author: YOUNG, Justice.

text:
    TEXAS CONSTRUCTION ASSOCIATES, INC., et al., Appellants, v. Gilbert BALLI, d/b/a C. C. Plumbing Company, Appellee.
    No. 1178.
    Court of Civil Appeals of Texas, Corpus Christi.
    Oct. 31, 1977.
    Rehearing Denied Dec. 8, 1977.

      Bruce Waitz, San Antonio, for appellants.
    John D. Barrow, Nicolas & Morris, William R. Anderson, Jr., David Seidler, Sor-rell, Anderson & Sorrell, Corpus Christi, for appellee.
   OPINION

YOUNG, Justice.

This appeal results from a suit instituted by appellee, Gilbert Balli, d/b/a C. C. Plumbing Company, against Sam Hausman Meat Packers, Inc. and the appellants, Texas Construction Associates, Inc., and West-chester Fire Insurance Company, for recovery on a contract between C. C. Plumbing Company, as subcontractor, and Texas Construction Associates, Inc., as general contractor, for materials furnished and work completed on the Sam Hausman Meat Packers, Inc., meat processing facility, in Corpus Christi, Texas.

Suit was brought pursuant to Tex.Rev. Civ.Stat.Ann. art. 5472d (Supp.1976), an act providing for bonds to pay liens or claims. Appellant Westchester Fire Insurance Company, as surety for Texas Construction Associates, Inc., was named defendant on the Article 5472d bond. Appel-lees, Martin D. Kirbow and A. J. McKenzie d/b/a Standard Plumbing Company, intervened in this cause as supplier of materials to C. C. Plumbing Company and brought suit against Texas Construction Associates, Inc., and Westchester Fire Insurance Company under Section 6 of Article 5472d, and against C. C. Plumbing for payment of an overdue account. Subsequently, C. C. Plumbing took a nonsuit as to Sam Haus-man Meat Packers, Inc. Trial was before the court without a jury.

Hereafter Texas Construction Associations, Inc., will be called Contractor; West-chester Fire Insurance Company, Surety; Gilbert Balli d/b/a C. C. Plumbing, Subcontractor; Martin D. Kirbow and A. J. McKenzie d/b/a Standard Plumbing Supply Company, Materialman; and Sam Hausman Meat Packers, Inc., Owner.

Owner entered into a contract with Contractor for the construction of a meat processing facility in Corpus Christi, Texas, during May of 1974. Contractor then entered into an agreement with Subcontractor to perform the plumbing work for the Owner’s project. In June of 1974, Contractor engaged Surety on a statutory payment bond complying with the provisions of Article 5472d.

It appears from the record that a primary part of subcontractor’s agreed duties on the project was to install a heated, pressurized cleaning system which included a “Mals-bury” heating unit, pipes to transport the heated water across the roof and down the walls, and cleaning facilities at seven different stations. Prior to installing the system Subcontractor disapproved of placing the pipe for this system under the roofing materials, i. e., insulation tar paper and tar and suggested that he might place the pipe on top of the roofing materials thereby making the pipe more accessible in the event of any future leaks. The request was denied and pipe was laid under the roofing material. Although Contractor and Subcontractor originally agreed to have Subcontractor connect one “Malsbury” unit, apparently Owner and Contractor decided, after all the pipe for the original system was laid, to purchase two additional “Malsbury” units to add to the system. At this time, the superintendent for Contractor orally promised to pay Subcontractor “extra” for installing the additional units. At trial it was shown that the addition of further “Malsbury” units could cause greater vibration in the pipes than would the originally installed unit by itself.

After the opening of the plant in June of 1975, water began leaking out of the cleaning system pipes. No specific reason was established as causing the leaks. The plumbing inspector for Corpus Christi testified, however, that he observed no faulty workmanship in Subcontractor’s plumbing and that the work met Corpus Christi plumbing standards. Subsequently, the entire system installed by Subcontractor was replaced.

During the course of construction, Mate-rialman sold to Subcontractor plumbing supplies and materials worth approximately $5,800. Subcontractor, however, neglected to pay Materialman for such materials for no apparent reason other than Subcontractor had not been fully paid for his labor and materials by Contractor. Contractor admitted that it had actual knowledge during February of 1975 that Subcontractor owed Materialman but was not sent written notice under Section 2b(l) of Article 5453 of the unpaid materialman’s claim until April 17, 1975. Subsequent to that notice, Contractor refused to pay Subcontractor’s invoices. Additional statutory notices were sent to Contractor and Owner on May 28, 1975, in order to comply with the notice requirements of Article 5453.

Final judgment was rendered on October 8, 1976, which granted Subcontractor a joint and several judgment for $4,320.21 and $1,900.00 attorney fees together with interest on both sums against Contractor and Surety. Materialman was awarded a joint and several judgment against Subcontractor, Contractor and Surety for $5,843.47, the price of the materials furnished Subcontractor, and $2,000.00 attorney fees with interest on both sums. It was further ordered that Contractor and Surety have judgment over against Subcontractor in the sum of $5,843.47 plus interest when such sum is paid to Materialman.

No motion for new trial was filed, and findings of fact and conclusions of law were neither requested nor filed in this appeal. Appellants did bring forward a statement of facts and therefore it must be presumed upon appeal that the trial judge found every fact necessary to sustain the judgment, provided such fact is raised by the pleadings and is supported by the evidence. Bishop v. Bishop, 359 S.W.2d 869 (Tex.Sup.1962); Oxford Development Co. v. Eppes, 422 S.W.2d 583 (Tex.Civ.App.—Corpus Christi 1967, no writ); 4 McDonald Texas Civil Practice § 16.10 (1971). Further, in considering the sufficiency of the evidence in support of presumed findings, we must construe the evidence in the light most favorable to the judgment and disregard all evidence to the contrary indulging every legitimate conclusion which tends to uphold the judgment. Bradshaw v. Holmes, 246 S.W.2d 296, 297 (Tex.Civ.App.—Amarillo 1951, writ ref d n.r.e.).

By appealing on such record appellants assume the burden of pointing out undisputed facts negating one or more presumed findings essential to the validity of the judgment or of pointing out the absence of evidence to support such findings. Threet v. Texas Employers’ Insurance Ass’n, 516 S.W.2d 276 (Tex.Civ.App.—Tyler 1974, no writ); Gibson v. Henderson, 136 S.W.2d 634 (Tex.Civ.App.—Galveston 1940, no writ); Hart v. Huie, 15 S.W.2d 654 (Tex. Civ.App.—San Antonio 1929, writ dism’d).

Contractor and Surety by their seventh and eighth points of error, contend the court’s conclusion that Subcontractor’s work was performed in a good and workmanlike manner is not supported by sufficient evidence and that this decision erroneously prevented certain offsets. By their ninth point of error they complain that the trial court’s refusal to grant an offset in the judgment was error because Subcontractor failed to perform work on time. Thus the judgment was against the great weight and preponderance of the evidence. We do not agree. We have had no undisputed facts pointed out to us nor have we been shown a lack of evidence to support the trial court’s conclusion. Contractor’s and Surety’s points seven, eight and nine are overruled.

Contractor and Surety contend in their second point of error that the trial court erred in entering a judgment which awarded attorney’s fees in favor of both Materialman and Subcontractor because they both sued Contractor and Surety for the same debt. We find there was evidence to support the trial court’s implied finding that Materialman and Subcontractor were not suing for the same debt. Thus, this second point is overruled.

In their first point of error, Contractor and Surety complain that the trial court erred in granting Materialman the $5,843.47 judgment against them because Material-man failed to comply with the notice requirements of Article 5453 § 2b(l) as to $1,651.19 of the entire $5,843.47 judgment granted. In this connection, their contention is apparent from an inspection of Article 5472d § 4 which forms the basis of Materialman’s claim. It states that there are two ways in which to perfect a claim under its terms:

“4. A claim to be enforceable against the bond may be perfected either in the manner prescribed for fixing and securing a lien by Article 5453 hereof, or .
a. By giving to the original contractor all applicable notices of claims required by Article 5453; and in addition thereto, by giving to the corporate surety, in lieu of to the owner, all notices therein required to be given to the owner;

Thus, in either case, the requirements of Article 5453 must be met to perfect a claim. For purposes of Article 5453, Materialman would be classified as a subcontractor under Article 5452 § 2f which provides:

“A subcontractor is any person or persons, firm or corporation who has furnished labor or materials or both as defined above to fulfill an obligation to an original contractor or to a subcontractor to perform all or part of the work required by the original contract. . .”

Further, because no retainage is involved here, Article 5453 § 2b(l) is the notice provision which would apply in this case. It provides in pertinent parts:

“2. If the claimant for such lien is other than an original contractor, such claim shall not be valid or enforceable unless the claimant shall also have complied with the applicable notice requirements hereafter set forth which shall be conditions precedent to the validity of such claims:
* ⅜ * ⅜! ⅜ ⅝
b. Excepting instances of retainages for which notices have been given in accordance with the preceding subpara-graph, the claimant shall give the applicable notice or notices described, as follows:
(1) Where the claim consists of a lien claim arising from a debt incurred by a subcontractor, the claimant shall give written notice of the unpaid balance of such claim to the original contractor not later than thirty-six (36) days after the tenth (10th) day of the month next following each month in which claimant’s labor was done or performed in whole or in part or his material delivered in whole or in part . . . .”

(Emphasis supplied.)

Materialman admitted at trial and in its brief that written notice was not sent to Contractor until April 17, 1975. Applying the above formula to the facts of this case, the written notice of April 17 was sufficient to perfect the claim for only the labor and materials delivered after March 1, 1975. As a result, Contractor and Surety contend that as a matter of law the portion of the trial court’s $5,843.47 judgment which represented the labor and materials delivered prior to March 1, 1977, i. e., $1,651.19 in value, should be subtracted from the judgment.

Materialman, on the other hand, submits that Contractor and Owner had actual notice of Subcontractor’s debt to Materialman as early as February of 1975, and that because Contractor and Surety were not prejudiced this actual notice was sufficient to perfect its claim against the Article 5472d surety bond.

Materialman cites Hunt Developers, Inc. v. Western Steel Company, 409 S.W.2d 443 (Tex.Civ.App.—Corpus Christi 1966, no writ) as its only authority. We find Hunt not controlling in the instant case. Hunt did not hold that notice may be waived entirely or that actual notice suffices where written notice is required. Hunt, rather, concerned itself with the content of the notice sent; i. e., that a warning is not required as a part of the notice which perfects a materialman’s lien under Article 5469. We therein stated that the legislature did not intend that “Materialmen should lose their liens through the technicalities of a warning where the owner was not misled to his prejudice,” but this legislative policy of liberal construction does not control in those cases where the legislature has mandated certain requirements for perfecting a surety bond claim in clear unequivocal terms. See Goldman v. Torres, 161 Tex. 437, 341 S.W.2d 154 (1960); Conn, Sherrod & Co. v. Tri-Elec. Supply Co., 535 S.W.2d 31 (Tex.Civ.App.—Tyler 1976, writ ref’d n.r.e.).

A case dealing with this issue, American Indem. Co. v. Da-Col Paint Manufacturing Co., 508 S.W.2d 944, 949 (Tex.Civ. App.—Dallas) ref’d on other grounds, 517 S.W.2d 270 (Tex.Sup.1974) stated: We hold that, timely written notice is a necessary condition precedent to perfecting a claim under Article 5472d § 4b. Stone Fort Nat Bank v. Elliott Elec. Supply, 548 S.W.2d 441 (Tex.Civ.App.—Tyler 1977, writ ref’d n.r.e.); Anderson v. Clayton, 494 S.W.2d 650 (Tex.Civ.App.—Dallas 1973, no writ).

“We do not agree that constructive notice or even actual knowledge by the original contractor of the unpaid balance of the claim satisfies the requirement of the statute.”

Materialman asserts, alternatively, that if we find its notice to be insufficient, the trial court’s judgment for $5,843.47 in favor of Materialman against Contractor and Surety can be sustained on another theory; i. e., Materialman’s unappealed judgment against Subcontractor for $5,843.47 entitled it to not only ownership of all the proceeds of the $4,320.21 judgment Subcontractor recovered against Contractor and Surety but also to application of these same funds to all of Subcontractor’s debts to Materialman incurred prior to March 1, 1975, and to those debts accruing after March 1, 1975, to the extent of the remaining money on a first-in first-out basis. The remaining funds Materialman would recover directly from Contractor and Surety, i. e., $1,523.46. This would necessarily cover those materials and supplies furnished after March 1, 1975, where no notice problems are raised.

Necessarily implicit in Materialman’s argument is the following contention: that Materialman is legally entitled to all money Contractor and Surety pay to Subcontractor, and therefore Materialman is entitled to have a direct judgment against Contractor and Surety for this amount. Simply stated, Materialman attempts to justify a direct judgment because he might be able to recover that same amount indirectly. We do not agree with this reasoning.

Materialman cites no authority nor has this Court found any authority to support this contention. Moreover, such argument implies that Materialman has acquired a first priority to the funds which Contractor and Surety might pay to Subcontractor, notwithstanding possible claims of competing creditors not a party to this suit.

Accordingly, the trial court’s judgment against Contractor and Surety in favor of Materialman should be reformed and reduced by $1,651.19. Further, Contractor’s and Surety’s judgment over against Subcontractor should be reduced in like amount.

By their third point of error, Contractor and Surety assert that the trial court erred in failing to grant them indemnity against Subcontractor for the $2,000 attorney’s fee judgment to be paid to Mate-rialman. We sustain this contention.

Contractor and Surety cite Sigmond Rothschild Co. v. Moore, 166 S.W.2d 744 (Tex.Civ.App.—Beaumont 1942, writ ref’d w.o.m.) and Turner v. Turner, 369 S.W.2d 675 (Tex.Civ.App.—Waco 1963) rev’d in part on other grounds, 385 S.W.2d 230 (Tex.Sup.1964) to support their claim for indemnity. Subcontractor cites us to no authority to support its contention that Contractor and Surety are not entitled to judgment over against Subcontractor for attorneys fees. While Moore and Turner, supra, do not deal with an implied obligation of indemnity arising out of a contractual relationship, they do present a few general rules of indemnity; namely, that a right to indemnity may be implied by law or arise under a contract. See also 30 Tex. Jur.2d Indemnity § 8 (1962). Also, a party is entitled to be indemnified when exposed to liability for the wrongful act of another. Turner at 679.

In Felker v. Thomas, 83 S.W.2d 1055 (Tex.Civ.App.—El Paso 1935, no writ) -the court dealt with this issue of implied indemnification arising out of a contractual relationship on facts closely analogous to those of the instant case. In Felker, the accommodation signer of a note, that is, one who guarantees the payment of a note without consideration from the obligor of the note, was held to have a right to be indemnified by the obligor upon default on the note and subsequent judgment against the accommodation signer for the amount of the note. It follows that, in our case, Contractor and Surety, without consideration, acted as guarantors of the obligations of Subcontractor to his suppliers, much the same as did the accommodation signer of the note in Felker.

Accordingly, we hold that Contractor and Surety are entitled to judgment over against Subcontractor for the amount of the $2,000 attorney’s fee judgment, if paid, and the trial court judgment should be reformed to reflect this holding.

In their fourth point of error, Contractor and Surety claim that the trial court erred in granting attorney’s fees to both Subcontractor and Materialman because Contractor was entitled to withhold final payment to Subcontractor upon receiving notice from Materialman that its claim for materials supplied to Subcontractor remained unpaid. Contractor and Surety cite Youngblood, Mechanics and Materialman’s Liens in Texas, 26 Sw.L.J. 665, 706 (1972) and American Indem. Co. v. Dal-Col Paint Manufacturing Co., supra, to support their position. The only condition precedent stated in Article 5472d § 6 to recovery of attorney’s fees is a recovery made under the bond. And no exceptions, even for rightful withholding of funds, are listed. Point of error number four is overruled.

Contractor’s and Surety’s fifth point of error contends that the trial court erred in entering a judgment for attorney’s fees in favor of both Subcontractor and Material-man against Contractor and Surety, jointly and severally, because attorney’s fees are not recoverable against the principal of a Hardeman Act Bond, citing University State Bank v. Gifford-Hill Con. Corp., 431 S.W.2d 561 (Tex.Civ.App.—Fort Worth 1968, writ ref’d n.r.e.) which states at 568:

“The trial court’s judgment provides that attorney’s fees awarded to Rebar and to G. H. may be enforced by foreclosure of mechanic’s liens against the property of the owner and grants the materialmen recovery of attorney’s fees against Aetna. The fees are recoverable against Aetna under Sec. 6 of Art. 5472d, Vernon’s Ann. Civ.St., but not against the owner and general contractor because their written contracts contain no provisions for attorney’s fees. . . . ”

Contractor and Surety offer the above language to support their contention that as a matter of law a claimant on an Article 5472d bond cannot recover attorney’s fees from the general contractor unless the claimant has a contract which provides for the payment of attorney’s fees with the general contractor. We do not interpret Article 5472d or the above cited case to comport with this proposed interpretation.

The above language in Gifford-Hili is unclear as to which written contracts the court was referring. We can only conjecture that these contracts were the owner’s and general contractor’s contract which is required to be filed with the bond pursuant to Article 5472d .§ 2 or possibly an indemnity agreement among the owner, general contractor and surety. We find no indication from the language used that the court was referring to a contract between the materialmen and both the general contractor and owner, as Contractor contends.

Assuming, arguendo, that the contract referred to was the owner’s and general contractor’s written contracts, filed with the bond, the court appears to hold that unless there is a provision in owner’s and general contractor’s contract providing for attorney’s fees for materialmen, none can be recovered from the owner or general contractor.

The liability of the owner for attorney’s fees is not before us. We do not find, though, that Article 5472d § 6 was intended to allow recovery of attorney’s fees from only the surety. This result would be contrary to the nature of the principal-surety relationship; i. e., a surety is one who agrees to be responsible for the debt of another. 53 Tex.Jur.2d § 1 (1964); First Nat. Bank v. Alexander, 4 S.W.2d 298 (Tex. Civ.App.—Amarillo 1928, writ dism’d). Unless a judgment is also taken against the principal, the surety will have no rights to which it can be subrogated in order that it might recover the attorney’s fees paid. See Tex.Bus.Comm.Code Ann. § 34.04 (1968).

Moreover, in Campbell Brothers, Inc. v. General Electric Sup. Co., 383 S.W.2d 61 (Tex.Civ.App.—Dallas 1964, writ ref’d n.r.e.) the Court recognized the trial court’s award of attorney’s fees against both the general contractor and the surety pursuant to Article 5472d without mention of a contractual provision. In addition, a careful reading of Article 5472d § 6 discloses no requirement of a contractual agreement for a claimant to recover attorney’s fees from both the general contractor and the surety.

Finally, Rule 31, T.R.C.P. (1967) provides: “No surety shall be sued unless his principal is joined with him, or unless judgment has previously been rendered against his principal, except in cases otherwise provided for in the law and these rules.”

The express language of Article 5472d § 6 uses the terms principal and surety, and we find no legislative intention to limit recovery of Article 5472d § 6 attorney’s fees to only the surety and those claimants with a contractual relation to the general contractor. Appellants’ fifth point is overruled.

Contractor and Surety assert in their sixth point of error that the trial court erred in entering a judgment in favor of Subcontractor for extra work which Contractor did not approve in writing, as required by Contractor’s contract with Subcontractor.

The provision referred to provides:

“Any alteration or deviation from above specifications involving extra costs, will be executed only upon written orders, and will become an extra charge over and above the estimate.”

Generally, a provision in a construction contract providing that any alterations or deviations must be executed in writing is binding, and there can be no recovery unless the writing requirement is met. State v. Martin Bros., 138 Tex. 505, 160 S.W.2d 58 (1942); D. H. Overmyer Co. v. Harbison, 453 S.W.2d 368 (Tex.Civ.App.—El Paso 1970, no writ); Stave v. F & C Engineering Company, 438 S.W.2d 647 (Tex.Civ.App.—Houston [14th Dist.] 1969, writ ref’d n.r.e.). However, such a provision can be waived by the actions and conduct of the parties. Mood v. Methodist Episcopal Church South, of Cisco, 296 S.W. 506 (Tex.Comm’n App.1927, holding approved); Travis-Williamson County Water C. & I. Dist. v. Page, 358 S.W.2d 158 (Tex. Civ.App.—Austin 1962), rev’d in part on other grounds, 367 S.W.2d 307 (Tex.Sup. 1963); Housing Authority of City of Dallas v. Hubbell, 325 S.W.2d 880 (Tex.Civ.App.—Dallas 1959, writ ref’d n.r.e.).

As we have heretofore noted, where no findings of fact or conclusions of law were brought forward we can sustain the trial court’s judgment on any theory which is raised by the pleadings and supported by the evidence. We hold, therefore, that the trial court was justified in granting the extras to Subcontractor under the theory that Contractor waived its right to enforce the contract’s writing requirement and that, consequently, Subcontractor was entitled to recover his extras under the theory of quantum meruit as we will demonstrate.

Though we have been unable to find any pleadings by Subcontractor using the specific term “waiver,” we find that the general allegations seeking pay for extra work, without objections, were sufficient to give notice of waiver. Travis-Williamson County Water C. & I. Dist. v. Page, supra.

The general rule as to implied waiver is aptly stated in Lewis v. Smith, 198 S.W.2d 598, 601 (Tex.Civ.App.—Fort Worth 1946, writ dism’d):

“. . .In the absence of an express renunciation of a known right, a waiver will not be presumed or implied contrary to the intention of the party whose rights would be injuriously affected thereby, unless by his conduct the opposite party has been misled to his prejudice into an honest belief that such waiver was intended or assented to. . . . ”

See also, City of Wichita Falls v. Bruner, 191 S.W.2d 912 (Tex.Civ.App.—Forth Worth 1945, no writ).

We find there is evidence to support the trial court’s implied conclusion that Subcontractor was led into an honest belief that the writing requirement had been waived with respect to the connection of the two additional “Malsbury” units. Not only did Contractor itself, in conjunction with Owner, manifest its assent to the extra work by ordering, delivering and putting into position the extra “Malsbury” units and providing written instruction booklets for installation, but also Mr. Cannul, the construction superintendent, specifically requested Subcontractor to install them while promising him that he would be paid extra for the installation. These facts show that a reasonable man would believe he would be paid notwithstanding a writing requirement. See 2 A.L.R.3d 620, 661-66 (1965). Accordingly, we find the trial court properly held that Subcontractor recover for extra work.

By crosspoints, Subcontractor and Materialman contend that the trial court abused its discretion in denying both Subcontractor’s and Materialman’s motions to reopen testimony so as to present evidence supporting their claim for attorney’s fees on appeal and that the Court of Civil Appeals should order the granting of reasonable attorney’s fees upon appeal. We find no abuse of discretion.

As to their second contention, a Court of Civil Appeals may not initiate an award for attorney’s fees, since this would be the exercise of original rather than appellate jurisdiction. International Security Life Insurance Co. v. Spray, 468 S.W.2d 347 (Tex.Sup.1971). As to their first contention, the award of attorney’s fees is a fact issue which must be passed upon by the trial court. International Security Life Insurance Co. v. Spray, supra. Moreover, a trial court’s awarding attorney’s fees under Article 5472d is discretionary and not mandatory. See also Olivares v. Porter Poultry & Egg Company, 523 S.W.2d 726 (Tex.Civ. App.—San Antonio 1975, no writ), Bernard v. Bernard, 491 S.W.2d 222 (Tex.Civ.App.—Houston [1st Dist.] 1973, no writ). As a result, the trial court’s refusal in our case to reopen the evidence as to reasonable attorney’s fees on appeal was tantamount to his refusal to allow attorney’s fees for the appeal. Schwartz v. Jacob, 394 S.W.2d 15 (Tex.Civ.App.—Houston [1st Dist.] 1965, writ ref’d n.r.e.)

There is conferred upon us the power to modify the trial court’s judgment and to render such judgment against the appellants as should have been rendered by the court below. Rule 435, T.R.C.P. Therefore the trial court’s judgment is reformed to provide that judgment against Contractor and Surety in favor of Materialman be reduced by $1,651.19, representing the amount not subject to timely notice by Ma-terialman; that Contractor’s and Surety’s judgment over against Subcontractor be reduced by the same amount; and that Contractor’s and Surety’s judgment over against Subcontractor be increased by $2,000.00, representing Materialman’s attorney’s fees.

As reformed, the judgment of the trial court is affirmed.

NYE, C. J., not participating.

      . All statutory references are to Vernon’s Civ. Stats.Ann. unless otherwise noted.


source: Caselaw Access Project

author: RALEIGH BROWN, Justice.

license: Public Domain

text:
    Mary Sunshine COOK et al., Appellants, v. Billy J. HUDSON et ux., Appellees.
    No. 5086.
    Court of Civil Appeals of Texas, Eastland.
    Nov. 3, 1977.
    Rehearing Denied Dec. 8, 1977.

      George D. Gordon, Baggett, Kirk, Gordon & Hodge, Houston, for appellants.
    T. L. Rees, Thompson & Rees, Colorado City, for appellees.
   RALEIGH BROWN, Justice.

Appellees seek to affirm this case on certificate in accordance with Rule 387, T.R. C.P.

For determination is the issue whether a motion for an extension of time to file “statement of facts” supports a request for an extension of time to file the transcript.

The record reflects that judgment was entered in the trial court on April 15, 1977. Notice of appeal was filed on April 22,1977. Appellants have not filed in this court either a transcript of the record or a motion for an extension of time to file the transcript within the period of time as required by Rules 386 and 21c, T.R.C.P.

Appellants timely filed a motion for an extension of time to file “statement of facts” and concede that the motion is limited to a request for an extension of time to file the “statement of facts”. Appellants contend, however, that because reasonable explanation was shown why the statement of facts would not be timely filed, they have complied with the requisites of Rules 386 and 21c, T.R.C.P., with respect to the late filing of the transcript even though no timely request was made. Appellants cite Embry v. Bel-Aire Corporation, 502 S.W.2d 543 (Tex.1973) in support of this position.

We interpret Embry to hold that good cause for late filing of the statement of facts is sufficient reason for the late filing of the transcript when the motion filed includes a request for an extension of time for late filing of both the statement of facts and the transcript. We conclude Embry does not eliminate the necessity for a request to be made in a proper motion for permission to late file the specific instrument sought to be filed. Appellants’ motion makes no request for an extension of time to file the transcript, therefore, Embry has no application. Appellants have failed to comply with Rules 386 and 21c, T.R.C.P.

Appellees’ motion to affirm on certificate is granted and the judgment of the trial court is affirmed as provided in Rule 387, T.R.C.P.

McCLOUD, C. J., not participating.


author: WALTER, Justice.

text:
    BRUNKEN TOYOTA, INC., et al., Appellants, v. The CITY OF LUBBOCK et al., Appellees.
    No. 5072.
    Court of Civil Appeals of Texas, Eastland.
    Nov. 3, 1977.
    Rehearing Denied Dec. 8, 1977.

      Aubrey J. Fouts, Key, Carr, Evans & Fouts, Lubbock, for appellants.
    Fred 0. Senter, Jr., City Atty., Charles L. Cobb, McWhorter, Cobb & Johnson, Lubbock, for appellees.
   WALTER, Justice.

Brunken Toyota, Inc., Carlsbad Auto Company, Inc. d/b/a Pollard Friendly Ford, Inc., and Don Crow, Trustee, filed suit against the City of Lubbock, Lubbock Independent School District, the Board of Equalization for the City and the School District, and John R. Brooks, Tax Assessor and Collector, seeking injunctive relief. Plaintiffs contended the ad valorem tax system adopted by the defendants in 1975 for the years 1975 and 1976 was arbitrary and capricious and in violation of Article 8, Section 1 of the Texas Constitution.

In a trial before the court without a jury, judgment was rendered for the defendants and the plaintiffs have appealed.

Appellees say the statement of facts given by appellants in their brief is correct and is adopted by them. We copy from appellants’ brief the following facts which we find are supported by the record:

“Plaintiffs went to trial on their Second Amended Original Petition in which they contend that the method and plan adopted by the Defendant Taxing Authorities for the year 1975 is arbitrary and capricious, resulting in the Plaintiffs’ properties being valued for tax purposes grossly in excess of the fair market value of the properties and further resulting in discriminatorily excessive assessments of the Plaintiffs’ properties as compared with comparable properties within the jurisdiction of the Taxing Authorities. The Plaintiffs attacked the selective reevaluation system adopted by the Taxing Authorities which involved re-evaluation of only certain segments of the community in 1975 without a corresponding adjustment in the values of other comparable properties in other segments of the community.
Plaintiffs contend that the application of the plan of taxation results in their paying a disproportionment share of the taxes levied by the Taxing Authorities in comparison with other taxpayers of the same class and that therefore the system of taxation adopted in 1975, which was also applied in 1976, is discriminatory, arbitrary, capricious and violates the Constitution and Statutes of the State of Texas.

This suit was brought prior to the closing of the tax rolls in 1975 and the plan under attack has not been put into effect as to the Plaintiffs’ properties for either 1975 or 1976.

The Plaintiffs sought injunctive relief to prevent the Taxing Authorities from putting the plan of taxation into effect as to their properties for 1975 and 1976 and they sought a mandatory injunction requiring the Defendants to reassess their property on a basis of equality and uniformity with other taxpayers in accordance with the Constitution and Laws of the State of Texas for 1975 and requiring the Defendants to accept the rendered values of the Plaintiffs on the properties as the assessed value for the year 1976.

The Defendants by their First Amended Original Answer denied the allegations of the Plaintiffs and contended that they had adopted a continuing program of reevaluation of properties in good faith and with available personnel whereby a certain section of the taxing units is re-evaluated on an annual basis and in rotation without discrimination. The Defendants contend that they made an honest effort to equalize all properties which time, ability and circumstances would permit and they denied that any of the properties of Plaintiffs were valued in excess of their market value for purposes of taxation.

The case was tried to the Court resulting in a judgment favorable to the Defendant Taxing Authorities on October 21, 1976, based upon findings of fact and conclusions of law contained in the judgment and additional findings of fact and conclusions of law in response to the requests of the Plaintiffs. The Plaintiffs have duly perfected their appeal from such judgment to this Court.

Appellants believe that a brief review of the tax evaluation and assessment system adopted by the Taxing Authorities prior to the years in controversy is important to an understanding of how the system which the Appellants contend is illegal came into being in 1975.

In 1965 an outside appraisal firm was engaged by the Taxing Authorities to reappraise the entire City and School district. This firm established a principle which has been consistently followed since that time of using 90% of the market value of property as the full appraised value for tax purposes. The assessment upon which the actual tax is based is calculated on the basis of sixty-six and two-thirds percent (66⅜%) of the appraised value, or sixty percent (60%) of the market value. At the same time that this basic system was established in 1965, a policy or program was adopted under which it was intended that there would be reappraisals of all property in the jurisdictions each five (5) years. By 1967, because of rapid increases in market value arising from inflation, it was determined by the Taxing Authorities that they could not wait five (5) years to reappraise property for tax purposes.
In 1968, for the first time, a plan was adopted by the Taxing Authorities under which the City was divided into five (5) zones with the intent that a single zone would be reappraised each year for tax purposes over a five-year cycle. This represented a new concept of zoning reappraisal in Lubbock. The first section to be reappraised under the new concept was southwest Lubbock.”

John R. Brooks, Tax Assessor and Collector for the City of Lubbock, testified substantially as follows:

I assess and collect all taxes for the City of Lubbock and Lubbock Independent School District. My office recognizes the starting point for ad valorem taxes is to determine the fair market value of property. We have an interim value that we call the full appraised value which was established in 1965 by an outside appraisal firm. This interim tax office appraised value was set at 90% of fair market value. We have used this standard since 1965. We then assess at 66⅜% of the full appraised value.
In 1968, we had the City divided into five zones and it was to be a five year cycle. The first section reappraised in 1968 was the southwest part of the city.
In 1974, in preparation for the year 1975, we made some changes in the manner in which we approached the reappraised process.
We adopted an appraisal or cost manual that was prepared by Mr. Griggs. Px 1 is a copy of the cost manual. I believe the manual deals with construction costs based on 1975 costs.
In 1974, we rezoned the City into four zones.

Appellants contend the cycle reassessment policy of the appellees and their formula, method and system of assessment adopted for the years 1975 and 1976 are invalid, arbitrary and capricious.

Although the issue has not been passed upon in Texas, other jurisdictions have approved cycle reassessment programs. An early United States Supreme Court case established the burden to be met by the party complaining of a reappraisal program. In deciding whether the plaintiff in error had been denied equal protection, the court said to support a claim of discrimination, it must be shown there was an “intentional” violation of the principle of uniformity by the Taxing Authorities. Sunday Lake Iron Co. v. Wakefield, 247 U.S. 350, 38 S.Ct. 495, 62 L.Ed. 1154 (1918).

Facts similar to the instant case were considered by the Alabama Supreme Court in Hamilton v. Adkins, 250 Ala. 557, 35 So.2d 183 (1948). The board of equalization had developed a four-year systematic plan of review and revision of assessments. The Alabama Constitution’s uniformity requirements were similar to those found in the Texas Constitution. The complainants alleged inequality resulted in their property valuations which increased while properties in other parts of the county were not increased. In upholding this four-year revaluation plan, the Supreme Court of Alabama said:

“In short there must be a systematic and intentional discrimination before the State constitution is violated.”

In finding no fraud or evil intent on the part of the board of equalization, the court pointed out that mere inequality in valuation does not contravene Alabama constitutional provisions. Hamilton, supra.

It is well settled in Texas and other jurisdictions that exact uniformity and equality of taxation is virtually impossible to achieve and an unattainable ideal. State v. Whittenburg, 265 S.W.2d 569 (Tex.1954); Briscoe Ranches, Inc. v. Eagle Pass Independent School District, 439 S.W.2d 118 (Tex.Civ. App.—San Antonio 1969, writ ref. n.r.e.); Wild Goose Country Club v. Butte County, 60 Cal.App. 339, 212 P. 711 (1923).

New Mexico has a constitutional provision much like the Texas Constitution requiring equal and uniform taxes. Taxpayers complained the equal and uniform language in the Constitution had been violated when only 20% of the tax equalization program had been completed in a single year. The Supreme Court of New Mexico upheld the program indicating the record failed to demonstrate any intentional or systematic discrimination. Skinner v. New Mexico State Tax Commission, 66 N.M. 221, 345 P.2d 750 (1959).

Citing Hamilton, supra, and Skinner, supra, the Supreme Court of Washington reemphasized the importance of the Sunday Lake, supra, decision:

“ . . . state courts which have considered cyclical revaluation programs have generally found them to be compatible with constitutional equal protection and uniformity provisions, provided they be carried out systematically and without intentional discrimination.” Carkonen v. Williams, 76 Wash.2d 617, 458 P.2d 280 (1969).

It is well settled in this State when a board of equalization assesses property for tax purposes, it is exercising a quasi-judicial function. State v. Houser, 138 Tex. 28, 156 S.W.2d 968 (1941). In exercising this function, a strong presumption exists in favor of the actions taken by the board that it acted in good faith. Pierce v. City of Jacksonville, 403 S.W.2d 512 (Tex.Civ.App.—Tyler 1968, writ ref. n.r.e.).

We find no merit in appellants’ contention the evidence conclusively establishes they have shown substantial injury by comparison of the assessed values of comparable property owners of the same class in zones other than Zone 1 with the assessed value applied to plaintiffs’ property.

In City of Arlington v. Cannon, 153 Tex. 566, 271 S.W.2d 414 (1954), it is said:

“The Board of Equalization did not follow the statutory mandates for arriving at the value of property. It ignored market value as the basis for valuation. Its procedures in this respect were wholly unlawful and fundamentally wrong. It is now settled, however, that to obtain relief from taxes arrived at through the use of an arbitrary, illegal and fundamentally erroneous plan of valuation, the taxpayer must show substantial injury. Druesdow v. Baker, Tex.Com;App., 229 S.W. 493, affirmed Baker v. Druesdow, 263 U.S. 137, 44 S.Ct. 40, 68 L.Ed. 212; Rowland v. City of Tyler, Tex.Com.App., 5 S.W.2d 756; Lubbock Hotel Co. v. Lubbock Ind. School Dist., Tex.Civ.App., 85 S.W.2d 776, no writ history. We had occasion to write at some length on the subject in State v. Whittenburg, supra, and what was said there need not be repeated here.”

In City of Orange, Texas v. Levingston Shipbuilding Company, 258 F.2d 240 (5th Cir. 1958), it is said:

“If there is one thing made plain by the contemporary authoritative decisions of the Texas Courts and especially that of Montgomery County v. Humble, [Tex.Civ. App., 245 S.W.2d 326] supra, it is that when taxpayers undertake to establish invalidity either from excessiveness or inequality, it is not enough to take values fixed by the taxing authorities. If comparative values are relevant, either to establish excessiveness, inequality, or as here to show the dollar impact of omissions of property from the tax roll, the actual values must be established in a traditional way.
. It is merely an application of the approach consistently laid down that no matter how illegal the assessment, no matter how much it violates the State Constitutional pattern, the only relief of a taxpayer defending delinquent tax suit is to show in dollars that he is worse off. Consequently, Taxpayer failed in meeting the burden imposed by the Texas law

We have considered all of appellants’ points and find no merit in them. They are overruled.

The judgment is affirmed.


author: REYNOLDS, Justice.

text:
    Walter DITTBERNER, Appellant, v. C. H. BELL and Monty C. Bell, Appellees.
    No. 8821.
    Court of Civil Appeals of Texas, Amarillo.
    Nov. 7, 1977.
    Rehearing Denied Nov. 28, 1977.

      Folley, Snodgrass & Calhoun, O. M. Calhoun, Amarillo, for appellant.
    Gibson, Ochsner, Adkins, Harlan & Han-kins, W. P. Sturdivant, Amarillo, for appel-lee C. H. Bell.
   REYNOLDS, Justice.

The trial court rendered judgment for the payee-holder of a promissory note against a co-maker, adjudging that the co-maker take nothing in his actions based on fraud, either for recovery of monetary damages or in defense of liability on the note, or for judgment over against the other co-maker. On the appellate record, the co-maker waived a finding on an essential element of fraud that was not established as a matter of law, but no challenge has been made to his plea for judgment over against the other comaker. Reformed and affirmed.

C. H. Bell contracted to sell his Panhandle, Texas, automobile and farm equipment business to his son, Monty G. Bell, and to Walter Dittberner, accepting their promissory note as a part of the consideration. Thereafter, Monty managed the partnership business and Dittberner assumed the role of a silent partner. Some three years later, the business failed.

Dittberner filed this suit against C. H. Bell and Monty C. Bell, alleging that he was induced to enter into the contract by the fraudulent representations of the Bells and was entitled to recover his resulting monetary damages. C. H. Bell denied Ditt-berner’s allegations, and cross-actioned to recover from Dittberner the principal balance and accrued interest due on, together with the attorney’s fees provided in, the promissory note. Dittberner responded that if he was liable on the note, he should have judgment over against Monty for the amount of his adjudged liability. Monty did not file a formal answer, but, during the trial, he orally entered his appearance and general denial.

Trial was before a jury. Dittberner was the only witness. In brief, his testimony was that C. H. Bell stated that: he wanted to retire from the business and wanted someone to be a silent partner with Monty; the business had been financially successful under the partial management of Monty for the past three or four years; Monty “was capable of managing” the business; and under Monty’s management, the business would pay for itself. Relying on and being induced by these representations, which C. H. Bell knew were false and without which he (Dittberner) would not have entered into the transaction, he, together with Monty, executed the conditional sales contract for the purchase of the business for $70,000. Dittberner paid $29,000 cash to C. H. Bell, who gave Monty credit for $10,000, executed with Monty a $31,000 promissory note payable to C. H. Bell and, during Monty’s management of the partnership business, expended over $18,000 net to pay overdrafts and an outstanding check given by Monty. During his management, Monty overdrew his business account by more than $16,000. After the business failed, C. H. Bell told Dittberner that “one reason he (C. H. Bell) wanted to get out of business ... he never could trust Monty, that Monty was not a capable operator or manager.”

During his cross-examination, Dittberner confirmed that the contract recited that Dittberner had investigated the property, was relying on his own judgment, and does not “rely on the representation of anyone,” which, he admitted, included C. H. Bell. To the question, “ . . . you have no knowledge of Mr. Q. H. Bell ever telling you one thing that was not true, correct?”, Dittberner answered, “No, sir.” On re-direct following a recess, Dittberner was permitted to answer, over objection that he had talked to counsel and this was an attempt to impeach, that after the business failed, he found out that C. H. Bell’s representations were not true.

At the close of the evidence, C. H. Bell moved for an instructed verdict. The motion was granted to the extent that a verdict was instructed in favor of C. H. Bell and against Dittberner on. the note, conditioned on the failure of the jury to find the necessary elements of fraud to defeat the claim on the note.

Answering the six special issues submitted in the charge of the court, the jury found that: (1) C. H. Bell represented to Dittberner that Monty Bell was a competent manager of the business; (2) the representation was made as a material inducement to Dittberner to execute the note and contract; (3) C. H. Bell made the representation as a statement of fact; (4) the representation was false; (5) Dittberner relied on said representation; and (6) Dittberner would not have executed the note and contract had the representation not been made. Dittberner made no request for the submission of any other issues, but C. H. Bell objected to the charge for, among other reasons, the failure to submit an issue inquiring whether he knew the charged representation was false at the time he made it.

C. H. Bell moved for judgment by a written motion entitled “MOTION FOR JUDGMENT NON OBSTANTE VEREDICTO.” The court, designating the motion “a motion that judgment be entered in his (C. H. Bell’s) favor notwithstanding the verdict,” granted the motion without indicating which of its grounds was found valid. Judgment was rendered decreeing that Dittberner take nothing and that C. H. Bell recover from Dittberner on the promissory note in the total sum of $32,084.16, with interest at the rate of ten (10%) per cent per annum from 30 September 1976 until paid, and all costs.

Appealing, Dittberner asserts that the court erroneously granted the motion for, and rendered, judgment notwithstanding the verdict, and contends that he merits judgment on the jury’s verdict. His premise is that the verdict coupled with his damages, which were established as a matter of law, entitles him to judgment; and, if any necessary element of fraud was un-submitted to the jury, it was established as a matter of law. C. H. Bell has joined these issues on appeal. Candidly, Dittber-ner does not challenge the right of C. H. Bell to recover on the promissory note if there was no fraud; but, in that event, Dittberner asserts that the court erred in failing to grant him judgment against Monty C. Bell. Monty has not responded.

To properly posture the appeal, it first is necessary to determine within the scope of the Rules of Civil Procedure the nature of C. H. Bell’s motion, which the parties regard as being one for judgment non obstante veredicto, and of the judgment, which the parties refer to as one rendered notwithstanding the verdict. The nature of a motion is determined, not by its caption but by its substance, which is gleaned from the body and the prayer of the instrument. Mercer v. Band, 454 S.W.2d 833, 835-36 (Tex.Civ.App.—Houston [14th Dist.] 1970, no writ). A judgment is construed as a whole, Rodgers v. Williamson, 489 S.W.2d 558, 560 (Tex.1973), like other instruments. Permian Oil Co. v. Smith, 129 Tex. 413, 107 S.W.2d 564, 567 (1937).

The authority for a motion seeking judgment non obstante veredicto, and for the judgment rendered pursuant thereto, is Rule 301. The rule reads, in part:

. Provided, that upon motion and reasonable notice the court may render judgment non obstante veredicto if a directed verdict would have been proper, and provided further that the court may, upon like motion and notice, disregard any Special Issue Jury Finding that has no support in the evidence.

Under the rule, a court cannot render judgment non obstante veredicto except upon a motion therefor. Wilton v. Johnson, 278 S.W.2d 488, 489 (Tex.Civ.App.—Amarillo 1954, no writ). Accord, Hines v. Parks, 128 Tex. 289, 96 S.W.2d 970, 972 (1936), construing the same language in Vernon’s Ann. Civ.St. art. 2211, the source of Rule 301.

Implicit in the rule is the principle that a motion for judgment non obstante veredicto lies only if a directed verdict would have been proper. And a directed verdict is warranted only when the evidence is such that no other verdict can be rendered and the winning party is entitled, as a matter of law, to judgment. White v. White, 141 Tex. 328, 172 S.W.2d 295, 296 (1943). It follows that a directed verdict is not proper where the pleadings and the evidence raise factual issues for the jury’s determination. Hicks v. Matthews, 153 Tex. 177, 266 S.W.2d 846, 849 (1954). Thus, by definition, a motion for judgment non obstante veredicto, and the judgment rendered pursuant to it, must be predicated on either the presence of conclusive evidence which entitles the moving party to judgment as a matter of law or on the absence of any evidence of probative force to support an issue that the opposing party must prove in order to prevail.

Tested by these standards, C. H. Bell’s motion is not one seeking judgment non obstante veredicto. Although entitled as such, the motion has no assertions that any issue submitted to the jury is without support in the evidence, or that any fact was conclusively established contrary to the jury’s finding, or even that any finding should be disregarded. There is no prayer for judgment non obstante veredicto.

Rather, the substance of the motion is that, given the previously instructed verdict on the note and the verdict of the jury, C. H. Bell has a right to judgment because Dittberner failed to request or obtain jury findings on, and thereby waived, the essential elements of fraud, both as a ground for recovery of damages and as a defense to the cross-action on the note. Mentioned as waived are the elements whether C. H. Bell knew the statement was false at the time it was made, whether an injury was the result of the statement, and a finding of damages. As a result, the motion was merely a motion for judgment and not a motion for judgment non obstante veredicto.

Absent a motion for judgment non obstante veredicto, there could be no judgment notwithstanding the verdict. While the judgment recites that the motion is for judgment notwithstanding the verdict and that it should be granted, the judgment has no provision common to a basis for judgment non obstante veredicto. Instead, it, after containing notations of the instructed verdict, return of the jury’s special verdict, and the granting of the motion, provides only that Dittberner take nothing and that C. H. Bell recover from Dittberner on the note. The judgment, therefore, is not a judgment non obstante veredicto.

It is in the light of the true nature of the motion and judgment that Dittberner⅛ points of error are considered. The first three points are that the court erroneously sustained C. H. Bell’s motion and rendered judgment because Dittberner was entitled to judgment on the verdict. Dittberner asserts that the verdict includes affirmative findings on all necessary elements of fraud, it being his position that knowledge of the falsity of a representation at the time it was made is not an essential element of fraud, either as a ground of recovery or as an affirmative defense; but, if it is, C. H. Bell’s knowledge of falsity was established as a matter of law. C. H. Bell adopts the opposite viewpoint.

Both parties cite authorities sustaining their diverse propositions, yet both initially rely upon, with quotations of different holdings from, Wilson v. Jones, 45 S.W.2d 572 (Tex. Comm’n App. 1932, holdings approved). In support of his position that there is no necessity for a finding that C. H. Bell knew his representation was false when he made it, Dittberner quotes the Wilson holding appearing at 575 in this language:

. The rule is further well established in this state that, where affirmative representations of fact are made and designed to be acted upon by another and he does so believing them to be true when they are false, one making the representations is liable, regardless of his knowledge of falsity or intent to deceive.

Countering that an affirmative finding of knowledge of falsity is a prerequisite to establish fraud, C. H. Bell quotes from the same authority this holding at 573:

The authorities announce the general rule that to constitute actionable fraud it must appear: (1) that a material representation was made; (2) that it was false; (3) that, when the speaker made it, he knew it was false or made it recklessly without any knowledge of its truth and as a positive assertion; (4) that he made it with the intention that it should be acted upon by the party; (5) that the party acted in reliance upon it; and (6) that he thereby suffered injury. The gist of an action based upon fraud is found in the fraud of defendant and damage to plaintiff. Each of these elements must be established with a reasonable degree of certainty, and the absence of any one of them will prevent a recovery.

In addressing the question, we assume that C. H. Bell’s representation was, in conformity with the jury’s finding, a statement of a present or pre-existing fact rather than, as C. H. Bell advocates, a mere opinion. We also grant that the Texas decisions on the question have been conflicting, but we must subscribe to our Supreme Court’s latest expressions on the question. Those expressions are that the element that the speaker knew his representation was false, or that he positively asserted it recklessly without any knowledge of its truth, is one of the necessary elements of fraud, whether as a ground of recovery, Stone v. Lawyers Title Insurance Corporation, 554 S.W.2d 183, 185 (Tex.1977), or as an affirmative defense. Oilwell Division, United States Steel Corporation v. Fryer, 493 S.W.2d 487, 490-91 (Tex.1973).

Both Stone and Fryer list as the elements of fraud the same six elements enumerated in Wilson v. Jones, supra, at 573, and cite that case as authority. Fryer speaks of them as “the necessary elements of fraud,” elliptically quoting from Wilson v. Jones, supra: “Each of these elements must be established . . ., and the absence of any one of them will prevent a recovery.” Stone refers to the six enumerations as the “correctly stated” elements of actionable fraud and, focusing on the question before us, details the evidence adduced to show, in response to the intermediate court’s holding that there was no evidence on the element, that it either lead to an inference of knowledge of falsity or raised a fact issue of whether the speaker recklessly made a statement as a positive assertion without knowledge of its truth.

As a consequence of these pronouncements, we hold that, within the framework of this appeal, Dittberner was required to either establish as a matter of law or secure a factual finding that C. H. Bell knew his representation was false at the time he made it. There was not, and Dittberner did not request, a jury finding on the element; he contends, instead, that it was affirmatively established as a matter of law.

Dittberner, the only witness, was an interested party. His testimony merely raised a factual issue of C. H. Bell’s knowledge of the falsity of the representation when it was made, unless it can be said that Dittberner’s testimony is clear, direct and positive on the issue and there are no circumstances in evidence tending to discredit or impeach it. Cochran v. Woolgrowers Central Storage Co., 140 Tex. 184, 166 S.W.2d 904, 908 (1942). We have sifted all of the evidence, the essence of which is recited above. Although not contradicted by any other witness, Dittberner’s testimony contains incompatible assertions which prevent it from being clear, direct and positive on the issue. The testimony, therefore, does not meet the test of establishing the affirmative of the element as a matter of law, and Dittberner was relegated to securing a favorable finding on the factual issue.

In a jury trial, each litigant has the legal right to have the jury pass upon the essential issues of fact raised by the pleadings and the evidence which are sufficient to form the basis of a judgment. Wichita Falls & Oklahoma Ry. Co. v. Pepper, 134 Tex. 360, 135 S.W.2d 79, 85 (1940). Dittberner pleaded and produced evidence on the issue of C. H. Bell’s knowledge of the falsity of his representation; yet, despite the direction by Rule 277 for the court to submit the controlling issues raised by the pleadings and the evidence, the issue was omitted from the court’s charge. Dittber-ner made no request for the submission, or even any objection to the omission, of the issue. Rule 279 requires the party relying on the issue to request, on penalty of waiver for failure to request, the issue’s submission in substantially correct wording. Under the rule, waiver would not occur if the omitted issue is a component element of a ground of recovery or defense partially submitted and the issue is omitted without a request therefor by the party relying on it or an objection by the party opposing the issue. In that situation, the omitted jury issue is submitted to the trial court for resolution. Wilson v. Remmel Cattle Co., Inc., 542 S.W.2d 938, 942 (Tex.Civ.App.— Amarillo 1976, writ ref’d n. r. e.). Here, however, although he had no duty to do so, C. H. Bell objected to the omission of the issue, and his objection precluded any finding by the trial court on the element not submitted to the jury. Petroleum Anchor Equipment, Inc. v. Tyra, 419 S.W.2d 829, 834 (Tex.1967). Consequently, Dittberner waived one of the controlling issues upon which he relied for recovery and for defense and, by doing so, he has not met the burden placed on him by the law. Wichita Falls & Oklahoma Ry. Co. v. Pepper, supra, at 85.

When Dittberner failed to conclusively establish that C. H. Bell knew his representation was false when he made it, and waived a jury finding thereon, he foreclosed his cause of action for damages and his affirmative defense to liability on the note on the ground of fraud, and C. H. Bell became entitled to the judgment rendered. This result dictates the overruling of Ditt-berner’s first three points of error, and pre-termits a discussion of his next four points which submit that the judgment is not warranted by the other grounds advanced in C. H. Bell’s motion for judgment.

Dittberner’s eighth, and last, point of error is that the court erred in failing to render judgment in his favor against Monty, the co-maker of the note on which Ditt-berner has been held liable. He contends that on the record judgment over should be rendered as a matter of law.

Established is the execution of the note by Dittberner and Monty as co-makers and the amount of liability thereon. While each signer of a note is liable to the payee for the entire amount, V.T.C.A., Bus. & C. § 3.118(5), generally, as between two signers, each is liable for one-half of the amount. Beitel v. Beitel, 109 S.W.2d 345, 348 (Tex.Civ.App.—San Antonio 1937, writ dism’d). If, however, the co-obligors shared unequally in the consideration received out of the note, contribution may be prorated according to the benefits each received. Maresh v. Jennings, 38 S.W.2d 406, 407 (Tex.Civ.App.—Austin 1931, writ ref’d).

Dittberner’s brief contains factual statements of the record showing amounts which, mathematically computed, demonstrate that the consideration flowing from the execution of the note benefited Monty and Dittberner in proportions of 63.57% and 36.43%, respectively, and that, as between them, their proportionate liability for the amount of $32,084.16 now due on the note is $20,396.36 and $11,687.80, respectively. Monty has not filed a brief and Dittberner’s factual recitations of the record have not been otherwise answered or challenged. Under these circumstances, Rule 419 authorizes the acceptance of Dittberner’s statements as correctly stating the facts and the record in disposing of the point. Campbell v. Campbell, 411 S.W.2d 376, 378 (Tex.Civ. App.—Amarillo 1972, no writ).

Accordingly, the judgment is reformed to decree that Walter Dittberner do have and recover from Monty C. Bell all sums that Dittberner shall pay on the judgment in excess of $11,687.80 and the accrued interest on that sum, together with interest on the excess at the rate of nine (9%) per cent per annum from the date(s) of payment(s) until paid. Rule 434.

As reformed, the judgment of the trial court is affirmed.

      . All rules cited herein are the Texas Rules of Civil Procedure.

      . Illustratively, in Graves v. Hartford Accident & Indemnity Co., 138 Tex. 589, 161 S.W.2d 464, 466-67 (1942), the Supreme Court said, “ . . . (U)nder the law of this state . it is not an essential element of fraud that the party charged therewith . . must know of the falsity of the representation in question;” yet the Court listed in Stone v. Lawyers Tide Insurance Corporation, 554 S.W.2d 183, 185 (Tex.1977), and in Oilwell Division, United States Steel Corporation v. Fryer, 493 S.W.2d 487, 491 (Tex.1973), the element that the speaker knew his representation was false or he positively asserted it without knowledge of its truth as one of the necessary elements of fraud. Some Texas cases—e. g., Wilson v. Jones, 45 S.W.2d 572 (Tex. Comm’n App. 1932, holdings approved), and Harris v. Sanderson, 178 S.W.2d 315 (Tex.Civ.App.—Eastland 1944, writ ref d w. o. m.)—have marked a distinction between a false representation of fact and a false statement of opinion: given the other elements of fraud, the false factual representation is actionable without any knowledge of its falsity, but a false statement of opinion becomes actionable only if expressed on a matter susceptible of knowledge and is stated with knowledge of its falsity. Other cases have applied, apparently without distinction for the character of the statement, one rule or the other. See 25 Tex.Jur.2d Fraud and Deceit § 13.


author: NYE, Chief Justice.

text:
    Wallace P. WOODRUFF et al., Appellants, v. Lillie O. BRYANT et al., Appellees.
    No. 1210.
    Court of Civil Appeals of Texas, Corpus Christi.
    Nov. 10, 1977.
    Rehearing Denied Dec. 8, 1977.

      Richard B. Stone, Stone, Berryman & Giles, Corpus Christi, for appellants.
    Donald B. Dailey, Jr., Tinker & Dailey, Richard J. Hatch, Mahoney, Shaffer, Hatch & Layton, Corpus Christi, for appellees.
   OPINION

NYE, Chief Justice.

This is a partnership case. Plaintiffs and Defendant, Lillie Bryant, were all partners in a small business named “Flour Bluff Finance Company.” Plaintiffs brought suit against Mrs. Bryant for breach of her fiduciary duties not to engage in a similar competing business. Plaintiffs also sued Defendants, James C. Bryant and Harold Eas-ley, for enticing her to breach her fiduciary duties in forming and operating a similar business close to the Flour Bluff Finance Co. Mrs. Bryant cross-claimed for her partnership share of the partnership assets. Trial was to a jury on special issues. The jury answered the issues against Plaintiffs’ claims and for Mrs. Bryant on her cross-claims. The trial court entered a take nothing judgment as to the Plaintiffs and awarded Mrs. Bryant a $7,917.75 judgment representing her one-fourth interest in the partnership assets against the Plaintiffs on her cross-action. The Plaintiffs have duly perfected their appeal from this judgment.

Wallace Woodruff, W. B. Stanton and Charles Postel entered into a partnership business forming the Flour Bluff Finance Company. The company was to engage in a small unsecured loan business dealing primarily with loans between $5 — $100 in the Flour Bluff area of Corpus Christi. The company was regulated and licensed by the consumer credit commission under Article 5069-1.01 et seq., Tex.Rev.Civ.Stat.Ann. In March of 1969 Howard Barth purchased W. B. Stanton’s one-third interest in the partnership for $12,000.00 and Don Woodruff purchased Charles Postel’s one-third interest for $12,000.00. In June of 1969, the company hired Lillie Bryant to be the manager of the company. In November of 1969 Lillie Bryant was made a partner in the company; acquiring a one-fourth interest through the payment of $3,000.00 to each of the then partners.

In February, 1971 a dispute arose between Mrs. Bryant and Wallace Woodruff, the company’s attorney, over the policy of filing collection suits on the overdue accounts. A partnership meeting was held and a majority of the partners voted to continue the policy of filing suits on the overdue accounts. A couple of months later, Mrs. Bryant resigned as manager and tendered her one-fourth interest to the other partners for sale for $12,000.00. The partners took no action on Mrs. Bryant’s letter. Shortly thereafter she left her employment with the company. Mrs. Bryant continued to receive her share of the partnership profits however, even after leaving the company.

In early January, 1972 “Pay Day Loans” began business approximately 100 feet from Flour Bluff Finance Company, making the same type of loans as did Flour Bluff Finance Company. Pay Day Loans was owned by a partnership composed of James Bryant, Harold Easley and James Layton. It was managed by Lillie Bryant until the summer of 1973. Pay Day Loans was sold in November, 1975 and Flour Bluff Finance Company went out of business in March of 1976.

The original cause of action, which is the subject matter of this appeal, was filed in September of 1972. The Plaintiffs sought recovery from Mrs. Bryant, her husband, Mr. Bryant, and Pay Day Loans for breach of a partner’s fiduciary duty not to compete, for $75,000.00 in actual and punitive damages, and for a temporary injunction to prevent Lillie Bryant from working for Pay Day Loans. Mrs. Bryant answered the Plaintiffs’ claims with a general denial and a cross-action seeking to recover her monetary interest in the partnership. The Plaintiffs’ trial petition alleged a cause of action against both Bryants, Harold Easley’s widow and estate, and Pay Day Loans for unlawful competition and interference with contractual rights.

The jury, in response to the special issues submitted, found: 1) that Mrs. Bryant intended to dissolve the partnership on April 27, 1971; 2) that Mrs. Bryant ceased to be associated with Flour Bluff Finance Company prior to becoming associated with Pay Day Loans; 3) that Pay Day Loans was a competitor of Flour Bluff Finance Company from January 1, 1972 to November, 1975; that James Bryant (Issue No. 4) and Harold Easley (Issue No. 7) did not induce Mrs. Bryant to assist in forming and engaging in the business of Pay Day Loans (Special Issues No. 5, 6, 8 and 9 were not answered); that Flour Bluff Finance Company was not entitled to any compensation as actual (Issue No. 10) or punitive (Issue No. 11) damages from Pay Day Loans; and 12) that the reasonable net cash market value of Flour Bluff Finance Company partnership on July 27,1971 was $31,671.00. Based on these findings by the jury, the trial court entered the aforesaid judgment.

The first question presented by this appeal is whether or not the partnership between Mrs. Bryant, Wallace Wood-ruff, Don Woodruff and Howard Barth d/b/a Flour Bluff Finance Company was dissolved by Mrs. Bryant’s letter of April 27, 1971. The Uniform Partnership Act of Texas (Art. 6132a, et seq) discusses three entirely different concepts: “dissolution”; “winding up”; and “termination”. See McKellar v. Bracewell, 473 S.W.2d 542 (Tex. Civ.App.—Houston [1st Dist.] 1971, writ ref’d n. r. e.). Dissolution is defined as the change in the relationship of the partners caused by any partner ceasing to be associated in the carrying on of the partnership, as distinguished from the winding up of the business. See Art. 6132b § 29, Tex.Rev.Civ. Stat.Ann. (1970). Generally when a partnership is dissolved, the partnership continues during the period of winding up until all preexisting matters are terminated. See Art. 6132b § 30, Tex.Rev.Civ.Stat.Ann. (1970). Howell, Texas Practice, Vol. 19 § 182 (1973). Dissolution is an act that actually changes the legal relationship of the partnership, and has nothing to do with whether or not the partnership business is continuing or winding up. It is a technical legal concept, unlike the concept of dissolution in other areas, such as corporations. Causes of dissolution are set out in §§ 31 and 32 of the Partnership Act. The causes set out in § 31 are automatic and dissolution occurs immediately upon the happening of the specified event.

At common law a partner could dissolve the partnership by giving explicit notice to the other partners. Green v. Waco State Bank, 78 Tex. 2, 14 S.W. 253 (1890). Section 31 codifies this common law rule by providing that dissolution can be caused by the “express will” of any partner. But, dissolution does not necessarily terminate the partnership business. Even if the business is to be discontinued, the partnership continues to exist, at least for the limited purpose of winding up. Boyd v. Leasing Associates, Inc., 516 S.W.2d 485 (Tex.Civ.App.—Houston [1st Dist.] 1974, writ ref’d n. r. e.); Howell v. Bowden, 368 S.W .2d 842 (Tex.Civ.App.—Dallas 1963, writ ref’d n. r. e.). See § 30, Art. 6132b. It is only upon termination that the final partnership relationship ceases to exist.

Plaintiffs contend in effect that special issues one and two cannot form the basis of the $7,917.75 award to Lillie Bryant representing her partnership interest in Flour Bluff Finance Company because: 1) she failed to follow the dissolution procedures enumerated in the partnership agreement; 2) that there is no evidence and 3) there is insufficient evidence to support the answers to issues one and two. We agree with their third contention.

Plaintiffs argue that Bryant’s power to dissolve the partnership could only be exercised if she complied with these contractual dissolution procedures. This is not so. The Texas Uniform Partnership Act codifies the common law rule so that every partner has the inherent power to dissolve his partnership even though the partnership agreement might attempt to limit that partner’s right to dissolve the partnership. This would be true even though in some circumstances, the exercise of this right to dissolve might constitute a breach of the partnership agreement and render the dissolving partner liable for damages resulting from the breach. See Art. 6132b §§ 31, 32, 38, Tex.Rev.Civ.Stat.Ann. (1970); Collins v. Lewis, 283 S.W.2d 258 (Tex.Civ.App.—Galveston 1955, writ ref’d n. r. e.); Bluestein v. Davis, 86 Ill.App.2d 61, 230 N.E.2d 61 (1967); Hamilton, Texas Practice, Vol. 19 § 190, pp. 183-85 (1973).

Next, plaintiffs attack the jury’s findings in special issues one and two because there is no evidence or insufficient evidence to support the jury’s answers to these issues. In special issue one the jury found that Lillie Bryant intended to dissolve the partnership on April 27,1971; and in special issue two the jury found that Lillie Bryant’s association with Flour Bluff Finance Company ceased prior to her association with Pay Day Loans. A “no evidence” point is a question of law and our review requires us to consider only the evidence and inferences which support the questioned jury findings, disregarding all evidence and inferences to the contrary. Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.Sup.1965). Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 Texas L.Rev. 361, 362-63 (1960).

Lillie Bryant testified that in January or February 1971 she became dissatisfied with the partnership policy of filing suit on delinquent accounts. She discussed her dissatisfaction individually with the other partners and at a subsequent partnership meeting the other partners voted to continue the policy. On April 27, 1971 she wrote a letter to the other partners in which she stated that she was resigning as an employee of the partnership and was offering to sell her share in the partnership. She testified that she wrote the letter because she “wanted to get out of it.” Pay Day Loans opened for business on January 3, 1972, approximately six months after the time Lillie Bryant testified her involvement in the partnership operations of Flour Bluff Finance Company had ceased. We overrule the no evidence contentions.

In points of error 4 and 9, plaintiffs complain that the evidence in support of the jury’s findings in special issues one and two is “factually insufficient.” These factual sufficiency points require the Court of Civil Appeals, in exercise of its fact finding powers, to consider and weigh all of the probative evidence in the case and to set aside the verdict and remand the cause for a new trial if we sustain the points and conclude that the judgment complained of is wrong and unjust. In Re King’s Estate, 150 Tex. 662, 244 S.W.2d 660 (1951); Ruiz v. Flexonics, 517 S.W.2d 853 (Tex.Civ.App.—Corpus Christi 1974, writ ref’d n. r. e.).

The record indicates that Lillie Bryant was employed as “company manager” of Flour Bluff Finance Company for approximately six months before she purchased her one-fourth share in the partnership. At the time the partnership agreement was amended to add her as a partner and to designate her as “managing partner”, she retained her employee status as “company manager.” She testified that the reference to “by-laws” in her letter was a reference to the partnership agreement and that at the time she wrote the letter she had read article 11 of the agreement. Her letter notified the other partners that she was proceeding in accordance with article 11 of the partnership agreement. After her single communication by letter of April 27, 1971, Lillie Bryant took no further initiative to communicate with any of the partners regarding her offer to sell her one-fourth interest for $12,000.00. Lillie Bryant testified that she “hoped” she would hear from the other partners and that they would accept her $12,000.00 offer.

The partners made no written reply to her offer. Lillie Bryant testified that she assumed the partners had rejected her offer when they failed to respond. She admitted that she would have accepted $9,000.00 for her share but did not communicate this to any of the other partners. Wallace Wood-ruff, who assumed the duties of managing partner, testified that he tried to talk to Mrs. Bryant about the letter and the reasons for her wanting to leave as company manager, but she avoided him and refused to talk with him.

Lillie Bryant testified she knew the-requirements contained in Article 11 of the partnership agreement. She admitted that she did not follow through with the designated procedures even though her letter indicated she was acting in accordance with Article XI, nor did she ever tell the other partners that she wanted to dissolve or terminate the partnership.

The entire record contains overwhelming evidence that although Lillie Bryant discontinued her status as an employee and as managing partner, she maintained her partner status as a silent partner along with Howard Barth and Don Woodruff. Flour Bluff Finance Company from its inception had a managing partner and two or three silent partners who participated by voting only when management decisions were necessary. Wallace Woodruff, who assumed the responsibilities of managing partner, testified he did not discuss partnership business with either Howard Barth or Don Woodruff between July and December, 1971 and that Lillie Bryant was as active in partnership business as the other silent partners were during this period.

Lillie Bryant admitted that her cross-action in this suit was her first attempt to dissolve or terminate the Flour Bluff Finance Company partnership. In October 1971 she told Mr. Easley, a future partner of Pay Day Loans, that she was still a partner in Flour Bluff Finance Company and was still waiting to hear from the other partners concerning her sale offer. It was after this conversation that James Bryant, Mr. Easley, and Mr. Layton organized and became the partners of Pay Day Loans.

Lillie Bryant admitted that she did not become a partner of Pay Day Loans because she could not be a partner in two loan companies at the same time. She also admitted that as long as she retained her partnership interest in Flour Bluff Finance Company she thought her employment with Pay Day Loans would not violate the covenant not to compete contained in Article XIII of Flour Bluff Finance Company’s partnership agreement. Article XIII provides as follows:

“In the event one of the partners sells his interest in the partnership business, he hereby agrees not to compete or cater the loan business in Nueces County, Texas, for a period of five (5) years from date of sale of his interest.” (emphasis added)

She testified she was aware of this clause at the time Pay Day Loans was formed and thought that she would not violate its terms if she did not sell her partnership interest. She further testified that at the time of trial she was still a partner of Flour Bluff Finance Company and that she had not sold her interest in this partnership.

The record also indicates Lillie Bryant received Flour Bluff Finance Company’s profit and loss statements until January 1972; she reported Flour Bluff partnership income and loss on her tax returns until 1975; Flour Bluff partnership tax returns listed her as a partner through 1975; she received $500 in the Fall 1971 and $1,000 in February 1972 representing her share of profits in Flour Bluff Finance Company. We agree with plaintiffs’ statement that this evidence is not necessarily evidence that Lillie Bryant was involved in carrying on the partnership business of Flour Bluff Finance Company. We note, however, that she accepted the profit, tax benefits and company statements without protest or comment. This evidence coupled with the virtually uncontradicted testimony that she participated in the partnership business to the same extent as the other silent partners, that she considered herself a partner at the time of trial, and that she tried to circumvent the covenant not to compete by retaining her partnership share, all clearly show that she did not withdraw from the partnership business of Flour Bluff Finance Company prior to her association with Pay Day Loans. We hold that there is insufficient evidence to support the jury’s answers to special issues one and two and that the verdict based on these issues is so contrary to the overwhelming weight of all the evidence as to be manifestly unjust. In Re King’s Estate, 150 Tex. 662, 244 S.W.2d 660 (1951).

In points of error 15 through 18B plaintiffs contend that there is “no evidence” and “factually insufficient” evidence that the date of the alleged dissolution was July 27, 1971 and therefore the trial court erred in awarding $7,917.75 to Lillie Bryant based on the jury’s answer to special issue twelve. In addition, plaintiffs attack the jury’s finding that the reasonable net cash market value of Flour Bluff Finance Company partnership on July 27,1971 was $31,671.00. Because we have sustained plaintiffs’ factual sufficiency points directed to special issues one and two, there are no special issues to support a determination that a dissolution of Flour Bluff Finance Company took place, or if it did, the particular date of such dissolution. The trial court’s judgment awarding Lillie Bryant $7,917.75 based on the jury’s answers to special issues one, two and twelve was therefore error.

Plaintiffs next contend in effect that Lillie Bryant’s fiduciary duty not to compete with Flour Bluff Finance Company continued beyond the alleged date of dissolution until the actual termination of the partnership and therefore the trial court erred in submitting issues one and two and in rendering judgment against plaintiffs.

Section 21 of the Texas Uniform Partnership Act provides in relevant part as follows:

“(1) Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by him of its property.” (emphasis added)

Section 21 specifically extends the fiduciary duties owed by one partner to another to transactions connected with the partnership business during the period of winding up the partnership business and liquidating the partnership assets. See Giddings Convalescent Home, Inc. v. Wilson, 473 S.W.2d 246 (Tex.Civ.App.—Austin 1971, writ ref’d n. r. e.); Morgan v. Arnold, 441 S.W.2d 897 (Tex.Civ.App.—Dallas 1969, writ ref’d n. r. e.); Howell, Texas Civil Practice, Vol. 19 § 184 (1973). The fiduciary relationship between partners comes to an end as to new business commenced after the date of dissolution which is not the subject of unfinished partnership business commenced prior to the date of dissolution, and subsequently completed during the winding up stage; or which is not the subject of a claim rightfully belonging to the partnership during the winding up stage. Compare: Mathis v. Cactus Drilling Corporation, 430 S.W.2d 78, 83 (Tex.Civ.App.—Austin 1968, writ ref’d n. r. e.) and see Bluestein v. Davis, 86 Ill. App.2d 61, 230 N.E.2d 61, 64 (1967).

The trial court did not err in submitting special issues one and two to the jury. These issues were relevant to Lillie Bryant’s cross-action seeking a judicial determination that the Flour Bluff Finance Company’s partnership had been dissolved and to a possible monetary award representing her share of the partnership as of the date of dissolution. Plaintiffs’ points of error 2 and 7 are overruled.

We next consider plaintiffs’ points of error concerning the trial court’s take nothing judgment on plaintiff’s action against James Bryant and Harold Easley for allegedly inducing Lillie Bryant to assist them in forming and conducting the business of Pay Day Loans. Texas recognizes the tort of intentional interference with contract rights. When a person knowingly induces another to breach his contract with a third person, the third person has a right of action against the person causing the breach for any resulting damages. Raymond v. Yarrington, 96 Tex. 443, 73 S.W. 800, 803-04 (1903). To hold James Bryant or Harold Easley liable for inducing Lillie Bryant to breach the Flour Bluff Finance Company partnership agreement, there must be evidence that they actually caused or brought about the breach. Arabesque Studios v. Academy of Fine Arts, 529 S.W.2d 564, 568 (Tex.Civ.App.—Dallas 1975, no writ); Moore v. Sussdorf, 421 S.W.2d 460, 461 (Tex.Civ.App.—Tyler 1967, writ ref’d n. r. e.). In addition, the actionable conduct must have been done willfully and intentionally with actual knowledge of the contract in question. Frost National Bank v. Alamo National Bank, 421 S.W.2d 153, 156-57 (Tex.Civ.App.—San Antonio 1967, writ ref’d n. r. e.).

The statement of facts contains ample evidence to support the jury’s findings to special issues four and seven that James Bryant and Harold Easley did not induce Lillie Bryant to assist them in forming and participating in the business of Pay Day Loans. Lillie Bryant testified that the initial conversation between herself, James Bryant, Harold Easley and Mrs. Easley regarding Pay Day Loans transpired in the Fall of 1971 in a social setting. Mr. Easley jokingly remarked that they should open up another loan company if the other partners in Flour Bluff Finance Company would not purchase her (Lillie Bryant’s) share of the partnership assets. James Bryant testified that he considered this original discussion to be idle social conversation. Lillie Bryant testified that she did not discuss capitalization, profit or investment potential of Pay Day Loans with either Harold Easley or James Bryant. She also stated she did not assist them in selecting a site for the new company nor did she help in determining the type of loan company to be formed, although it was virtually uncontradicted that Lillie Bryant had good business skills and judgment. She testified that she had considered the covenant not to compete contained in the Flour Bluff Finance Company partnership agreement and had finally concluded that such partnership agreement would not be violated by her if she worked for Pay Day Loans.

The record before us is devoid of any affirmative acts or statements made by either James Bryant or Harold Easley to the effect that they enticed Lillie Bryant to work for Pay Day Loans. At most, they testified in substance that they “assumed” and “intended” for Lillie Bryant to be employed as company manager. This testimony is the only evidence in the record connecting James Bryant or Harold Easley to Lillie Bryant’s participation in Pay Day Loans. The jury reasonably could and did conclude on ample evidence that neither James Bryant nor Harold Easley induced Lillie Bryant to assist in forming or participating in the business of Pay Day Loans and that she voluntarily participated and/or even initiated her own participation. We have considered the entire record and find that the jury’s findings to special issues four and seven are not so against the great weight and preponderance of the evidence as to be manifestly unjust. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (1951). Plaintiffs’ points of error 19, 20, 21, 22, 23, 24, 25, 27 and 28 are overruled.

Plaintiffs next present factual and legal sufficiency points complaining of the jury’s negative findings to the damage issues ten and eleven. The jury found Flour Bluff Finance Company had suffered no damages by the competition of Pay Day Loans and that the plaintiffs were not entitled to punitive damages from any of the defendants, Harold Easley, James Bryant or Lillie Bryant. In order for plaintiffs’ position to be tenable, the issues of which they complain must be material. The jury’s negative findings to the liability issues, (Special issues 4 and 7), prevent plaintiffs from recovering any damages against defendants Harold Easley and James Bryant. Therefore, the jury’s answers to the damages issues were immaterial as to them. Miller v. Hood, 536 S.W.2d 278 (Tex.Civ. App.—Corpus Christi 1976, writ ref’d n. r. e.); Ruiz v. Flexonics, 517 S.W.2d 853 (Tex. Civ.App.—Corpus Christi 1974, writ ref’d n. r. e.); Rampy v. Allstate Insurance Company, 492 S.W.2d 85 (Tex.Civ.App.—Austin 1973, writ ref’d n. r. e.). Additionally, exemplary damages may not be awarded where actual damages are not found. Giraud v. Moore, 86 Tex. 675, 26 S.W. 945, 946 (1894); Garza v. San Antonio Light, 531 S.W.2d 926, 930 (Tex.Civ.App.—Corpus Christi 1975 writ ref’d n. r. e.). Points of error 11,12,13, 29, 30 and 31 are overruled.

The damage issues, if any, as to Lillie Bryant must be retried in accordance with our remand to the trial court. On retrial of this case, defendant, Lillie Bryant, must show that a dissolution occurred and the date of such dissolution, if any. A partnership, once proved, presumptively continues until the contrary appears. Heathington v. Heathington Lumber Company, 398 S.W.2d 822 (Tex.Civ.App.—Amarillo 1966) on appeal after remand 420 S.W.2d 252 (Tex.Civ.App.—Amarillo 1967, writ ref’d n. r. e.). On the other hand, plaintiffs are entitled to a reconsideration of whether Lillie Bryant breached her fiduciary duties by her employment with Pay Day Loans. In the original trial of this case no special issues were submitted to the jury concerning the actual damages caused by her alleged breach of such fiduciary duties. In Latta v. Kilbourn, 150 U.S. 524, 14 S.Ct. 201, 37 L.Ed. 1169 (1893) the United States Supreme Court stated that one partner cannot carry on another business in competition or rivalry with his partners without being held accountable for any profit that accrues to him therefrom. Accord Holmes v. Keets, 80 U.S.App.D.C. 327, 153 F.2d 132 (1945); Hamilton, Texas Practice, Vol. 11 § 129 (1973). Our Courts have recognized this same principle. MacDonald v. Follett, 142 Tex. 616, 180 S.W.2d 334, 336 (1944); Wampler v. Harrington, 261 S.W.2d 883 (Tex.Civ.App.—Texarkana 1953, writ ref’d n. r. e.). The financial benefit gained by Lillie Bryant through her competition with Flour Bluff Finance Company, including her salary, bonuses, if any, and her community interest, if any, in James Bryant’s interest in Pay Day Loans partnership, should be included as elements of damages in this case. See Article 6132b §§ 28-A (Extent of Community Property Rights of a Partner’s Spouse), 26 (Nature of Partner’s Interest in the Partnership) and 21 (Partner Accountable as a Fiduciary) Tex.Rev.Civ.Stat.Ann. (1970). Exemplary damages may be awarded only if a partner’s act “partake of a wanton and malicious nature.” Ogle v. Craig, 464 S.W.2d 95, 97 (Tex.Sup.1971). There must be more than strained relations between the partners to justify altering the standards of the finer loyalties required of partners in accordance with their fiduciary relationship. Johnson v. Peckham, 132 Tex. 148, 120 S.W.2d 786, 788 (1938).

We therefore hold that plaintiffs’ cause of action against James Bryant and Harold Easley, individually and d/b/a Pay Day Loans is hereby severed and the judgment of the trial court is as to them, affirmed. Plaintiffs’ cause of action against Lillie Bryant for allegedly breaching her fiduciary duties as a partner and Lillie Bryant’s cross-action for a judicial determination of the value of her partnership interest as of the date of the actual dissolution of Flour Bluff Finance Company is reversed and these causes are remanded to the trial court for a new trial. Rule 434, T.R.C.P. The costs are adjudged 80% against Lillie Bryant and 20% against the plaintiffs.

Affirmed in part and reversed and remanded in part.

      . Lillie Bryant’s April 27, 1971 letter to the other partners stated in relevant part as follows:
      “Pursuant to most recent telephone conversations with Mr. Woodruff and Mr. Barth, I here-by submit that my one-fourth share in the Flour Bluff Finance Company be placed before you for sale in accordance with bylaws governing the company.
      Be advised that I am in complete accord in remaining as manager, to such a degree of time, that it shall take to properly indoctrinate and train person or persons of your choice to take over my function. It is then proposed that I be dismissed from acting manager.
      Through careful evaluation of worth for my share, I submit that a fair and equitable price shall be $12,000.00. I am hopeful that agreement for purchase of my share shall be forthcoming in the most immediate future.” (emphasis added)

      . Article 11 of the Flour Bluff Finance Company partnership agreement provides in relevant part as follows:
      “ARTICLE XI. Although it is the intention of the parties for this partnership to operate for an indefinite period, if any of the parties hereto become dissatisfied with the partnership, he shall give ninety (90) days notice to the other partners that he wishes to sell or buy. The value of the interest of each partner shall be made and agreed to by the partners and if the value of the interest of the dissatisfied partner as so fixed is not paid to him in cash in purchase of his interest by the other partners within ninety (90) days, the dissatisfied partner shall have the right to purchase the interest of the other partners for cash at the value so fixed for it; and in such case, the person or persons remaining with the business shall have sole ownership, possession and control of all property thereof, and shall be responsible for and hold the other partners harmless as to any of the debts of the partnership theretofore incurred.
      In the event the net interest of each partner cannot be mutually agreed to within thirty (30) days after receipt of notice, as provided above, the dissatisfied partner shall appoint one arbitrator. The remaining partners shall also appoint one arbitrator. The two arbitrators so appointed shall select a third arbitrator. These three arbitrators will determine the value of the partnership and the decision of the majority of these three arbitrators shall be conclusive and final.”