 559 S.W.2d 864, 872 (Tex.Civ.App.—Corpus Christi 1977, no writ).

With regard to appellee’s supplementary answer concerning an alleged settlement, the trial court refused to consider the same for reasons of public policy, no exception or objection thereto was made or ruled on, and appellee has brought no cross-point thereon to this court. Again, no fundamental error is involved. Therefore, it is not properly before us for decision. Smith v. Davis, 453 S.W.2d 340, 348 (Tex.Civ.App.—Fort Worth 1970, writ ref'd n.r.e.); Yelverton v. Brown, 412 S.W.2d 325, 329 (Tex.Civ.App.—Tyler 1967, no writ).

In view of the foregoing disposition of this appeal, we find it unnecessary to address appellant’s remaining points of error.

Accordingly, the judgment of the trial court is reversed, and judgment is here rendered that appellant, Zemaco, Inc., recover from appellee, Franklin Navarro, individually and d/b/a Navarro Farms, the principal amount sued for, i. e., $381.19. The severed cause relating to attorney’s fees is remanded to the trial court for its determination of the amount of reasonable attorney’s fees due appellant.


author: OSBORN, Justice.

text:
    Laura Aurora FIGUEROA, Appellant, v. Javier FIGUEROA, Appellee.
    No. 6806.
    Court of Civil Appeals of Texas, El Paso.
    April 4, 1979.

      Ruth Tone, El Paso, for appellant.
    Hector M. Zavaleta, Peter S. Peca, Jr., El Paso, for appellee.
   OPINION

OSBORN, Justice.

This is a suit by a father seeking to modify within a period of one year after the date of the divorce an order awarding custody of two minor children to their mother. The trial Court granted the motion and gave custody to the father. We reverse and render.

These parties were divorced in October, 1977. That decree of the Court named the mother, Laura Figueroa, as Managing Conservator and the father, Javier Figueroa, as Possessory Conservator of the two children, a girl five years old and a boy six years old. In December, 1977, the mother agreed that the two children could live with their father until May, 1978. In March, 1978, Laura remarried and approximately a week later Javier filed his motion to modify the prior decree and name himself as Managing Conservator of the children.

By her first point of error and the argument thereunder, Laura asserts that the Court erred in modifying the prior order without a proper showing of a compliance with Section 14.08(d) of the Texas Family Code concerning endangering the children’s physical health or impairing their emotional development. The applicable part of that Code provision is as follows: (d) If the motion is filed for the purpose of changing the designation of the managing conservator and is filed within one year after the date of issuance of the order or decree to be modified, there shall be attached to the motion an affidavit executed by the person making the motion. The affidavit must contain at least one of the following allegations along with the supportive facts:

(1) that the child’s present environment may endanger his physical health or significantly impair his emotional development; .

In order to comply with that provision of the Code, Javier attached an affidavit to his motion to modify and in the affidavit said:

‘My name is Javier Figueroa, I am well acquainted with the present environment of children PAUL ANTHONY FIGUEROA and CHRISTINE ELIZABETH FIGUEROA, and I hereby state under oath that the children’s environment with the managing conservator may endanger their physical health or significantly impair their emotional development. Specific facts that support the above are:
Since the entry of the decree of divorce Movant has had the physical custody of the children.’

It was the obvious intention of the Legislature in putting Section 14.08(d) in the Family Code to give some stability to the provision for custody of children of divorced parents and to prevent the custody award from being relitigated within a short period of time, except in cases involving the children’s physical health and emotional development. And this Section requires an initial determination by the court of whether the facts sworn to in the motion to modify justify a hearing. Texas Family Code Symposium, 5 Tex.Tech.L.Rev. 434 (1974).

In DeLeon v. Periman, 530 S.W.2d 174 (Tex.Civ.App.—Amarillo 1975, no writ), the court pointed out that “the legislature specified that the court shall deny a Sec. 14.-08(d) motion unless the court determines that the attached affidavit expresses adequate facts to support its allegation, . . ”

In this case, at the time the motion to modify was filed the children were in the physical custody of the father and that was the only fact asserted in the affidavit to support his motion to modify. As a matter of law, that fact did not show that the children’s environment with their mother as the Managing Conservator would endanger their physical health or significantly impair their emotional development, and the allegation was not sufficient to permit the Court to set the motion for a hearing. Even though the mother had given physical custody of the children to the father, she never sought, nor consented to, any modification of the prior custody order, and the affidavit does not purport to assert the applicability of Section 14.08(d)(2), Tex. Family Code Ann., which permits a change on request or consent of the managing conservator. Under Section 14.08(e), Tex.Family Code Ann., the Court was required to deny the motion and refuse to schedule a hearing. Point of error No. 1 is sustained.

The modification order is reversed and judgment is rendered denying the motion to modify the prior order.